Image courtesy AIA
Spending on nonresidential facilities will decline just over eight percent this year, and another five percent next year, according to the American Institute of Architects’ (AIA’s) mid-year update to its Consensus Construction Forecast.
“With so much of the economy in slowdown or shutdown mode, businesses and organizations are hesitant to invest in modernized or new facilities,” said Kermit Baker, AIA chief economist. “As a result, construction spending ended its almost decade-long expansion this past spring, and it appears that it will remain in recession throughout 2020 and well into 2021.”
The commercial building sector (office, retail, and other commercial structures, and hotels) is expected to be the hardest hit, with spending projected to decline almost 12 percent this year and an additional eight percent in 2021. The industrial sector (manufacturing production and related distribution facilities) is slated to see declines of five percent this year and three percent in 2021. While institutional buildings (healthcare, education, religious, public safety, and amusement and recreation) will fare the best on the nonresidential side, spending on these facilities is projected to drop almost five percent this year, and another two percent next year.
While virtually all major construction sectors are expected to see declines this year and next, the expected declines are generally greatest in the commercial categories. Even entering 2020, the commercial sector was expected to be weak, and the pandemic has only exacerbated this situation.
Offices
Spending on office construction is expected to decline 11 percent this year and almost eight percent next.
Retail
Spending on retail facilities is expected to continue its 2019 weakness, declining eight percent this year and seven percent next.
Hotel
The hotel construction sector is expected to be the weakest major nonresidential sector, declining over 20 percent this year and another almost 17 percent in 2021.
Healthcare
Healthcare spending is projected to increase over two percent this year and another three percent next.
Education
Spending on education facilities saw a modest gain last year, but is projected to decline almost seven percent this year and another one percent next.
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