In 2014 the nonresidential building market started to show clear signs of recovery, even closing out the year with higher than expected spending levels. This positive trend continued strong in 2015 and is expected to pick up even more in 2016. The AIA’s Consensus Construction Forecast cites increased demand for office buildings and hotels. In fact, this demand has been highlighted as the principle factor behind this growth in the commercial and industrial sector.
The institutional sector is expected to experience gains related to growth in the healthcare and education sectors. Nonresidential spending increased approximately 7.7% in 2015, and the AIA’s report forecasts that overall nonresidential spending will increase an additional 8.2% in 2016. In fact, the institutional sector is expected to be the most significant driver of this revival. This is due, in particular, to the demand for new healthcare and educational facilities. Traditionally, the healthcare and education sectors account for approximately one third of spending on new nonresidential building construction.
In the commercial and industrial sector, construction of new hotels increased by 13.1% in 2015. The AIA report predicts an additional 9.2% increase in hotel construction in 2016. Retail construction also saw significant growth in 2015, with a 10.5% increase. The report forecasts an additional 11.5% growth in retail construction in 2016. There was a 9.2% increase in office building construction in 2015, and the AIA expects an additional 10.8% increase in 2016. The number of new industrial facilities constructed in 2015 grew by 7.8%, and the report expects an additional 8.7% increase in 2016.
The institutional sector also saw significant growth in 2015, with even greater gains expected in 2016. There was a 9.9% increase in construction related to amusement and recreation in 2015, with an additional 7.5% boost expected in 2016. Construction of healthcare facilities increased by 5.2% in 2015 and the AIA report predicts an additional 7.8% growth in this area in 2016. Construction related to educational facilities increased by 2.8% in 2015, and the report posits an additional 5.8% growth in 2016. Additionally, construction projects related to public safety and religious facilities are expected to increase by 3.1% and 1.3% respectively in 2016.
