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
Higher Education | Jun 14, 2023
Designing higher education facilities without knowing the end users
A team of architects with Page offers five important factors to consider when designing spaces for multiple—and potentially changing—stakeholders.
Resiliency | Jun 14, 2023
HUD offers $4.8 billion in funding for green and resilient building retrofit projects
The Department of Housing and Urban Development (HUD) recently released guidelines for its Green and Resilient Retrofit Program (GRRP) that has $4.8 billion for funding green projects.
Arenas | Jun 14, 2023
A multipurpose arena helps revitalize a historic African American community in Georgia
In Savannah, Ga., Enmarket Arena, a multipurpose arena that opened last year, has helped revitalize the city’s historic Canal District—home to a largely African American community that has been historically separated from the rest of downtown.
Building Materials | Jun 14, 2023
Construction input prices fall 0.6% in May 2023
Construction input prices fell 0.6% in May compared to the previous month, according to an Associated Builders and Contractors analysis of the U.S. Bureau of Labor Statistics’ Producer Price Index data released today. Nonresidential construction input prices declined 0.5% for the month.
Mass Timber | Jun 13, 2023
Mass timber construction featured in two-story mixed-use art gallery and wine bar in Silicon Valley
The Edes Building, a two-story art gallery and wine bar in the Silicon Valley community of Morgan Hill, will prominently feature mass timber. Cross-laminated timber (CLT) and glulam posts and beams were specified for aesthetics, biophilic properties, and a reduced carbon footprint compared to concrete and steel alternatives.
Mixed-Use | Jun 12, 2023
Goettsch Partners completes its largest China project to date: a mixed-used, five-tower complex
Chicago-based global architecture firm Goettsch Partners (GP) recently announced the completion of its largest project in China to date: the China Resources Qianhai Center, a mixed-use complex in the Qianhai district of Shenzhen. Developed by CR Land, the project includes five towers totaling almost 472,000 square meters (4.6 million sf).
Engineers | Jun 12, 2023
Stantec to acquire Environmental Systems Design
Stantec, a global leader in sustainable design and engineering, has signed an agreement to acquire Environmental Systems Design, Inc. (ESD), a 270-person engineering firm headquartered in Chicago. Founded in 1967, ESD has built a reputation for excellence and innovation in high-performance design with a roster of industry-leading clients. The terms of the transaction are not disclosed.
University Buildings | Jun 9, 2023
Cornell’s new information science building will foster dynamic exchange of ideas and quiet, focused research
Construction recently began on Cornell University’s new 135,000-sf building for the Cornell Ann S. Bowers College of Computing and Information Science (Cornell Bowers CIS). The structure will bring together the departments of Computer Science, Information Science, and Statistics and Data Science for the first time in one complex.
Museums | Jun 6, 2023
New wing of Natural History Museums of Los Angeles to be a destination and portal
NHM Commons, a new wing and community hub under construction at The Natural History Museums (NHM) of Los Angeles County, was designed to be both a destination and a portal into the building and to the surrounding grounds.
Performing Arts Centers | Jun 6, 2023
Mumbai, India’s new Nita Mukesh Ambani Cultural Centre has three performing arts venues
In Mumbai, India, the recently completed Nita Mukesh Ambani Cultural Centre (NMACC) will showcase music, theater, and fine arts from India and from across the globe. Atlanta’s TVS Design served as the principal architect and interior designer of both the cultural center and the larger, adjacent Jio World Centre.