Modernization that leans heavier on technology to attract a younger, diverse, and skilled workforce is likely to determine the future success and growth of New York’s construction industry.
That is one of the key takeaways from a “State of the Construction Industry” survey of 20 New York metro-area AEC firms that the accounting consultancy Anchin, Block & Anchin conducted last November, and whose results it released earlier this month.
![Technology is a primary driver of success in construction. Chart: Anchin](/sites/default/files/inline-images/Anchin%20-%20technology.png)
The report found a New York market that is at once resilient and facing “unprecedented challenges.” Its “most pressing” issues, as stated by nearly two-thirds of the firms polled, are labor shortages and public funding for infrastructure projects. Retaining talent is critical to these companies, and has led AEC firms toward greater flexibility about allowing remote or hybrid work, and increasing worker salaries. Thirty percent of the firms polled are focusing on management training and career development.
LIFE SCIENCES AND INDUSTRIAL SEEN AS GROWTH SECTORS
![Infrastructure and life sciences are expected to be the most vibrant sectors. Chart: Anchin](/sites/default/files/inline-images/Anchin%20-%20verticals.png)
Since the coronavirus pandemic was declared in March 2020, more than half of the firms surveyed have diversified into the infrastructure sector, no doubt in anticipation of the $1.2 trillion federal infrastructure bill that President Biden signed into law last November. Eighty-five percent of the AEC firms polled expect infrastructure to be their market’s “busiest” sector over the next five to 10 years, followed by the life sciences/healthcare sector (into which nearly half of the firms polled diversified over the past 18 months}.
The survey’s authors also point to the industrial sector’s “growing momentum” as an in-demand asset driven by e-commerce.
However, AEC firms lamented the pressures being exerted on their companies’ cashflows from, most prominently, slower client payments, labor and materials cost inflation, insurance costs, and project delays.
![Labor shortages continue to plague projects. Chart: Anchin](/sites/default/files/inline-images/anchin%20-issues.png)
Half of the survey’s respondents said that their volume of work has increased during the pandemic, by an average of 36 percent. But 30 percent reported decreases in their companies’ work volumes, by an average of 22 percent. And 42 percent of those polled said their backlogs were down from 2019, by an average of 43 percent.
![Half of the firms polled report higher work volumes during the pandemic. Chart: Anchin](/sites/default/files/inline-images/Anchin%20-%20work%20volume.png)
RESILIENCE AND SUSTAINABILITY ARE CENTRAL
![Decarbonization of buildings is a pressing concern after regulations clamp down on emissions levels. Chart: Anchin](/sites/default/files/inline-images/Screen%20Shot%202022-01-06%20at%2011.55.48%20AM.png)
The usual suspects—tunnels, roads, bridges, rail stations—were cited by the survey’s respondents as being among the structures desperate for repair or replacement. A surprising 40 percent of the firms polled also identified “decarbonization” as a need, most probably because of New York’s Local Law 97, which passed in 2019, and creates carbon emissions limits for most commercial buildings over 25,000 sf, as well as alternative paths for the law’s two compliance periods: 2024-2029, and 2030-2034. Building owners must submit emission intensity reports, stamped by a registered design professional, every year starting in 2025 or face substantial fines.
“The overwhelming trend relates to resilience, particularly in the face of a growing urban population; and sustainability/climate change needs, which are being felt acutely,” the report states.
Related Stories
Contractors | Sep 19, 2017
Commercial Construction Index finds high optimism in U.S. commercial construction industry
Hurricane recovery efforts expected to heighten concerns about labor scarcities in the south, where two-thirds of contractors already face worker shortages.
Multifamily Housing | Sep 15, 2017
Hurricane Harvey damaged fewer apartments in greater Houston than estimated
As of Sept. 14, 166 properties reported damage to 8,956 units, about 1.4% of the total supply of apartments, according to ApartmentData.com.
Hotel Facilities | Sep 6, 2017
Marriott has the largest construction pipeline of any franchise company in the U.S.
Marriott has the most rooms currently under construction with 482 Projects/67,434 Rooms.
Market Data | Sep 5, 2017
Nonresidential construction declines again, public and private sector down in July
Weakness in spending was widespread.
Market Data | Aug 29, 2017
Hidden opportunities emerge from construction industry challenges
JLL’s latest construction report shows stability ahead with tech and innovation leading the way.
Market Data | Aug 28, 2017
U.S. hotel construction pipeline is up 7% year-over-year
For the economy, the rate of growth may be low but it’s running on all cylinders.
Market Data | Aug 23, 2017
Architecture Billings Index growth moderates
“The July figures show the continuation of healthy trends in the construction sector of our economy,” said AIA Chief Economist, Kermit Baker.
Architects | Aug 21, 2017
AIA: Architectural salaries exceed gains in the broader economy
AIA’s latest compensation report finds average compensation for staff positions up 2.8% from early 2015.
Market Data | Aug 20, 2017
Some suburban office markets are holding their own against corporate exodus to cities
An analysis of mortgage-backed loans suggests that demand remains relatively steady.
Market Data | Aug 17, 2017
Marcum Commercial Construction Index reports second quarter spending increase in commercial and office construction
Spending in all 12 of the remaining nonresidential construction subsectors retreated on both an annualized and monthly basis.