Key Points

Defining the Market
One problem with defining this market is that every recording/measuring agency segments buildings differently. For example, some use the term “commercial” as a catch-all to mean all buildings other than residential structures and industrial/manufacturing plants, while some use the term in reference to private office buildings. Some divide the market by privately-owned and publicly-owned buildings. Some use the term “income property” in place of commercial. And some include data for non-building structures such as streets, highways and sewers. This lack of consistency makes it difficult to obtain standardized, accurate data.

For our purposes, non-residential buildings fall into one of three categories: Commercial Buildings, Industrial/Manufacturing Facilities and Institutional Buildings.

According to the U.S. Department of Energy’s 2003 Commercial Buildings Energy Consumption Survey, there were 4.9 million commercial and institutional buildings in the U.S. as of 2003. Add the 350,000+ industrial/manufacturing facilities that existed (according to the U.S. Census Bureau 2002 Economic Census) and you’ll see that the C/I/I (non-residential) market consists of more than 5.1 million structures. That’s a lot of real estate. In fact, it’s over 100 billion square feet of floor space!

Those 5.1 million structures are existing buildings, where opportunities for renovation, retrofit, remodeling, modernization and M/R/O (maintenance/repair/operations) abound. Existing buildings represent about 80% of the total C/I/I buildings market. In addition, new construction projects continuously add to the C/I/I buildings inventory. Approximately 20% of the total C/I/I buildings market is under construction at any given moment. That projects out to about 1.3 million buildings under construction and a total C/I/I Buildings market of 6.8 million structures.

The importance of this data to manufacturers of mechanical systems/components is evident when you consider the following:

C/I/I Buildings Inventory
C/I/I buildings are often defined by their end use. For example, education (schools and universities) or warehouse and storage. C/I/I building floor space is dominated by four activities: office, retail, warehouse and education. Those four activities account for 60% of all C/I/I buildings floor space and 51% of all C/I/I buildings. Other principle categories include manufacturing, health care, government, lodging, service, public assembly, religious worship, food service, food sales and public order & safety.

Construction Data for C/I/I Buildings
Construction market data is tracked and reported by a number of organizations, including the U.S. Census Bureau, Reed Construction Data, FMI, McGraw-Hill Construction and others. Since no two groups collect and report their data in exactly the same way, it’s difficult to make an apples-to-apples comparison to ensure the accuracy of reported figures. Suffice it to say that each is valid in its own way. HPAC ENGINEERING chooses to connect you with several of these resources and let you decide which you find most valuable.

The Census Bureau breaks the construction industry out by Private Construction and Public Construction and tracks construction spending on a monthly basis. While these figures are further broken down into Residential and Non-Residential segments, the Census Bureau’s Non-Residential segment includes non-building categories such as Highways and Streets, Sewage and Waste Disposal and others. The Census Bureau reports data based on current information and makes no projections or forecasts. Visit: http://www.census.gov/const/www/c30index.html.

Reed Construction Data also tracks and reports construction for the Non-Residential, Residential and Heavy Engineering (roads/highways, bridges, water/sewage, etc) segments. Reed defines the Non-Residential segment as Commercial, Industrial and Institutional Buildings. Its figures closely parallel those of the Census Bureau. Reed Construction Data publishes an annual U.S. Construction Outlook report, which forecasts the next two years of activity. Visit http://www.reedconstructiondata.com/construction-starts/. Select Article of choice.

FMI, a consulting and investment banking services company for the construction industry, defines the total construction market as Residential Buildings, Non-Residential Buildings and Non-Building Structures. In fact, FMI’s construction categories mirror the Census Bureau’s, and its numbers closely parallel those of the Census Bureau and Reed Construction Data. FMI also publishes an annual U.S. Markets Construction Overview, as well quarterly Construction Outlook updates.
Visit http://www.fminet.com/

McGraw-Hill Construction presents a Monthly Summary of Construction Contract Value report and also features the Dodge Index.  Measuring construction by “construction starts” or “contract value”, McGraw-Hill places the entire value of a construction project into the month it starts and does not account for the thousands of ongoing projects still accruing costs during the given month as the Census Bureau, Reed and FMI do, therefore, its numbers are significantly lower. In years ending in odd numbers, McGraw-Hill releases a comprehensive Construction Outlook report. Visit http://www.construction.com. Scroll down to Features/Forecasts and Trends.