Construction 2020: Keeping Pace With the Growth Trend of 2018-2019
In 2018 the United States raised new non-residential buildings across the nation to the tune of $452.67 billion. Public non-residential construction totaled 295.2 billion dollars, according to the 2019 mid-year assessment at Statista. That set the bar quite high for continued growth in 2019 but the sector still registered a respectable 4.4% growth over the previous year in the overall non-residential building category.
Despite numerous challenges faced by the industry including costly tariffs on construction materials, chronic skilled workforce issues, and a significant need to "catch up with the rest of the world" when it comes to adapting to new software and digital technology, short-term projections are still predicting further 2.4% overall growth for the non-residential sector in 2020.
Turning the Tide in Construction: Summer 2019
By December of 2018, construction material costs had risen 10-12% over the previous year, and the forecasters for 2019 were anticipating stagnant growth if any at all. We conservatively anticipated a "Steady as She Goes" trend for 2019.
The first quarter of 2019 actually showed a troubling 7% decline compared to the first 3 months of 2018 and industry-watchers were concerned that the inevitable recession may have arrived earlier than anticipated.
Then came the summer of 2019, and the non-residential and residential construction sectors alike didn't hesitate to take advantage of more favorable market conditions.
By Q1 and Q2 of 2019 material prices began to flatten out, and by May 2019 prices actually started to decline, boosting construction starts by a seasonally adjusted 10%. By June 2019 new construction starts had advanced another 9% with much of the lift fueled by a 16% jump in non-residential building construction.
According to a recent Dodge Data and Analytics report, major contributors to the robust gains seen in the overall construction sector included:
- the $1.1 billion expansion project to Chicago's O'Hare International Airport at Terminal 5
- office buildings
- public buildings such as detention facilities and courthouses
- healthcare facilities
- nonbuilding construction (highways, and infrastructure) up 6%
- residential building up 5%.
The Major Civil Construction Players of 2019
New transportation terminal starts across the continent combined for an astounding 348% jump, contributing to the 37% increase in the institutional building category. Aside from the $1.1 billion from the June start at Chicago's O'Hare Terminal 5, airport construction racked up another $543 million from terminal projects including:
- $370 million Terminal E modernization project at Boston's Logan International Airport
- $98 million terminal renovation project at San Francisco International Airport
- $75 million terminal renovation project at Dallas-Ft. Worth International Airport
The Public Buildings Category also advanced with ambitious criminal justice projects launched in Texas, Michigan, and Indiana. These enormous projects contributed to a 242% increase from the construction starts including:
- $320 million for the Wayne County Criminal Justice Center in Detroit
- $280 million for Community Justice Campus in Indianapolis
- $163 million for the courthouse in Austin TX
Office Buildings and Healthcare facilities advanced by 31% and 22% respectively. Large data centers included Microsoft's $418 million facilities in Cumming IA, another $258 million for a center in Manassas VA, and the new $280 million data center in Papillion NE.
According to the Dodge Data & Analytics report, Warehouse Construction starts contributed to the 12% increase in the Commercial Building category with the Warehouse Construction category rising by 19% in June after the groundbreaking for Amazon's $750 million Amazon Prime Air Hub at the Cincinnati/Northern Kentucky International Airport.
Dollar Tree's new distribution center at $130 million for the Houston TX area and a $100 million Shugart Farms distribution center in Palmetto GA helped boost the commercial buildings category at a time when many other commercial building sectors showed declines such as hotels, stores, and commercial garages.
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