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
Cultural Facilities | Aug 21, 2024
Baltimore’s National Aquarium opens 10,000-sf floating wetland that mimics the harbor’s original tidal marsh habitat
The National Aquarium in Baltimore has opened the National Aquarium Harbor Wetland, a 10,000-sf floating wetland that mimics the Inner Harbor’s original Chesapeake Bay tidal marsh habitat. Located between Piers 3 and 4 on Baltimore’s Inner Harbor, the $14 million project features more than 32,000 native shrubs and marsh grasses.
Mixed-Use | Aug 21, 2024
Adaptive reuse of a Sears store becomes luxury mixed-use housing
6 Corners Lofts at 4714 W Irving Park Road, Chicago, Ill., opened in March of 2024 as a 394,000-sf adaptive reuse project born out of a former Sears store.
Building Materials | Aug 19, 2024
Federal 'buy clean' construction materials label program unveiled
The U.S. Environmental Protection Agency announced a plan for implementing a new label program to boost American production of more climate-friendly construction materials and products. The label program will prioritize steel, glass, asphalt and concrete.
Museums | Aug 19, 2024
The Tampa Museum of Art will soon undergo a $110 million expansion
In Tampa, Fla., the Tampa Museum of Art will soon undergo a 77,904-sf Centennial Expansion project. The museum plans to reach its $110 million fundraising goal by late 2024 or early 2025 and then break ground. Designed by Weiss/Manfredi, and with construction manager The Beck Group, the expansion will redefine the museum’s surrounding site.
Reconstruction & Renovation | Aug 19, 2024
Movement to protect historic buildings raises sharp criticism
While the movement to preserve historic buildings has widespread support, it also has some sharp critics with well-funded opposition groups springing up in recent years. Some opponents are linked to the Stand Together Foundation, founded and bankrolled by the Koch family’s conservative philanthropic organization, according to a column in Governing magazine.
Government Buildings | Aug 19, 2024
GSA posts new RFI for enabling energy efficiency, decarbonization in commercial buildings
The U.S. General Services Administration (GSA), in collaboration with the U.S. Department of Energy, recently released a new Request For Information (RFI) focused on enabling energy efficiency and decarbonization in commercial buildings. GSA wants to test innovative technologies through GSA’s Center for Emerging Building Technologies.
MFPRO+ New Projects | Aug 16, 2024
At 60 stories, the Paramount multifamily development will stand as Nashville’s tallest high rise
When complete, the 60-story Paramount building, at 750 feet high, will be the tallest high rise tower in Nashville, Tenn., surpassing the city’s current record holder, the 617-foot AT&T Building. The $390 million Paramount project recently launched condo sales after securing more than $230 million in construction financing.
Urban Planning | Aug 15, 2024
New York City begins first large-scale porous pavement installation
New York City is installing its first large-scale porous pavement installation along seven miles of roadway in Brooklyn. The project will keep 35 million gallons of stormwater out of the combined sewer system each year, according to a news release.
Curtain Wall | Aug 15, 2024
7 steps to investigating curtain wall leaks
It is common for significant curtain wall leakage to involve multiple variables. Therefore, a comprehensive multi-faceted investigation is required to determine the origin of leakage, according to building enclosure consultants Richard Aeck and John A. Rudisill with Rimkus.
MFPRO+ News | Aug 14, 2024
Report outlines how Atlanta can collaborate with private sector to spur more housing construction
A report by an Urban Land Institute’s Advisory Services panel, commissioned by the city’s housing authority, Atlanta Housing (AH), offered ways the city could collaborate with developers to spur more housing construction.
