Spending on nonresidential buildings will see a modest 4% increase in 2024, after increasing by more than 20% last year according to The American Institute of Architects’ latest Consensus Construction Forecast.
The pace will slow to just over 1% growth in 2025, a marked difference from the strong performance in 2023. Spending on commercial facilities will be flat this year and next, manufacturing construction will increase almost 10% this year before stabilizing in 2025, and institutional construction will see mid-single-digit gains this year and next.
The Consensus Construction Forecast panelists, a group comprised of the leading construction forecasters from across the country, found there are many factors fueling the projected slowdown:
- Tighter credit conditions continue to put pressure on many regional banks that account for a sizeable share of construction lending.
- Higher construction input costs due to inflation in materials costs and labor in recent years.
- Declines in commercial property values as weak demand continues in many sectors.
- Structural changes in demand, disrupting notoriously cyclical construction industry.
“There are several economic headwinds behind the projected slowdown,” said AIA Chief Economist Kermit Baker, Hon. AIA, PhD. “We already started to see construction starts either slow dramatically or turn negative in virtually all construction sectors in the latter part of 2023 and the weaker conditions are expected to stay into 2025.”
Related Stories
Giants 400 | Aug 22, 2023
2023 Giants 400 Report: Ranking the nation's largest architecture, engineering, and construction firms
A record 552 AEC firms submitted data for BD+C's 2023 Giants 400 Report. The final report includes 137 rankings across 25 building sectors and specialty categories.
Giants 400 | Aug 22, 2023
Top 175 Architecture Firms for 2023
Gensler, HKS, Perkins&Will, Corgan, and Perkins Eastman top the rankings of the nation's largest architecture firms for nonresidential building and multifamily housing work, as reported in Building Design+Construction's 2023 Giants 400 Report.
Apartments | Aug 22, 2023
Key takeaways from RCLCO's 2023 apartment renter preferences study
Gregg Logan, Managing Director of real estate consulting firm RCLCO, reveals the highlights of RCLCO's new research study, “2023 Rental Consumer Preferences Report.” Logan speaks with BD+C's Robert Cassidy.
Apartments | Aug 14, 2023
Yardi Matrix updates near-term multifamily supply forecast
The multifamily housing supply could increase by up to nearly 7% by the end of 2023, states the latest Multifamily Supply Forecast from Yardi Matrix.
Sports and Recreational Facilities | Jul 26, 2023
10 ways public aquatic centers and recreation centers benefit community health
A new report from HMC Architects explores the critical role aquatic centers and recreation centers play in society and how they can make a lasting, positive impact on the people they serve.
Market Data | Jul 24, 2023
Leading economists call for 2% increase in building construction spending in 2024
Following a 19.7% surge in spending for commercial, institutional, and industrial buildings in 2023, leading construction industry economists expect spending growth to come back to earth in 2024, according to the July 2023 AIA Consensus Construction Forecast Panel.
Codes and Standards | Jul 17, 2023
Outdated federal rainfall analysis impacting infrastructure projects, flood insurance
Severe rainstorms, sometimes described as “atmospheric rivers” or “torrential thunderstorms,” are making the concept of a “1-in-100-year flood event” obsolete, according to a report from First Street Foundation, an organization focused on weather risk research.
Multifamily Housing | Jul 13, 2023
Walkable neighborhoods encourage stronger sense of community
Adults who live in walkable neighborhoods are more likely to interact with their neighbors and have a stronger sense of community than people who live in car-dependent communities, according to a report by the Herbert Wertheim School of Public Health and Human Longevity Science at University of California San Diego.
Multifamily Housing | Jun 29, 2023
5 ways to rethink the future of multifamily development and design
The Gensler Research Institute’s investigation into the residential experience indicates a need for fresh perspectives on residential design and development, challenging norms, and raising the bar.
Apartments | Jun 27, 2023
Average U.S. apartment rent reached all-time high in May, at $1,716
Multifamily rents continued to increase through the first half of 2023, despite challenges for the sector and continuing economic uncertainty. But job growth has remained robust and new households keep forming, creating apartment demand and ongoing rent growth. The average U.S. apartment rent reached an all-time high of $1,716 in May.
