As the economy continues to stabilize, non-residential construction will grow, spurred along by declining office and retail vacancies as well as growing commercial property values. The American Institute of Architects (AIA) predicts that spending will increase 5.8% in 2014 and 8% in 2015.
Led by the hotel and retail project categories, the commercial sector is expected to see the biggest gains in construction spending, with demand for institutional projects increasing at a more moderate level. But this increase could pose problems.
“The rosy outlook also contains several concerns for the entire construction industry. Rising construction costs, a shortage of skilled labor, and bank credit standards that have not eased up enough to keep pace with the strong demand for construction financing are all serious challenges to sustained growth in the coming years,” says Kermit Baker, chief economist at AIA.
Market Segment Consensus Growth Forecasts
| Commercial, Industrial | 2014 | 2015 |
|---|---|---|
| Hotels | 13.1% | 9.2% |
| Retail | 10.5% | 11.5% |
| Office Buildings | 9.2% | 10.8% |
| Industrial Facilities | 7.8% | 8.7% |
| Institutional |
2014 |
2015 |
|---|---|---|
| Amusement, Recreation | 9.9% | 7.5% |
| Healthcare Facilities | 5.2% | 7.8% |
| Education | 2.8% | 5.8% |
| Public Safety | -0.2% | 3.1% |
| Religious | -1.7% | 1.3% |
For the full report, visit AIA's website.
