The AIA today released its semi-annual Consensus Construction Forecast, which projects a 7.7 percent increase in construction spending in 2015 and an 8.2 percent rise in 2016. The survey of U.S. construction forecasters also predicts an 11.8 percent increase in commercial-construction spending this year, fueled by demand for hotels and office buildings, according to an AIA press release. This is the first time post-recession that spending in all market sectors is projected to expand.
The report is based on a composite of U.S. nonresidential construction forecasters, including McGraw Hill Construction, Wells Fargo Securities, IHS-Global Insight, Moody’s economy.com, Reed Business Information, Associated Builders & Contractors, and FMI.
The AIA is seeing "reasonably healthy numbers" in the commercial and industrial sector, according to the AIA's chief economist, Kermit Baker, Hon. AIA, in his Economic Update for the first quarter of 2015. Two of the leading factors are hotels, which are predicted to rise in spending by 15.3 percent in 2015 and 10.4 percent in 2016, and office buildings, expected to increase by 12.9 percent in 2015 and 11.5 percent in 2016.
“This is the first time since the Great Recession that every major building category is projected to see increases in spending,” said Baker in the press release. “But by far, the most significant driver that will fuel greater expansion in the marketplace is the revival in the institutional sector, especially with growing demand for new healthcare and education facilities, which alone traditionally account for a third of spending on new building construction.” The report anticipates that healthcare facilities will increase spending by 4.7 percent in 2015 and 6.2 percent in 2016, and educational sectors by 4.7 percent in 2015 and 5.2 percent in 2016.
The institutional sector was certainly one of the key factors leading growth in the market, as indicated in the AIA’s monthly Architecture Billings Index (ABI) reports. According to the latest ABI data, released on Jan. 21, while billings for the institutional sector contracted in the first five months of 2014, falling to 47.2 in April and 49.1 in May before rapidly climbing in the summer months and ended the year on a positive note, at 52.5. Now, 50 percent of billings at architecture firms are for institutional projects, according to Baker in his Economic Update for the first quarter of 2015.
“The overall construction industry appears to be on very solid ground for the next two years," Baker said in the press release. "That said, uncertainties in international economies, potential labor shortages, lower energy costs, rising interest rates and construction costs all are factors that we will be watching closely to see how they may adversely impact the marketplace.”
Here’s a breakdown of Consensus Construction Forecast’s predictions.