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Annual Forecasts

Around the beginning of each year, many businesses, groups and associations publish reports and predictions for what the upcoming year will hold. Recently, the American Institute of Architects (AIA) released its semi-annual Consensus Construction Forecast. The survey of the nation's leading construction forecasters projects that after construction spending greatly exceeded expectations last year in the nonresidential market, construction spending will increase just more than 8 percent this year, with 2017's projection adding an extra 6.7 percent gain. Reportedly, there is still significant demand for hotels, office space, manufacturing facilities, and amusement and recreation spaces.

AIA Chief Economist Kermit Baker, Ph.D., Hon. AIA, notes that while rising interest rates could pose a challenge to the economy, lower energy prices, improved employment figures and an enacted federal budget for 2016 are all factoring into a very favorable outlook for the construction industry. Additionally, he says, after several years of challenging economic circumstances, the institutional project sector is finally on solid footing.

Additionally, AIA released its future construction trend survey results. For the survey, AIA queried its Architecture Billings Index (ABI) panelists for the design trends they think will be the most prevalent over the next decade.

The top nonresidential design trends include:

  • Water conservation, solar and wind power generation will become more prevalent over the next decade
  • Architects will specify more innovative building materials such as composites and new glass/glazing technologies to allow for expanded design options
  • Increased use of natural daylighting techniques and of lighting technology systems, including automation controls and motion-sensor activated lights
  • Building Information Modeling software use will grow substantially, along with alternative project delivery methods and lean construction practices that will increase the efficiency of the building design process and throughout the life cycle of the building

"Emerging technologies are becoming the dominant force in how buildings are being designed," says Baker. "Buildings in their own right are becoming far more energy efficient, and certain technologies are increasing both the efficiency of the people using the buildings and the project delivery methods in which buildings are being designed and constructed."

Another recent report of interest is Gilbane Building Co.'s Winter 2015-2016 Construction Economics Report. According to the report, the 2015 construction spending "boom" was led by nonresidential building construction, which increased 17.6 percent, up $53 billion, through November year-to-date over 2014. Additionally, residential spending year-to-date increased 13 percent, up $45 billion. Nonresidential building spending is expected to repeat this elevated activity with 13.7 percent growth this year.

Construction spending is expected to grow 10.7 percent for 2015 and 9.7 percent in 2016, with total spending in 2015 reaching $1.1 trillion. The three-year growth for total construction spending from 2014 to 2016 is expected to reach 30 percent, setting an all-time high, with growth from 2013 to 2015 reaching 27 percent, the second-highest growth period ever recorded.

Spending advances in 2015 and 2016 are supported by the strongest gains in nonresidential buildings in eight years. And, for five of the last six quarters, construction starts for new nonresidential buildings were the highest since Q3 2008.

With so many reports released around this time, it's easy to go on and on about the numbers. One thing that stands out from all I've seen is that the increase in construction building and spending is expected to continue.

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