Reticent lenders, government budget shortfalls, overbuilding, a depressed housing market and rising commodity costs have all contributed to a projected decline in nonresidential construction spending, according to the American Institute of Architects (AIA). Today, the AIA projected 2011 nonresidential construction spending to decline 5.6 percent, with "modest growth" expected in 2012.
"Consumer and business confidence is poor and the overall economy has yet to pull out of the downturn that began in 2008, which both add to the general sense of anxiety and uncertainty in the real estate market" said AIA Chief Economist Kermit Baker, PhD, Hon. AIA. "Spending on renovations of existing buildings has remained strong, but the depressed demand for new construction isn't likely to improve until next year, led by the commercial sector: offices, retail and hotels."
For a market segment breakdown of projected nonresidential construction spending, see the full AIA release.
