AIA Sees Higher Nonresidential Building in 2011

Washington, DC, July 14, 2010 – Even with modest improvements in the overall U.S. economy, nonresidential construction spending is expected to decrease by more than 20% in 2010 with a marginal increase of 3.1 percent in 2011 in inflation adjusted terms, according to the American Institute of Architects Consensus Construction Forecast.

AIA said that poor conditions remain because of an oversupply of nonresidential facilities in most construction categories, weak demand for space, continuing declines in commercial property values, and a strong reluctance to provide credit from real estate lenders.

“There are a number of factors at play here that are contributing to one of the steepest construction downturns in generations,” said AIA Chief Economist Kermit Baker.

“We have businesses nervous about expanding their facilities, a fragile financial sector, excess commercial space, and general unease in the international economy. Things should begin to turn around midway through next year with retail and hotels expected to see the strongest growth, along with health care and amusement and recreation facilities.”

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