No Recovery Expected for Nonresidential Building this Year, But Growth Projected for 2012

Commercial sector to lead industry into recoveryBy Kermit Baker, Hon. AIAAIA Chief Economist An uneven economic recovery, hesitancy on the part of lenders to finance construction projects, the weak financial position of governments at all levels, and rising costs of key building material commodities are all conspiring to restrain a recovery in the nonresidential construction sector.

The AIA Consensus Construction Forecast panel is projecting a decline of 5.6 percent this year in nonresidential spending for buildings, followed by a modest recovery of 6.4 percent in 2012. Because these predictions come on the heels of a more than 20 percent downturn in the overall nonresidential building sector last year, and a more than 30 percent drop in spending on commercial buildings, this year’s and next year’s expected declines are quite modest in comparison. 

Commercial facilities—office, retail, and hotel—are expected to see a more significant decline ( 6.5 percent) this year, but also a stronger recovery (almost 12 percent) next year. Spending on the construction of manufacturing facilities is expected to see a steep decline this year of almost 16 percent, followed by a relatively modest rebound of 8 percent. The traditionally more stable institutional sector is expected to fall just over 3 percent this year, and then offset this decline with a 4 percent increase in 2012. 

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600450 No Recovery Expected for Nonresidential Building this Year, But Growth Projected for 2012
Date: 3 August 2011

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