AIA Revises Construction Forecast Down

Washington, DC, July 28, 2011 -- The American Institute of Architects cut its 2011 U.S. construction forecast on Wednesday.

AIA said it now expects spending on nonresidential construction projects to fall 5.6 percent this year but rebound next year. In January it forecast a 2 percent decline this year.

"Consumer and business confidence is poor and the overall economy has yet to pull out of the downturn that began in 2008, which both add to the general sense of anxiety and uncertainty in the real estate market" said AIA Chief Economist Kermit Baker.

"The depressed demand for new construction isn't likely to improve until next year, led by the commercial sector: offices, retail and hotels."

Overall nonresidential spending is expected to rise 6.4 percent in 2012, AIA said, higher than it forecast six months ago.

Construction of hotels and industrial space is forecast to fall by double digits this year, while smaller declines are forecast for the office and retail sectors. However, next year spending on hotel construction is predicted to rise 18 percent, while spending on factories and other industrial buildings will rise 8.4 percent, with office buildings up 9.8 percent and retail up 11.8 percent.

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