No Recovery Expected for Nonresidential Building this Year

AIA Consensus Construction Forecast panel is projecting a decline of 5.6 percent this year in nonresidential spending for buildings, followed by a modest recovery of 6.4 percent in 2012. Courtesy of AIA

An uneven economic recovery, hesitancy on the part of lenders to finance construction projects, the weak financial position of governments at all levels, and rising costs of key building material commodities are all conspiring to restrain a recovery in the nonresidential construction sector.

These predictions come on the heels of a more than 20 percent downturn in the overall nonresidential building sector last year, according to Kermit Baker, AIA Chief Economist. Spending on commercial buildings dropped 30 percent this year and next year's expected declines are quite modest in comparison.

Commercial facilities-office, retail, and hotel-are expected to see a more significant decline (6.5 percent) this year, but also a stronger recovery (almost 12 percent) next year. Spending on the construction of manufacturing facilities is expected to see a steep decline this year of almost 16 percent, followed by a relatively modest rebound of 8 percent.

The traditionally more stable institutional sector is expected to fall just over 3 percent this year, and then offset this decline with a 4 percent increase in 2012.

- Courtesy of AIA