In Construction World’s ‘Forecasting Construction Industry Trends’ gain insight into the current state of the construction industry, and discover what the future holds. Industry trends range from new avenues of construction spending, emerging construction careers, changing workforces and green construction methodologies which continue to transform the industry as a whole. This guide will assess all facets of the construction industry, including:
- The current state of the construction industry
- Construction spending trends and patterns
- Emerging construction careers and jobs
- Powerful and relevant industry resources
Current Construction Industry Trends
Consumer spending continues to the key driver in the rising number of commercial construction projects. Similarly, we are seeing parallel trends in office building and warehouse construction, with e-commerce on the upswing. Despite the decrease in traditional brick and mortar retail spaces, warehouses are on the rise due to the growing impact of e-commerce, creating greater needs for largescale distribution centers. Hospitals and medical institutions are also gaining momentum with a growing number of project starts on the horizon.
Residential and household construction also remains strong, with the multifamily boom in full swing. With the arrival of the millennial generation, apartments and condominiums are growing in popularity. Representing a growth of 200,000 prospective home owners, millennials are proving their preference for apartment and home rentals, affecting the construction of new single-family homes. With a greater number of people selecting rentals over ownership, expect to see multifamily home production reign supreme over single-family construction.
Construction Market Hotspots
Along with the entrance of the millennial cohort into the workforce and construction market, their preference for cities will only continue to grow. Expect to see multi-family homes in the form of apartments and condominiums continue to intensify. The nature of the economy and high student debt are catalysts for these construction trends, which seem to be only be gaining steam. In contrast, with the e-commerce boom as the main driver for warehouse construction, expect to see suburban areas and towns to experience greater commercial and industrial projects. With the rising cost of property in large cities, not only warehouses, but office spaces will also begin to occupy rural and suburban spaces.
Construction Spending Trends
Construction Spending Statistics:
- A study by Stephen Fuller of George Mason University found that an extra $1 Billion in non-residential construction spending adds 3.4 billion to the GDP
- Total construction spending is on the rise, increasing anywhere from 2% to 5% year to year
- Although public spending is experiencing a slight dip, highway and street construction is still strong
- Amusement and recreation spending is sporadic and irregular, with funding for local, state and federal parks continuing to decrease
Ecommerce affecting retail
The number of standalone stores and shopping centers are decreasing, with the rise of mixed-use buildings. A combination of retail, entertainment and residential structures are becoming a more popular avenue for commercial developers. This is due to growing customer preferences for everyday needs like grocery stores, shopping areas, entertainment and residential spaces to be in close proximity to one another. In addition, mixed-use structures also reflect eco-friendly and sustainable values that many residents and businesses feel is a priority.
Warehouse construction continues to benefit from e-commerce, with the increasing need for distribution centers. Hotel construction is on the down slope, as hotel revenues slowly dip, and consumers turn to other forms of rentals and short term stay options. Much like the housing market and its ebbs and flows, customer demand continue to dictate the direction of construction spending within the retail sector.
The Rise of Green Construction
As more of the population adopt a more environmentally-friendly mindset, the construction industry is not far behind. Construction companies and developers are beginning to realize the importance of sustainable construction practices, with more businesses showing greater corporate social responsibility. Expect more constructions businesses and developers adopt green principles moving forward.
In terms of its practice, green construction is a strategy used when building any type of structures using environmentally friendly processes. The goal of green construction is to limit its environmental impact by conserving energy and water, and by using recycled or renewable materials to achieve resource efficiency. McGraw Hill Construction estimates that green non-residential construction at roughly $140 billion in 2015 and continually rising each year. Expect to see office buildings, hospitals and federal buildings adhering to green principles.
Rising Cost of Materials
Another trend in the construction industry is the rising cost of materials. Costs of iron and steel have gone up between 5% and 6% in recent years. Other surprising statistics show that materials like plumbing fixtures, asphalt, and roofing and siding products are also on the rise. Perhaps these rising costs will push construction companies to seek eco-friendly, reusable or recycled materials as alternatives to make up for the rising cost of basic construction materials. Other materials like copper, aluminum and diesel fuel are also slowly on the rise. Although this may seem unpromising, contractors have bigger things to worry about, like rising labor costs and lack of available talent.
Construction Jobs and Careers
General Overview of the Construction Workforce
Here are some statistics regarding the current and future shifts in construction careers:
- By 2020, the share of the youth labor force (workers between 16 and 24) is expected to decrease from 13.6% in 2010 to 11.2%
- The primary working age group (between 35 and 54) is projected to decline from 66.9% in 2010 to 63.7 in 2020
- The share of workers ages 55+ is projected to jump from 19.5% in 2010 to 25.2% in 2020
These statistics found in a report by Zurich Insurance Group is indicative of how baby boomers are still dominating much of the construction workforce. 2020 marks an important year however, representing the last batch of baby-boomers who will be entering the 55+ range, and are likely close to retirement. Although the next few years look as though the construction industry’s workforce is in good shape, these numbers suggest a work shortage is on the horizon.
As this occurs, there are 200,000 millennials entering the workforce each year, with a small percentage selecting the construction industry. We are entering a time where there will be massive turnover with the outgoing baby boomers, who have been present in the industry for decades, and the up-and-coming market of workers. There needs to be greater efforts by construction companies, associations and colleges, to use the talent, skills and knowledge of the experienced and aging workforce to mentor and train younger generations who will soon be eligible for more higher-level roles in construction.
One positive trend we are seeing is greater collaboration between contractors or construction industry associations and colleges. By exposing more young people to the benefits of a career in construction, a career in the industry is becoming a greater consideration for more people. A key driver for growing interest in the industry include construction’s adoption of modern technologies, specifically mobile, drones, 3D printing, virtual reality and augmented reality.
Current state of construction careers
Before diving into the latest trends in industry jobs, let’s explore some construction industry statistics from AGC (Associated General Contractors of America):
- The construction industry has over 650,000 employers with 6 million employees, creating $1 trillion worth of structures every year
- There are 9,700 direct construction jobs located in the state of investment
- 4,600 indirect jobs from supplying materials and services within the state of investment
Despite these seemingly positive statistics, there is still some work to be done. The greatest area of concern for construction companies is filling hourly craft and salary positions. This trend suggests that those who have the appropriate experience and credentials are already hired, which lowers the number of unemployed construction professionals. Although this is a good thing, we are lacking incoming workers to fill these jobs.
Although the prospects for the future of construction workers looks good, there remains a shortage of skilled workers. This is nothing new for the industry, but follows the same pattern we have been experiencing for years, the unfortunate fact that many people are uninterested in getting an education in specific construction trades.
14% of the Construction Industry is temporary workers
Not only in construction but throughout other industries, temporary workers are being used to efficiently address current labor needs. Temporary workers are hired once demand increase and laid off when demand decreases. This growing reliance on temporary workers is representative of the rising operational costs construction companies are experiencing, as well as the need for workforce flexibility. The number of temporary workers in the construction industry peaked in 2013, accounting for roughly 14% of the construction industry workforce. Construction represents the second highest percentage of temporary workers, with only the agricultural industry having a greater proportion.
Possible construction careers
A survey done by AGC found that 79% of respondents are having trouble filling hourly craft positions followed by carpenters at 73% of respondents. There are also a large number of positions available for certain trades, specifically sheet metal installers, concrete workers and electricians. These construction industry statistics show that many trades are still under-employed, creating tremendous career opportunities.
To deal with these shortages, construction companies are undertaking a variety of strategies, including raising base pay, providing bonus incentives, increasing benefits and paying more overtime. In addition, 43% of respondents are using more subcontractors, and 33% is relying on staffing companies. Prefabricated construction offsite is also being used as a cost-cutting alternative.
Painting the Construction Industry Green
The green movement is nothing new in construction, but a few trends seem to be taking off more than others. Eco-friendly strategies gaining in popularity include recycled insulation material for both residential and commercial structures. Others include green roofs, solar power, geothermal heating and cooling, smart windows and reusable water systems.
As the construction industry adopts green principles in a more substantial manner, jobs in this newfound sector is on the rise. One way we see construction jobs transforming is through the introduction of training for green construction trades. Both on national and local levels, a variety of organizations including the NCCER (National Center for Construction Education and Research), the USGC have been heavily involved in developing and deploying training programs for construction companies.
All construction jobs, ranging from engineers, architects, construction managers and laborers are now abandoning traditional notions of construction and are adopting a more environmentally-friendly mindset. Project managers must now develop recycling plans for unused materials and are responsible for protecting environmentally sensitive areas of jobsites. Laborers and others on jobsites and in the field must also now adhere to these new rules put in place.
As more construction companies adopt green practices, new employment opportunities will continue to present itself. With greater emphasis on sustainable construction practices and green technologies, expect more careers and jobs in construction to intersect with the technology industry.
Overall Outlook for Construction Careers
With continued growth in the economy, the overall outlook remains promising. According to the OPWR (The Center for Construction research and Training), construction employment is expected to grow by 29% by 2022, compared to just 11% in other industries. With the recent lull in residential building, the OPWR predicts an influx of almost 50% employment in this sector.
Construction Industry Resources
Keeping track of ever-changing construction industry statistics and market data is difficult. In order for top companies to remain competitive however, it is essential to keep track of the current construction industry trends, patterns in construction spending and emerging technologies. One way to stay up-to-date is by referring to some of the industry’s most important publications and organizations that are dedicated to researching and studying the industry. Here are some resources worth visiting:
The Construction Industry Institute is a consortium of over 130 construction owners, engineers, contractors and supply firms from both the public and private sectors. This large group of organizations have joined together with the goal of enhancing the effectiveness and sustainability of the industry. The key for the CII is collaboration among various construction trades, professionals and academics to create a resource for all working in the construction industry. Resources that the Construction Industry Institute provide include:
- Up-do-date construction news
- Best practices
- Annual reports
- New CII research findings
- Tutorials and construction videos
- Free online courses
The Associated General Contractors of America (AGC) represents over 26,000 firms, 6,500 general contractors and over 9,000 specialty- contracting firms connecting service providers and suppliers nationwide. The AGC is one of the largest construction-related associations, and is comprised of 92 chapters based on industry and location. Members of the AGC are provided with:
- Professional development opportunities
- Up-to-date construction statistics
- Construction industry trends
- Discounts on products, programs and services
- Annual reports on the state of the construction industry
The Construction Management Association of America is exclusively dedicated to the interests of professional construction and program management. Formed in 1982, the membership is comprised of over 15,000 construction management and project management practitioners, construction owners in the private and public sectors, as well as academics. The CMAA has 29 regional chapters and student chapters at colleges and universities across the nation. Members of The Construction Management Association of America are provided with:
- The CMAA career center, a complimentary service that provides job seekers with access to the best career opportunities, internships and management positions
- Professional resources and guides
- Two national gatherings, the Capital Projects Symposium in the Spring and the National Conference & Trade Show in the fall
- Professional development programs
- Self-paced online programs
The MCAA serves the needs of about 2,500 firms involved in heating, air conditioning, refrigeration, plumbing, piping and mechanical service. Members are provided with educational materials and programs to help them attain the highest level of expertise. The MCAA provides members with:
- Educational courses
- Weekly newsletters regarding the industry
- Directory and Buyer’s Guide
- Online bookstore
The CFMA is a non-profit organization dedicated to service the educational needs of construction financial professionals. The CFMA’s membership represents all types of contractors, including general contractors, developers, construction managers, architects, engineers, and suppliers. Associate members include professionals in accounting, insurance, surety, software and the banking industry. The CFMA provides members with:
- Online courses
- Classroom courses
- Online Buyer’s Guide
- Cost-saving programs
- Career center
- State tax laws
- Annual conferences
The ACCA is a non-profit association that has a membership of over 60,000 professionals and 4,000 businesses in the indoor environment and energy services community. The ACCA works to promote professional contracting, energy efficiency and healthy, comfortable indoor environments. The ACCA benefits include:
- Conference and expos on leadership
- Certification programs
- Industry-specific resources
- Workforce development
- Online school directories
The Automatic Fire Alarm Association is an organization dedicated to improving the quality, reliability and value of fire and fire-safety systems. The AFFA achieves their mission by providing members with:
- Online training
- Networking opportunities with fire alarm industry professionals
- The AFAA Buyer’s Guide
- Technical assistance on interpretations of codes and standards