Looks like the construction industry is coming back with a vengeance! If last month’s blog about a strong 2014 wasn’t enough, here’s more confirmation that we are heading into better times.
A leader in construction industry analysis, Dodge Data & Analytics, released its report last November, the Dodge Construction Outlook, showing that U.S. construction starts in 2015 will rise 9% to $612 billion!
Also, the report reveals that financing for construction projects is becoming more available, a sign that the lending standards at banks are easing up.
Here is a quick summary of the 2015 Dodge Construction Outlook:
Commercial building – 15% increase. Office construction will lead the way, aided by expanding private development as well as healthy construction activity related to technology and finance firms. Hotel and warehouse construction should also strengthen.
Institutional building – 9% increase. The educational building category is now seeing an increasing amount construction, aided by the financing made available by the passage of recent construction bond measures.
Single family housing – 15% increase. It’s expected that access to home mortgage loans will be expanded, lifting housing demand.
Multifamily housing – 9% increase. Occupancies and rent growth continue to be strong, although the rate of increase for construction is now decelerating as the multifamily market matures.
Public works construction – 5% increase. Highway and bridge construction should stabilize, and modest gains are anticipated for environmental public works. Federal spending restraint will be offset by a greater financing role played by the states, involving higher user fees and the increased use of public-private partnerships.
Electric utilities – 9% decrease. A continuing downward trend that’s followed the exceptional volume of construction starts that was reported during 2011-2012. With more projects now coming on line, capacity utilization rates will stay low, limiting the need for new construction.
Manufacturing plant construction – 16% decrease. But after the huge increases reported during both 2013 (up 42%) and 2014 (up 57%) that reflected the start of massive chemical and energy-related projects, this year’s volume will remain quite high by recent historical standards.
Overall, it looks like another great year for the construction industry and the national economy. Although the Federal Government is still tight with construction funds, the States are stepping in to get more done.
Interest rates should remain low and thus help encourage further expansion in overall contruction activities. Occupancies and rents for commercial building and multifamily housing continue to strengthen, as the economy has in general.