AIA: Commercial Construction Will Surge
in 2012

Increases in nonresidential and commercial construction are turning industry forecasters' predictions upward, shown in a new AIA survey that more than doubles the projection for construction spending for the remainder of 2012.

The American Institute of Architects (AIA) is forecasting an improvement in nonresidential construction projects for the rest of 2012, bolstered by a surge in demand for industrial facilities and hotel/retail projects.

The organization is projecting a 4.4 percent rise in spending for the rest of this year, more than doubling the 2.1 percent projected increase that the trade group forecast in January. The AIA's semi-annual survey results, collected from the nation's leading construction forecasters, also predict spending to increase by 6.2 percent in 2013.

Commercial construction growth, especially for industrial facilities and warehouses, hotels, retail and office buildings, is expected to jump 5.7 percent this year, and make double-digit gains next year around 10.2 percent, according to the AIA. However, institutional construction like health care facilities, education, amusement and recreation, and public safety facilities is expected to rise just 0.7 percent this year and 3 percent in 2013.

''With companies looking to bring back manufacturing jobs from overseas, there has been a sharp rise in demand for industrial facilities, which is leading to an upward revision in projections for future construction spending,'' said AIA top economist Kermit Baker. ''Continued budget shortfalls at the state and local level, along with a depressed municipal bond market are holding the institutional market back from seeing similar upticks in spending.''

The adverse effects of the federal tax hikes and spending cuts set to kick in at year's end, known as the ''fiscal cliff,'' could undermine the AIA's projections, Baker added

"We will likely have a better sense after the presidential election of what will happen with the Bush-era tax cuts, Social Security payroll tax, extended unemployment, and deficit reduction plans that will have a ripple effect [on] the construction industry," Baker said.