Although the construction recovery continues to lag other sectors as well as the overall U.S. economy, the industry is finally seeing a rebound. Commercial real estate giant Jones Lang LaSalle recently released its Summer 2013 Construction Highlights report, which found that there are some sectors (such as energy and high-tech) driving demand for construction, while a few major cities are starting to record increased levels of speculative office building developments. However, with construction demand on the rise in some areas, JLL documents labor shortages and material costs increasing as well.
Local Markets
The recovery theme in the U.S. construction industry can be easily identified as lagging other sectors and the overall U.S. economy. Among many challenges specific to the construction industry, the fact that the overall US.. labor market recovery has been so prolonged is not helping a rebound in construction, which depends on a growing workforce to expand demand across property types. The previous “bright spot” in the construction world – public construction – has taken a backseat in the recovery as the Federal government trims budgets and pulls back on pending.
While job numbers year-over-year are improved, construction employment was hard hit in the month of April, showing a net loss of 6,000 jobs, very much a function of pullback in non-residential sectors including public construction. With the long-awaited rebound in the housing market now permeating the single-family realm, however, job gains and increases in construction-put-in place for residential construction have materialized, and should fuel stronger growth. President Obama’s persistent efforts to increase infrastructure construction funding and MAP-21 investment, already accounted for in budgets, could also ultimately help shore up weaker areas of the construction industry during the next 12 months.
Market Highlights
· Seattle: Technology drives construction, with just over 1 MSF delivered in 2012, much of it pre-leased to Amazon. The spec development pipeline is picking up.
· Portland: Owner-user office development comprises the major projects under construction. Several speculative projects are proposed, but adaptive reuse is the preferred strategy.
· San Francisco: Office and multi-family construction is booming as developers work to meet demand from the growing economy, driven by the technology industry.
· Los Angeles: The first skyscraper to be added to the CBD in over 20 years is underway. Upon completion, the Wilshire Grand will feature retail, office and hospitality components.
· Orange County: Vacancy remains high and rents are still too low to justify any spec development at this time. However, four sizable build-to-suit projects are currently underway.
· Boston: Four build-to-suit projects are underway totaling 2.5 MSF in Boston. Cambridge has 2.5 MSF of new construction (38% lab space, 62% office).
· New York: Construction to begin on more than 5.0 MSF of office space during the next five years, with potentially 25 MSF delivered over next two decades.
· Philadelphia: Liberty Property Trust will break ground on a build-to-suit project for Vanguard. The six-story, 205,000 SF facility will be built to meet LEED standards.
· Washington DC: Nearly 6.2 MSF of office construction is underway. Over one-third of the under construction inventory has garnered preleases.
· Atlanta: Demand for interior build outs up in the last six to nine months; upward pressure on construction costs. Pricing has bottomed and expected to rise due to housing market improvements.
· Minneapolis: Construction activity is on the rise, but so are costs. Construction prices increased 3.2% since last year. Recent negotiations with labor unions will result in average annual increases in labor costs of 2-2.5% through 2016.
· Chicago: No office construction is underway, but River Point is in development stages and broke ground in Q4 2012. Multifamily in the Loop and River North is expanding aggressively, with about 1,000 units under construction.
· Dallas: Availability of the trades is becoming an issue as new construction activity accelerates. This will likely lead to higher labor costs and the need for higher contingencies in project proformas.
· Houston: Houston’s booming energy market continues to drive new office construction. Houston’s CBD market is expecting 4 MSF of new office deliveries in the next 36 to 48 months.
Related Stories
| Jan 3, 2014
World’s tallest vegetated façade to sprout in Sri Lanka [slideshow]
Set to open in late 2015, the 46-story Clearpoint Residences condo tower will feature planted terraces circling the entire structure.
| Dec 31, 2013
Top 10 blog posts from 2013
BD+C editors and our contributors posted hundreds of blogs in 2013. Here's a recap of the most popular topics. They include valuable lessons from one of the first BIM-related lawsuits and sage advice from AEC legend Arthur Gensler.
| Dec 31, 2013
BD+C's top 10 stories of 2013
The world's tallest twisting tower and the rise of augmented reality technology in construction were among the 10 most popular articles posted on Building Design+Construction's website, BDCnetwork.com.
| Dec 30, 2013
Calatrava facing legal action from his home town over crumbling cultural complex
Officials with the city of Valencia, Spain, are blaming Santiago Calatrava for the rapid deterioration of buildings within its City of Arts and Sciences complex.
| Dec 30, 2013
Survey: Number of licensed architects grows in 2012-13
A survey by NCARB shows that there are 105,847 registered architects in the U.S., up slightly from the organization's 2011-2012 survey.
| Dec 29, 2013
7 ways to make your firm more efficient
In a CEO.com post, Andrew Miller, president of ACM Consulting, shares the seven organizational efficiency strategies he encounters most frequently as he works with corporate executives to boost their performance.
| Dec 24, 2013
First Look: Calatrava's Sharq Crossing in Doha, Qatar [video]
The government of Qatar has released details of Sharq Crossing, a massive infrastructure project designed by Spanish architect Santiago Calatrava.
| Dec 23, 2013
MBI commends start of module setting at B2, world's tallest modular building
The first modules have been set at B2 residential tower at Atlantic Yards in New York, set to become the tallest modular building in the world.
| Dec 23, 2013
First Look: KPF's dual-tower design for Ziraat Bank in Istanbul
Kohn Pedersen Fox Associates (KPF) is designing a new headquarters for Turkey’s largest and oldest financial institution, Ziraat Bank, in a modern, suburban district of Istanbul.
| Dec 20, 2013
Must see for the holidays: Architects re-create iconic structures using gingerbread
Gensler, PBK, Page Sutherland Page, and Kirksey were among the firms to compete in the 5th Annual Gingerbread Build-Off.