The country’s largest professional architectural association is predicting increases in nonresidential building construction spending through the rest of the year, and an even bigger jump in 2023.
Based on the findings of its Consensus Construction Forecast panel, the Washington-based American Institute of Architects thinks spending on nonresidential building projects will enjoy a healthy 5.4% increase this year.
In a statement, Kermit Baker, chief economist with the AIA, remarked that “challenges to the economy and the construction industry notwithstanding, the outlook for the residential building market looks promising for this year and next.”
Averaging out the forecasts of such construction market analytical services as the Dodge Construction Network, IHS Markit, and Moody’s Analytics, among others, the AIA panel notes that in 2021 “retail and other commercial, industrial, and health care facilities managed to eke out spending increases.”
Growth for this year, however, is expected to be generally across the board, with “only the hotel, religious, and public safety sectors” expected to decline.
Commercial construction, says the report, “is projected to see growth of just under 5% this year, and an additional 5.3% in 2023, and as such is one of the biggest surprises in the construction outlook.”
The AIA panel also sees a 9% gain in industrial market construction this year, followed by a slightly lower, but more than 8% increase in 2023.
“This sector has been one of the few in nonresidential construction to benefit from the pandemic,” notes the report. “The strong growth in e-commerce during the pandemic meant increased need for distribution facilities.”
The institutional sector, meanwhile, is expected to see a 4.5% increase for the rest of 2022, and an even larger 5% for all next year.
Despite this generally rosy outlook, the AIA report warns that supply chain disruptions are expected to continue for the time being, with marked inflation “expected to put upward pressure on interest rates.”
Finally, the report adds, “The already-serious labor shortages look to become even more severe this year and next.”
By Garry Boulard
