Experts Predict Nonresidential Building Will Rally by 2023

By Holly Sauer | Feb 22, 2022
Photo by chandler denise on Unsplash

The nonresidential building sector did not see the same gains in 2021 as other sectors, such as multifamily. In fact, spending on nonresidential declined 5% in 2021, compounding on a 2% decline in 2020. However, according to the American Institute of Architects (AIA), the sector is predicted to rebound by 2023.

The AIA’s Consensus Construction Forecast panel, made up of economic forecasters, anticipates nonresidential building construction spending to increase 5.4% in 2022 and 6.1% in 2023. The group also projects hotel, religious, and public safety sectors to decline in 2022, though all major commercial, industrial and institutional sectors are expected to see gains.

Uncertainty surrounding COVID-19, supply chain issues, inflation and a tight labor market are all challenges to continued economic growth. Although most of the more than 22 million jobs lost during the pandemic were added back into the economy, according to AIA, companies are reporting trouble retaining their current employees and attracting new ones.

Kermit Baker, AIA’s chief economist, said, “Challenges to the economy and the construction industry notwithstanding, the outlook for the nonresidential building market looks promising for this year and next.”

Baker is not alone in hoping for the future of the nonresidential sector. Dodge Data and Analytics reported that nonresidential starts increased 4% in January 2022 to a seasonally adjusted rate of $293.7 billion. Commercial moved 8% higher because of a growth in retail, office and warehouse starts. Thanks to healthcare, recreation and transportation starts, institutional building increased 10%, though manufacturing starts fell 42% in January.

Total construction was 8% higher in January 2022 than in January 2021. In the 12 months ending in January 2022, nonresidential starts were 14% higher than in the 12 months ending in January 2021. During the same time, commercial starts rose 11%, institutional gained 8% and manufacturing increased 82%.

To read more about experts’ predictions for 2022 and beyond, read “The Patience of Recovery.”

About The Author

A woman, Holly Sauer, smiles in front of a gray background.

Holly Sauer

Associate Editor

Holly Sauer is Electrical Contractor magazine's associate editor. Reach her at [email protected]

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