Commercial construction continues to grow in 2017, fulfilling predictions made by the leading economist for Associated Builders and Contractors (ABC) in a 2016 report.  Chief Economist Anirban Basu predicted growth in the range of 3-4 % for 2017 and we’re still on track. Growth is being led by privately financed projects.In March, 2017, private nonresidential construction was up 6.4% from the same time last year, with commercial construction showing a 10.9% increase. Public nonresidential spending is down 6.5% year over year due to a slowing of government spending.

Construction Spending Trends

Total spending for nonresidential construction in 2016 was estimated at $397.2 billion, up 3% from 2015. The 2017 forecast shows an increase of 3.5% to $411.1 billion, according to Basu.

Commercial construction was up 8.5% to $156.9 billion in 2016, from $144.5 billion 2015. It is forecasted to further increase 3.2% in 2017 for a total of $161.9 billion.

Industrial construction declined by 3.9% to $80.2 billion in 2016; however, a 6% increase to $85 billion is forecast for 2017.

Institutional construction was forecasted to be $160.2 billion in 2016, up 1.5% from 2015. A 2.5% increase to $164.2 billion is forecasted for 2017.

For all three segments the Backlog Indicator Average is 8.6 months as of 1Q17. In Arizona, growth in construction jobs is forecasted at 11% for 2016.

Construction Growth Estimates

Growth estimates for 2017 by commercial construction product types show office product leading the way:

Office: +7.5%
Education: +6.3%
Institutional: +5.8%
Retail: +5.2%
Health: +5.0%

A leading indicator of commercial construction spending was positive in the first quarter of 2017. The Architecture Billings Index reflects the approximate nine to twelve-month lead time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the March ABI score was 54.3, up from a score of 50.7 in the previous month. This score reflects a sizable increase in design services (any score above 50 indicates an increase in billings).


2018-09-18T15:35:09+00:00May 16th, 2017|
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