It’s hard to believe that it’s been almost 10 years since the housing market crash that led to one of the worst recessions in our country’s history first made national headlines. The crash left millions of Americans upside down on their mortgage, led to hundreds of thousands of foreclosures, and crushed the construction industry. Over the last few years, however, the construction industry in many parts of the country has rebounded as new commercial and residential development projects get underway.
So what’s the outlook for the industry in 2015? According to an annual report by Dodge Data & Analytics, the total construction industry is predicted to grow 9% to $612 billion, up from the 5% increase to $564 billion estimated for 2014. So why the increase? According to the VP of Dodge Data & Analytics, there are several positives in the economic environment that will boost total construction starts including available financing, “a greater focus on real estate development by the investment community,” and the passing of more construction bond measures. Additionally, interest rates are expected to remain low and “market fundamentals for commercial building and multifamily housing” will get stronger.
Here is a breakdown of a few of the construction market sectors in the “2015 Dodge Construction Outlook” as reported by Electrical Construction & Maintenance:
Commercial: Will increase by 15%. Office construction has assumed a leading role in the commercial building upturn. Hotel and warehouse construction should also strengthen.
Institutional: Will grow by 9% thanks to an increasing amount of K-12 school construction. Healthcare facilities are also expected to show an improvement.
Single family housing: Will rise 15% in dollars, corresponding to an 11% increase in units to 700,000. Access to home mortgage loans is expected to expand, boosting housing demand.
Multifamily housing: Will increase 9% in dollars and 7% in units to 405,000, supported by occupancies and rent growth.
Public works: Will improve 5%, a partial rebound following a 9% decline in 2014. Highway and bridge construction should stabilize. Environmental public works should see some gains.
Electric utilities: Will slide 9%, continuing a downward trend that’s followed the large volume of construction starts reported during 2011-2012.
Manufacturing plant: Will settle back 16% after huge increases in 2013 (up 42%) and 2014 (up 57%) that reflected the start of massive chemical and energy-related projects.
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