According to Architects Newspaper, a mid-year update to the American Institute of Architects’ (AIA) Consensus Construction Forecast indicates that spending on nonresidential building projects is on the decline and is expected to remain so through 2021. The AIA Consensus Construction Forecasting Panel estimated an overall dip of roughly 8 percent in spending in 2020 and just under 5 percent next year, an article in Architects Newspaper says.
This is the first time in about 10 years that nonresidential construction spending has dipped, the AIA says. The reason for the decline, officials believe, is that investments in projects have waned due to economic disruptions prompted by a continuing global health crisis. And looking into 2021, the article says, forecasters believe that businesses and organizations wounded by the coronavirus pandemic will remain reluctant to invest in the construction of new facilities or the modernization of existing ones.
Researchers note that any optimism about the health of the U.S. economy that was present in May and June, when the spiking unemployment rate began to ease back down, largely flattened in mid-June as the COVID-19 crisis spread further across the country following the lifting of lockdown restrictions.
“As much of the economy was shut down in mid-March to help limit the spread of the pandemic, there was hope that after the initial steep decline in economic activity there could be an almost equally quick recovery,” AIA chief economist Kermit Baker said in a press release. “However, since mid-June economic growth has stalled. The timing coincides with a spike in new Covid-19 cases across the country, and the resulting pause or roll-back of reopening plans in many states.”
Nonresidential building includes three core sector categories: commercial, institutional, and industrial construction. Construction on office space, retail spaces and hotels are expected to suffer the steepest declines, researchers suggest. Educational, religious projects and healthcare-related projects are expected to fare the best. For more, read the entire story HERE.