Nonresidential Building Activity Projected to Accelerate in 2014

Healthy fundamentals in the commercial property market combined with the international economy returning to more traditional growth levels are factoring into a projected increase in growth for the design and construction industry, according to a new report from the American Institute of Architects (AIA). Led by the hotel and retail project categories, the commercial sector looks to see the biggest gains in construction spending, with demand for institutional projects increasing at a more moderate level.

The AIA semi-annual “Consensus Construction Forecast,” a survey of the nation’s leading construction forecasters, projects that spending will see a 5.8-percent increase in 2014, with next year’s projections raised to 8 percent.

“Since the overall economy is stabilizing, there should be a significant improvement in the outlook for the construction industry that has been recovering at a slow and steady pace the last two years,” says AIA chief economist Kermit Baker, PhD, Hon. AIA. “At a more granular level, the surging housing market, growing commercial property values, and declining office and retail vacancies are all contributing to what is expected to amount to a much greater spending on nonresidential building projects.”

Baker continues, “The rosy outlook also contains several concerns for the entire construction industry.  Rising construction costs, a shortage of skilled labor, and bank credit standards that have not eased up enough to keep pace with the strong demand for construction financing are all serious challenges to sustained growth in the coming years.”

 Market Segment Consensus Growth Forecasts




Overall nonresidential building 5.8%     8.0%
Commercial/industrial 10.3%   10.8%
Hotels 13.1% 9.2%
Retail 10.5% 11.5%
Office buildings 9.2% 10.8%
Industrial facilities 7.8% 8.7%
Institutional 3.4%     6.3%
Amusement/recreation 9.9% 7.5%
Healthcare facilities 5.2% 7.8%
Education 2.8% 5.8%
Public safety -0.2% 3.1%
Religious -1.7% 1.3%
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