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As the construction industry continues on its road to recovery, the institutional sector finally appears to be back in action.
According to the recently released 2015 Dodge Construction Outlook by Dodge Data & Analytics, the institutional construction sector has seen its first growth in at least six years, increasing four percent in 2014 after either seeing decreases or remaining stagnant in each year since 2009—largely due to dependency on public funding.
Dodge projects the moderate growth this year, however, will continue in 2015, as starts are predicted to increase nine percent. Within that sector, educational buildings are expected to increase at an even nine percent, as well.
Courtesy of Dodge Data & Analytics
“The educational building category is now seeing an increasing amount of K-12 construction, reflecting the financing made available by the passage of recent school construction bond measures,” Robert A. Murray, chief economist and vice president of Dodge, wrote in the Outlook.
Speaking at the Outlook Executive Conference in Washington, D.C., last week, Murray explained that several large bond measures passed in the November 2012 elections in states such as Texas, California and New Jersey are materializing into positive prospects for the educational sector.
And college endowments investment returns, Murray says, increased 12 percent in 2013 “after being basically flat in 2012.” He adds that major universities are now re-visiting deferred capital spending plans.
In 2013, community colleges saw a 38 percent increase in square footage, and laboratories have led the way so far in 2014, adding 45 percent of square footage.
Murray notes that “K-12 school construction is larger and more volatile than colleges and universities,” as square footage for K-12 school construction was 3.5 times the size of higher education construction in 2014, and K-12 projects produced 2.3 times the dollar amount in that same span.
Seven of the 12 largest educational projects this year to date have been of the K-12 variety, though the largest of all is a $251.3 million University of Buffalo School of Medicine project.
Investment in healthcare facilities, meanwhile, has been put on hold over the past several years due in part to uncertainty regarding healthcare reform. Still, Murray says the sector is supported by the need to replace aging facilities, as well as the growth of the elderly population.
“Healthcare facilities are expected to show some improvement relative to weaker activity in 2014,” the Outlook reads.
Dodge projects construction of healthcare facilities will increase by six percent in 2015 and other institutional buildings—including amusement and recreational facilities—10 percent.
The sports arenas construction category, for example, has seen a whopping 296 percent increase in square footage, headlined by the 1.8-million square-foot Atlanta Falcons stadium.
