A bruising presidential election and a tightening labor market are prompting reservations about future spending for nonresidential building, even as the construction industry’s performance has staved off most gloom-and-doom scenarios.
Total spending for nonresidential building was up nearly 11%, to $103.3 billion, in the first quarter. The Census Bureau estimated that the value of nonresidential building put in place rose 3.1% in April compared to April 2015, to an annualized $461.8 billion, spurred by robust building of hotels, offices, and entertainment/amusement centers.
TOP CONTRACTOR GIANTS
2015 GC Revenue ($)
1. Turner Construction Co. $10,566,643,175
2. Whiting-Turner Contracting Co. $5,530,003,229
3. Fluor Corp. $5,048,920,000
4. Skanska USA $4,887,571,264
5. Gilbane Building Co. $4,406,057,000
6. PCL Construction Enterprises $4,344,294,460
7. Balfour Beatty US $3,955,770,283
8. Structure Tone $3,865,600,000
9. AECOM $3,772,057,000
10. DPR Construction $3,085,975,000
TOP CM/PM GIANTS
2015 CM/PM Revenue ($)
1. Hill International $503,000,000
2. Jacobs $460,670,000
3. JLL $328,233,760
4. Hunter Roberts Construction Group $259,724,915
5. AECOM $256,933,000
6. Burns & McDonnell $255,390,861
7. WSP | Parsons Brinckerhoff $173,063,000
8. Turner Construction Co. $161,788,824
9. Sachse Construction $109,836,555
10. Cumming $96,538,000
CONSTRUCTION GIANTS SPONSORED BY:
“The construction sector is likely to be the economic tailwind” in the U.S., predicts Kermit Baker, PhD, Chief Economist with the American Institute of Architects.
Baker and chief economists Ken Simonson of the Associated General Contractors of America and Alex Carrick of CMD Construction Data expect nonresidential construction spending to increase 9–10% this year and 4–8% in 2017. More than one-third of AGC’s membership expects there will be more work to bid on this year than last year, particularly in the retail, warehouse, lodging, and office sectors.
The trio of economists raised a number of red flags about factors that could slow construction spending. “Market fundamentals remain positive, but are fading in most sectors,” said Baker.
Carrick and Simonson are less sanguine about spending for education-related projects, mainly because growth figures for 4- to 17-year-olds and 18- to 26-year-olds are either flat lining or receding.
Simonson noted that recent legislation passed by Congress extends tax credits and allows for more federal dollars to flow into construction. But the federal government is reducing its overall physical footprint, so it’s more likely to renovate existing buildings than build new.
Multifamily housing, which has been one of the construction industry’s high-powered turbines—it’s up 30% since 2009, according to Baker—is expected to taper off to a still-strong but normalized range of 410,000–440,000 units per year.
Simonson also pointed out that the U.S. population has been growing at less than 1% annually, and that several states have lost population. Immigration, which has pushed population growth over the past few decades, has lost traction. The factors could lead to less mobility and less demand for new construction.
HELLO!!! ARE THERE ANY CARPENTERS OUT THERE?
Another area of concern for contractors is finding the skilled labor they need to complete projects they bid for.
The country’s unemployment rate stood at 4.7% in May, and was down in 269 of 387 metros, according to Bureau of Labor Statistics estimates. Carrick noted that the labor participation rate (the labor force as a percentage of the working-age population) fell to 62.5% in Q1/2016, from 67% in 2001.
Citing a recent survey of 1,300 AGC-member companies, Simonson said that 79% are having difficulty finding hourly craft professionals, and 73% struggle to hire carpenters. More than half (56%) said they have raised their base pay for hourly workers; 29% provide incentives and bonuses.
None of the economists anticipates a recession rearing its head any time soon. “I think there’s too much negative talk about the economy,” said Carrick. What does worry him are the sluggish energy sector and economic slowdowns outside the U.S., specifically China.
As for the presidential race, AGC’s Simonson lamented that it might not make much difference who wins. “I expect continued gridlock,” he says. “Uncertainty will cause companies to hold back on major investments.”
More on the 2016 Construction Giants: BD+C's John Caulfield examines how Turner uses to design-build, P3, Lean practices, and engineering services.
RETURN TO THE GIANTS 300 LANDING PAGE
Related Stories
| Jan 21, 2011
Library planned for modern media enthusiasts
The England Run Library, a new 30,000-sf glass, brick, and stone building, will soon house more than 100,000 books and DVDs. The Lukmire Partnership, Arlington, Va., designed the Stafford County, Va., library, the firm’s fourth for the Central Rappahannock Library System, to combine modern library-browsing trends with traditional library services.
| Jan 21, 2011
Virginia community college completes LEED Silver science building
The new 60,000-sf science building at John Tyler Community College in Midlothian, Va., just earned LEED Silver, the first facility in the Commonwealth’s community college system to earn this recognition. The facility, designed by Burt Hill with Gilbane Building Co. as construction manager, houses an entire floor of laboratory classrooms, plus a new library, student lounge, and bookstore.
| Jan 21, 2011
Upscale apartments offer residents a twist on modern history
The Goodwynn at Town: Brookhaven, a 433,300-sf residential and retail building in DeKalb County, Ga., combines a historic look with modern amenities. Atlanta-based project architect Niles Bolton Associates used contemporary materials in historic patterns and colors on the exterior, while concealing a six-level parking structure on the interior.
| Jan 21, 2011
Research center built for interdisciplinary cooperation
The Jan and Dan Duncan Neurological Research Institute at Texas Children’s Hospital, in Houston, the first basic research institute for childhood neurological diseases, is a 13-story twisting tower in the center of the hospital campus.
| Jan 21, 2011
Music festival’s new home showcases scenic setting
Epstein Joslin Architects, Cambridge, Mass., designed the Shalin Liu Performance Center in Rockport, Mass., to showcase the Rockport Chamber Music Festival, as well at the site’s ocean views.
| Jan 21, 2011
GSA Recognizes the Best in Public Architecture
The U.S. General Services Administration recognized the best in public architecture and civilian federal workplaces at the 2010 GSA Design Awards in Washington, D.C. This year's 11 award winners showcase the federal government's commitment to cutting-edge architectural design and its focus on sustainability.
| Jan 20, 2011
Houston Dynamo soccer team plans new venue
Construction is scheduled to begin this month on a new 22,000-seat Major League Soccer stadium for the Houston Dynamo. The $60 million project is expected to be ready for the 2012 MLS season.
| Jan 20, 2011
Worship center design offers warm and welcoming atmosphere
The Worship Place Studio of local firm Ziegler Cooper Architects designed a new 46,000-sf church complex for the Pare de Sufrir parish in Houston.
| Jan 20, 2011
Construction begins on second St. Louis community center
O’Fallon Park Recreation Complex in St. Louis, designed by local architecture/engineering firm KAI Design & Build, will feature an indoor aquatic park with interactive water play features, a lazy river, water slides, laps lanes, and an outdoor spray and multiuse pool.
| Jan 20, 2011
Community college to prepare next-gen Homeland Security personnel
The College of DuPage, Glen Ellyn, Ill., began work on the Homeland Security Education Center, which will prepare future emergency personnel to tackle terrorist attacks and disasters. The $25 million, 61,100-sf building’s centerpiece will be an immersive interior street lab for urban response simulations.
