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AEDNews - Construction Equipment Industry News

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Nonresidential Construction Spending Expected to Increase

Even with the myriad of obstacles preventing a full-scale recovery for the overall U.S. economy, the design and construction industry appears to have reasons to be at least modestly optimistic in the coming months and into next year. A sharp spike in demand for industrial facilities so far this year, along with sustained demand for hotels and retail projects factors into what projects to be a 4.4 percent rise in spending this year for nonresidential construction projects – up from a projection of a 2.1 percent increase in the January Consensus Forecast. The American Institute of Architects (AIA) semi-annual Consensus Construction Forecast, a survey of the nation’s leading construction forecasters, also projects a 6.2 percent increase of spending in 2013.

“With companies looking to bring back manufacturing jobs from overseas, there has been a sharp rise in demand for industrial facilities, which is leading to an upward revision in projections for future construction spending,” said AIA Chief Economist Kermit Baker, PhD, Hon. AIA. “Continued budget shortfalls at the state and local level, along with a depressed municipal bond market are holding the institutional market back from seeing similar upticks in spending.”

Market Segment Consensus Growth Forecasts	2012	2013

Overall nonresidential	4.4 percent	6.2 percent

Commercial / industrial	5.7 percent	10.2 percent
Industrial	12.9 percent	8.1 percent
Hotels	9.5 percent	18.2 percent
Retail	6.2 percent	9.0 percent
Office buildings	4.7 percent	8.7 percent

Institutional	0.7 percent	3.0 percent
Healthcare facilities	4.0 percent	7.5 percent
Education	0.3 percent	1.1 percent
Amusement / recreation	0.1 percent	2.3 percent
Public safety	0.0 percent	0.1 percent
Religious	-5.0 percent	3.0 percent

Remarking on what risks exist that could undermine these projections, Baker added, “Federal tax and spending changes – the so-called fiscal cliff – that may come into play in early 2013 could upset the economic applecart and prove detrimental to recovery possibilities. We will likely have a better sense after the presidential election what will happen with regards to the Bush-era tax cuts, Social Security payroll tax, extended unemployment, and deficit reduction plans that will have a ripple effect that will extend to the construction industry.”

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, Wells Fargo Securities, IHS-Global Insight, Moody’s economy.com, Reed Business Information, Associated Builders & Contractors and FMI. The purpose of the Consensus Construction Forecast Panel is to project business conditions in the construction industry over the coming 12 to 18 months. The Consensus Construction Forecast Panel has been conducted for 13 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. Members adhere to a code of ethics and professional conduct to ensure the highest standards in professional practice. Embracing their responsibility to serve society, AIA members engage civic and government leaders and the public in helping find needed solutions to pressing issues facing our communities, institutions, nation and world. Visit www.aia.org. Twitter: http://twitter.com/AIA_Media

Associated Equipment Distributors (AED) is an international trade association representing companies involved in the distribution, rental and support of equipment used in construction, mining, forestry, power generation, agriculture and industrial applications. AED member dealers are unique in that they are each authorized, via contract with an original equipment manufacturer, to inventory, sell and service new machinery in a given geography. More than 90% of AED's factory authorized dealers rent construction equipment as well. The Associated Equipment Distributors strongly adheres to and strongly advocates principles of integrity, ethics and fairness. The AED urges its members to conduct their businesses ethically and compatibly with the free enterprise system and the laws which govern it. Contractors can locate factory authorized construction equipment dealers at the MachineMart® web site.
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