During a recent webcast, three prominent construction economists agreed that things look generally promising for the next few years, but that there are a few significant barriers we will have to fight our way through.
CMD economist Alex Carrick noted that labor and materials prices are stable, which is good, but that construction starts remain relatively flat, especially in residential construction and retail. He foresees an upward trend in offices, hotels, and hospitals/clinics, although the latter has not grown over the past few years due to the effects of the Affordable Care Act.
Kermit Baker from the American Institute of Architects, presented statistics on the makeup of the construction labor force pre- and post-recession. The construction labor force is getting older (35% are over age 35) and the percentage of foreign-born workers and women (around 2%) has not changed. He emphasized the need to attract younger workers, women, and foreign-born workers in order to satisfy the demand.
AGC economist Ken Simonson listed some of the things pushing the construction economy forward and also some of the headwinds. On the positive side is the shale oil boom, which continues despite the drop in the price of oil; the Panama Canal expansion which is generating construction of ports, bridges, highways, and warehouses; and the continuing boom in multifamily and mixed-use construction. On the negative side is the continuing slowness of government spending on transportation and other infrastructure; the trend towards consumers buying online instead of in stores; and the shrinking size of office space per employee, partly due to the trend of working offsite.
Overall, a positive report, but with some reservations. What are you seeing in your corner of the industry?