More Construction Growth on Tap for 2018November 3rd, 2017 | Category: Industry News
The commercial and institutional building segments are projected for further growth in 2018, while multifamily construction will continue to settle back, according to Dodge Data & Analytics’ new 2018 outlook report.
Dodge chief economist Robert Murray presented the outlook Thursday at the 79th annual Outlook Executive Conference in Chicago.
“We’ve now moved into a more mature state of expansion,” Murray said. “… But there is still ample evidence to suggest the construction industry has room to grow in 2018.”
The total construction industry saw increases from 11 to 13 percent per year from 2012 through 2015, but starts advanced 5 percent in 2016 and are estimated to rise 4 percent in 2017.
Looking ahead, Dodge projects 3-percent growth in 2018.
Prospects are positive for nonresidential segments that use large amounts of glass.
In terms of dollar value, commercial building registered a 3-percent gain in 2017 and will increase another 2 percent next year. The institutional side spiked 14 percent this year and is projected to grow 3 percent next year.
Office construction has been on a sharp incline over the past four years and will continue its climb next year, though at a more moderate 5-percent pace.
“The office market may be approaching its peak, but it has not reached its peak,” Murray said.
Murray said office vacancy rates have receded through the third quarter of 2017 “in a more gradual manner than prior expansions.” He added that much of the new office area is coming from highrises, and that office alterations have strengthened considerably.
Hotel and store construction have both slowed down, though store renovations have been on the rise and are outpacing new construction.
Growth in the institutional category has been helped by educational building, which continues to increase in 2017 and will again do so in 2017. K-12 school construction is the main driver in that segment.
Healthcare facility construction has also been ticking up over the last few years and will increase again in 2018.
Another key subset within institutional has been transportation terminals. Construction in that sector surged 120 percent in 2017, according to Murray.
On the residential side, the multifamily sector has reached a mature state. After large year-over-year gains for much of the last decade, this category decreased 7 percent in 2017 and is projected to decline another 11 percent next year. The recent declines have been driven in part by a pullback in multifamily construction in New York City, though that market still continues to dominate the sector in terms of dollar value.
For more on Dodge’s economic outlook and the 2018 conference, check out the upcoming December issue of USGlass magazine.