Nonresidential building spending to decline through 2021

WASHINGTON – July 21, 2020 – As a result of the partially shutdown economy, businesses and organizations will continue to be hesitant to invest in modernized or new facilities, according to a mid-year update to the American Institute of Architects’ (AIA) Consensus Construction Forecast. The trend ends an almost decade-long expansion in construction spending.

The AIA Consensus Construction Forecast Panel—consisting of leading economic forecasters—projects spending on nonresidential facilities will decline just over eight percent this year, and another five percent in 2021. The commercial building sector is expected to be the hardest hit, with spending projected to decline almost 12 percent this year and another eight percent in 2021. The industrial sector is slated to see declines of five percent this year and three percent next year. While institutional buildings 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.

“As much of the economy was shut down in mid-March to help limit the spread of the pandemic, there was hope that after the initial steep decline in economic activity there could be an almost equally quick recovery,” said AIA Chief Economist Kermit Baker, Hon. AIA, PhD. “However, since mid-June economic growth has stalled. The timing coincides with a spike in new Covid-19 cases across the country, and the resulting pause or roll-back of reopening plans in many states.”

Market Segment Consensus Growth Forecasts              2020               2021      

• Overall nonresidential building                                 -8.1%            -4.8%      
• Commercial total                                                           -11.6%            -8.4%      
• Retail & other commercial                                                -7.7%           -7.2%      
• Office space                                                                       -11.1%           -7.6%      
• Hotel                                                                                 -20.5%          -16.5%      
• Industrial total                                                               -8.3%          -3.3%      
• Institutional total                                                         -4.5%             -1.7%      
• Public safety                                                                      15.6%             2.5%      
• Healthcare facilities                                                           2.4%             3.2%      
• Education                                                                          -6.6%            -1.0%      
• Religious                                                                           -9.9%            -5.9%      
• Amusement / recreation                                               -13.0%            -11.9%  

Complete details on the latest Consensus Construction Forecast can be found on AIA’s website.

About AIA

Founded in 1857, AIA consistently works to create more valuable, healthy, secure, and sustainable buildings, neighborhoods, and communities. Through more than 200 international, state and local chapters, AIA advocates for public policies that promote economic vitality and public wellbeing.

AIA provides members with tools and resources to assist them in their careers and business as well as engaging civic and government leaders and the public to find solutions to pressing issues facing our communities, institutions, nation, and world. Members adhere to a code of ethics and conduct to ensure the highest professional standards.

AIA Press Contact: Matt Tinder, 202-626-7462.