This week, the American Institute of Architects (AIA) released the results of its first Consensus Construction Forecast of the year. The forecast is compiled based on predictions of the industry's leading forecasters and is conducted bi-annually to anticipate shifting business conditions in the construction industry. The dominant trend in this forecast (projected for 2015 and 2016) is an overall increase in spending in the construction sector.
Kermit Baker, the Chief Economist for the AIA, commented, "This is the first time since the Great Recession that every major building category is projected to see increases in spending." This is due in large to a rising demand within the commercial construction sector for hotels and office buildings. Other bumps in spending will likely be driven by strides in the institutional sector, as demands for improved schools and healthcare facilities are on the rise. These improvements are facilitated by significant job growth and payroll increases in 2014, which helped foster a more healthy economic status and increase consumer confidence, encouraging more spending.
Across the board, all categories of the construction industry are expected to see increased spending in the next two years, but the percentages span a wide margin. The lowest projected increase is just 1.2% in 2015 for religious institutions, while the highest jump is an astounding 15.3% in 2015 for hotels. This is a shift from the past few years when residential architecture has dominated the market, although its growth is expected to continue at a slower rate.
In anticipation of the trends we can expect in the next forecast, Baker states, "Uncertainties in international economies, potential labor shortages, lower energy costs, rising interest rates and construction costs all are factors that we will be watching closely to see how they may adversely impact the marketplace."
To learn more about the forecast, watch the 2015 Economic Forecast video.