Steep Downturns in Nonresidential Construction Projected Through 2010

The greatest downturn in construction could be in the commercial and industrial sector. Institutional downturn could be more modest. - Courtesy of Chambers Street Builders

A weak economy and continued difficulties with construction financing have slowed investment in nonresidential buildings by U.S. businesses, nonprofit institutions and government agencies, according to Kermit Baker, PhD, Hon. AIA Chief Economist. Construction of buildings, which began to slow in the second half of last year, moved into a downward spiral toward the end of the year. This industry will see no relief this year, but the decline will moderate somewhat as we move through 2010. The AIA Consensus Construction Forecast Panel projected a 16 percent decline in nonresidential construction activity this year, and an additional drop of almost 12 percent in 2010.

Spending on previously started projects masks the underlying weakness in new project activity. Architecture Billings Index, which measures design activity at U.S. architecture firms, has been declining since early 2008, indicating that there in substantially less activity at present in the design pipeline. – Courtesy of AIA