4 Construction Industry Trends for 2013
The frozen construction industry is finally beginning to thaw. Credit and funding are becoming more accessible as market conditions slowly become more hospitable. According to McGraw-Hill Construction’s 2013 Dodge Outlook Report, the total U.S. construction starts for 2013 will rise 6% to $483.7 billion, slightly higher than the 5% increase to $458 billion estimated for 2012.
What else should we expect in 2013?
Here are four major trends that could impact the construction industry over the next few years.
- Stabilization of Nonresidential Construction – Expect to see relatively large upticks in permitting and spending on large construction projects. The 2013 project starts for the commercial construction sector are expected to total about $55.9 billion nationwide, for a 12% gain over 2012. The much-needed stabilization will continue, however, most sectors are only chugging modestly upward after hitting rock-bottom. It is important to keep in mind that these incremental increases are based off of historic lows, so overall volumes may still feel suppressed. We most likely won’t experience the stratospheric spending like we did during the boom years.
- Strengthening Labor Markets – We can expect ongoing improvement in construction-related employment, a sector that shed 2.2 million jobs between 2006 and 2011, but which through July of this year has seen its first year-over-year increase since 2006. The U.S. construction sector added 17,000 jobs in October. The U.S. construction unemployment rate is also down significantly from 13.7% (October 2011) to 11.4% (October 2012) according to reports from REED Construction Data.
- Positive Momentum – Permitting for new projects, which is a key indicator of new construction projects and development, has largely been put on hold for the last five years. However, with stronger job prospects and more secure employment, this trend will change. In fact, a new study released by Harvard University projects that the pace of growth the construction industry for the 2010-2020 period will average 150 million square feet annually, largely supported by the growth in the medical sector. McGraw-Hill Construction expects residential contracts to show the most improvement, increasing by 22% in volume.
- New Building Trends – As builders and developers continue on the path to recovery, new building trends are emerging. The green building movement is being embraced by a growing number of contractors, suppliers and design professionals providing an opportunity for construction professionals to expand their services to include green building. Many contractors, architects and project owners are also seeing benefits to modular building construction. Modular design and prefabrication can support eco-friendly designs and building materials, faster production times and lower operating costs. These building trends can be an indication of the direction the construction industry may be taking. Contractors will need to be proactive in order to improve their competitive position and demonstrate their understanding and commitment to sustainability and green building projects in order to stand out in the marketplace.
What does all of this mean?
The growth may be modest but pockets of opportunity are emerging in markets across the country. The overall outlook has improved for commercial construction albeit cautiously optimistic. Take these trends into consideration, examine the economy in your local market, and then create a plan for progress. Using temporary workers can be a great strategy to help your business in the coming year. Please contact us or call 1.866.532.6777 if we can be of further assistance.
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