NEW YORK — Spending on commercial construction projects in the United States will drop 5.6 percent this year, according to the American Institute of Architects (AIA). In January, AIA forecast a 2 percent decrease this year.
AIA cites tight credit conditions, government budget shortfalls and a depressed housing market as reasons for the decline. Security systems manufacturers and integrators continue to be affected by the downturn in U.S. construction spending, which dropped to its lowest in May.
The group predicts that hotel and industrial space construction will fall by the double digits this year, reports Reuters. And while smaller declines are forecast for the office and retail sectors, the demand in the commercial sector will not likely improve until next year.
AIA expects overall commercial spending to increase 6.4 percent in 2012, which is a marginally stronger recovery from what it predicted six months ago. By 2012, it predicts hotel construction will rise 18 percent, while industrial buildings will increase 8.4 percent. Office building construction should be up 9.8 percent next year, and retail should rise 11.8 percent.
The trade group also estimates that there will be modest recoveries in the construction of churches, schools and hospitals.
Conducted twice a year, the AIA Consensus Construction Forecast Panel consists of nonresidential construction forecasters. The group publishes an index of architecture billings, which is deemed as a leading guide on construction spending up to a year ahead. The billings index has been below 50 for three consecutive months, which shows contraction, despite recovery earlier this year.