Dive Brief:
- Nonresidential construction activity is expected to jump 4% in 2018 and in 2019, according to the American Institute of Architects' (AIA) semi-annual consensus report.
- The nonresidential commercial sector will drive construction this year, the AIA reported, but industrial and institutional will take the lead through 2019. Office construction (+4.6%) should be the standout in 2018, while industrial (+5.2%) and education-related projects (+4.9%) will be 2019's top performers.
- AIA Chief Economist Kermit Baker said the rebuilding effort after 2017's spate of natural disasters, the potential for a massive infrastructure program from the Trump administration, and the possible upshots from the tax reform bill passed in late 2017 could provide the opportunity for additional growth in the next few years.
Dive Insight:
Data earlier this month from Cushman & Wakefield aligns with the AIA's forecast for an upcoming office boom. According to Cushman & Wakefield, Manhattan will see more than 12 million square feet of new office space come online during the next two years, the most new stock of any two-year period since 1985 and 1986 — and that expansion is expected to continue through next year. Beyond 2018 and 2019, more than 22 million square feet of new office space will become available during the next five years.
The U.S. is still waiting for President Donald Trump to unveil official details about his now $1.7 trillion infrastructure program. The president could reveal more of the plan in his State of the Union address, though murmurings in the run-up to the address have indicated a broad overview of what the long-awaited infrastructure program might look like.
The administration's proposal is expected to include a requirement that state and municipal agencies looking for federal funding must come up with 80% of the project costs themselves, an about-face of the federal government's existing practice of usually financing the lion's share. Additional non-federal contributions could be behind the president's statements earlier this month that his $1 trillion plan could grow to $1.7 trillion.
