Gilbane Building Company announced the Summer 2014 edition of its in-house economics report, Building for the Future — Construction Economics: Market Conditions in Construction. The report predicts rapid growth coupled with the lack of skilled, experienced labor and the ability to meet schedule will be some of the most important industry issues to address over the next few years.
“The good, if not, great news is that the most favorable, forward-looking conditions support expectations for strong industry growth in 2015,” said Ed Zarenski, a Gilbane estimating executive with more than 40 years in the construction business. “Very active markets will drive escalation to climb more rapidly than we have seen in six years.
“The challenge of anticipated workforce shortages will have a detrimental effect on labor cost, productivity, the ability to readily increase construction volume and the ability to complete projects on time," Zarenski added.
While construction spending for 2014 will finish the year 5.5% higher than 2013 and the unemployment rate in construction is down to 7.5%, the industry has been losing workers for more than five years, falling to low points in the third quarters of both 2012 and 2013.
Going forward, as the workload expands rapidly, the significant shortage of available skilled workers, as well as management-level personnel, will impact productivity and force extended work schedules. The report notes total construction spending will increase 7% for 2015, which is a good sign for future hiring, but highlights the need for workers to have the right training and skills.
Other report highlights include:
-
The workforce has never grown as fast as what will be needed to accommodate the rate of new construction growth predicted. Rapid workforce expansion leads to productivity losses.
-
Construction jobs are up 600,000, or 11% from the low point. However, new jobs plus added hours worked for the entire labor force shows total labor is up 18%. That means 40% of the total gains in labor in the past three years is due to added hours, not new jobs. That is the equivalent of nearly 400,000 jobs.
-
The average annual rate of new nonresidential construction starts for the most recent four months is $197 billion. The average for the same four months one year ago was $146 billion. It is expected to be higher in the next four months. This large increase in starts will result in a rapid increase in nonresidential buildings spending growth in the second half 2014 through 2015.
-
Residential construction will increase 12% in 2015, but non-building infrastructure will decrease 5%. Nonresidential buildings spending will grow 11%, led by commercial and office construction, both expected to be up 15% in 2015.
The report is available here.
Related Stories
Airports | Jun 29, 2022
BIG and HOK’s winning design for Zurich airport’s new terminal
Two years ago, Zurich Airport, which opened in the 1950s, launched an international design competition to replace the aging Dock A—the airport’s largest dock.
Museums | Jun 28, 2022
The California Science Center breaks grounds on its Air and Space Center
The California Science Center—a hands-on science center in Los Angeles—recently broke ground on its Samuel Oschin Air and Space Center.
Contractors | Jun 27, 2022
Reverse mentorship: A model for the future of the construction workforce
Reverse mentorship can help seasoned professionals develop new skills, stay connected with younger generations, and gain future-forward insights for life and business.
Building Team | Jun 27, 2022
Chapel of St. Ignatius by Steven Holl Architects receives AIA’s twenty-five year award
The American Institute of Architects (AIA) is honoring the Chapel of St. Ignatius in Seattle, designed by Steven Holl Architects, with its Twenty-five Year Award.
Green | Jun 22, 2022
The business case for passive house multifamily
A trio of Passive House experts talk about the true costs and benefits of passive house design and construction for multifamily projects.
Building Team | Jun 22, 2022
Design for new San Clemente Marine Safety Headquarters would create new public plaza
A proposed design by HMC Architects for a new San Clemente Marine Safety Headquarters makes creative use of the seaside topography of the Pacific Coast.
Augmented Reality | Jun 22, 2022
Not just for POKÉMON GO anymore: how augmented reality is transforming architecture
By solving a long-standing communication problem, Augmented Reality (AR) is poised to make architecture quicker, nimbler, and more cost effective.
Healthcare Facilities | Jun 22, 2022
Arizona State University’s Health Futures Center: A new home for medical tech innovation
In Phoenix, the Arizona State University (ASU) has constructed its Health Futures Center—expanding the school’s impact as a research institution emphasizing medical technology acceleration and innovation, entrepreneurship, and healthcare education.
Market Data | Jun 22, 2022
Architecture Billings Index slows but remains strong
Architecture firms reported increasing demand for design services in May, according to a new report today from The American Institute of Architects (AIA).
Green | Jun 22, 2022
World’s largest commercial Living Building opens in Portland, Ore.
The world’s largest commercial Living Building recently opened in Portland, Ore.