In 2017, commercial construction spending was at a high point toward the winter months and the industry is expected to carry that momentum into 2018. Overall, 2017 was a profitable one for the industry and 2018 looks to exceed that success.
Here are the top 5 commercial construction trends worth analyzing in 2018:
A few years ago offsite construction, both modular and prefabrication, was a company’s go-to method, and then took an economic hit but is back on the rise again. There is a renewed interest in both prefab and modular construction amongst commercial construction and this trend is becoming wide-spread.
For most clients of offsite construction, one of the main beneficial factors is the condensed construction schedule. Offsite construction allows for building in a controlled environment in an assembly-line fashion which in turn means no weather delays and creates a safer environment for workers. Employees who are placed at a significant height have risk of falling, as is common on traditional construction sites, but offsite building eliminates the height risk.
One example of the renewed interest in offsite construction is Katerra, a start-up formed in 2015 and already valued at over $1 billion. They handle design, material sourcing and supply, prefabrication and onsite construction of a project. This is becoming more and more popular with large companies like hospitals, universities, and hotels.
Continued Labor Shortages
It seems the construction industry has dealt with labor shortages ever since it began, but in 2018 it may hit an all-time low. High schools have either lost the funding for the trade classes or they are not generating enough interest to keep them in the curriculum. In 2018, as firms struggle to find enough skilled craft workers to meet the growing demand in order to keep pace with the increase in construction spending, this could become problematic.
According to the AGC, the construction industry added 210,000 jobs in 2017, with 30,000 of those, mostly specialty trade contractors, being added in December. This is up from the 155,000 added in 2016 but still down from the 336,000 added back in 2015.
Despite that reduction of skilled workers, the survey from the AGC also claims that 75% of firms surveyed are planning to add headcount in 2018. That in itself seems to be good news, however, 78% of firms are currently having a hard time filling skilled labor positions and 82% of firms expect it to remain difficult or become harder to do so.
With the recent reduction in the corporate tax rate, it will be interesting to see if construction firms invest those savings into creating training programs to lure more workers to the industry or by increasing wages to attract more workers. All in all, there is hope…especially as we engage in technology.
Technology to the Rescue
While the industry as a whole continues to be slow to adopt and underinvest in technology, those firms that do are reaping the benefits. According to Construct Connect, construction technology is going to continue to make inroads to solving some of the industry’s major problems: safety, productivity and labor shortages.
Companies are using a variety of robots, drones and autonomous construction equipment on their job sites. This technology performs tasks that previously required skilled workers and is helping reduce the number of workers being placed in dangerous conditions. Drones are conducting site surveys and inspections. Autonomous equipment is being used for earthmoving and site work operations. Robots are handling monotonous, repetitive tasks like laying bricks and tying rebar.
Another technological use in commercial construction is business and design construction software that is being integrated with virtual and augmented reality to help visualize projects, perform clash detections prior to construction, increase productivity and improve communication and collaboration. There are VR simulators that companies utilize to train the skilled workers on such things as troubleshooting and heavy equipment.
Another tech trend is a portable device that workers wear so they can be monitored on a job site for their safety as well as track movement to improve productivity.
Almost all construction sites have adapted some sense of net-zero building and/or green components, resulting in the major trend of sustainability in 2018.
Recycling construction waste is another sustainable measure gaining traction. Waste from demolition and renovation projects are being diverted from landfills and recycled. This not only increases client appreciation but also has a positive effect on the community. There were quite a few natural disasters in 2017, adding resiliency to the sustainability trend. It is important to rebuild for the impact of the environment, but also designing more resilient protected buildings and infrastructure from being completely destroyed.
Construction spending and starts are expected to remain strong in 2018, but again the amount of growth is forecast to be a bit more subdued.
According to Construct Connect, construction starts forecast for 2018 is a 4.8% increase to $773.1 billion. Commercial construction (offices, parking garages and transportation terminals) is expected to have a 12.4% increase in starts next year with conservative growth out through 2021. Unfortunately, retail construction starts are expected to decline another 2.8% in 2018 after experiencing a 16.5% drop in 2017.
Overall, the impact of the shortage of workers will be transformed to a positive with the implementation of technology. The growth of the commercial construction world will increase as the need for strength of buildings becomes a necessity and offsite building makes a comeback which ensures the safety of the workers.
Bring it on 2018. CF Jones is ready for you.