According to JLL’s latest Construction Outlook, the US construction market remained stable and growing last quarter, with key indicators such as construction spending, construction backlog and under construction pipeline showing solid progress alongside an expected uptick in costs. Though the rate of growth in the industry is slowing, construction spending continues to hit cyclical highs.
While many trends affect the construction industry on a daily basis, these themes
had the largest impact last quarter and will continue to be prevalent in the months to come.
- RISK: What does the future hold? Financiers, developers, and contractors alike, are now starting to take a more cautious look at new projects and their risk. As a result, new construction starts are likely to slow in line with demand and projects will be focused on markets with only the strongest fundamentals.
- LABOR: The challenges continue A lack of construction labor continues to be a challenge in all US markets. With both construction and overall US unemployment rates near record lows, and development volumes at cycle highs, labor costs will continue to rise over the next year.
- TECH: Making waves in construction Construction and development are historically slower to innovate but new design, productivity, and sharing tools are revolutionizing how work is done.
Most expensive cities to build
New York City, San Francisco, and San Jose, continue to be the most expensive cities to build in the US, topping the list once again, but Boston isn’t too far behind, ranking as the 7th most expensive city to build, significantly above the national average.
What to expect
By the end of 2017, expect to see a softer construction industry across the US as demand and market saturations begin to level out across property types. A significant decline isn’t expected, but the rate of growth in the industry will slow. Available jobs and work in the Northeast have already started to slow with flat growth of under construction volumes this quarter, as well as a decline in business workload for firms in the industry.