Commercial construction outlook for 2021

The year 2020 has been anything but normal or predictable due to the pandemic. Some commercial construction sectors like hotels have plummeted this year while others like warehouse construction have endured through the economic downturn amid the crisis. What will 2021 look like — recovery, further decline or accelerated growth? Most likely there will be a blend of negative, positive and mixed growth in the new year.

In 2021, the United States and the world will continue to deal with the economic and health crises caused by the pandemic. Some forecasters are cautiously optimistic for the future but remind us that meaningful growth is still several months away.

Forecasters are reporting that the overall dollar value of commercial building starts will increase 5% in 2021. Here is a brief overview of the commercial construction outlook in 2021 by selected market sectors.

Office construction starts are predicted to increase due to the rising demand for data centers, which are included in the office category, and to the need for renovations to existing space for physical distancing and for well building design criteria.

Retail construction is a sector already in decline because it was hit extremely hard by the pandemic. Several retail companies have filed for bankruptcy. The current new wave of increasing COVID-19 cases across the U.S. means foot traffic will continue to decline and cause further economic hardship for retail.

Contrasting the loss in retail construction is the continuing growth of warehouse construction. Warehouse starts grew 2% in 2020, to $30.7% billion, with another 8% increase expected in 2021, according to Dodge Reports. Warehouse construction will be the leader and the big winner as ecommerce continues to drive the need for more logistics infrastructure.

Forecasts indicate that institutional construction will increase by a mere 1%. Public building construction will be significantly impacted with budget deficits continuing to increase at state and local governments.

Higher education construction is expected to show additional declines in 2021 due to lost revenues in