Construction spending on offices, retail centres and hotels is likely to fall 16% this year and 12% in 2010, more than previously forecast, the American Institute of Architects said.

Rising unemployment and reductions in business spending prompted the Washington-based institute to cut its outlook from January, when it predicted non-residential construction spending would drop 11% this year and 5% in 2010.

'We’ve had a really rocky six months in the economy and in the construction sector,' Kermit Baker, the institute’s chief economist, said in a telephone interview. 'People are seeing a real tough environment out there and not a lot of incentive to invest in projects.'