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Construction Spending Forecast Upgraded 08-13-15 | News

Construction Spending Forecast Upgraded
Commercial, Manufacturing Sectors Surging

The AIA has predicted spending on construction projects will be 9 percent higher in 2015, up from the 7.7 percent it forecast in January.

A projection of nonresidential construction spending for 2015 has been considerably upgraded in the latest report from the American Institute of Architects.

In January, the AIA predicted spending would increase 7.7 percent in 2015. But the AIA is now saying construction spending will be nearly 9 percent higher this year instead.

The AIA conducts a Consensus Construction Forecast, a survey of the nation's leading construction forecasters, twice each year.

Back in January, the AIA also predicted growth in nonresidential spending of 8.2 percent in 2016. This forecast remains unchanged in the AIA's most recent analysis.

So far in 2015, the development of commercial properties is surging, most of it in the form of offices and hotels. There has also been a "high spike" in the manufacturing sector because of heightened domestic oil and natural gas production. "Buoyed mostly by the red-hot commercial sector, spending on nonresidential buildings should be close to $360 billion this year, approaching $390 billion in 2016," said Kermit Baker, the AIA's chief economist.

"But the demographic factors that are also fueling heavy demand for healthcare and education facilities are going to lead to a more balanced construction market in the foreseeable future," Baker warned.

The purpose of the Consensus Construction Forecast is to project business conditions in the construction industry over the coming 12 to 18 months, the AIA said. The AIA has been conducting this survey for 16 years. Overall, nonresidential construction spending is forecast to be 8.9 percent higher in 2015.

By sector, the AIA is predicting percentage hikes in spending in the following sectors: commercial-industrial, 12.3 percent this year, and 10.6 next year; industrial facilities, 21.9 percent in 2015, and 9.9 percent in 2016; office buildings, 14.7 percent this year, 11.7 percent next year; hotels, 13.3 percent in 2015, and 12.4 percent in 2016.

These sectors will see increases as well: institutional, 2.8 percent this year, 5.6 percent next year; amusement and recreation, 14.3 percent in 2015, and 5.9 percent in 2016; health care, 2.4 percent this year, 5.8 percent next year; education, 1.5 percent in 2015, and 5.9 percent in 2016.