FMI has published a national construction market outlook that indicates overall construction spending in the US will increase in 2019 by roughly one percent from 2018 levels.
However, the construction industry management consultant and investment banker says the seemingly stagnant numbers need to be taken in context of the overall boom in recent years.
“That still marks an increase to $1.3 trillion, which is a good $150 billion more than the prior peak that we saw in 2006,” says FMI managing director Jay Bowman.
In a video, Bowman asserts that “high level shortages from a skilled labour perspective and other conditions are really sort of crimping the ability of many contractors to take on more work.”
Much of the overall slowness in growth relates to downward pressure in the residential construction market, including “a 5 percent decrease in single family home construction for 2019,” he said.
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“Now, over time we do see this increasing to about a 3 percent or rate of inflation growth over the next five years, but obviously, as a large part of the total construction spending, it is dragging down the total growth.”
Conditions are much better in the non-residential building sector and the non-building sector, he said, “each growing fairly well at 4 and 5 percent respectively.”
Bowman says the industry is affected by displacement and replacement trends. In replacement, for example, large million foot-plus data centres are replacing smaller facilities. Meanwhile, displacement is occurring from e-commerce, where distribution centers are thriving, at the expense of conventional retail shopping centers.
He said that about 50 per cent of all construction spending in the US will take place in just 20 metropolitan markets across the country, and map he provided indicates the major centers in North Carolina are expected to experience reasonable growth.
“Current top-performing segments forecast in 2019 include conservation and development (+9 percent), transportation (+8 percent), water supply (+8 percent), public safety (+7 percent), office (+6 percent), and highway and street (+6 percent),” FMI says.
The market will be stable for commercial, health care, educational, amusement and recreation, communication and power, and will decline for single and multi-family residential, improvements, lodging, and religious buildings, FMI reports.