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
| Jan 5, 2015
Beyond training: How locker rooms are becoming more like living rooms
Despite having common elements—lockers for personal gear and high-quality sound systems—the real challenge when designing locker rooms is creating a space that reflects the attitude of the team, writes SRG Partnership's Aaron Pleskac.
| Jan 2, 2015
Construction put in place enjoyed healthy gains in 2014
Construction consultant FMI foresees—with some caveats—continuing growth in the office, lodging, and manufacturing sectors. But funding uncertainties raise red flags in education and healthcare.
| Dec 30, 2014
A simplified arena concept for NBA’s Warriors creates interest
The Golden State Warriors, currently the team with the best record in the National Basketball Association, looks like it could finally get a new arena.
| Dec 30, 2014
The future of healthcare facilities: new products, changing delivery models, and strategic relationships
Healthcare continues to shift toward Madison Avenue and Silicon Valley as it revamps business practices to focus on consumerism and efficiency, writes CBRE Healthcare's Patrick Duke.
| Dec 29, 2014
High-strength aluminum footbridge designed to withstand deep-ocean movement, high wind speeds [BD+C's 2014 Great Solutions Report]
The metal’s flexibility makes the difference in an oil rig footbridge connecting platforms in the West Philippine Sea. The design solution was named a 2014 Great Solution by the editors of Building Design+Construction.
| Dec 29, 2014
HDR and Hill International to turn three floors of a jail into a modern, secure healthcare center [BD+C's 2014 Great Solutions Report]
By bringing healthcare services in house, Dallas County Jail will greatly minimize the security risk and added cost of transferring ill or injured prisoners to a nearby hospital. The project was named a 2014 Great Solution by the editors of Building Design+Construction.
| Dec 29, 2014
New mobile unit takes the worry out of equipment sterilization during healthcare construction [BD+C's 2014 Great Solutions Report]
Infection control, a constant worry for hospital administrators and clinical staffs, is heightened when the hospital is undergoing a major construction project. Mobile Sterilization Solutions, a mobile sterile-processing department, is designed to simplify the task. The technology was named a 2014 Great Solution by the editors of Building Design+Construction.
| Dec 29, 2014
Startup Solarbox London turns phone booths into quick-charge stations [BD+C's 2014 Great Solutions Report]
About 8,000 of London’s famous red telephone boxes sit unused in warehouses, orphans of the digital age. Two entrepreneurs plan to convert them into charging stations for mobile devices. Their invention was named a 2014 Great Solution by the editors of Building Design+Construction.
| Dec 29, 2014
Spherical reflectors help spread daylight throughout a college library in Portland, Ore. [BD+C's 2014 Great Solutions Report]
The 40,000-sf library is equipped with four “cones of light,” spherical reflectors made from extruded aluminum that distribute daylight from the library’s third floor to illuminate the second. The innovation was named a 2014 Great Solution by the editors of Building Design+Construction.
| Dec 29, 2014
Hard hat equipped with smartglass technology could enhance job site management [BD+C's 2014 Great Solutions Report]
Smart Helmet is equipped with an array of cameras that provides 360-degree vision through its glass visor, even in low light. It was named a 2014 Great Solution by the editors of Building Design+Construction.
