Public Spend­ing Sours Build­ing Fore­cast

Arkansas Democrat-Gazette
July 26, 2014

Spend­ing on non­res­i­den­tial con­struc­tion in the U.S. will be less than ini­tially pro­jected as state and lo­cal gov­ern­ments scale back in­vest­ments in such prop­er­ties as schools and health care build­ings, the Amer­i­can In­sti­tute of Ar­chi­tects said Fri­day.

To­tal spend­ing on com­mer­cial and in­sti­tu­tional de­vel­op­ment prob­a­bly will in­crease 4.9 per­cent this year, down from an ear­lier es­ti­mate of 5.8 per­cent, ac­cord­ing to a semi-an­nual sur­vey by the Wash­ing­ton-based group.

A slow­down in fund­ing for in­sti­tu­tional projects, which in­clude ed­u­ca­tion, health care, re­li­gious and pub­lic-safety fa­cil­i­ties, has been a drag on the re­cov­ery of the wider in­dus­try, ac­cord­ing to Ker­mit Baker, the in­sti­tute’s chief econ­o­mist. The group ex­pects in­sti­tu­tional-con­struc­tion spend­ing to fall 0.1 per­cent this year, com­pared with Jan­uary’s pro­jec­tion for an in­crease of 3.4 per­cent, Baker said.

While growth in in­sti­tu­tional con­struc­tion tends to lag be­hind com­mer­cial build­ing, “it has been even more de­layed than pre­vi­ously ex­pected be­cause of fis­cal prob­lems on the lo­cal and state level and some un­cer­tain­ties, such as around the new af­ford­able health care act,” Baker said. “There isn’t a lot of ap­petite to build new fa­cil­i­ties.”— Bloomberg News