Best Practices
Where to Find Work in 2018
According to a Jan. 10, 2018 report from Aggregators Manager, “The US transportation infrastructure market is anticipated to rebound slightly in 2018 after a 2.8% drop in 2017, according to the latest forecast from the American Road & Transportation Builders Association (ARTBA).” Their forecast for the transportation infrastructure market is one for modest growth in 2018, but varying significantly by state and region. Within this sector, however, “Airport terminal and related work, including structures like parking garages, hangars, air freight terminals and traffic towers, is expected to increase from $11.7 billion in 2017 to $13.4 billion, a 14% increase.”
As an indication of the type of construction going on in airports, in 2017 Security Signs (Portland, OR) produced a marquee for the Hollywood Theater – inside PDX, the Portland International Airport. Carol Keljo, owner of Security Signs, believes it’s the only such venue in the country. Given recent trends to at least appear to try to make passengers more comfortable during their time waiting in terminals, expect more construction of food, retail and services as part of healthy airport construction.
OFFICE CONSTRUCTION
After an extremely buoyant 2017 in which the industry enjoyed 8.9% growth in office construction, the AIA’s consolidated forecast for 2018’s growth is a more modest 4%. However, Dodge Data Analytics (which contributed to AIA’s consolidated forecast) reported on Nov. 2, 2017, “Office construction should see further growth in 2018, helped by broad development efforts in downtown markets.” And a separate forecaster, Oldcastle Building Solutions’ (not an AIA contributor) Carolina Cavalcante wrote on Oct. 20, 2017 that “Commercial is expected to grow 2% with office leading at 6%,” so perhaps there’s a chance the AIA’s prediction of 4% is conservative.
RETAIL
With 2017 being a difficult year for retail sales, the 10% growth rate enjoyed last year is expected to slow considerably to 4.6% in 2018 according to the AIA. Kermit Baker summarizes, “There have been numerous store closings in recent years, particularly among major department store chains. … E-commerce is typically blamed for the weakness in brick-and-mortar retail facilities. … However, closer analysis points to much of the weakness being concentrated in exurban and rural locations that have seen population losses recently.” Interestingly, e-commerce companies like Amazon are now opening brick and mortar stores. “Retail facilities will no doubt face a challenging future, but the seriousness of this challenge at present may be overstated,” Baker wrote.
HOSPITALITY
Despite a handful of national hotel renovations, AIA forecast contributor ConstructConnect’s Kendall Jones wrote in a Nov. 30, 2017 report, “Lodging construction, including hotels and motels, is expected to be down in 2018 after experiencing growth in 2017.” And Dodge Data Analytics concurs, stating, “Hotel construction will continue to pull back from its 2016 peak.” Visitors to the US from other countries have declined recently (per USA Today), due to threatened or actual travel bans as well as other political factors such as the proposed border wall to the south. Airbnb, HomeAway and similar “sharing” lodging options, which don’t generally involve significant construction or signage, threaten the future of construction and renovation in hospitality, too.
HEALTHCARE
One of the few segments in which 2018’s growth is expected to exceed that of 2017 is healthcare construction. Kermit Baker of AIA wrote, “Healthcare demand is heavily influenced by demographics… namely the over age 65 population, [which, for] this age group are extremely strong.” What isn’t strong, Baker wrote, is the political environment supporting healthcare policy. “Until current healthcare policy is settled, there will be continued hesitancy in investing in this sector.” So, despite the uncertainty, the aging US population is driving the growing construction demand. Another driver is the growth of healthcare conglomerates seeking to dominate their geographic markets through mergers and acquisitions. Fierce competition from these behemoths (think medical arts buildings, urgent care centers, hospitals and even imaging centers all owned by the same parent company) has forced smaller, independent healthcare providers to close, particularly in rural areas.
EDUCATION
School construction has been strong or weak in recent years, largely depending on the growth or contraction of property taxes. Oldcastle Building Solutions’ Carolina Cavalcante wrote, “Nonresidential should have strong [I]nstitutional growth with education and public buildings growing 6%,” which is slightly more rosy than the AIA’s consolidated forecast. AIA’s Kermit Baker wrote that the construction of education facilities has been hamstrung of late due to declining property taxes to fund new facilities. Now, however, property values have recovered in many markets across the country and so the driving force becomes demographics again, but unlike healthcare construction, this time at the younger end. “The peak year for births for the large millennial generation was 1990, and since the leading edge of this generation has largely completed its formal education, demand for facilities at all education levels nationally has been declining,” Baker wrote. “For example, there were 120,000 fewer births nationally in 2000 than there were in 1990; 180,000 fewer in 2010, and 200,000 fewer in 2015.” Baker concludes that education will continue to be a healthy construction market, but growth opportunities are hampered by demographic trends.
AMUSEMENT + RECREATION
With professional sports teams moving from one city to another, as well as expansion teams coming online, ConstructConnect’s Kendall Jones wrote that “areas where we are expected to expect to see growth include stadiums and arenas with new NFL stadiums planned in Los Angeles and Las Vegas as well as expansion of Major League Soccer in Miami and other cities in the coming years.” Beyond those more high-profile venues are amusement parks and recreation facilities undergoing new construction or renovation. However, The Washington Post reported that athletic participation for kids aged 6 to 12 is down almost 8% over the last decade, perhaps led by new concerns regarding concussions and head injuries in contact sports, particularly football.
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