The AEC industry is heading into 2010 in better shape than was the case a year ago, according to the 2010 AEC Industry Outlook: Strategy and Insight for Design & Construction Firms, a new forecast released by ZweigWhite this month.
A significant turnaround for the commercial market isn't anticipated until 2011, but a modest pickup is expected in late 2010. Some sectors are faring better than others—and will continue to do so. Markets to watch for 2010: healthcare, education, and mixed-use.
Following is an overview of the major commercial AEC markets, based on the ZweigWhite report.
Three sectors showing growth
Healthcare. This sector's growth over the past few years is expected to continue for 2010 and beyond. Although some slowing is expected, healthcare is still considered the hottest market for AEC firms. Behind the market's growth: rising numbers of outpatient procedures, aging population, declining hospital infrastructure, consolidation of healthcare systems, BIM and other technologies, sustainable design, and security and disaster preparedness.
The value of healthcare construction to be put in place for 2010 will reach $48.5 billion, an increase of 1.2% from 2009 levels.
Education. Education is one of the largest sectors for AEC firms, and it's growing, making K-12 and higher education markets two of the industry's best prospects. The markets aren't expected to slow significantly, but they took big hits in 2008 and 2009 and are not immune to the downturn.
For 2010, the education sector outlook is mixed, with high school construction looking strong and college and university construction to continue apace to meet projected enrollment increases through 2017. Project work is also expected to be mixed—some new construction and some expansions and renovations to existing facilities.
Overall, the value of all school construction to be put in place for 2010 will top $99.5 billion.
Mixed-use. Another bright spot in the industry. Mixed-use projects are gaining in popularity because the building type ties into New Urbanist principals, creates more livable communities, and is being used as a catalyst for city redevelopment.
Construction spending on mixed-use projects is not tracked, so predictions for 2010 are unavailable. Mixed-use projects, however, aren't immune to a slow economy because many incorporate components from markets that are down, such as lodging and retail.
The rest of the story
Lodging. One of the hardest-hit commercial sectors, lodging is expected to continue its sluggish pace in 2010. The decline, however, is viewed as cyclical, and a recovery is anticipated for 2011.
The value of lodging construction to be put in place for 2010 will reach $20.1 billion, a decrease of 12.8% from 2009 levels.
Manufacturing. Construction of manufacturing and industrial facilities also slowed significantly because of the recession, and 2010 is expected to be another down year. Rents are expected to decline through 2010. Market recovery isn't expected until 2011, and then is expected to be slow.
The value of manufacturing construction to be put in place for 2010 will reach $59.6 billion, a decrease of 19% from 2009 levels.
Multifamily. This sector was hit hard by the recession, and a slow 2010 is expected, with some growth anticipated in 2011. Multifamily starts are notoriously volatile, but they are expected to reach 126,000 for 2010, down from 130,000 in 2009. Looking ahead to 2011, multifamily starts are expected to average 150,000.
Office buildings. With so many layoffs, the nation's reduced workforce is the biggest drag on the office sector. An improving economy signals a turnaround—although the rebound will happen slowly and cautiously. Vacancy rates are expected to remain high during 2010 and then start to decrease in 2011.
The value of office construction to be put in place for 2010 will reach $46.6 billion, a decrease of 13.5% from 2009 levels.
The ZweigWhite 2010 AEC Industry Outlook (214-page PDF, $295; free Executive Summary) may be ordered at: http://www.zweigwhite.com/p-858-2010-aec-industry-outlook-strategy-and-insight-for-design-construction-firms.php?mtn=F3658E
Related Stories
| Aug 11, 2010
FMI: 2009 was the bottom for residential, non-residential construction still in freefall
While 2009 was likely the bottom in terms of percentage decline, 2010 will be the bottom in terms of dollar volume for non-residential construction, according to market analysts at consulting firm FMI. Residential construction is expected to begin recovering in 2010. The economy may show some signs of improving, but it is just the beginning of the downfall for nonresidential construction.
| Aug 11, 2010
SFI releases new sustainable forestry standard
The Sustainable Forestry Initiative has released a new standard. SFI 2010-2014 addresses climate change and bioenergy; strengthen unique SFI fiber sourcing requirements, which broaden the practice of sustainable forestry; complements SFI activities aimed at avoiding controversial or illegal offshore fiber sources, and embraces Lacey Act amendments to prevent illegal logging; and expands requirements for logger training and support for trained loggers and certified logger programs.
| Aug 11, 2010
Another steep decline in nonresidential construction activity projected for 2010
Despite signs that the overall U.S. economy is beginning to improve, nonresidential construction spending is expected to decrease by 13.4% in 2010 with a marginal increase of 1.8% in 2011 in inflation adjusted terms, according the American Institute of Architects' Consensus Construction Forecast. Commercial and industrial projects will continue to see the most significant decrease in activity. Thanks, in part, to federal stimulus spending, institutional building categories will fare better over the new year. BD+C, January 6
| Aug 11, 2010
WattStopper contributes freezer case occupancy sensor to DOE study
WattStopper has participated in a ground-breaking demonstration of solid-state lighting (SSL) technology combined with occupancy sensors in grocery store freezer cases. The project was supported under the U.S. Department of Energy (DOE) Solid-State Lighting GATEWAY Technology Demonstration Program. WattStopper contributed FS-705 Wide Angle PIR occupancy sensors to the project.
| Aug 11, 2010
Construction spending hits six-year low as employment declines in 324 of 337 cities
Construction employment declined in 324 out of 337 metropolitan areas over the past year as spending on construction projects dropped by over $137 billion in November to a 6-year low of $900 billion, according to a new analysis by the Associated General Contractors of America of federal figures released recently.
| Aug 11, 2010
New data shows low construction prices may soon be coming to an end
New federal data released recently shows sharp increases in the prices of key construction materials like diesel, copper and brass mill shapes likely foreshadow future increases in construction costs, the Associated General Contractors of America said. The new November producer price index (PPI) report from the Bureau of Labor Statistics provide the strongest indication yet that construction prices are heading up, the association noted.
| Aug 11, 2010
Underwriters Laboratories, ICC Evaluation Service announce dual evaluation and certification program for building products
Underwriters Laboratories (UL), the leading product safety testing organization, and ICC Evaluation Service, Inc (ICC-ES), the United States' leader in evaluating building products for compliance with code, today announced a partnership that will provide the building materials industry with a Dual Evaluation and Certification Program for building products.
| Aug 11, 2010
The New Yorker's David Owen: Why Manhattan is America's greenest community
David Owen is a staff writer at The New Yorker and the author of 14 books, most recently Green Metropolis: Why Living Smaller, Living Closer, and Driving Less Are the Keys to Sustainability, in which he argues that Manhattan is the greenest community in America. He graduated from Harvard and lives in Washington, Conn., where he chairs the town planning commission.
| Aug 11, 2010
Economic conditions to cause drag on cement consumption
The conditions facing the construction industry are likely to remain weak for another year or more, causing a drag on cement consumption, according to the most recent economic forecast from Skokie, Ill.-based Portland Cement Association (PCA).
