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Construction Forecast Shows Stability for Education Market

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WASHINGTON — Despite a predicted decline in new nonresidential construction for 2008 and 2009, stability is expected for the educational facilities market, according to a recent report by the American Institute of Architects.


The AIA surveyed the nation’s leading construction forecasters for the Consensus Nonresidential Constru-ction Forecast Panel midyear report.


“The overall institutional outlook is now for a modest gain in construction levels this year, with almost no change for 2009,” writes AIA Chief Economist Kermit Baker in the report summary. “The two largest institutional categories — health and education — are both projected to see a modest increase this year.”


A slight reduction of construction activity for new educational facilities in 2009 is also expected.


Demographics play a key role in the overall steadiness of the education sector, as construction is significantly driven by enrollment.


According to the report, the “U.S. Census Bureau is projecting very strong growth in college and university enrollments (up to 10 percent over the next seven years), moderately strong growth in elementary and secondary enrollments (up 8 percent over this time period), while much weaker growth in high-school enrollments (up less than 4 percent overall).”


Baker links the construction decline in other markets to an increase in building material costs, a stagnant economy, the housing market crisis and lending restrictions for construction projects.


“The one bit of good news is that this contradiction in activity is likely to be considerably milder than the construction recessions of the early 1990s and earlier this decade,” according to the report. 


Moderate growth in construction activity for educational and healthcare sectors is not expected to halt the expected 1.9 percent dip in inflation-adjusted activity for new non-residential facilities in 2008, followed by a 6.7 percent drop in 2009. It may, however, help offset losses in commercial, industrial, office and retail markets.