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
Resiliency | Aug 19, 2021
White paper outlines cost-effective flood protection approaches for building owners
A new white paper from Walter P Moore offers an in-depth review of the flood protection process and proven approaches.
Multifamily Housing | Jul 7, 2021
Make sure to get your multifamily amenities mix right
One of the hardest decisions multifamily developers and their design teams have to make is what mix of amenities they’re going to put into each project. A lot of squiggly factors go into that decision: the type of community, the geographic market, local recreation preferences, climate/weather conditions, physical parameters, and of course the budget. The permutations are mind-boggling.
Digital Twin | May 24, 2021
Digital twin’s value propositions for the built environment, explained
Ernst & Young’s white paper makes its cases for the technology’s myriad benefits.
Industry Research | May 20, 2021
Latest ULI report forecasts robust real estate rebound
It’s going to take some time, though, for the office sector to recover
Industry Research | Apr 9, 2021
BD+C exclusive research: What building owners want from AEC firms
BD+C’s first-ever owners’ survey finds them focused on improving buildings’ performance for higher investment returns.
Market Data | Feb 24, 2021
2021 won’t be a growth year for construction spending, says latest JLL forecast
Predicts second-half improvement toward normalization next year.
Healthcare Facilities | Feb 18, 2021
The Weekly show, Feb 18, 2021: What patients want from healthcare facilities, and Post-COVID retail trends
This week on The Weekly show, BD+C editors speak with AEC industry leaders from JLL and Landini Associates about what patients want from healthcare facilities, based on JLL's recent survey of 4,015 patients, and making online sales work for a retail sector recovery.
Market Data | Jan 19, 2021
2021 construction forecast: Nonresidential building spending will drop 5.7%, bounce back in 2022
Healthcare and public safety are the only nonresidential construction sectors that will see growth in spending in 2021, according to AIA's 2021 Consensus Construction Forecast.
AEC Tech | Feb 13, 2020
Exclusive research: Download the final report for BD+C's Giants 300 Technology and Innovation Study
This survey of 130 of the nation's largest architecture, engineering, and construction firms tracks the state of AEC technology adoption and innovation initiatives at the AEC Giants.
