AIA: Nonresidential Construction Poised to Drop Further

WASHINGTON, DC-American Institute of Architect’s Consensus Construction Forecast is projecting nonresidential construction spending to decrease by 16% in 2009 and drop by another almost 12% in 2010 in inflation adjusted terms, according to its latest projections. Commercial projects will see the most significant decrease in activity, the semi-annual report finds; by contrast, most institutional building categories are expected to see much more modest declines over this period.

According to the report retail will decline by 28% in 2009 and another 12.6% in 2010. Hotel construction will drop by 25.8% this year and 16.8% in 2010. Office by 21.5% in 2009; 17.3% in 2010. Industrial facilities construction will decline modestly this year–0.8%–but then decline dramatically in 2010 at 28.4%. Nonresidential construction activity typically lags behind the rest of the economy, explains AIA Chief Economist Kermit Baker. Meanwhile declines in the institutional sector will be even more moderate thanks to the stimulus spending, he says. For example, spending on public safety this year is expected to increase by 1.7% and drop 0.7% next year.