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Construction Industry Forecast 2012

Construction Forecast: Construction Industry Forecast 2012


Construction Forecast: Construction 2012

The construction industry has been through a tough 2011, ups and down, materials cost increase bankruptcies, double dipping and more. So what 2012 will be like? Another year where the construction forecast is not as good as expected, and while more numbers and studies are available, the general forecast for 2012 calls for a steady below-normal year. The McGraw Hill Construction forecast for 2012 predicts that construction starts will be near $412 billion, 4% less than the forecasted level for 2011.

Construction Forecast 2012 Key Findings McGraw-Hill

Based on significant research and in-depth analysis of macro-trends, the 2012 Dodge Construction Outlook details the forecasts for each construction sector, as follows.

  • Single family housing in 2012 will improve 10% in dollars, corresponding to a 7% increase in the number of units to 435,000. This is still a low amount, as the excess supply of homes due to foreclosures continues to depress the market.
  • Multifamily housing will rise 18% in dollars and 17% in units, continuing its moderate, upward trend.
  • Commercial building will grow 8%. Warehouses and hotels will see the largest percentage increases, but improvement for offices and stores will be modest.
  • The institutional building market will slip an additional 2% in 2012, after falling 15% in 2011. The tough fiscal environment for states and localities will continue to dampen school construction, and the uncertain economic environment will limit growth in healthcare facilities.
  • Manufacturing buildings will increase 4%, following the 35% gain in 2011, as the low value of the U.S. dollar continues to support export growth.
  • Public works construction will drop a further 5%, after a 16% decline in 2011, due to spending cuts and the absence of a multiyear federal transportation bill for highway and bridge construction.
  • Electric utilities will retreat 24%, following a 48% jump in 2011.

Construction Forecast 2012 AIA Consensus

The AIA Consensus construction forecast for 2012 predicts that nonresidential and commercial construction will continue to dip due to an uneven recovery and the absence of strong economic indicators on these kinds of projects. The AIA forecast based their opinion on the problems faced when looking on finance options for construction projects, the weak governmental finance and the sudden rising of construction cost.

The nonresidential factor is expected to suffer a 6.5 percent decline, while manufacturing facilities will experience a 16 percent reduction. On the other hand, institutional projects will decline 3 percent, the least amount expected among general facilities.

Construction Forecast Top Markets

During the 2012, the top markets referred as key cities on this forecast will be:

  1. Washington, D.C.- The DC area has a diversified economy, including communication, transportation and biomedical institution that will see large investments primarily as improvements to existing facilities. Home market will pick up ahead of other cities, as predicted on the 2012 Construction forecast.
  2. Austin - Driven by large college campus, this exciting city provide high paying jobs, all year long economic activities and still need medical, educational and transportation infrastructure to deal with its high population.
  3. San Francisco - While the luxury housing market still struggling to get back in business, the office and retail market will benefit from improvements as old buildings and low-efficiency building will receive a cash boost to improve their efficiency and accommodate new tenants. Hotel market can also expect an increase of business and retrofitting opportunities.
  4. New York City - A new era of residential properties and market stability will lead the way in Manhattan, while hotels improvements will also receive its best part during as part of 2012 construction forecast.
  5. Boston - One of the best housing markets during 2012, although, office and retail projects will likely tend to reduce their activity. Housing prices will increase again after suffering only modest declines in the downturn.

Other places that should be monitored closely are:

  • Houston- The oil industry will continue to generate profits and new investments.
  • Los Angeles – Will likely be the nation’s number two residential and industrial market.
  • San Diego – The medical industry and retirees will attract investments to the area.
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