The American Institute of Architects (AIA) has published its latest AIA Consensus Construction Forecast Panel, a metric that collects the perspectives of "leading economic forecasters" to help project potential near-term demand for construction services.
AIA's latest report signals that the broad contraction experienced by non-residential market sectors as a result of the COVID-19 pandemic will continue through 2020 and into 2021. According to the report, "As a result of the partially shutdown economy, businesses and organizations will continue to be hesitant to invest in modernized or new facilities." The report adds, "The trend ends an almost decade-long expansion in construction spending."
AIA estimates that the commercial building sector will be hardest hit by the slow down, with a projected decline in construction activity of nearly 12% expected this year. The slide will continue in 2021, when construction in this market sector could drop by as much as 8.4%.
Meanwhile, industrial construction is also expected to drop, as are the office, hotel, institutional, education, amusement, and religious sectors. AIA projects that only public safety and hospital sectors will grow, with hospitals growing at 2 to 3% this year and next, respectively, and public safety projects expected to grow a whopping 15.6% this year.
Describing the findings, AIA Chief Economist Kermit Baker, Hon. AIA, PhD. explains, “As much of the economy was shut down in mid-March to help limit the spread of the pandemic, there was hope that after the initial steep decline in economic activity there could be an almost equally quick recovery. However, since mid-June economic growth has stalled. The timing coincides with a spike in new Covid-19 cases across the country, and the resulting pause or roll-back of reopening plans in many states.”
A breakdown of the projected rates of decline follows.
Overall nonresidential building
Commercial total
Retail & other commercial
Office space
Hotel
Industrial total
Institutional total
Public safety
Healthcare facilities
Education
Religious
Amusement / recreation
5 Comments
But how about the residential projects, does it mean it will keep growing anyway?
I believe residential and commercial construction activity is always reported separately because these two markets more more or less independently from one another, especially during the COVID era, residential seems to be doing fine, if not growing.
See this article we published last week for more info: https://archinect.com/news/article/150207464/divergence-between-housing-and-commercial-markets-continues-as-pandemic-impact-on-construction-and-design-deepens
I feel bad for everyone graduating in 2020 and 2021. Such unfortunate timing...
Thanks for putting all this together. Very enlightening as to trends going forward. As a part of a construction segment, modular elevators, it is good to see what is on the horizon.
Thanks again.
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