The non-residential building market saw a 5.8% increase in production overall in 2014. It is expected that this recovery will continue into 2015 with a predicted 8% increase overall and a 6% increase for institutional buildings.
It is expected that 2015 will see a more balanced growth in all sectors, than has been seen in recent years. Research shows that specifically:
With an estimated growth of 15%, commercial building will see a slight increase from 2014, with office and retail construction taking the lead in the upturn. Private development, hotel, and warehouse construction is also expected to strengthen moderately in 2015.
Healthcare and educational facility construction will help advance institutional building increases by 9%, with the additional financing options having been made available through bond measures that were passed in recent months.
Gains in home pricing will boost consumer confidence, reversing the foreclosure crisis, and causing a growth spurt in single-family housing with an estimated 25% in housing starts. Still that only equates to between 1.1 to 1.2 million starts compared to long-term trends.
In 2015, the U.S. economy is expected to continue to stabilize, and the construction industry should see substantial improvement. In 2013 and 2014, the residential sector led in the upturn, however solid results have been reported in both the commercial and industrial sectors. Another growth factor indicating a positive turn for the commercial industry is property values. Hit hardest during the recession, commercial property values are well on the road to recovery, having gained back close to two-thirds of the losses seen in previous years.
Other market indicators include the decline in vacancy rates in office and retail facilities and the increase in occupancy rates in hotels. These factors are expected to continue on an upward trend and are indicative of an increase in demand for commercial property.
What has yet to recover in the industry is the unemployment rate. Though overall unemployment numbers are going down, the construction industry unemployment rate is among the highest in the U.S. That being said, general contractors are reporting difficulty in filling positions and finding skilled workers to fill their open craft positions. It’s estimated that the construction industry will hire between 20 and 21 million workers in 2015, driving unemployment rate down for the industry from 6.4% to 6.2%.
Taking into account that construction costs may see an increase of nearly 3 percent in 2015, current economic trends should still allow for the industry to continue to see moderate growth.