flexiblefullpage -
billboard - default
interstitial1 - interstitial
catfish1 - bottom
Currently Reading

2021 construction forecast: Nonresidential building spending will drop 5.7%, bounce back in 2022

Market Data

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.


By AIA | January 19, 2021
2021 construction forecast: Nonresidential building spending will drop 5.7%, bounce back in 2022 Photo pexels juan cruz palacio

Eight leading construction industry economists forecast a slowdown this year for the nonresidential building industry, with the hotel and amusement/recreation sectors taking the biggest hit, according to AIA's latest Consensus Construction Forecast. Photo: Juan Cruz Palacio via Pexels

    

Slowing demand at architecture firms last year is expected to contribute to a projected 5.7% decline in construction spending for 2021, according to a new consensus forecast from The American Institute of Architects (AIA).

The AIA Consensus Construction Forecast Panel—comprised of leading economic forecasters—expects steep declines this year in construction spending on office buildings, hotels, and amusement and recreation centers. Health care and public safety are the only major sectors that are slated to produce gains in 2021. 

Growth in nonresidential construction is expected for 2022, with 3% gains projected for the overall building market matched by both the commercial and institutional sectors. 

“The December jobs report confirmed that the economy needs additional support in order to move to a sustainable economic expansion,” said AIA Chief Economist Kermit Baker, Hon. AIA, PhD. “As pandemic concerns begin to wane and economic activity begins to pick up later in 2021, there is likely to be considerable pent-up demand for nonresidential space, leading to anticipated growth in construction spending in 2022.” 

 

AIA 2021 Consensus Construction Forecast: Eight leading construction industry economists forecast a slowdown this year for the nonresidential building sector
CLICK CHART TO LAUNCH INTERACTIVE CHART FROM AIA

 

Here are some takeaways from AIA's Chief Economist Kermit Baker, Hon. AIA:

• Hotel, airlines, and recreation industry jobs have been decimated by the pandemic. "The December jobs report confirmed that the economy needs additional support in order to move to a sustainable economic expansion. Of particular concern were the 500,000 payroll positions lost in the leisure and hospitality sector. That means that this sector has lost almost 25% of payroll positions since February 2020, matching losses in the airline industry."

• The $900 billion stimulus package passed in December 2020 is not nearly enough to sustain economic growth. "Key elements of this package include another $600 in direct payments to qualifying individuals, $300 per week in supplemental unemployment insurance for up to 11 weeks, and $280 billion designated for the Paycheck Protection Program, which provided incentives for small businesses to keep employees on their payrolls. These initiatives were generally very effective in providing a safety net for impacted households and small businesses last spring. However, they weren’t designed to provide sufficient support for an extended period of economic weakness, and the December jobs report suggests that we may already be heading into another down cycle. Even this additional funding is unlikely to provide sufficient financial support for economic growth through the entire vaccination period, suggesting that even more stimulus will be needed in the coming months or else our economy likely will be in for an extended period of stagnant growth or modest declines."

• Biden win bodes well for infrastructure investment. "With the two Georgia senate seats now in the democratic column, there are a new set of policy options for the Biden administration. Still, given the razor thin margins in both the House and the Senate, programs likely to be enacted will need to have at least modest levels of bipartisan support. An infrastructure program is likely near the top of the list of programs that both parties could support, and the Biden Administration seems ready to make this a priority, in part because it would be viewed as a stimulus program, but also because borrowing costs are near historical lows."

• Architecture firms are seeing more positive signs for the long-term. "Project inquiries from prospective and former clients have been strong recently, suggesting that new work may be picking up. More concretely, new design work coming into architecture firms has generally been more positive than billings in recent months, suggesting that firms are bringing in more project activity than they are completing. However, firms are seeing different business conditions regionally. Firms in the northeast saw the steepest downturns as the pandemic hit, and conditions remained the weakest for the remainder of the year. Business conditions at firms in the other three regions – all modestly declining – are fairly comparable."

Read Kermit Baker's full report.

Related Stories

Market Data | Sep 17, 2018

ABC’s Construction Backlog Indicator hits a new high in second quarter of 2018

Backlog is up 12.2% from the first quarter and 14% compared to the same time last year.

Market Data | Sep 12, 2018

Construction material prices fall in August

Softwood lumber prices plummeted 9.6% in August yet are up 5% on a yearly basis (down from a 19.5% increase year-over-year in July).

Market Data | Sep 7, 2018

Safety risks in commercial construction industry exacerbated by workforce shortages

The report revealed 88% of contractors expect to feel at least a moderate impact from the workforce shortages in the next three years.

Market Data | Sep 5, 2018

Public nonresidential construction up in July

Private nonresidential spending fell 1% in July, while public nonresidential spending expanded 0.7%.

Market Data | Aug 30, 2018

Construction in ASEAN region to grow by over 6% annually over next five years

Although there are disparities in the pace of growth in construction output among the ASEAN member states, the region’s construction industry as a whole will grow by 6.1% on an annual average basis in the next five years.

Market Data | Aug 22, 2018

July architecture firm billings remain positive despite growth slowing

Architecture firms located in the South remain especially strong.

Market Data | Aug 15, 2018

National asking rents for office space rise again

The rise in rental rates marks the 21st consecutive quarterly increase.

Market Data | Aug 10, 2018

Construction material prices inch down in July

Nonresidential construction input prices increased fell 0.3% in July but are up 9.6% year over year.

Market Data | Aug 9, 2018

Projections reveal nonresidential construction spending to grow

AIA releases latest Consensus Construction Forecast.

boombox1 - default
boombox2 -
native1 -

More In Category


AEC Tech

Lack of organizational readiness is biggest hurdle to artificial intelligence adoption

Managers of companies in the industrial sector, including construction, have bought the hype of artificial intelligence (AI) as a transformative technology, but their organizations are not ready to realize its promise, according to research from IFS, a global cloud enterprise software company. An IFS survey of 1,700 senior decision-makers found that 84% of executives anticipate massive organizational benefits from AI. 



Construction Costs

New download: BD+C's April 2024 Market Intelligence Report

Building Design+Construction's monthly Market Intelligence Report offers a snapshot of the health of the U.S. building construction industry, including the commercial, multifamily, institutional, and industrial building sectors. This report tracks the latest metrics related to construction spending, demand for design services, contractor backlogs, and material price trends.

halfpage1 -

Most Popular Content

  1. 2021 Giants 400 Report
  2. Top 150 Architecture Firms for 2019
  3. 13 projects that represent the future of affordable housing
  4. Sagrada Familia completion date pushed back due to coronavirus
  5. Top 160 Architecture Firms 2021