Strong Nonresidential Activity Expected in 2007

Washington, DC, June 29, 2007--Despite the continued sagging housing industry, the nonresidential construction market has shown solid gains this year and spending is expected to increase by 7.2 percent in 2007 in inflation adjusted terms, following the growth of near six percent in 2006. Led by heavy demand for institutional projects, the growth in 2008 is expected to be at a slower pace, closer to a three percent gain in total activity.

These are highlights from The American Institute of Architects (AIA) semi-annual Consensus Construction Forecast, a survey of the nation’s leading construction forecasters.

“Construction activity in the nonresidential market has been robust this year so far, even exceeding the optimistic projections at the beginning of the year,” said AIA Chief Economist, Kermit Baker, PhD, Hon. AIA. “This pattern should continue for the rest of the year, with more tempered growth moving into 2008.”

Link to full report: http://www.aia.org/aiarchitect/thisweek07/0629/0629b_econforecast.cfm

Market Segment Consensus Growth Forecasts

Commercial / industrial                                        2007                    2008
• Hotels                                                              26.4%                    1.3%
• Office buildings                                               11.2%                    3.5%
• Industrial facilities                                            6.5%                    5.2%
• Retail                                                                 3.7%                   -0.9%

Institutional
• Health care facilities                                         8.5%                    5.0%
• Public safety                                                      8.6%                    3.3%
• Education                                                           5.9%                    4.1%
• Amusement / recreation                                   4.2%                    2.7%
• Religious                                                            1.3%                    4.3%

Baker added, “As activity in the commercial market abates, the institutional sector is projected to see stable growth. The good financial position of state and local governments should support continued growth in the construction of schools, and health care facility construction has become the fastest growing institutional category based on several state mandates for universal or near-universal coverage.”

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