HVAC Breaking News

Feb. 18, 2013: AIA Projects Steady Increase in U.S. Construction Activity Through 2014

February 18, 2013
WASHINGTON — Even though growth in the U.S. economy continues to be disappointing, nonresidential construction activity is projected to see healthy if unspectacular gains this year, with construction spending for buildings rising by 5 percent in 2013 before accelerating to 7.2 percent in 2014, according to a report from the American Institute of Architects (AIA). The construction of commercial facilities is expected to lead the upturn, with spending gains of almost 9 percent this year and nearly 11 percent next year, led by double-digit gains in hotel construction. Industrial construction spending is projected to nearly match the overall nonresidential building totals this year and next, while institutional construction activity should lag behind, with modest single-digit gains over each of the next two years. Health care is expected to be the strongest institutional sector.

These predictions from the AIA’s Consensus Construction Forecast Panel, comprised of some of the nation’s leading construction forecasters, are consistent with information derived from the AIA’s Architecture Billings Index (ABI). While national ABI numbers were mixed in 2011 — suggesting an uneven performance for construction in 2012 — they were more uniformly positive in 2012. Eight of the 12 months of 2012 showed positive national ABI readings, including the final five months of the year. The ABI readings in the fourth quarter of 2012 were the strongest quarter since the downturn began in early 2008, suggesting that construction activity should begin to accelerate significantly in the first half of 2013.

This year, architecture firms are expecting gross revenue to increase by about 3 percent on average. Almost half (45 percent) of firms are expecting revenue growth, 20 percent are projecting revenue declines, and 35 percent expect that revenue will be similar to 2012 levels. By specialization, residential firms are the most optimistic, expecting average revenue growth of 3.5 percent.

The AIA Consensus Construction Forecast panelists are a bit more optimistic than architecture firms in terms of projected revenue growth. They expect the $300 billion in spending for nonresidential structures to increase 5 percent, to about $315 billion in 2013. By 2014, they expect this level to increase another 7.2 percent, or $340 billion. While this is a reasonably healthy growth rate, that level of construction activity is still below the $377 billion average in nonresidential construction spending seen over the past decade.

Commercial facilities are expected to see the strongest growth this year and next. Growth is projected at just below 9 percent in 2013 and an additional 11 percent in 2014. That would bring commercial construction levels to almost $115 billion by the end of next year, which is still more than 10 percent below the average of the past decade. Hotel construction is expected to see strong growth this year and next, and both office and retail construction are projected to see growth averaging almost 10 percent per year.

Industrial construction should see reasonably healthy growth over the next two years, but nowhere near the almost 20 percent increase realized in 2012. Many companies are seeing the benefits of having manufacturing production facilities closer to home, particularly for products that have longer production lead times with offshore manufacturing. Construction increases are expected to be in the mid-single-digit range for the next two years, bringing industrial construction activity up to almost $56 billion by the end of next year.

Institutional construction spending growth tends to lag behind commercial and industrial activity both on the downside and upside. Spending increased very modestly in this category in 2012, and is projected to continue to see modest gains in 2013. By 2014, the pace of construction is expected to accelerate a bit more, growing by almost 5 percent that year. The strongest institutional sector for projected growth over the next two years is health care. Education, which traditionally accounts for about 40 percent of the institutional category, is expected to grow at about the same pace as the overall institutional category.

Publication date: 2/18/2013

Did you enjoy this article? Click here to subscribe to The NEWS Magazine

You must login or register in order to post a comment.

Multimedia

Videos

Image Galleries

2014 MCAA Annual Convention

Scenes from the 2014 MCAA Annual Convention in Scottsdale, Ariz.

Podcasts

NEWSmakers: Julian Scadden

Training is an ongoing process. Julian will discuss how you can generate maximum return on time and energy invested training by following a three part process. Listen to this podcast to get expert tips on training, tracking and follow up. 

More Podcasts

ACHRNEWS

NEWS 04-21-14 cover

2014 April 21

Check out the weekly edition of The NEWS today!

Table Of Contents Subscribe

SERVICE CALLS POLL

Which statement on service calls best applies to your business?
View Results Poll Archive

HVACR INDUSTRY STORE

plumbing-hvac.gif
2014 National Plumbing & HVAC Estimator

Every plumbing and HVAC estimator can use the cost estimates in this practical manual!

More Products

Clear Seas Research

 

Clear Seas ResearchWith access to over one million professionals and more than 60 industry-specific publications, Clear Seas Research offers relevant insights from those who know your industry best. Let us customize a market research solution that exceeds your marketing goals.

DON'T MISS A THING

Magazine image
 
Register today for complete access to ACHRNews.com. Get full access to the latest features, Extra Edition, and more.

STAY CONNECTED

facebook icontwitter iconyoutube iconLinkedIn i con