 Each week brings new announcements of layoffs and losses. The stock market can’t decide whether it’s up or down. But when it is down, it’s way down. If we’re not heading for a recession, then we’re not exactly speeding along the highway of economic growth and prosperity either. It’s cliché by now—but worth repeating; for the foreseeable future the only certainty is uncertainty. All sectors of the economy are vulnerable to the negative effects of uncertainty. Some more than others. Some less. It appears that the commercial construction industry will fall into the latter category, though the months ahead will certainly be frustrating, at best, difficult at worst. Twice annually, the American Institute of Architects conducts a survey of leading nonresidential construction forecasters including, McGraw Hill Construction, Global Insight, Moody’s economy.com, Reed Business Information, FMI, and the Portland Cement Association. The survey projects business conditions in the construction industry for the 12 to 18 months following the survey’s publication. The forecast, published in January, projects a “modest” 0.7 percent inflation-adjusted increase in nonresidential construction activity in 2008, with another “modest” 1.3 percent decline in commercial categories. A “reasonably healthy” 4.2 percent increase in institutional construction is also forecast. A decline of 0.9 percent in nonresidential building activity is forecast for 2009. As with 2008, commercial sectors are forecasted to fare worse than institutional categories. These projections seem more grim than they otherwise might, coming as they do after an estimated 18 percent increase in nonresidential construction in 2007. Also grim is that the 2007 growth in commercial building was offset by a comparable percentage decline in residential activity in the same period. Commercial construction was strongest in hospitality facilities (up more than 60 percent), public safety and transportation (each up more than 20 percent), and office space and entertainment facilities (each up close to 20 percent). Robert Murray, vice president of economic affairs for McGraw-Hill, one of the participants in the AIA survey, predicts commercial building construction starts to drop to $91.1 billion from a total of $97.3 billion in 2007.
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