AIA predicts nonresidential spending growth through 2019
- The latest American Institute of Architects Consensus Construction Forecast predicts that nonresidential industry spending in the U.S. will increase by 4.7% this year and another 4% through 2019. This is an uptick from 2017, during which nonresidential spending grew just enough to outrun inflation.
- The AIA's Consensus Construction Forecast Panel said spending in the commercial/industrial sector will outpace institutional outlays by 2.2% in 2018 but that institutional will take the lead in 2019 with a 4.5% increase versus 3.4% for commercial/industrial. The AIA forecasters said the top performers in 2018 will be in the public safety (+10.9%), hotel (+7.9%), office (+6.6%) and retail (+6.3%) spaces. Public safety (+5.9%), education (+5.2%), industrial (+4.9%), healthcare (+4.4%) and office (+4.1%) projects should see the most spending in 2019.
- At the beginning of the year, the institute's panel, which includes Dodge Data & Analytics, ConstructConnect, Wells Fargo Securities and FMI Corp., predicted that 2018 nonresidential spending would grow 4% and then 3.9% in 2019, but since upgraded its estimate. The AIA said that if the panel's projections hold true, 2019 will be the ninth consecutive year of nonresidential spending growth.
The AIA is not alone in predicting construction industry growth for the next few years, which likely comes as good news to contractors that might be wondering when U.S. tariffs on steel and aluminum imports, persistent labor shortages or other some other factor will let some of the air out of the current building boom. But there are some differing opinions about how long the upmarket will last.
Last month, the results of a CEO survey conducted by Vistage found that 64% of construction executives planned to increase hiring in the next 12 months, 72% expected to increase revenue, 57% predicted higher profits and 70% said they would raise their prices. However, only 31% of the same group of CEOs responded that they expected the U.S. economy to improve in the next year, with 44% predicting they would increase their level of investment.
A 2018 second-quarter Engineering News-Record survey discovered that while the participating construction executives were optimistic about the industry's continuing expansion through 2019, fewer than 20% thought they would still be seeing a pattern of growth in three years, with 35% anticipating a contraction.
A recent Cushman & Wakefield report had a less sunny outlook for 2019. The real estate and research firm said that the rate of office construction could start easing up in 2019, as developers try to deal with rising construction costs and attempt to predict when the current, active real estate cycle might slow.
- American Institute of Architects Projections reveal nonresidential construction spending to grow
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