Spending on nonresidential buildings will see a modest 4% increase in 2024, after increasing by more than 20% last year according to The American Institute of Architects’ latest Consensus Construction Forecast.
The pace will slow to just over 1% growth in 2025, a marked difference from the strong performance in 2023. Spending on commercial facilities will be flat this year and next, manufacturing construction will increase almost 10% this year before stabilizing in 2025, and institutional construction will see mid-single-digit gains this year and next.
The Consensus Construction Forecast panelists, a group comprised of the leading construction forecasters from across the country, found there are many factors fueling the projected slowdown:
- Tighter credit conditions continue to put pressure on many regional banks that account for a sizeable share of construction lending.
- Higher construction input costs due to inflation in materials costs and labor in recent years.
- Declines in commercial property values as weak demand continues in many sectors.
- Structural changes in demand, disrupting notoriously cyclical construction industry.
“There are several economic headwinds behind the projected slowdown,” said AIA Chief Economist Kermit Baker, Hon. AIA, PhD. “We already started to see construction starts either slow dramatically or turn negative in virtually all construction sectors in the latter part of 2023 and the weaker conditions are expected to stay into 2025.”
Related Stories
Industry Research | Apr 4, 2022
Nonresidential Construction Spending Drops Slightly in February, Says ABC
National nonresidential construction spending was down 0.1% in February, according to an Associated Builders and Contractors analysis of data published today by the U.S. Census Bureau
Reconstruction & Renovation | Mar 28, 2022
Is your firm a reconstruction sector giant?
Is your firm active in the U.S. building reconstruction, renovation, historic preservation, and adaptive reuse markets? We invite you to participate in BD+C's inaugural Reconstruction Market Research Report.
Industry Research | Mar 28, 2022
ABC Construction Backlog Indicator unchanged in February
Associated Builders and Contractors reported today that its Construction Backlog Indicator remained unchanged at 8.0 months in February, according to an ABC member survey conducted Feb. 21 to March 8.
Industry Research | Mar 23, 2022
Architecture Billings Index (ABI) shows the demand for design service continues to grow
Demand for design services in February grew slightly since January, according to a new report today from The American Institute of Architects (AIA).
Industry Research | Mar 17, 2022
Construction input prices rise 2.6% in February, says ABC
Construction input prices increased 2.6% in February compared to the previous month, according to an Associated Builders and Contractors analysis of the U.S. Bureau of Labor Statistics’ Producer Price Index data released today
Museums | Mar 16, 2022
Unpacking the secrets to good museum storage
Museum leaders should focus as much design attention on the archives as the galleries themselves, according to a new white paper by Erin Flynn and Bruce Davis, architects and museum experts with the firm Cooper Robertson.
Codes and Standards | Mar 10, 2022
HOK offers guidance for reducing operational and embodied carbon in labs
Global design firm HOK has released research providing lab owners and developers guidance for reducing operational and embodied carbon to meet net zero goals.
Industry Research | Mar 9, 2022
Survey reveals five ways COVID-19 changed Americans’ impressions of public restrooms and facilities
Upon entering the third year of the pandemic, Americans are not only more sensitive to germs in public restrooms, they now hold higher standards for the cleanliness, condition and technology used in these shared spaces, according to the annual Healthy Handwashing Survey™ from Bradley Corporation conducted in January.
Codes and Standards | Mar 7, 2022
Late payments in the construction industry rose in 2021
Last year was a tough one for contractors when it comes to getting paid on time.
Multifamily Housing | Mar 4, 2022
221,000 renters identify what they want in multifamily housing, post-Covid-19
Fresh data from the 2022 NMHC/Grace Hill Renter Preferences Survey shows how remote work is impacting renters' wants and needs in apartment developments.