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

“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 Kermit Baker, PhD, AIA’s chief economist. “This pattern should continue for the rest of the year, with more tempered growth moving into 2008. 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 healthcare facility construction has become the fastest growing institutional category based on several state mandates for universal or near-universal coverage.”

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%

Healthcare 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%