Manufacturing and lodging continue to lead the charge in the construction sector, which is expected to grow by 6% in 2015, according to the latest forecasts by FMI, the investment consulting and banking firm. That’s a percentage point higher than the growth FMI projected three months ago.
FMI also expects construction activity to increase by 7% in 2016, and reach $1.09 trillion, the highest level since 2008. Nonresidential construction in place should hit $423.96 billion this year, representing a 9% gain, and keep growing by 7% to $452.25 billion in 2016. For the most part, the biggest sectors of nonresidential construction are expected to thrive through next year.
Here are some of the report’s highlights:
• Manufacturing has been the “rock star” of nonresidential building, says FMI. Construction activity in this sector should be up 18% to $68.2 billion this year. “Manufacturing capacity utilization rates [were] at 77.7% of capacity in July 2015, which is near the historical average.” However, FMI expects this sector to slow next year, when construction growth is projected to increase by just 5% to $71.9 billion. “One concern, like much of the construction industry, is the lack of trained personnel needed to keep up with growing backlogs.”
• Lodging construction continues to be strong. FMI forecasts 15% growth this year to $18.5 billion, and 12% in 2016 to $20.8 billion. To bolster its predictions, FMI quotes a May 2015 report from Lodging Econometrics that estimates 3,885 projects and 488,230 rooms currently under construction. “The greatest amount of growth will continue to be upscale properties and event locations,” FMI states;
• Office construction has slowed a bit from its gains in 2014. But FMI still expects office construction to be up by 14% to $52.6 billion this year, and by 7% to $56.3 billion in 2016. The National Association of Realtors predicts that office vacancies would drop below 15% by year’s end. And JLI noted recently that more than 40% of all office leases 20,000 sf or larger are exhibiting growth;
• Healthcare construction is on a path to return to “historical growth rates” over the next four years. That would mean a 5% increase to $40.4 billion this year, and a 10% gain to $41.9 billion next year. FMI points out, though, that “the changing nature of health care and insurance” continues to make investors nervous. Renovation and expansion will account for the lion’s share of construction projects going forward;
• The Educational sector “is growing again,” albeit modestly, says FMI. Construction in place should increase by 3% to $82.3 billion this year, and then bump up by 10% to $85.8 billion in 2016. FMI notes that K-12 construction is getting less funding from states, even as enrollment is expected to expand by 2.5 million over the next four years.
• Commercial construction—which is essentially the retail and food segments—should be up 8% to $67.7 billion in 2015, and grow by another 10% to $74.4 billion, next year. FMI quotes Commerce Department estimates that food services and drinking places were up in July by 9% over the same month in 2014, and non-store retail rose by 5.2%.
• Amusements and recreation-related construction was up 9% last year, and is expected to increase to 11% to $18.5 billion in 2015, and by 8% next year, when it should hit nearly $20 billion. FMI anticipates ongoing municipal demand for sports venues, which are seen as “job creators.”
• The slowdown of multifamily construction may have to wait another year. FMI expects construction of buildings with five or more residential units to increase by 11% in 2015, and by 12% next year to $63.1 billion.
Related Stories
Contractors | Apr 15, 2019
Suffolk launches Smart Lab in Los Angeles
The lab will identify, test, and scale new technologies to help advance the construction industry.
Contractors | Apr 11, 2019
The construction industry has a problem, and women are going to solve it
Women currently comprise 9% of the construction industry. Here’s how we will change this to solve one of the industry’s most pressing issues.
Building Tech | Apr 8, 2019
Factory-based construction with no siloes starts with a single source of truth
Working from a single source of truth means every factor of design, procurement, manufacturing, and assembly will be accounted for before the assembly line is turned on.
Contractors | Apr 8, 2019
Employers at risk when using construction equipment not sized for women
As more women enter male-dominated fields, gear supply has not kept up with demand.
Mixed-Use | Apr 7, 2019
Chicago-area joint venture antes up $1 billion for Opportunity Zone development investment
Decennial Group says it’s looking at 250 potential projects, primarily in America’s heartland and rural areas.
AEC Tech | Jan 9, 2019
Our robotic future: Assessing AI's impact on the AEC profession and the built environment
This is the first in a series by Lance Hosey, FAIA, on how automation is disrupting design and construction.
Great Solutions | Jan 2, 2019
Net zero construction trailer brings health and wellness to the jobsite
As AEC firms scramble to upgrade their offices to maximize occupant wellness and productivity, Pepper Construction asks, What about the jobsite office?
Building Owners | Dec 18, 2018
More-frequent catastrophes are exposing commercial real estate and properties to potentially higher insurance rates
A new report on the property and casualty market foresees modest rate hikes for construction projects.
Building Technology | Dec 18, 2018
Data and analytics are becoming essential for EC firms competing to rebuild America’s infrastructure
A new paper from Deloitte Consulting advises companies to revise their strategies with an eye toward leveraging advanced technologies.
3D Printing | Dec 7, 2018
Additive manufacturing heads to the jobsite
Prototype mobile 3D printing shop aims to identify additive manufacturing applications for construction jobsites.