K-12 Schools Report: High schools will lead the way in the K-12 schools market

Middle schools led the growth in K-12 construction spending in 2006, when peak enrollment was in the 8th grade. But the lead will shift to high schools, as the enrollment-bulge students will be 10th graders in the fall.

Construction spending for elementary schools, after project cost inflation, has been declining since 2001 and will continue to decline slowly. Overall K-12 school construction spending will increase 10% this year and 7% in 2008, barely faster than inflation. Tax revenue growth is still enough to support this growth rate.

The spending mix includes replacement and renovation projects, often very expensive per square foot, in cities in the Northeast and Midwest that are experiencing stable or declining enrollments, as well as low-cost classroom space expansions in southern and western cities with expanding student enrollments.

Nationally, space additions are not keeping up with enrollment growth so the unmet need for school space continues to build.