Originally post by Bill Esler on February 3, 2014
WASHINGTON, DC – Design and construction markets are expected to increase 5.8% in 2014, with hotel construction and build-outs of new retail establishments leading the expansion, says the American Institute of Architects.
In AIA’s analysis of the semi-annual forecast, based on seven major construction forecasting groups, healthy fundamentals in commercial property market combined with the international economy returning to more traditional growth levels are a big factor. Spending will see an 8% increase in 2015.
“Since the overall economy is stabilizing, there should be a significant improvement in the outlook for the construction industry,” said AIA Chief Economist, Kermit Baker, PhD. “The surging housing market, growing commercial property values, and declining office and retail vacancies are all contributing to what is expected to amount to a much greater spending on nonresidential building projects.”
| AIA Market Segment Forecasts | |||||
| 2014 | 2015 | ||||
| Overall nonresidential building | 5.8% | 8.0% | |||
| Commercial / industrial | 10.3% | 10.8% | |||
| Hotels | 13.1% | 9.2% | |||
| Retail | 10.5% | 11.5% | |||
| Office buildings | 9.2% | 10.8% | |||
| Industrial facilities | 7.8% | 8.7% | |||
| Institutional | 3.4% | 6.3% | |||
| Amusement / recreation | 9.9% | 7.5% | |||
| Healthcare facilities | 5.2% | 7.8% | |||
| Education | 2.8% | 5.8% | |||
| Public safety | -0.2% | 3.1% | |||
| Religious | -1.7% | 1.3% |
The forecast comes as welcome news, since the most recent AIA Billings Index fell for the second consecutive month in December.
Amusement and recreation sectors will do well in 2014, as will office building construction. Continuing to contract in 2014 are religious institutions, which will eke out small gains in 2015.
Baker says rising construction costs, a shortage of skilled labor, and bank credit standards that have not eased enough to keep pace with the strong demand for construction financing pose serious challenges to sustained growth in the coming years.
The AIA Consensus Construction Forecast Panel is conducted twice a year with the leading nonresidential construction forecasters in the United States including, McGraw Hill Construction, Wells Fargo Securities, IHS-Global Insight, Moody’s economy.com, Reed Business Information, Associated Builders & Contractors and FMI. The American Institute of Architects, with some 300 state and local chapters, is a widely watched source forconstruction and building forecasts. www.aia.org.