AIA CONSENSUS CONSTRUCTION FORECAST
After Strong Growth in 2007, Nonresidential Construction Activity Is Projected to Flatten Out
A weakening economy in 2008 is expected to stall the current nonresidential construction expansion
by Kermit Baker, PhD, Hon. AIA
Summary: Emerging weakness in the broader national economy has dampened the mood of the leading nonresidential construction forecasters. The AIA Consensus Construction Forecast Panel is now projecting a modest 0.7 percent inflation-adjusted increase in nonresidential construction activity this coming year, with a modest 1.3 percent decline in the commercial categories, but a reasonably healthy 4.2 percent gain in institutional facilities. Our forecast panel does not expect improvement as we move into 2009; the consensus is for a small decline of 0.9 percent in nonresidential activity for next year. Again, the commercial sectors are expected to fare worse than the institutional categories.
National economic slowdown underway
This past year turned out very positive for the nonresidential construction sector. Spending on the construction of nonresidential buildings increased by an estimated 18 percent (before inflation adjustments), according to U.S. Commerce data covering activity through November 2007. This growth almost offset a comparable percentage decline in residential activity. Nonresidential spending was particularly strong for lodging facilities (up more than 60 percent), public safety and transportation (each up more than 20 percent), and offices, communication facilities, and amusement and recreation facilities (each up close to 20 percent).
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