Significant Downturn in Nonresidential Construction Activity Projected through 2010 Print E-mail
Monday, 13 July 2009 07:21

Feeling the effects of the struggling overall U.S. economy, nonresidential construction spending is expected to decrease by 16 percent in 2009 and drop by another almost 12 percent in 2010 in inflation adjusted terms. Commercial projects will see the most significant decrease in activity. In contrast, most institutional building categories are expected to see much more modest declines over this period. These are highlights from the American Institute of Architects (AIA) semi-annual Consensus Construction Forecast, a survey of the nation’s leading construction forecasters.

“While there are some indications that the overall economy is beginning to recover, nonresidential construction activity typically lags behind the rest of the economy,” said AIA Chief Economist, Kermit Baker, PhD, Hon. AIA. “Commercial facilities such as hotels, retail establishments and offices will feel the decline most dramatically. The institutional market will fare much better as stimulus funding becomes available for education, healthcare and government facilities.”

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Market Segment Consensus Growth Forecasts

Commercial / Industrial 2009 2010
Retail -28.0% -12.6%
Hotels -25.8%
-16.8%
Office buildings -21.5% -17.3%
Industrial facilities -0.8% -28.4%

Institutional 2009 2010
Amusement / recreation -20.8% -8.1%
Religious -10.7% -6.9%
Education -8.2% -0.7%
Health care facilities -1.5% -0.8%
Public safety 1.7% -0.7%

“This nonresidential downturn is shaping up to be the deepest decline in nonresidential activity in over a generation.” Baker added. “However, we’re beginning to see some moderation in the trends in design billings at architecture firms, so we hopefully are nearing the bottom of this cycle.”


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