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New Consensus: AIA Revises 2020 Construction Industry Forecast

April 26, 2020
Pandemic pulse check with eight industry forecasters finds mounting challenges ahead. For now.

An April update on 2020 projections from the American Institute of Architects...

While 2020 was initially projected to be a year of modestly slow growth for nonresidential building activity, significant declines are now expected due to the impact of the COVID-19 pandemic. In the last full Consensus Construction Forecast survey, conducted in December 2019 of eight leading industry forecasters, the panelists predicted an average of 1.5% growth in nonresidential construction spending in 2020, up from the 2019 total of $452 billion.

A survey conducted of the same forecasters during the week of April 6 revealed a much more pessimistic outlook. The small projected growth for 2020 has now been revised down to an 11% decline, with the sharpest decline predicted to occur in the commercial construction sector. While slight 0.6% growth was originally forecast for 2020, it has now been revised down to a loss of 14%. Institutional construction spending will also be hard hit, although not quite as seriously, with losses of 7% now projected, versus the 2.9% growth predicted in December.

Panelists surveyed represent:
  • Dodge Data & Analytics
  • IHS Economics
  • Moody’s Economy.com
  • FMI
  • ConstructConnect
  • Associated Builders & Contractors
  • Wells Fargo Securities
  • Markstein Advisors

Panelists were also asked to each select one or two sectors they thought could over-perform the overall market in 2020, and one or two that could under-perform. Five of the eight panelists expect the healthcare sector to outperform, which makes sense given the need for medical facilities to treat and screen COVID-19 patients. Two panelists each also selected education and public safety as the most likely to over-perform. Some architects have reported that education projects have already started to ramp up in recent weeks—with many schools already closed for the remainder of the academic year, projects that weren’t supposed to start until summer break are already underway.

As far as the sectors projected to under-perform the overall market in 2020, six panelists each selected retail and hotel, both of which are probably the hardest hit sectors so far as a result of social distancing measures implemented across the country. And while one panelist selected office construction to under-perform, another forecast it to outperform.

On April 22, AIA also released its latest Architecture Billings Index (ABI), which saw a record drop in demand for design services, reflecting the national economy's deteriorating conditions. The March 2020 ABI score of 33.3 represented a decrease in services provided by U.S. design firms (any score below 50 indicates a decrease in billings). During March, both the new project inquiries and design contracts scores fell dramatically, posting scores of 23.8 and 27.1 respectively.  

“Though most architecture firms have made quick transitions to remote operations, the complete shutdown of business activity is severely impacting architects,” said AIA Chief Economist Kermit Baker, Hon. AIA, PhD. “The dramatic pullback in new and ongoing design projects reflects just how quickly and fundamentally business conditions have changed across the country and around the world in the last month as a result of the COVID-19 pandemic.”


The next full  AIA Consensus forecast will be released in July 2020.