Saturday, July 11, 2009

Consensus Construction Forecast

As an AIA component president, I receive bi-weekly media coverage reports from the national Institute office. Below is a press release issued by the AIA Consensus Construction Forecast Panel. The Panel is conducted twice a year with the leading nonresidential construction forecasters in the United States including McGraw Hill Construction, Global Insight, Moody’s, Reed Business Information, the Portland Cement Association, 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 11 years.

The numbers project that the decline in construction spending will moderate through 2010. However, this only means that the rate at which things are worsening may slow down. The Panel is not predicting an upturn in construction activity through the end of 2010. This is not welcome news to many in the architectural profession who are already struggling to maintain the viability of their offices or keep their jobs. I’m not certain if the numbers are representative of projected construction activity in Oregon as the news release did not include details by individual states or regions.

I expressed optimism in my July President’s Message that the skills and knowledge we possess as architects will serve us well as the economy is being restructured. Our brains are wired in precisely the way necessary for visionary thinking at all scales and all levels of concern. We may be better prepared than most to quickly adapt to a new reality shaped by peak oil, global warming, health care reform, and the disappearance of easy credit. Certainly, this recession has been a wakeup call for the entire country. Ironically, it may have taken a banking system meltdown, bankruptcies at Chrysler and General Motors, and massive unemployment to finally prompt large scale and popularly supported moves toward transformation of the nation’s communities to be more compact, sustainable, and less automobile-reliant. Let’s take advantage of this opportunity and demonstrate leadership as this transformation unfolds.

Here is the press release:

Significant Downturn in Nonresidential Construction Activity Projected through 2010
Greatest drop in commercial and industrial sectors

Washington, D.C. – Feeling the effects of the struggling overall U.S. economy, nonresidential construction spending is expected to decrease by 16 percent in 2009 and drop by another almost 12 percent in 2010 in inflation adjusted terms. Commercial projects will see the most significant decrease in activity. In contrast, most institutional building categories are expected to see much more modest declines over this period. These are highlights from the American Institute of Architects (AIA) semi-annual Consensus Construction Forecast, a survey of the nation’s leading construction forecasters.

“While there are some indications that the overall economy is beginning to recover, nonresidential construction activity typically lags behind the rest of the economy,” said AIA Chief Economist, Kermit Baker, PhD, Hon. AIA. “Commercial facilities such as hotels, retail establishments and offices will feel the decline most dramatically. The institutional market will fare much better as stimulus funding becomes available for education, healthcare and government facilities.”

Market Segment Consensus Growth Forecasts

“This nonresidential downturn is shaping up to be the deepest decline in nonresidential activity in over a generation.” Baker added. “However, we’re beginning to see some moderation in the trends in design billings at architecture firms, so we hopefully are nearing the bottom of this cycle.”

Contact: Scott Frank

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