Spending on U.S. nonresidential construction projects will fall both in 2009 and 2010 as builders delay or cancel plans for hotels, office buildings and retail facilities, the American Institute of Architects predicted last week.
The AIA expects such construction activity to decline 11 percent in 2009 and another 5 percent in 2010. The group cited falling company profits and the lack of credit to finance projects.
Spending on hotel construction is expected to decline by more than 20 percent this year and an additional 12 percent next year, AIA said. It predicts construction of retail, office and industrial facilities to also decline by double digits this year, with a slower rate of decline in 2010. Institutional categories such as churches, schools and healthcare facilities will post similar declines.
A look at past recessions supports this expectation, AIA said. Activity fell by almost 28 percent in the 1980s before growth resumed, and by 31 percent during the early 1990s recession. The downturn earlier this decade brought a 25-percent decline.