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      Increase in Nonresidential Construction Spending Not Expected Until Late 2011

      Stronger gains for commercial real estate sector expected in 2012

      Contact: Scott Frank
      202-626-7467
      sfrank@aia.org

      For immediate release:
      Washington, D.C. – January 26, 2011 –
      A slow recovery period is projected for the nonresidential construction industry this year, and 2011 spending levels are not anticipated to be enough to show growth over 2010 figures. While activity for institutional projects should hover near 2010 levels, there is likely to be a modest decline in commercial construction. Overall nonresidential construction spending is expected to decrease by two percent in 2011, with 2012 seeing an increase of five percent in inflation adjusted terms. These are highlights from the American Institute of Architects (AIA) semi-annual Consensus Construction Forecast, a survey of the nation’s leading construction forecasters.

      “The key factors that have prevented an accelerated recovery include historically low lending rates for real estate projects, the lingering effects of general overbuilding and an unfavorable bond market that has hampered the ability for municipalities to get the requisite funding to build new schools and hospitals,” said AIA Chief Economist, Kermit Baker, PhD, Hon. AIA. “Conditions should improve later this year and gain momentum as we move into 2012, particularly for hotel, retail and office building projects.”

    Market Segment Consensus Growth Forecasts

    2011

    2012

         

    Overall nonresidential

    -2%

    5%

         

    Commercial / industrial

    -4.2%

    10.9%

    Industrial

    -11.8%

    5.8%

    Office buildings

    -7.9%

    7.1%

    Hotels

    -6.2%

    15.6%

    Retail

    -1%

    10.9%

         

    Institutional

    -0.2%

    1.6%

    Public safety

    -6.7%

    -2.3%

    Education

    -3.1%

    1.7%

    Health care facilities

    1.1%

    5.5%

    Religious

    1.3%

    3.4%

    Amusement / recreation

    1.4%

    1.2%

      Baker added, “Two areas that are of concern that may adversely affect the design and construction industry are the increasing federal budget deficit that will force private sector borrowing costs to increase, and the likelihood that energy costs will increase in the coming years – as crude oil prices have doubled from their recent low in 2009.”

      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, 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 13 years.

      About The American Institute of Architects
      For over 150 years, members of the American Institute of Architects have worked with each other and their communities to create more valuable, healthy, secure, and sustainable buildings and cityscapes. Members adhere to a code of ethics and professional conduct to ensure the highest standards in professional practice. Embracing their responsibility to serve society, AIA members engage civic and government leaders and the public in helping find needed solutions to pressing issues facing our communities, institutions, nation and world. Visit www.aia.org. Twitter: http://twitter.com/AIA_Media

      Facebook: http://www.facebook.com/#!/AIANational

 

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