Spending on nonresidential building construction is expected to grow in late 2023 and beyond, according to the AIA’s latest Consensus Construction Forecast. The analysis projects that spending on nonresidential buildings will increase by almost 20% this year, a pace not seen since before the 2008 financial crash. The pace will however slow to 2% in 2024.

“The forecast for nonresidential construction activity remains healthy through the second half of 2023 and into 2024,” says AIA Chief Economist Kermit Baker. “The industry got off to an extremely strong start in the first half of the year, and that momentum will ensure healthy gains for the year before moving to a much more moderate pace of expansion in 2024.”

According to the analysis, the heaviest increase in construction spending will be in the industrial sector, where spending will increase more than 55% over 2022 levels. All sectors, including commercial, institutional, and industrial construction, are projected to increase by double digits.

Though spending also increased by 10% in 2022, real increases were much lower when inflation is factored. According to the AIA analysis, the result is that while companies are investing heavily in new buildings and renovation, their investments may not translate into comparable economic growth or employment opportunities. The analysis nonetheless adds that with inflation in construction slowing, this trend may improve.

The forecast is one of several analyses of the AEC economy recently reported in our editorial. Earlier this month, the Dodge Momentum Index fell in June due to a sharp decline in institutional planning, while last month, the AIA’s Architecture Billings Index showed a rebound in demand for design services. June also saw a report that construction input prices have declined almost 4% in one year.