American Institute of Architects Reports Nonresidential Construction to Decline

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Robison Wells
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According to a new report from the American Institute of Architects (AIA), the decrease in construction spending that began with the pandemic is likely to continue well into 2021. Among all construction sectors, the commercial sector (which includes office, retail and hotels) will be the hardest hit, with spending projected to decline 12% this year and 8% more in 2021, according to the AIA Consensus Construction Forecast.

The industrial sector—made up of manufacturing and distribution facilities—is going to fare better, declining at 5% this year and 3% the next. Institutional buildings (health care and education) will be the least hit, at 5% and 2%.

Acknowledging that the pandemic is the cause of this, the forecast discusses some unknowns that could affect the declines—either lengthening or shortening them. Those unknowns include the development of a vaccine, additional stimulus spending, and continuing problems for restaurants and airlines.

The worst hit area will be hospitality, which was already struggling before the pandemic but is now devastated by it because of the cessation of travel, and the elimination of conventions and trade shows. “While competition from Airbnb and other online sources was already limiting the need for new hotels, the pandemic has accelerated this weakness,” notes AIA. Hotel construction is expected to be the weakest in any nonresidential sector, declining more than 20% this year and 17% the next.

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