Healthy fundamentals in the commercial property market combined with the international economy returning to more traditional growth levels are factoring into a projected increase in growth for the design and construction industry.  Led by the hotel and retail project categories, the commercial sector looks to see the biggest gains in construction spending, with demand for institutional projects increasing at a more moderate level.  The American Institute of Architects’ (AIA) semi-annual Consensus Construction Forecast, a survey of the nation’s leading construction forecasters, is projecting that spending will see a 5.8% increase in 2014, with next year’s projections raised to 8%.

“Since the overall economy is stabilizing, there should be a significant improvement in the outlook for the construction industry that has been recovering at a slow and steady pace the last two years,” said AIA Chief Economist, Kermit Baker, PhD, Hon. AIA. “At a more granular level, 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.”

 

Market Segment Consensus Growth 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%

Baker continued, “The rosy outlook also contains several concerns for the entire construction industry.  Rising construction costs, a shortage of skilled labor, and bank credit standards that have not eased up enough to keep pace with the strong demand for construction financing are all serious challenges to sustained growth in the coming years.”

About the AIA Consensus Construction Forecast Panel
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 purpose of the Consensus Construction Forecast Panel is to project business conditions in the construction industry over the coming 12 to 18 months.  The Consensus Construction Forecast Panel has been conducted for 15 years.