Spending on nonresidential buildings is projected to increase more than 7 percent this year, according to American Institute of Architects’ (AIA) mid-year Consensus Construction Forecast. The spending will slow to 2 percent in 2025 as market challenges continue to impact the pace of growth.
Construction spending, while continuing to increase, has seen the pace of growth slow so far this year, and this slowdown is expected to continue into 2025. The challenging lending market for construction projects, continued weakness in commercial property values, and ongoing softness in billings at architecture firms contribute to the slowdown.
The Consensus Construction Forecast panelists, a group of the leading construction forecasters from across the U.S., report sector conditions diverging with performance varying greatly sector by sector:
- Commercial facilities activity effectively will be flat in 2024 and 2025.
- Manufacturing construction will increase almost 14 percent this year before stabilizing in 2025.
- Institutional construction will see a more than 10 percent gain this year before slowing to 4 percent in 2025.
Kermit Baker, PhD, chief economist at AIA, says, “The disparity in sector performance highlights the uneven economic conditions and ongoing market uncertainties. Despite the challenges, specific sectors like manufacturing construction are showing strong ongoing activity from the surge in projects that started during the pandemic, while most institutional sectors are seeing reasonably healthy gains, fueled by the education market.”
