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Nonresidential Construction Outlook Dim


Latest News > Industry News

The steep decline in nonresidential construction is likely to continue through 2010, says the latest American Institute of Architects (AIA) semi-annual Consensus Construction Forecast.

Nonresidential construction spending is expected to slide by 16% this year and fall some 12% more in 2010 in inflation-adjusted terms, according to the survey of leading U.S. construction forecasters. The commercial and industrial sectors are expected to suffer the worst declines.

"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 Kermit Baker, AIA chief economist. "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."

Market segment growth forecasts, according to the survey include:

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