Bad News For Construction Forecasts

As the nonresidential sector has experienced cutbacks in demand for new space, the projections for construction activity for new nonresidential facilities are in for a mild decline in 2008, with a more significant downturn in 2009. The forecasts are more negative for commercial and industrial buildings, with an especially large drop-off in the office and retail sectors.

The two largest institutional categories, healthcare and education facilities, should see a slight increase this year and could help offset some of the losses in the other project categories. The continued increase in building material costs in recent years could also adversely affect the construction industry.

These are highlights from the American Institute of Architects (AIA) semi-annual Consensus Construction Forecast, a survey of the nation’s leading construction forecasters. The report is also calling for a 1.9% decline in inflation-adjusted activity in 2008, followed by a projected 6.7% decline in 2009.

“The more pessimistic forecasts this round stems from the lack of growth in the overall economy, the ripple effect from the faltering housing market, and the anxiety in the credit markets leading to a restriction in lending for all types of construction projects,” said AIA Chief Economist, Kermit Baker, PhD, Hon. AIA. “The one bit of good news is that this contraction in activity is likely to be considerably milder than the construction recessions of the early 1990s and earlier this decade.”

Market Segment Consensus Growth Forecasts:
Commercial/Industrial
Retail: -8.3% (2008) -9.9% (2009)
Office buildings: -3.7% (2008) -12.3% (2009)
Hotels: 6.6% (2008) -9.9% (2009)
Industrial facilities: 4.6% (2008) -5.5% (2009)

Institutional
Healthcare: 0.2% (2008) 1.1% (2009)
Education: 2.7% (2008) -1.1% (2009)
Amusement/Recreation: 3.6% (2008) -8.5% (2009)
Public Safety: 5.9% (2008) -1.9% (2009)
Religious: -11.7% (2008) -1.2% (2009)

Baker added, “Another key concern for the industry is that the cost of construction materials has increased more than twice that of consumer products and services – up 37% versus 18% since 2004. Petroleum-based materials and other key construction commodities such as steel, concrete and stone have experienced very sharp price increases in recent years.”

For the complete report, click this link.

Exhibition on Transforming South Street Seaport To Be Launched by AIA New York

Compelling proposals to change the face of lower Manhattan will be on display at the Center for Architecture in New York. "South Street Seaport: Re-envisioning the Urban Edge", is an exhibition from July 17 through September 20, 2008 that showcases 37 prospective designs resulting from the third Biennial Ideas Competition launched by the Emerging New York Architects Committee (ENYA) of the AIA NY. This competition encouraged participants to envision new connections, both material and metaphoric, to Manhattan’s contemporary urban fabric.

"South Street Seaport: Re-envisioning the Urban Edge" provided a rare opportunity for students and young professionals in the field of design and architecture, and who have completed their education at the undergraduate or graduate level within the past 10 years, to engage the ongoing evolution of the South Street Seaport.

Preserving waterfront history
Continuing its recent tradition of selecting sites tied to New York City’s waterfront, ENYA partnered with the Seaman's Church Institute (SCI), whose headquarters have been in the Seaport neighborhood since 1832. With SCI functioning as a hypothetical client, participants were asked to consider the area’s past before suggesting interventions to its future.

Principal design elements of the contest included a community center for the SCI and gallery space to house their collection of maritime art and artifacts, as well as open space usage that would preserve the neighborhood’s intriguing history. Unlike previous competitions that have asked entrants to consider building on terra firma, this competition required the design of a new pier over the water south of the Brooklyn Bridge.

“ENYA’s Biennial Competition program provides an important opportunity for emerging architects from around the world to proffer their suggestions about what the future face of New York City might look like,” commented Carolyn Sponza, AIA, LEED AP, Vice President for Professional Development with the AIA New York Chapter. “As an ideas competition, many of the selections break the mold of traditional thinking about urbanism and engagement with the city—often resulting in proposals that tread the boundary between the accepted and radical."

Global perspectives on the Seaport
The competition jury included highly influential designers and critics form New York, including Nina Baniahmad, Sara Caples-Jefferson, Kate Kerrigan, Eeva Liisa Pelkonen, Michael Sorkin and Calvin Tsao. The exhibition curators are Anne Leonhardt, Joel Melton, and Sean Rasmussen. Models of the four winning entries will be displayed along with the 37 proposals selected by the jury. More than 200 participants entered the competition, representing a broad spectrum of domestic and international architects, landscape architects, urban designers and planners, and graphic artists from 13 countries.

Opening party, walking tour and more
In addition to the opening on July 17, other events will include a symposium, walking tour, and lecture. The exhibition is accompanied by a publication that contains highlights of the best entries, critical essays by noted architectural writers on architecture Michael Sorkin and Ann Buttonwieser, and proposals by NYC high school students involved in an architectural design studio program.

Architecture Billings Index Drops to Lowest Level Ever

Emblematic of the various struggling sectors in the overall economy, the Architecture Billings Index (ABI) dropped two points in March and fell to its lowest level since the survey’s inception in 1995. As a leading economic indicator of construction activity, the ABI shows an approximate nine to 12 month lag time between architecture billings and construction spending.

The American Institute of Architects (AIA) reported the March ABI rating dropped to 39.7, following its steep nine point decline in February (any score above 50 indicates an increase in billings). The inquiries for new projects score was 48.0, also the lowest mark for the survey.

“We’ve seen an 11-point fall-off in the first quarter of the year, and the prognosis for commercial construction later this year is not favorable at this point,” said AIA Chief Economist Kermit Baker, PhD, Hon. AIA. “Aside from historically low project demand, all regions are showing very poor business conditions. This is not likely to reverse itself anytime soon.”

Key March ABI highlights:
Regional averages: South (45.3), Northeast (38.7), West (38.7), Midwest (36.9)
Sector index breakdown: institutional (50.8), commercial/industrial (38.3), multi-family residential (31.7)
Project inquiries index: 48.0

The Architecture Billings Index is derived from a monthly “Work-on-the-Boards” survey and produced by the AIA Economics Market Research Group. Based on a comparison of data compiled since the survey’s inception in 1995 with figures from the Department of Commerce on Construction Put in Place, the findings amount to a leading economic indicator that provides an approximately nine to 12 month glimpse into the future of nonresidential construction activity.

The diffusion indexes contained in the full report are derived from a monthly survey sent to a panel of AIA member-owned firms. Participants are asked whether their billings increased, decreased, or stayed the same in the month that just ended. According to the proportion of respondents choosing each option, a score is generated, which represents an index value for each month.