An update on 2020 projections for the nonresidential construction industry

While 2020 was initially projected to be a year of modestly slow growth for nonresidential building activity, significant declines are now expected due to the impact of the COVID-19 pandemic. In the last full Consensus Construction Forecast survey, conducted in December 2019 of eight leading industry forecasters, the panelists predicted an average of 1.5% growth in nonresidential construction spending in 2020, from the 2019 total of $452 billion.

A survey conducted of the same forecasters during the week of April 6 revealed a much more pessimistic outlook. The small projected growth for 2020 has now been revised down to an 11% decline, with the sharpest decline predicted to occur in the commercial construction sector. While slight 0.6% growth was originally forecast for 2020, it has now been revised down to a loss of 14%. Institutional construction spending will also be hard hit, although not quite as seriously as commercial, with losses of 7% now projected, versus 2.9% growth predicted in December.

The panelists were also asked to each select one or two sectors they thought could overperform the overall market in 2020, and one or two that could underperform. Five of the eight panelists expect the healthcare sector to outperform, which makes sense given the need for medical facilities to treat and screen COVID-19 patients. Two panelists each also selected education and public safety as the most likely to overperform. Some architects have reported that education projects have already started to ramp up in recent weeks—with many schools already closed for the remainder of the academic year, projects that weren’t supposed to start until summer break are already underway.

As far as the sectors projected to underperform the overall market in 2020, six panelists each selected retail and hotel, both of which are probably the hardest hit sectors so far as a result of social distancing measures implemented across the country. And while one panelist selected office construction to underperform, another forecast it to outperform.

These data were collected from feedback provided by the eight organizations that comprise the AIA Consensus Construction Forecast panel the week of April 6, 2020. Please visit the web page for more information on the panelists, and the complete forecast from December 2019: https://www.aia.org/resources/10081-consensus-construction-forecast

The next full forecast will be released in July 2020.