Nonresidential Construction Activity Expected To Grow Through 2007

Construction activity in hospitality, health care and educational facilities is expected to see the most growth in 2007, according to the American Institute of Architects (AIA).
 
The nonresidential construction market has shown solid gains this year and spending is expected to increase by 7.2 percent in 2007 in inflation adjusted terms, following the growth of near six percent in 2006, according to AIA.

Led by heavy demand for institutional projects, the growth in 2008 is expected to be closer to a three percent gain in total activity. The data comes from the AIA semi-annual Consensus Construction Forecast, a survey of the nation’s leading construction forecasters.

“Construction activity in the nonresidential market has been robust this year so far, even exceeding the optimistic projections at the beginning of the year,” says Kermit Baker, AIA chief economist. “This pattern should continue for the rest of the year, with more tempered growth moving into 2008.”

Market Segment Consensus Growth Forecasts

Commercial/industrial                                                           
Hotels
2007: 26.4 percent
2008: 1.3 percent                                                                  

Office buildings
2007: 11.2 percent
2008: 3.5 percent                                                     

Industrial facilities
2007: 6.5 percent   
2008: 5.2 percent  
                                              
Retail  
2007: 3.7 percent
2008: -0.9 percent                                                                 

Institutional
Health care facilities
2007:8.5 percent
2008: 5.0 percent                                               

Public safety
2007: 8.6 percent
2008: 3.3 percent

Education                                                                
2007: 5.9 percent                   
2008: 4.1 percent

Amusement/recreation
2007: 4.2 percent                    
2008: 2.7 percent

Religious                                                                 
2007: 1.3 percent                    
2008: 4.3 percent

“As activity in the commercial market abates, the institutional sector is projected to see stable growth,” says Baker. “The good financial position of state and local governments should support continued growth in the construction of schools, and health care facility construction has become the fastest growing institutional category based on several state mandates for universal or near-universal coverage.”

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