A bruising presidential election and a tightening labor market are prompting reservations about future spending for nonresidential building, even as the construction industry’s performance has staved off most gloom-and-doom scenarios.
Total spending for nonresidential building was up nearly 11%, to $103.3 billion, in the first quarter. The Census Bureau estimated that the value of nonresidential building put in place rose 3.1% in April compared to April 2015, to an annualized $461.8 billion, spurred by robust building of hotels, offices, and entertainment/amusement centers.
TOP CONTRACTOR GIANTS
2015 GC Revenue ($)
1. Turner Construction Co. $10,566,643,175
2. Whiting-Turner Contracting Co. $5,530,003,229
3. Fluor Corp. $5,048,920,000
4. Skanska USA $4,887,571,264
5. Gilbane Building Co. $4,406,057,000
6. PCL Construction Enterprises $4,344,294,460
7. Balfour Beatty US $3,955,770,283
8. Structure Tone $3,865,600,000
9. AECOM $3,772,057,000
10. DPR Construction $3,085,975,000
TOP CM/PM GIANTS
2015 CM/PM Revenue ($)
1. Hill International $503,000,000
2. Jacobs $460,670,000
3. JLL $328,233,760
4. Hunter Roberts Construction Group $259,724,915
5. AECOM $256,933,000
6. Burns & McDonnell $255,390,861
7. WSP | Parsons Brinckerhoff $173,063,000
8. Turner Construction Co. $161,788,824
9. Sachse Construction $109,836,555
10. Cumming $96,538,000
CONSTRUCTION GIANTS SPONSORED BY:
“The construction sector is likely to be the economic tailwind” in the U.S., predicts Kermit Baker, PhD, Chief Economist with the American Institute of Architects.
Baker and chief economists Ken Simonson of the Associated General Contractors of America and Alex Carrick of CMD Construction Data expect nonresidential construction spending to increase 9–10% this year and 4–8% in 2017. More than one-third of AGC’s membership expects there will be more work to bid on this year than last year, particularly in the retail, warehouse, lodging, and office sectors.
The trio of economists raised a number of red flags about factors that could slow construction spending. “Market fundamentals remain positive, but are fading in most sectors,” said Baker.
Carrick and Simonson are less sanguine about spending for education-related projects, mainly because growth figures for 4- to 17-year-olds and 18- to 26-year-olds are either flat lining or receding.
Simonson noted that recent legislation passed by Congress extends tax credits and allows for more federal dollars to flow into construction. But the federal government is reducing its overall physical footprint, so it’s more likely to renovate existing buildings than build new.
Multifamily housing, which has been one of the construction industry’s high-powered turbines—it’s up 30% since 2009, according to Baker—is expected to taper off to a still-strong but normalized range of 410,000–440,000 units per year.
Simonson also pointed out that the U.S. population has been growing at less than 1% annually, and that several states have lost population. Immigration, which has pushed population growth over the past few decades, has lost traction. The factors could lead to less mobility and less demand for new construction.
HELLO!!! ARE THERE ANY CARPENTERS OUT THERE?
Another area of concern for contractors is finding the skilled labor they need to complete projects they bid for.
The country’s unemployment rate stood at 4.7% in May, and was down in 269 of 387 metros, according to Bureau of Labor Statistics estimates. Carrick noted that the labor participation rate (the labor force as a percentage of the working-age population) fell to 62.5% in Q1/2016, from 67% in 2001.
Citing a recent survey of 1,300 AGC-member companies, Simonson said that 79% are having difficulty finding hourly craft professionals, and 73% struggle to hire carpenters. More than half (56%) said they have raised their base pay for hourly workers; 29% provide incentives and bonuses.
None of the economists anticipates a recession rearing its head any time soon. “I think there’s too much negative talk about the economy,” said Carrick. What does worry him are the sluggish energy sector and economic slowdowns outside the U.S., specifically China.
As for the presidential race, AGC’s Simonson lamented that it might not make much difference who wins. “I expect continued gridlock,” he says. “Uncertainty will cause companies to hold back on major investments.”
More on the 2016 Construction Giants: BD+C's John Caulfield examines how Turner uses to design-build, P3, Lean practices, and engineering services.
RETURN TO THE GIANTS 300 LANDING PAGE
Related Stories
Codes | Jul 10, 2023
Water Demand Calculator outperforms traditional plumbing codes for energy, carbon, and water savings
Using IAPMO’s Water Demand Calculator tool can result in energy, carbon, and water savings as compared to using traditional plumbing specification methods in plumbing codes, according to a study by Arup.
Adaptive Reuse | Jul 10, 2023
California updates building code for adaptive reuse of office, retail structures for housing
The California Building Standards Commission recently voted to make it easier to convert commercial properties to residential use. The commission adopted provisions of the International Existing Building Code (IEBC) that allow developers more flexibility for adaptive reuse of retail and office structures.
Laboratories | Jul 10, 2023
U.S. Department of Agriculture opens nation’s first biosafety level 4 containment facility for animal disease research
Replacing a seven-decade-old animal disease center, the National Bio and Agro-Defense Facility includes the nation’s first facility with biosafety containment capable of housing large livestock.
Market Data | Jul 5, 2023
Nonresidential construction spending decreased in May, its first drop in nearly a year
National nonresidential construction spending decreased 0.2% in May, according to an Associated Builders and Contractors analysis of data published today by the U.S. Census Bureau. On a seasonally adjusted annualized basis, nonresidential spending totaled $1.06 trillion.
Contractors | Jun 30, 2023
Construction industry task force aims for standardized carbon reporting
A newly formed Associated General Contractors of America (AGC) task force on decarbonization and carbon reporting will address the challenges around reporting and reducing carbon emissions in the construction industry.
Standards | Jun 30, 2023
New ASHRAE standard aims to reduce disease transmission risk in indoor spaces
ASHRAE Standard 241, Control of Infectious Aerosols establishes minimum requirements to reduce the risk of disease transmission by exposure to infectious aerosols in new buildings, existing buildings, and major renovations. Infectious aerosols are tiny, exhaled particles that can carry pathogens that cause infections or disease.
Mixed-Use | Jun 29, 2023
Massive work-live-play development opens in LA's new Cumulus District
VOX at Cumulus, a 14-acre work-live-play development in Los Angeles, offers 910 housing units and 100,000 sf of retail space anchored by a Whole Foods outlet. VOX, one of the largest mixed-use communities to open in the Los Angeles area, features apartments and townhomes with more than one dozen floorplans.
School Construction | Jun 29, 2023
K-12 school construction: 5 ways strong community relations can lead to success
When constructing a K-12 school, building positive relationships with the community—including students, parents, school staff and residents—is critical to the success of the project. Here are five ways Skanska puts the community first when building K-12 schools in the Pacific Northwest.
Multifamily Housing | Jun 28, 2023
Sutton Tower, an 80-story multifamily development, completes construction in Manhattan’s Midtown East
In Manhattan’s Midtown East, the construction of Sutton Tower, an 80-story residential building, has been completed. Located in the Sutton Place neighborhood, the tower offers 120 for-sale residences, with the first move-ins scheduled for this summer. The project was designed by Thomas Juul-Hansen and developed by Gamma Real Estate and JVP Management. Lendlease, the general contractor, started construction in 2018.
Apartments | Jun 27, 2023
Average U.S. apartment rent reached all-time high in May, at $1,716
Multifamily rents continued to increase through the first half of 2023, despite challenges for the sector and continuing economic uncertainty. But job growth has remained robust and new households keep forming, creating apartment demand and ongoing rent growth. The average U.S. apartment rent reached an all-time high of $1,716 in May.
