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
| Nov 6, 2012
Simpson Strong-Tie donates $25K to hurricane support
The company will also be matching employees’ personal contributions to the Red Cross and other nonprofit disaster relief organizations.
| Nov 6, 2012
Goettsch Partners designs new tower in Shunde, China
200-meter-tall building will be located between Guangzhou and Hong Kong.
| Nov 5, 2012
Brasfield & Gorrie awarded new steel processing facility for Kloeckner Metals
The construction will take place on a 16-acre greenfield site at ThyssenKrupp Industrial Park in Calvert.
| Nov 5, 2012
Trimble acquires Vico assets, extends design-build-operate capabilities
Software to add 5D management to Trimble’s Solutions for vertical construction contractors.
| Oct 30, 2012
Lord, Aeck & Sargent announces four student life facility wins
Projects recognize the architecture firm’s expertise on a nationwide basis.
| Oct 30, 2012
The Beck Group announces CEO succession plan
Current Eastern Division Director and company veteran, Fred Perpall, named CEO.
| Oct 30, 2012
Two-hour fire rated curtain wall passes CDC tests
CDC (Curtain Wall Design and Consulting) is an independent firm providing a wide range of building envelope design, engineering, and consulting services to design professionals nationwide.
| Oct 30, 2012
Wight & Company announces three hires
Expands team and adds staff to work on the UNO project.
| Oct 15, 2012
Silicones from Dow Corning solve high-altitude technical challenges at the world’s tallest tower
The spectacular Burj Khalifa skyscraper soars to 828m above ground level, holding the record for being the world’s tallest building and also for the highest installation of an aluminum and glass façade. To take on its numerous challenges and technical difficulties, it required proven silicone solutions and full support from Dow Corning.
| Oct 15, 2012
Three new members elected to AISC Board of Directors
New members will immediately begin serving on the AISC Board of Directors, assisting with the organization's planning and leadership in the steel construction industry.