The American Institute of Architects (AIA) is predicting a 2.1% rise in spending this year for nonresidential construction projects and a 6.4% increase in 2013.
According to the AIA's semi-annual Consensus Construction Forecast, there are signs that the U.S. design and construction industry will be improving despite the current state of the economy. The AIA notes that corporate profits are returning to pre-recession levels and businesses have subsequently been increasing their capital spending, while borrowing costs are at record-low levels and the demand for commercial and retail projects is growing.
‘Spending on hotels, industrial plants and commercial properties is going to set the pace for the construction industry over the next two years,’ says AIA Chief Economist Kermit Baker. ‘The institutional market won't experience the same growth, but healthcare facilities and places of worship are poised for a positive economic outlook in that sector.’
The AIA is predicting a 10.2% increase in the hotel sector's construction projects for this year and a 19.7% rise for 2013. The industrial sector is expected to see a 6% increase in construction projects this year and a 10.2% increase next year. Retail construction is pegged for a 5% increase this year and a 9.9% spike next year, while the office building sector is being forecast at a 4.3% jump this year and a 9.6% increase next year.
However, Baker warns that there are still potholes in the road to recovery. ‘We are concerned that the unusually high energy costs, given the overall weakness in the economy, might trigger a jolt in inflation and hamstring economic recovery,’ he says. ‘The housing market also needs prices to stabilize and to resolve the high number of delinquencies and foreclosures before it can fully recover.’