The AEC industry is heading into 2010 in better shape than was the case a year ago, according to the 2010 AEC Industry Outlook: Strategy and Insight for Design & Construction Firms, a new forecast released by ZweigWhite this month.
A significant turnaround for the commercial market isn't anticipated until 2011, but a modest pickup is expected in late 2010. Some sectors are faring better than others—and will continue to do so. Markets to watch for 2010: healthcare, education, and mixed-use.
Following is an overview of the major commercial AEC markets, based on the ZweigWhite report.
Three sectors showing growth
Healthcare. This sector's growth over the past few years is expected to continue for 2010 and beyond. Although some slowing is expected, healthcare is still considered the hottest market for AEC firms. Behind the market's growth: rising numbers of outpatient procedures, aging population, declining hospital infrastructure, consolidation of healthcare systems, BIM and other technologies, sustainable design, and security and disaster preparedness.
The value of healthcare construction to be put in place for 2010 will reach $48.5 billion, an increase of 1.2% from 2009 levels.
Education. Education is one of the largest sectors for AEC firms, and it's growing, making K-12 and higher education markets two of the industry's best prospects. The markets aren't expected to slow significantly, but they took big hits in 2008 and 2009 and are not immune to the downturn.
For 2010, the education sector outlook is mixed, with high school construction looking strong and college and university construction to continue apace to meet projected enrollment increases through 2017. Project work is also expected to be mixed—some new construction and some expansions and renovations to existing facilities.
Overall, the value of all school construction to be put in place for 2010 will top $99.5 billion.
Mixed-use. Another bright spot in the industry. Mixed-use projects are gaining in popularity because the building type ties into New Urbanist principals, creates more livable communities, and is being used as a catalyst for city redevelopment.
Construction spending on mixed-use projects is not tracked, so predictions for 2010 are unavailable. Mixed-use projects, however, aren't immune to a slow economy because many incorporate components from markets that are down, such as lodging and retail.
The rest of the story
Lodging. One of the hardest-hit commercial sectors, lodging is expected to continue its sluggish pace in 2010. The decline, however, is viewed as cyclical, and a recovery is anticipated for 2011.
The value of lodging construction to be put in place for 2010 will reach $20.1 billion, a decrease of 12.8% from 2009 levels.
Manufacturing. Construction of manufacturing and industrial facilities also slowed significantly because of the recession, and 2010 is expected to be another down year. Rents are expected to decline through 2010. Market recovery isn't expected until 2011, and then is expected to be slow.
The value of manufacturing construction to be put in place for 2010 will reach $59.6 billion, a decrease of 19% from 2009 levels.
Multifamily. This sector was hit hard by the recession, and a slow 2010 is expected, with some growth anticipated in 2011. Multifamily starts are notoriously volatile, but they are expected to reach 126,000 for 2010, down from 130,000 in 2009. Looking ahead to 2011, multifamily starts are expected to average 150,000.
Office buildings. With so many layoffs, the nation's reduced workforce is the biggest drag on the office sector. An improving economy signals a turnaround—although the rebound will happen slowly and cautiously. Vacancy rates are expected to remain high during 2010 and then start to decrease in 2011.
The value of office construction to be put in place for 2010 will reach $46.6 billion, a decrease of 13.5% from 2009 levels.
The ZweigWhite 2010 AEC Industry Outlook (214-page PDF, $295; free Executive Summary) may be ordered at: http://www.zweigwhite.com/p-858-2010-aec-industry-outlook-strategy-and-insight-for-design-construction-firms.php?mtn=F3658E
Related Stories
Building Materials | Aug 3, 2022
Shawmut CEO Les Hiscoe on coping with a shaky supply chain in construction
BD+C's John Caulfield interviews Les Hiscoe, CEO of Shawmut Design and Construction, about how his firm keeps projects on schedule and budget in the face of shortages, delays, and price volatility.
Building Materials | Jun 20, 2022
Early-stage procurement: The next evolution of the construction supply chain
Austin Commercial’s Jason Earnhardt explains why supply chain issues for the construction industry are not going to go away and how developers and owners can get ahead of project roadblocks.
Events Facilities | May 13, 2022
Sloan opens new showroom and office in Chicago's Fulton Market District
The flagship showroom highlights Sloan’s full suite of aesthetic, hygienic commercial restroom products.
Multifamily Housing | May 11, 2022
Kitchen+Bath AMENITIES – Take the survey for a chance at a $50 gift card
MULTIFAMILY DESIGN + CONSTRUCTION is conducting a research study on the use of kitchen and bath products in the $106 billion multifamily construction sector.
Sponsored | BD+C University Course | May 10, 2022
Design guide for parapets: Safety, continuity, and the building code
This course covers design considerations for parapets. The modern parapet must provide fire protection, serve as a fall-protective guard, transition and protect the roof/facade interface, conceal rooftop equipment, and contribute to the aesthetic character of the building.
Products and Materials | Apr 12, 2022
Edward W. Bullard, inventor of the hard hat, to be inducted into National Inventors Hall of Fame
Bullard, the Kentucky-based manufacturer of high-quality personal protective equipment and systems, announced that Edward W. Bullard will be inducted into the National Inventors Hall of Fame next month.
Sponsored | BD+C University Course | Apr 10, 2022
Designing with commercial and industrial insulated metal wall panels
Discover the characteristics, benefits and design options for commercial/industrial buildings using insulated metal panels (IMPs). Recognize the factors affecting panel spans and the relationship of these to structural supports. Gain knowledge of IMP code compliance.
Contractors | Mar 28, 2022
Amid supply chain woes, building teams employ extreme procurement measures
Project teams are looking to eliminate much of the guesswork around product availability and price inflation by employing early bulk-purchasing measures for entire building projects.
AEC Tech Innovation | Mar 9, 2022
Meet Emerge: WSP USA's new AEC tech incubator
Pooja Jain, WSP’s VP-Strategic Innovation, discusses the pilot programs her firm’s new incubator, Emerge, has initiated with four tech startup companies. Jain speaks with BD+C's John Caulfield about the four AEC tech firms to join Cohort 1 of the firm’s incubator.
Projects | Mar 8, 2022
A scalable EV charging solution
Resembling a fueling station, VersiCharge XL—a new electric vehicle (EV) charging concept structure—can charge large numbers of EVs in outdoor areas ranging from small office building parking lots to last-mile logistics hubs to stadium parking lots.
