Commercial construction, like any industry, has its ebbs and flows, its changes and expectations. Construction entrepreneurs always keep an eye on the near future, figure out what's next for their businesses, and get ahead of their competitors in adopting new ideas or reacting to inevitable shifts in the market.
With that in mind, here are ten commercial construction trends to watch for in 2018.
- Labor shortages. The 2008 recession caused a serious downturn in prospects for the construction industry. Since they began to recover, however, construction companies have had difficulty finding sufficient skilled workers to meet the demand. While it should be a purely positive sign that three-quarters of construction companies plan to add employees in 2018, this is countered by the fact that even more—82%—expect it will remain as difficult, or even harder, to do so. Companies that solve this riddle, be it through better training program, higher wages, a mix of the two, or other ideas entirely, will be at an advantage.
- Prefab construction. Ever since the early 1900s, when Sears sold prefabricated homes and shipped them to customers in boxes for them to build on their own, the potential value in prefab construction has been apparent. Building on a controlled assembly line reduces construction time and costs. For the most part, however, no one has been able to put this idea to effective use; thus construction has continued in the traditional style, with workers and materials placed on site and buildings raised from the foundation up. Now, thanks to the efforts of companies like Katerra and buy-in from major corporations such as Marriott, modular and prefab construction are seeing a resurgence.
- Giant companies need more space. The biggest headline example of this is the creation of a second Amazon headquarters. However, other massive tech companies are expanding as well. Data center investment in 2017 far outstripped 2016; given the constantly increasing amount of data companies need to store on their servers, this trend does not appear ready to decline. Non-tech sector companies such as General Electric and Marriott are poised to open new headquarters as well.
- Automation. Although many labor organizations fear automation's effect on the overall workforce, new advances have created robots that can perform tasks dangerous to human workers. This covers many industries, but construction businesses may take note of the robot that can tie rebar and form bridge decks, both for the safety of its employees and to help allay the aforementioned issues in adding headcount to their companies.
- Resiliency. In 2017, the world was impacted by a remarkable number of environmental calamities. The devastation in Puerto Rico was the most newsworthy, but other hurricanes, heat and cold waves, flooding, and other disasters all caused significant destruction. Governments and other organizations are coming to understand that constantly putting new buildings in place of the old is too costly, and a call for more resilient construction has been amplified. The United States government declared November 2017 to be Critical Infrastructure Security and Resilience Month as a way to highlight the issue, and projects such as raising the streets in Miami Beach are potentially just the vanguard to a more widespread movement in construction.
- Sustainability. Somewhat related to resiliency, in the sense of improving the environmental impact of industry activities, is the trend towards even more sustainability in construction. Although most projects incorporate some sustainable elements, there is a move towards initiatives like mass timber construction for massive projects such as stadiums, office buildings, and college dormitories. In addition, more and more construction companies are recycling their construction waste from all types of projects—building, renovation, and demolition.
- Augmented and virtual reality, and the use of drones. Although the idea of a construction worker with a virtual reality headset and a pair of controllers rather than a hard hat and a toolbox may seem odd, this technology is seeing greater adoption across the industry. Through these systems, workers can control drones that serve numerous purposes, most of them designed for increased safety. Inspections of high-rise buildings can be carried out via drone cameras with a minimum of workers moving around in dangerous areas. In addition, building sites can be mapped and monitored from angles impossible for humans to reach. And, finally, AR/VR use may potentially draw in young workers who otherwise would have had little or no interest in the construction industry.
- New regulations. Not all regulations that will impact the industry are construction-specific; the new tax overhaul, for example, is designed to have a substantial impact on businesses, with tax relief for contractors that can now structure themselves as C-corporations and pass-through entities. Zooming in on specific locations in the U.S., New York City now has a law that requires forty hours of safety training for construction workers, and a new law in California requires contractors acting as direct contractors on private construction projects to be "financially responsible for any wages, fringe benefits and union contributions left unpaid by subcontractors and their sub-tiers".
- Increased public transportation investment. As infrastructure problems become more acute across the U.S., construction companies are seeing increased business from states and municipalities investing in major new transportation initiatives, or remodeling existing ones. For example, Nashville is proposing a $5.2 billion plan for new infrastructure and transit; this still needs to be voted on in May. Minneapolis has a Southwest light-rail plan that is ready to go if financing issues are resolved. And Boston's Green Line is being 'rebooted', expanding from Cambridge to Medford, MA, a 4.7-mile extension. This is on top of smaller projects, mostly in the area of repair, being planned nationwide.
- Reduction in growth. Fortunately, a reduction in growth does not mean a lack of growth. Commercial construction, especially, is expected to have a double-digit percentage increase in starts next year, according to industry forecasts from groups such as Associated General Contractors of America. However, industrial and retail construction are both expected to see a decline. The industrial construction aspect is especially disappointing if true, as 2017 was a year of substantial growth in that sector.
If you're part of a commercial construction company, study these trends and use that knowledge to put yourself a step ahead of the competition. Look ahead, plan ahead, get ahead.