The American Institute of Architect’s (AIA) Consensus Construction Forecast panel has optimistic projections for nonresidential building spending in late 2023 and beyond, and the news is generally positive – with a caveat. The panel—comprised of leading economic forecasters—is projecting that spending on buildings will increase by 20% this year—a torrid pace not seen since the construction boom years leading up to the Great Recession. 

“The forecast for nonresidential construction activity remains healthy through the second half of 2023 and into 2024,” says AIA Chief Economist Kermit Baker, PhD, Hon. AIA. “The industry got off to an extremely strong start in the first half of the year, and that momentum will ensure healthy gains for the year before moving to a much more moderate pace of expansion in 2024.” 

Leading the charge is the manufacturing sector, where spending is projected to increase more than 50% over last year’s exceptional performance. Healthy gains are expected across all sectors, including commercial, institutional, and industrial construction categories, with each projected to increase at a double-digit pace. 

Though spending on nonresidential buildings increased by more than 10% last year, once inflation is factored in, real increases were much lower. This means that while companies are investing heavily in new buildings and renovations this year, their investments may not translate into comparable economic growth or employment opportunities. However, with inflation in construction moderating, there is optimism among industry professionals about what lies ahead for nonresidential building projects this year and beyond.