According to a new report from the American Institute of Architects, the nonresidential building sector is expected to see a healthy rebound through next year after failing to recover with the broader economy last year.
The AIA’s Consensus Construction Forecast panel—comprising leading economic forecasters—expects spending on nonresidential building construction to increase by 5.4 percent in 2022, and accelerate to an additional 6.1 percent increase in 2023. With a five percent decline in construction spending on buildings last year, only retail and other commercial, industrial, and health care facilities managed spending increases.
This year, only the hotel, religious, and public safety sectors are expected to continue to decline. By 2023, all the major commercial, industrial, and institutional categories are projected to see at least reasonably healthy gains.
“The pandemic, supply chain disruptions, growing inflation, labor shortages, and the potential passage of all or part of the Build Back Better legislation could have a dramatic impact on the construction sector this year,” said AIA Chief Economist Kermit Baker, Hon. AIA, PhD. “Challenges to the economy and the construction industry notwithstanding, the outlook for the nonresidential building market looks promising for this year and next.”
CLICK HERE TO VIEW INTERACTIVE CHART
More from AIA:
- The recovery in the broader economy in 2021 didn’t carry over to the nonresidential building sector. Spending on the construction of these facilities declined about 5%, on top of the 2% decline in 2020.
- The broader economy has seen a solid recovery since the depths of the pandemic-induced recession. It grew by about 5% last year and now has fully recovered from the past recession. There were almost 4 million net new payroll positions added last year, bringing national employment almost back to the level it was at in February 2020 prior to the pandemic. The national unemployment rate was 3.9% at the end of last year, just above the 3.5% rate in February 2020.
- In spite of these positive economic indicators, there are several headwinds to future economic growth. The uncertainty surrounding combatting Covid and its variants have added tremendous uncertainty to future building needs. The Biden Administration’s Build Back Better program was slated to add significant support to the construction sector, but its funding is very much in doubt at present (January 2022). Supply chain disruptions are likely to continue slow economic growth well into this year. Inflation accelerated during the second half of last year to its highest rate in almost four decades, which is expected to put upward pressure on interest rates. Finally, the already-serious labor shortages look to become even more severe this year and next.
- Industries throughout the economy are finding it challenging to retain their current employees and are having difficulty recruiting new ones. Most workers feel that jobs are plentiful, and therefore are increasingly comfortable leaving their current job in favor of searching for a better one. A recent survey of architecture firm leaders found that more than four in ten feel that recruiting architectural staff is a serious problem at present, and that it may create difficulties for the firm over the coming months given anticipated project workloads.
Related Stories
Market Data | Jan 31, 2022
Canada's hotel construction pipeline ends 2021 with 262 projects and 35,325 rooms
At the close of 2021, projects under construction stand at 62 projects/8,100 rooms.
Market Data | Jan 27, 2022
Record high counts for franchise companies in the early planning stage at the end of Q4'21
Through year-end 2021, Marriott, Hilton, and IHG branded hotels represented 585 new hotel openings with 73,415 rooms.
Market Data | Jan 27, 2022
Dallas leads as the top market by project count in the U.S. hotel construction pipeline at year-end 2021
The market with the greatest number of projects already in the ground, at the end of the fourth quarter, is New York with 90 projects/14,513 rooms.
Market Data | Jan 24, 2022
U.S. hotel construction pipeline stands at 4,814 projects/581,953 rooms at year-end 2021
Projects scheduled to start construction in the next 12 months stand at 1,821 projects/210,890 rooms at the end of the fourth quarter.
Market Data | Jan 19, 2022
Architecture firms end 2021 on a strong note
December’s Architectural Billings Index (ABI) score of 52.0 was an increase from 51.0 in November.
Market Data | Jan 13, 2022
Materials prices soar 20% in 2021 despite moderating in December
Most contractors in association survey list costs as top concern in 2022.
Market Data | Jan 12, 2022
Construction firms forsee growing demand for most types of projects
Seventy-four percent of firms plan to hire in 2022 despite supply-chain and labor challenges.
Market Data | Jan 7, 2022
Construction adds 22,000 jobs in December
Jobless rate falls to 5% as ongoing nonresidential recovery offsets rare dip in residential total.
Market Data | Jan 6, 2022
Inflation tempers optimism about construction in North America
Rider Levett Bucknall’s latest report cites labor shortages and supply chain snags among causes for cost increases.
Market Data | Jan 6, 2022
A new survey offers a snapshot of New York’s construction market
Anchin’s poll of 20 AEC clients finds a “growing optimism,” but also multiple pressure points.