The United States is on track to end this year with its highest level of construction put in place since 2008, a total that, if achieved, would represent nearly 7% of the country’s GDP.
However, construction has slowed of late, according to FMI Corporation, the management and investment consultant. In its Q2 Construction Outlook, FMI estimates construction in place this year would rise 5% to $1.012 trillion. In the first quarter, FMI had projected an 8% annualized gain.
FMI estimates the nonresidential building portion of total construction to expand by 7.6% to $407.2 billion in 2015, and to keep growing through 2019, when it should reach $510.2 billion. However, with housing also expected to recover strongly during this period, nonresidential building’s share of total construction put in place would fall in 2019 to 39.1%, from 40.2% in 2015.
Construction spending in general “continues to build on the rapid growth experienced in the industry last year,” observes Chris Daum, FMI’s senior managing director and president of Investment Banking. FMI’s latest report looks at 17 sectors. Here are some highlights:
• Don’t anticipate much from the two big-ticket sectors, Healthcare and Education, says FMI.
Even with 2.5 million students expected to enroll over the next four year, FMI doesn’t see Education growing in 2015. “One of the biggest hurdles to new construction continues to be state and local budgets,” it writes, adding that there is likely to be “significantly less” state funding for K-12 schools.”
Healthcare should fare a little better, growing by 2% in 2015, and 4% in 2016 to $41 billion. But a “difficult funding environment,” along with changes to construction delivery methods, poses challenges. One trend FMI identifies is toward rebuilding existing facilities using modern hospital design and allow for greater use of technology.
• Manufacturing: After a double-digit gain in 2014, FMI expects manufacturing construction to increase by 17% this year, and then slow to an 8% increase in 2016. It cautions that manufacturing capital construction is highly cyclical when markets reach a state of overcapacity, as some petrochemical products are expected to do in the next few years after a spate of building.
• Amusement/recreation: This section grew by 7% in 2014, and should top that at 9% in 2015. Several major sports stadiums are under construction, and a number of smaller towns and colleges are improving their sports facilities. States also continue to welcome gaming in hopes of increasing their tax bases. A new mixed-use development model combines multiple entertainment venues and shopping into an overall plan.
• Lodging: This sector will be a bright spot, growing by 19% in 2015, and by 12% in 2016, before slowing to 7% in 2019. To buttress its projections, FMI quotes from Lodging Econometrics’ May 2015 reports, which notes that there are 3,885 projects with 488,230 rooms in the construction pipeline, “with the last three quarters posting Year-Over-Year gains of 20% or greater.”
• Office: This sector is benefiting from improving employment levels, and should see 11% growth in 2015, albeit a bit slower than the 19% it hit in 2014.
• Commercial: Capturing what’s going on in retail construction, this sector is expected to grow by 13% to $69 billion this year, but be flat in 2016. “Consumers remain relatively confident about the economy, but they are also remaining conservative in their discretionary spending, at least until wage recovery improves,” FMI writes.
• Religious: What growth there is will likely be in renovation, as new congregations move into vacated retail space or reoccupy church buildings abandoned by other faiths. FMI thinks this sector could be flatlining, and quotes statistics from Pew Research Center that show the percentage of adults (ages 18 and older) who describe themselves as Christians dropping by nearly eight percentage points in just seven years through 2014. Over that same period, the percentage of Americans who are religiously unaffiliated jumped by more than six points, to 22.8%
• Transportation: After registering 5% growth in 2014, transportation is expected to add 7% for 2015 to $44.7 billion. But this sector remains heavily dependent on government support that is never a certainty.
Related Stories
Mixed-Use | Mar 13, 2015
Dubai announces mega waterfront development Aladdin City
Planned on 4,000 acres in the Dubai Creek area, the towers will be covered in gold lattice and connected via air-conditioned bridges.
Contractors | Mar 13, 2015
Construction materials prices rise for first time in six months
The largest monthly gain in petroleum prices in over three years caused construction materials prices to expand 0.4% in February, ending a six-month streak when prices failed to rise, according to the Bureau of Labor Statistics.
Contractors | Mar 12, 2015
Construction demand exploding in 2015, but costs complicate recovery
Raw materials and labor costs temper expectations for soaring profits.
Codes and Standards | Mar 12, 2015
Energy Trust of Oregon offers financial incentives for net-zero buildings
The organization is offering technical assistance along with financial benefits.
Multifamily Housing | Mar 12, 2015
Multifamily construction has been a boon to L.A.’s economy
A new study finds that nearly one-quarter of Los Angeles’ population lived in rental homes and apartments in 2013, a number that undoubtedly has increased since.
BIM and Information Technology | Mar 11, 2015
Google plans to use robots, cranes to manipulate modular offices at its new HQ
Its visions of “crabots” accentuate the search-engine giant’s recent fascination with robotics and automation.
Sports and Recreational Facilities | Mar 11, 2015
Foster + Partners wins bid for 2022 World Cup centerpiece stadium in Qatar
Norman Foster described the design as “an exciting step forward in stadium design—it will be the first to break the mold of the free-standing suburban concept, and instead anticipates the grid of this future city.”
Modular Building | Mar 10, 2015
Must see: 57-story modular skyscraper was completed in 19 days
After erecting the mega prefab tower in Changsha, China, modular builder BSB stated, “three floors in a day is China’s new normal.”
Sponsored | Metals | Mar 10, 2015
Metal Building Systems: A Rising Star in the Market
A new report by the Metal Building Manufacturer's Association explains the entity's efforts in refining and extending metal building systems as a construction choice.
Museums | Mar 9, 2015
Architecture based on astronomy principles for new planetarium in Shanghai
The ancient Chinese civilization left some of the earliest records of humans studying the stars and skies. To exhibit this long history, a new planetarium and astronomy museum is planned for construction in Shanghai.
