JLL just released their US Construction Perspective and it found that in addition to increased activity, labor and materials pricing are also increasing. Read what AIA has found here:
According to the latest American Institute of Architects(AIA) Consensus Construction Forecast, conducted in December, the national building activity level for non-residential real estate is climbing. We spoke with AIA Chief Economist Kermit Baker to find out what’s behind the AIA’s prognosis. An edited transcript of that interview follows.
NREI: How does AIA monitor construction activity?
Kermit Baker: We run a Consensus Construction Forecast twice a year. We have seven or eight pros on the panel and we ask them to supply their topline forecast for non-residential building activity. We compile that and come up with the AIA Consensus, which is simply the average of all those numbers. We just did the most recent one at the end of the December, so the numbers are really pretty current. We break it down into commercial, institutional and industrial.
For commercial, we include offices, retail, hotels and other commercial activity, like banks. Industrial includes manufacturing facilities and related distribution facilities. Institutional is buildings that have either government or non-profit ownership; the biggest types of activity there are health and education, but we also ask for information on religious facilities, public safety facilities and amusement and recreation facilities.
Overall, forecast results on a construction spending basis is that overall activity for non-residential buildings is predicted to be up 7.7 percent in 2015 and 8.2 percent in 2016. In 2015, the commercial sector is projected to increase 11.8 percent, industrial to increase 10.5 percent and institutional to rise 5 percent. So they’re all pretty healthy numbers. Almost 8 percent growth would be a pretty good performance—not stellar, but good, and obviously it’s the strongest performance since the industry went into a recession at the end of 2008.
NREI: How does that compare with the lowest point?
Kermit Baker: Spending at the peak of the market in 2008 was exactly $500 billion. The trough was in 2011, when it was $337 billion. Our estimate, we don’t have final revised numbers in, but our estimate for 2014 is $377 billion. So it’s come back, but it’s certainly well below where it was before the downturn.
Read the rest of the article here.