Washington, D.C., July 16,
2008 — As the nonresidential sector has experienced cutbacks in demand
for new space, the projections for construction activity for new
nonresidential facilities are for a mild decline in 2008, with a
more significant downturn in 2009. The forecasts are more negative
for commercial and industrial buildings, with an especially large
drop-off in the office and retail sectors. The two largest
institutional categories, healthcare and education facilities,
should see a slight increase this year and could help offset some
of the losses in the other project categories. The continued
increase in building material costs in recent years could also
adversely affect the construction industry. These are highlights
from the American Institute of Architects (AIA) semi-annual
Consensus Construction Forecast, a survey of the nation’s
leading construction forecasters which is calling for a 1.2%
decline in inflation-adjusted activity in 2008, followed by a
projected 6.7% decline in 2009.
“The more pessimistic forecasts this round stems from the lack
of growth in the overall economy, the ripple effect from the
faltering housing market and the anxiety in the credit markets
leading to a restriction in lending for all types of construction
projects,” said AIA Chief Economist, Kermit Baker, PhD, Hon.
AIA. “The one bit of good news is that this contraction in
activity is likely to be considerably milder than the construction
recessions of the early 1990’s and earlier this
decade.”
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Market Segment Consensus Growth
Forecasts
| Commercial / industrial
|
2008 |
2009 |
| • Retail |
-8.3% |
-9.9% |
| • Office buildings |
-3.7% |
-12.3% |
| • Hotels |
6.6% |
-9.9% |
| • Industrial facilities |
4.6% |
-5.5% |
| Institutional |
|
|
| • Health care facilities |
0.2% |
1.1% |
| • Education |
2.7% |
-1.1% |
| • Amusement / recreation |
3.6% |
-8.5% |
| • Public safety |
5.9% |
-1.9% |
| • Religious |
-11.7% |
-1.2% |
Baker added, “Another key concern for the industry is that
the cost of construction materials has increased more than twice
that of consumer products and services – up 37% versus 18%
since 2004. Petroleum-based materials and other key construction
commodities such as steel, concrete and stone have experienced very
sharp price increases in recent years.”
About the AIA Consensus Construction Forecast
Panel
The AIA Consensus Construction Forecast Panel is conducted twice a
year with the leading nonresidential construction forecasters in
the United States including, McGraw Hill Construction, Global
Insight, Moody’s economy.com, Reed Business Information, FMI,
and the Portland Cement Association. The purpose of the Consensus
Construction Forecast Panel is to project business condition in the
construction industry over the coming 12 to 18 months. The
Consensus Construction Forecast Panel has been conducted for 10
years.
About The American Institute of
Architects
For over 150 years, members of the American Institute of Architects
have worked with each other and their communities to create more
valuable, healthy, secure, and sustainable buildings and
cityscapes. By using sustainable design practices, materials, and
techniques, AIA architects are uniquely poised to provide the
leadership and guidance needed to provide solutions to address
climate change. AIA architects walk the walk on sustainable design.
Visit www.aia.org/walkthewalk.
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