Steep Decline Predicted for Nonresidential Construction Activity in 2009

Jan 14, 2009, 07:00 ET from American Institute of Architects

Commercial sector to be hardest hit; lower building materials costs

WASHINGTON, Jan. 14 /PRNewswire-USNewswire/ -- As the overall U.S. economy continues to struggle, nonresidential construction spending is expected to decrease by 11 percent in 2009 in inflation adjusted terms. Commercial projects including office buildings and retail establishments will see the most significant decrease in activity. On the positive side, prices have dropped for key construction commodities. These are highlights from the American Institute of Architects (AIA) semi-annual Consensus Construction Forecast, a survey of the nation's leading construction forecasters.

"As profits for businesses have fallen and the ability to get credit to finance projects has become far more difficult, construction plans have been put on hold or canceled outright in recent months," said AIA Chief Economist, Kermit Baker, PhD, Hon. AIA. "This is not expected to turn around anytime soon and it's likely to get worse before it gets better."

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    Market Segment Consensus Growth Forecasts
    Commercial / industrial         2009               2010
    Hotels                         -20.2%            -12.2%
    Retail                         -19.2%             -6.6%
    Office buildings               -17.5%            -11.1%
    Industrial facilities          -11.2%             -8.4%

    Religious                      -9.4%               1.4%
    Education                      -7.4%              -1.9%
    Amusement / recreation         -5.9%               1.0%
    Health care facilities         -3.6%              -1.9%
    Public safety                  -3.5%              -1.9%

"The downturn in nonresidential activity has helped stabilize construction costs," Baker added. "For example, prices for steel, gypsum products, lumber and cement have all come down recently which makes taking on projects more attractive to developers."

About the AIA Consensus Construction Forecast Panel

The AIA Consensus Construction Forecast Panel is conducted twice a year with the leading nonresidential construction forecasters in the United States including, McGraw Hill Construction, Global Insight, Moody's, Reed Business Information, and FMI. The purpose of the Consensus Construction Forecast Panel is to project business condition in the construction industry over the coming 12 to 18 months. The Consensus Construction Forecast Panel has been conducted for 11 years.

About The American Institute of Architects

For over 150 years, members of the American Institute of Architects have worked with each other and their communities to create more valuable, healthy, secure, and sustainable buildings and cityscapes. By using sustainable design practices, materials, and techniques, AIA architects are uniquely poised to provide the leadership and guidance needed to provide solutions to address climate change. AIA architects walk the walk on sustainable design. Visit

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SOURCE American Institute of Architects