Construction sales is a numbers game, and it’s imperative to stay on top of current and expected trends to get the most for your company.
With economic and political changes occurring around the globe (and especially here in the United States), it’s important to keep an eye out for how these transformations will affect construction sales.
Lucky for you, we’ve got 7 of these trends to watch out for in the quickly approaching upcoming year.
If you’re ready to ring in the New Year with the knowledge needed to succeed in construction sales, keep reading!
1. Stay Positive—Just Like the Construction Outlook and Continued Growth
There’s good news—the economy will keep growing and construction will keep growing as well!
Since there may be an increasing list of threats to the U.S. economy for 2017, there are therefore similar concerns in the construction sector as well. However, stay positive because reports say the outlook remains reasonably favorable overall.
This can be seen in the AIA’s Architecture Billings Index (ABI), which is an accurate indicator of construction activity that leads spending in the nonresidential sector by 9 to 12 months.
The ABI has remained in the growth range since mid-2012 and continues to send off positive signals.
Despite recent volatility, the ABI still documents an increase in design activity and architecture firms.
In addition to the AIA, economists from the National Association of Home Builders and the Associated Builders and Contractors convened in August earlier this year to deliver a midyear status update on the health of the construction sector.
The update stated that although recovery among the market sub-categories has largely been uneven and will continue to be, there is growth to be expected across the sectors in 2017.
These sub-categories include commercial/industrial, multifamily, institutional, and single-family residential construction.
2. Grab a Seat and Strap In, Because Growth is Expected to Swing
In 2017, growth is expected to swing to the institutional sector.
Here, spending in 2016 is already up 3.2 percent in the first half of the year from the first half of 2015, and the growth is predicted to only continue.
Health care and education construction were specifically seen to show an increase.
Health care construction increased 2.2 percent to $19.6 billion while education construction rose 6.2 percent to a whopping $41 billion for the same period.
Health care construction is only expected to surpass its previous record and should double in the upcoming year.
3. Nonresidential Construction Spending is the Expected Slowpoke of 2017
In 2017, nonresidential construction could slow down.
According to the AIA’s latest semi-annual Consensus Construction Forecast, this will occur in the wake of a turbulent global economy and uncertainty around the U.S. presidential election.
The report, which is a survey of the country’s leading construction market forecasters, was released in late July of this year and projects spending growth.
This growth projects 5.6 percent for nonresidential building in 2017. For 2016, this growth was projected to be higher, at 5.8 percent for the same category.
The report finds that what will spur construction spending this year will be the demand for the creation of new hotels, offices, and amusement and recreation spaces.
AIA chief economist, Kermit Baker, explains that healthy job growth, strong consumer confidence, and low-interest rates are several positive factors that influence the economy.
These factors, he says, will allow demand from the last downturn to move forward.
“But at the same time, the slowing in the overall economy could extend to the construction industry a bit,” Baker adds.
The biggest drop-off in the industrial facility sector is expected to occur in the next year and a half, according to Baker.
4. Housing Forecast = Growth
Just like in 2016, housing construction will increase and home prices will rise in 2017.
In fact, the U.S. housing market is expected to stay strong through 2020.
Since more housing units are being occupied, the market will continue to strengthen.
The number of housing units actually occupied has increased by 2 million units.
Half of the new occupancy comes partly from population growth, while the other half comes from adult children moving out of their parents’ homes, singles living alone, and couples getting divorced.
Because of this, the amount of people setting up new households will show growth at least in 2017 and likely in the following years as well.
Overall, the U.S. housing predictions remain positive, and real estate holds strong as one of the best investments.
5. Expect Volatility in the Energy Sector
“We can certainly expect volatility, that’s always almost true,” says Chief Economist Ken Simonson of the Associated General Contractors of America. “But I don’t see a big upward movement.”
Simonson forecasts volatility as one of the key players in construction sales for 2017.
He continues, stating that he believes we’ll gradually see more development of oil and gas fields, as well as more fracking happening.
Simonson concludes that although we probably won’t be getting back to the levels of 2011 to 2013, things will be better than the low point of 2015 and 2016.
6. A Contractors’ Concern—Where are all the Qualified Workers?
Another predicted key driver for growth in 2017 is that there is much work available in the construction industry, in turn, aiding construction sales.
Simonson says that contractors’ number one concern in most parts of the country is finding enough qualified workers.
He says that because of this, contractors’ have been actively working with high schools, colleges, and local training programs to improve that pipeline of people coming into the industry.
Trying to get the word out to students or people looking to change careers, the goal is to spread the word that not only is construction hiring, but it’s keeping workers on and there’s room for advancement in the industry.
“It’s no longer a low-tech business,” Simonson says. “We use drones, GPS and laser-guided equipment. It’s really got a lot of opportunities.”
7. Exporters May Need to Expect the Worst from the Global Economy
Global economy could be bad news for exporters and therefore, construction sales.
Currently, with the huge uncertainty as to what the political environment is going to be, Simonson says this could be a disruptor for construction sales growth in 2017.
“Certainly if the country becomes hostile to immigrants, and we push people out who have already been working here or we keep more people from coming in, I think it’s going to be very hard to find enough qualified workers,” he explains.
Further detailing his major concerns, Simonson says that there are a lot of question as to whether the global economic expansion will resume.
He explains that if not there is bad news in store for exporters and businesses who rely on tourists alike, and even investment from abroad.
Staying hopeful, Simonson concludes, “overall, I think that the world economy is going to gradually improve and the US economy will keep growing.
What other trends have you noticed in construction sales over previous years that we have not mentioned here? Tell us what you think.
Leave a Reply