|Consensus Projection: Steady Increase in Construction |
Commercial construction activity should see a "solid, yet measured" increase of 5 percent this year, reported a survey of construction forecasters.
The American Institute of Architects' twice-yearly Consensus Construction Forecast said commercial construction spending has grown faster than the overall U.S. economy. The 5 percent consensus figure for 2013 represents an increase from the July 2012 projection of a 4.4 percent increase in 2013.
“After seeing construction activity seesaw for much of last year, there is a much stronger sense that we have entered a recovery phase and the industry is positioned to see continued economic improvement as we move through the year and into 2014,” said Kermit Baker, chief economist with AIA, Washington, D.C.
The resurgent housing market has led to a ripple effect where there is a need for more retail establishments and office buildings across the country, Baker said. “Industrial construction spending is projected to nearly match the overall nonresidential building totals [of 5 percent] this year and next, while institutional construction activity [such as healthcare, religious and education facilities] should lag behind, with modest single-digit gains over each of the next two years. Healthcare is expected to be the strongest institutional sector; hotel construction could see double-digit gains," he said.
Baker said the survey projects a 7.2 percent commercial construction spending increase in 2014.
Like any 12- to 18-month forecast, these figures could change, Baker said. “We can’t truly think the design and construction industry is completely out of the woods until the continued uncertainty over federal budget and debt issues is resolved,” he said. “This has caused enough anxiety in the real estate marketplace that has resulted in numerous delays and even cancellations of active construction projects. More than one-quarter of architecture firms are reporting that this tenuous situation is a tremendous concern to clients and may lead to more delays or project terminations.”
The forecast panel includes McGraw-Hill Construction, Wells Fargo Securities, IHS-Global Insight, Moody’s economy.com, Reed Business Information, Associated Builders & Contractors and FMI.