After a strong 2015, there is a growing sense that the construction industry expansion will be more tempered over the next eighteen months. However, continued demand for hotels, office space, and amusement and recreation spaces will ensure continued growth in the overall construction spending market over this time period.
The American Institute of Architects’ (AIA) semi-annual Consensus Construction Forecast, a survey of the nation’s construction forecasters, is projecting that spending will increase less than six percent for 2016, with next year’s projection being an additional 5.6% gain.
INFOGRAPHIC: To see each of the panelist’s projections, click here.
“Healthy job growth, consumer confidence and low interest rates are several positive factors in the economy, which will allow some of the pent-up demand from the last downturn to go forward,” said AIA Chief Economist, Kermit Baker, PhD, hon. AIA. “But at the same time, the slowing in the overall economy could extend to the construction industry a bit – with the biggest drop off expected in the industrial facility sector over the next year and a half.”
Market Segment Consensus Growth Forecasts 2016 2017
Overall nonresidential building 5.8% 5.6%
Commercial / industrial 11.7% 6.5%
Hotels 17.9% 7.6%
Office space 14.7% 7.5%
Retail 7.4% 5.2%
Industrial facilities -2.1% 2.9%
Institutional 4.5% 5.8%
Amusement / recreation 10.0% 5.7%
Education 6.5% 6.3%
Healthcare facilities 2.3% 5.0%
Religious -0.4% 1.9%
Public safety -3.7% 3.3%
Baker added, “The issues that could derail continued expansion in the construction sector include: weak U.S. manufacturing output, struggling economies in key international markets, the ripple effect from the Brexit decision, and the typical uncertainty leading up to a U.S. presidential election that results in reluctant investors.”