In US residential construction, the multi-family homebuilding segment has returned to a level of starts on a par with before the Great Recession, said Alex Car- rick, Chief Economist for ConstructConnect (formerly Reed Construction Data), December 1. Single-family groundbreakings, while considerably better than they were in 2010, are still languishing below their previous ‘norm’.
Many analysts are fond of saying there is an accumulation of pent-up demand.
While this trend will fuel growth in single-family home-building in the next several years, it may not become as pervasive as in times gone by. There’s now a lot to like about downtown living, even with children in tow, as attempts by civic leaders to reduce pollution and crime have met with success. Also, the excitement that comes with near-at-hand cultural, entertainment and shopping venues is undeniable.
Over the next several years, single-family homebuilding will almost certainly forge ahead faster than the multi-family market, but the latter may show a liveliness that will catch many by surprise.
NONRESIDENTIAL BUILDING
Retail
Retail sales over the Internet have been surging. They’ve established a growth rate approaching +10 per cent per year since 2000.
Nevertheless, ‘actual’ retail construction has managed a growth pattern that has been unexpectedly upbeat. The savviest of shopkeepers have learned that to attract clientele, it helps if they offer visitors a memorable ‘experience.’ In-store owner-doggie spas at PetSmart and yoga classes at Lululemon locations are two examples.
US Construction Outlook 2017: ConstructConnect
Office Buildings
Private office building construction has been on a tear over the last couple of years. Vacancy rates have diminished to their best levels in a decade in most major urban centers. Many of the highest profile career designations that lease space have been registering strong jobs advances.
Compared with the ‘Big Dip’ in 2008-09, staffing with ar- chitectural and engineering firms, accounting and bookkeeping firms, computer and design services companies and with financial services corporations is vastly better. Only the ‘legal services’ profession stands out for its failure to recover. One possible explanation may lie with the Web. Many residential real estate transactions in America have shifted to the Internet, while also embracing a do-it- yourself methodology.
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There remains a great deal of lost ground to be made up in single-family construction. Many analysts are fond of calling this an accumulation of pent-up demand.”
– ConstructConnect
MANUFACTURING
Campaigning during the most recent election season made clear the fervent hope in heartland America that manufacturing jobs can be repatriated from outside the country. Proposals by the new Trump administration to lower corporate taxes and to encourage companies to bring their foreign profits home point to more funds becoming available for new capital projects in the US.
But some of that money will be diverted into share buybacks, dividend increases and merger and acquisition activity, none of which contributes to the construction of new square footage. There are other headwinds to the creation of new manufacturing jobs to consider as well. Much of the decline in assembly line employment has resulted from a massive shift to the usage of robotics and automation, forms of production that will only become more pronounced in the years ahead.
There would seem to be opportunities in petrochemical investment. Thanks to new hydraulic fracturing sites, the U.S. now has abundant and cheap supplies of oil and natural gas. Gas from the Marcellus shale rock deposit in Pennsylvania is even supplanting shipments from Alberta in the Ontario and Quebec industrial and home heating marketplaces.
For the first time in decades, the US is exporting energy thanks to new liquefied natural gas (LNG) terminals at Sabine Pass in Louisiana and Cove Point in Maryland. Kudos should also be extended to the expanded Panama Canal which provides easier access to potential energy product customers in Asia and along South America’s Pacific Coast.
US Non-Residential Construction Spending: Associated Builders and Contractors
Nonresidential construction spending in the US totalled US$699.7 billion on a seasonally adjusted, annualized basis in October, a 0.3 per cent decrease from September’s significantly upwardly revised total, but an increase of 2.6 per cent year-over-year. according to analysis of US Census Bureau data released today by Associated Builders and Contractors (ABC).
September’s nonresidential spending estimate was revised from $690.5 billion to $701.7 billion, a 1.6 percent in- crease. August’s estimate received a similar revision, increasing from $696.6 billion to $703.6 billion. Nonresidential spending is now 2.6 percent higher than at the same time one year ago.
October’s estimate is 3.4 per cent higher than a year ago. The October 2015 seasonally adjusted annual rate was US$1,134.4 billion. During the first 10 months of 2016, construction spending totaled US$972.2 billion, 4.5 per cent higher than the same time period last year. Construction spending through the first 10 months of 2015 was at US$930.7 billion.
PUBLIC CONSTRUCTION SPENDING
The seasonally adjusted annual rate of public construction spending rose 2.8 per cent in October to US$286.8 bil- lion. September’s estimate was revised up from US$270.3 billion to US$279.1 billion. August’s estimate was also revised up US$272.8 billion to US$278.1 billion. Despite some increases over the past couple of months, October’s estimate is 0.6 per cent below the October 2015 figure of US$288.7 billion.