Entering 2017, forecasters in the construction industry were quite optimistic. Not only was 2016 ending up with strong construction spending numbers—6% across the entire nonresidential building sector, with more than 10% in the commercial categories—but industry experts were hopeful that a Trump administration would mean favorable fiscal policies that would provide even more momentum for this market in 2017.
Needless to say, construction spending in 2017 has been fairly disappointing so far. Commercial/industrial construction spending has increased just under 7% through the first five months of the year relative to the same period in 2016, as compared to over 10% growth for 2016 overall.
So, with the consensus being that our economy will only grow in the 2-2.5% range through the end of 2018, it's just as important as ever to stay well versed on industry trends.
So what's happening?
1. iOT and Energy Efficient Appliances and Products
According to a new report from Juniper Research, smart devices like the Amazon Echo, Google Home and Sonos One will be installed in a majority (55%) of U.S. households by the year 2022.
In other words, if you aren't optomizing your homes for iOT technology, you certainly should be.
And trying to save the planet from the damages of climate change is no longer just an emotional sales pitch – it's now easier and more cost effective than ever. Solar panels and energy storage devices (such as the Tesla Powerwall battery) have gone mainstream and will likely become even more entrenched in the average American home build. Using recycled materials, investing in insulation, choosing LED bulbs over regular ones, installing low-flow faucets and paying close attention to temperature regulation are also becoming some of the new norms – and many of these products can be integrated with your smart devices, too!
2. Labor Shortage
Construction isn’t always about great innovations and this trend is one of the biggest problems we’ll all be facing in the years to come. The reason is simple: there’s just not enough people in the industry. Just in the USA alone, only about 100,000 new people started working in construction last year, as opposed to almost 300,000 that were given jobs in 2015. There are limited options for attracting labor into the industry and a particular concern is that immigrant labor accounts for close to 30 percent of the construction labor force, with most of these being Hispanics, and the recent focus on immigration could limit the availability of this labor pool. This issue becomes more visible in extraordinary situations, such as when hurricanes and other natural disasters occur.
3. Rising Material Costs
After years of overcapacity and weak demand for many construction commodities, there has been a reversal of this trend recently. According to an AIA report, over the past year, oil-related products (diesel fuel, asphalt) have been rising at a 20 percent pace, metals (steel, copper, aluminum) at a 10 percent pace, and other basic building commodities (cement, gypsum board, lumber and plywood) at a high single-digit pace. This past June, an AIA survey asked architecture firms if higher material costs were affecting their practice. Most firms indicated that they have seen noticeable changes in material costs. Of these firms, a third indicated that these increases were a serious problem, and an additional 45 percent reported that they were somewhat serious. In response to this situation, architecture firms and their clients have resorted to a variety of measures, including scaling back the scope or size of projects, redesigning projects, or even putting projects on hold or dropping them entirely.
4. Software for Employee Health and Safety
Ensuring worker safety is critical for any company, but the stakes are particularly high for those in the construction industry. Companies need to provide workers with proper training, conduct regular safety inspections and identify and eliminate site hazards wherever possible, to name just a few obligations. With fewer workers and fewer people to take on these administrative roles there has been a growing trend of technology designed to take on these tasks for you. From mobile apps that help your employees understand safety better to advanced regulations prescribed by OSHA, keeping your workers safe and sound every single day is ultimately the only way to make sure the industry keeps on growing.
5. Modular Construction
Given the other trends in the segment (slow economic growth + shortage of labor + rising construction costs + consumer desire for smarter, energy-efficient devices) this is one of the most interesting things that has happened to the world of construction in the past decade – being able to build livable structures out of ready-made modules that are put together like Lego pieces is simply more amazing and more advanced than people realize. This method of building is fast, reliable, precise and affordable, which is why lots of big companies decide to build their headquarters this way. You can use modular building for your own home too, as long as you’re aware of the costs, so it's recommended that you investigate this trend immediately as it may become a competitive threat (or a worthwile venture?) for you in the future.
In order to stay updated and informed, you need to get out there, talk to your colleagues and listen to the advice given by professionals. Relying on others and listening to their feedback is crucial in this business, and one of the events you should definitely attend is the annual Construction Super Conference scheduled for the beginning of December this year in Las Vegas, Nevada. By adding this event to your calendar, you’ll be on the road to learning new technologies and finding out how to reduce your costs more efficiently.
Of course, these aren’t the only trends you need to keep an eye on in the years to come, but just some of the ones that are certainly going to reshape the way construction business is run today. Adapting to new tendencies and using new technologies is the key to success, and only by broadening your views will you be able to stay in the game.
Will Sandford is a Sydney based wood architect, blogger and contributor on interior design and ecology blogs. Besides that, he is also interested in home improvement combined with green technology. In his spare time, Will enjoys surfing and rock climbing. He is a regular contributor to SmoothDecorator website.