Spending on nonresidential buildings will see a modest 4% increase in 2024, after increasing by more than 20% last year according to The American Institute of Architects’ latest Consensus Construction Forecast. The pace will slow to just over 1% growth in 2025, a marked difference from the strong performance in 2023.
Although construction spending in the nonresidential building sector is projected to be at a slower pace through 2025, healthcare construction spending is projected to see gains. Although modest, the sector is expected to increase 3.6% in 2024 and 3.5% in 2025. Complete details can be found at aia.org. The Consensus Construction Forecast panelists, a group comprised of the leading construction forecasters from across the country, found there are many factors fueling the projected slowdown:
- Tighter credit conditions continue to put pressure on many regional banks that account for a sizeable share of construction lending.
- Higher construction input costs due to inflation in materials costs and labor in recent years.
- Declines in commercial property values as weak demand continues in many sectors.
- Structural changes in demand, disrupting notoriously cyclical construction industry.
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