In a post-election environment, with developers willing to experiment with new technologies and approaches for their businesses, change is the name of the game for the construction industry heading into 2017. It is essential for the industry to keep an eye on these up-and-coming construction trends in order to best prepare their team and services.
There are at least five majors construction trends to watch for in this upcoming year. Our findings predict these construction trends will be seen throughout the U.S., with a few pertaining directly to Orange County, California. These trends emphasize the growing importance of economic diversity in our communities, the impact of the labor shortage on construction costs, and the positive implications of technology for the construction industry as a whole.
1. Overall Growth in Construction Sector
The Associated Builders and Contractors, Inc. (ABC) reports an acceleration in construction job growth as we forecast into 2017. In fact, the U.S. construction industry added 19,000 net new jobs in November 2016 and has now added jobs for three consecutive months, according to the analysis of U.S. Bureau of Labor Statistics data released on December 2, 2016 by Associated Builders and Contractors (ABC). After peaking in early 2006, dropping steeply during the recession and recovering since, construction activity has since hit a period of “ups and downs,” said Ken Simonson, chief economist for the Associated General Contractors of America. Being aware of construction trends has been a lifeline for many industry professionals, as they understand the volatile nature of the industry itself. However, thus far, the statistics for 2017 have all been trending upward according to leading economists.
Industry employment is up by 2.4 percent on a year-over-year basis, considerably faster than the overall economy’s 1.6 percent job growth rate. Construction industry employment growth would likely be much sharper if more suitably skilled or trainable workers were available to fill available job openings. The skilled labor shortage appears to be impacting nonresidential activity more than residential. The nonresidential sector added 1,100 net new jobs in November, while the residential sector added 19,600 positions. Heavy and civil engineering lost 2,100 jobs for the month. Look to construction trend #3 to see how the industry is responding to this need of specialized hiring.
2. Post-Election Construction Economics
With the election finally over, the construction industry is able to start looking toward potential trends for the upcoming few years. Industry professionals are asking questions such as: what are the likely impacts on housing, private nonresidential investment, infrastructure and other public projects? Will labor availability ease or continue to plague many contractors? Are materials prices heading up, down or sideways? While there are no guarantees, leading economists are seemingly optimistic for 2017 construction trends.
“Next year is shaping up to be a good one for both residential and nonresidential construction segments,” said ABC Chief Economist Anirban Basu. “Of the two branches of the industry, nonresidential likely offers the larger upside. An infrastructure-led stimulus package would largely be oriented around nonresidential activities. Moreover, in certain markets, there is evidence that the apartment market is approaching saturation. Expected increases in interest rates next year would also tend to hit certain residential activities (i.e., single-family construction) more forcefully.”
3. More Competition for Skilled Workers
As baby boomers approach retirement, millennials are entering the workforce in droves and disrupting the standard procedure of talent development. This reality means there will soon be gaps skilled workers – not just for volume, but for a new class of employees who are vocationally trained and up-to-date on current energy efficiency and building codes. “The demand for construction talent was strong before the 2016 election, and the outcome has improved the near-term outlook for private and public construction activity,” said Basu, “The implication is that demand for construction workers is positioned to remain high, which will translate into gradual reduction in industry unemployment and significant wage pressures.”
In order to hire and retain new talent to fill these spots, the modern construction workplace must be ready to meet the young professionals with the knowledge and wages they’re seeking. “Some of these wage pressures are already evident,” said Basu. “Construction firms in the nation’s hottest markets, including New York, Seattle and Miami, report that in certain occupational categories, compensation is rising at a 10 percent per annum pace or more. This appears to be particularly true for construction superintendents and managers”.
Responding to this demand, the California Homebuilding Foundation (CHF) has been working to promote the Building Industry Technology Academy (BITA)—a comprehensive, four-year high school program instilling applicable and work-ready skills in students seeking careers in the building trades. Over the last year, the BITA program has expanded to 11 school sites throughout California with 4 to 6 new sites slated for the 2016/17 school year. Students enrolled in BITA courses become immersed in the various aspects of homebuilding trades and careers by completing hands-on construction assignments such as framing, roofing, reading blueprints, mechanical installations, plumbing, site preparation and more.
4. Local Governments Improve Housing Affordability
Demand among first-time homebuyers has increased dramatically while activity in the move-up market has been relatively flat, ConsructConnect Chief Economist Alex Carrick said. Construction trends previously reported that first-timers typically purchase previously owned properties, but through the recession, those owners weren’t trading up to larger homes in great enough numbers to meet the demand coming in, economists told Construction Dive last month. The category has seen an upward, if inconsistent trend this year, however, and posted a modest increase of 3.2% from August to September on the strength of a return in first-time buyers to the market. Still, first-time buyers are more than a few percentage points off their prerecession 40% share of home sales.
The buzzwords in Orange County are “high density” and “small lot”. Earlier this year the Building Industry Association Orange County hosted an event in which city planners, mayors and other leaders of their communities all came together to discuss housing and development trends for 2016. It was evident that the community was growing more rapidly than affordable housing options, driving these perspective first-time home buyers to Riverside or LA Counties. 2017 is shaping up to be no different.
5. Drone Construction Surveillance
This past year, construction technology has launched from something of the future to day to day functionality. Remember in May 2015 when the first 3D Printed Office Building was made in Dubai? Now with these advances in technology, their practical application is already apparent on the jobsite. Construction trends range from wearables such as “smart vests” that use sensors to measure a construction worker’s body temperature and heart rate, to cloud integration that fosters a paperless environment between the job site and the office. Technology is far more practical in 2017 that it has been in the past.
A big construction trend that went from dreams to reality: the drone. Drones are now being utilized in construction on a day to day basis, and this is projected to only increase into 2017. Drones are being used to track job progress, conduct site surveys, asset management, and overall provide communication between the office and field. Drones are steadily emerging as the most effective and safe way to survey a project or site pre, during or post construction. While there were initially concerns that the Federal Aviation Authority (FAA) would inbibit the growth of drone usage, recent legislation actually made it easier for companies to leverage the aerial power of drones.
What are construction trends that you foresee for 2017? How are you and your company going to adjust for the upcoming year of growth? Happy New Year from Murow Development Consultants .
