Spending on nonresidential buildings is projected to increase more than +7% this year, according to The American Institute of Architects’ (AIA) mid-year Consensus Construction Forecast. AIA says the spending will slow to only +2% in 2025 as market challenges continue to impact the pace of growth.
As is often the case, the construction economists on the panel had a wide range of forecasts. For example, there’s a 6.7-point swing between the high and low estimates for the rate of growth for 2024’s overall nonresidential market, with Associated Builders & Contractors forecasting
+9.9% growth and Dodge Construction Network seeing +3.2% growth. The consensus forecast is for +7.4% growth in the 2024 nonresidential market.
The construction economists on the panel represent the following companies: Associated Builders & Contractors, ConstructConnect, Dodge Construction Network, FMI, Markstein Advisors, S&P Global Market Intelligence, Moody’s Analytics, Piedmont Crescent Capital and
Wells Fargo Securities.
AIA has seen the pace of growth in the construction market slow this year, and this slowdown is expected to continue into 2025. The challenging lending market for projects, continued weakness in commercial property values and ongoing softness in billings at architecture firms contribute to the slowdown.
AIA’s 2025 Consensus Construction Forecast panelists said sector conditions will vary greatly sector-by-sector:
• Commercial facilities activity effectively will be flat this year and next
• Manufacturing construction will increase almost 14% this year before stabilizing in 2025
• Institutional construction will see a more than +10% gain this year before slowing to +4% in 2025
“The disparity in sector performance highlights the uneven economic conditions and ongoing market uncertainties,” said AIA Chief Economist Kermit Baker in the forecast. “Despite the challenges, specific sectors like manufacturing construction are showing strong ongoing activity from the surge in projects that started during the pandemic, while most institutional
sectors are seeing reasonably healthy gains, fueled by the education market.”
Click here for more AIA analyis on its latest Consensus Construction Forecast.
