AIA Says Nonresidential Construction Recovery Possible by Latter Part of 2011; Expects Sharp Declines for the Rest of 2010

AIA Says Nonresidential Construction Recovery Possible by Latter Part of 2011; Expects Sharp Declines for the Rest of 2010
July 15, 2010

Market Segment Consensus Growth Forecasts	2010	2011
Overall nonresidential	-20.3%	3.1%
Commercial / industrial
Hotels	-43.3%	8.7%
Office buildings	-29.1%	0.0%
Retail	-25.6%	7.6%
Industrial	-21.3	-2.0%
Institutional
Amusement/recreation	-14.4%	8.1%
Education	-13.2%	1.3%
Religious	-10.2%	0.0%
Public safety	-9.1%	-0.7%
Health care facilities	-6.5%	5.1%

Even with modest improvements in the overall U.S. economy, nonresidential construction spending is expected to decrease by more than 20 percent in 2010 with a marginal increase of 3.1 percent in 2011 in inflation adjusted terms, according to the American Institute of Architects (AIA) semi-annual Consensus Construction Forecast, a survey of the nation’s leading construction forecasters. Poor conditions remain because of an oversupply of nonresidential facilities in most construction categories, weak demand for space, continuing declines in commercial property values, and a strong reluctance to provide credit from real estate lenders.

“There are a number of factors at play here that are contributing to one of the steepest construction downturns in generations,” says AIA chief economist, Kermit Baker, PhD, Hon. AIA. “We have businesses nervous about expanding their facilities, a fragile financial sector, excess commercial space and general unease in the international economy. Things should begin to turn around midway through next year with retail and hotels expected to see the strongest growth, along with health care and amusement and recreation facilities.”

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