Commercial construction grew modestly but steadily at the end of 2016, according to the most recent data released for 2016 Q4.
And while everyone hopes that trend will continue in 2017, the consulting firm JLL – which compiled the Q4 figures in its Q4 U.S. Construction Outlook – said some unknowns exist, mostly based on political changes in the U.S.
“We expect political and policy decisions from the White House to greatly (affect) how business is done this year,” said JLL. “Immigration legislation, labor laws, international trade deals and tariffs—combined with a hesitant industry—make a significant (change) almost certain. But we aren’t seeing it just yet.”
JLL’s report also suggests the growth of commercial construction depends very much on the region in which it takes places.
“Despite the notable struggles in the West and Northeast, steady work down South and robust growth throughout the Midwest continue to offset any national slowdown,” said the firm. “Expect the labor crunch to remain a major challenge for companies looking to hire given a lack of available skilled workers.”
- Presidential policies affecting the construction industry will be passed, but won’t have concrete (affects) until late 2017.
- Construction labor will still be a pain point for the industry at large, and wages will rise as a result. This will affect project timelines and budgets.
- Large construction loan lenders will weigh risk carefully and adjust standards to counter lagging demand to encourage increased borrowing.
- Regional slowdowns will begin to weigh on the national construction industry as a whole. Companies will turn their focus to the South and Midwest regions for business growth.
- Business dynamics in the construction industry will transform as labor and materials costs continue to rise. Firms will struggle to maintain sustainable profit margins.
- Full effects of Washington’s shifting policies will be felt across the nation. Changing trade deals, new import tariffs, immigration reform and large-scale infrastructure projects will significantly impact the construction industry.