One interesting trend that we continue to follow is the rising demand for multifamily construction that appears to be emerging in low density markets. Apartment construction in suburbs and exurbs is even outpacing that of many larger metropolitan areas as more people continue to migrate away from big cities like New York, Chicago, and San Francisco to smaller towns around the country. According to USPS data, over 15.9 million people have relocated driving up multi-family household construction. Here are some other notable trends impacting the construction industry.
Overall Construction Demand is Down
Although housing is up, overall construction is down. Nonbuilding projects like utility and gas plants experienced the biggest drops last year, along with highway and bridge construction. The demand for new hotels, restaurants, gyms, and office buildings has also plummeted due to lingering lockdowns and quarantines across the nation. However, contractors are quick to point out that even though overall construction remains sluggish, there is a pent-up demand for new projects, and the industry is expected to hire more workers to meet the surge to come.
Cold-Storage Construction Warms Up
The demand for cold storage facilities is also on the rise due to a shift in consumer shopping habits. A growing number of people are opting to order online for home delivery instead of traditional shopping methods. The sudden demand for cold storage also uncovered some potential issues with existing facilities in that most of them are seriously lacking modern logistics and energy efficiency. Owners and developers are building new micro fulfillment centers to bridge the gap between their products and customers. As e-commerce continues to boom, so does the demand for new warehouse and distribution facilities.
Increased Infrastructure Spending
Projects like surface transportation, renewable energy, public school construction and broadband could quickly rebound thanks to a multi-trillion-dollar infrastructure bill being proposed by the new administration. The Build Back Better Initiative could significantly benefit contractors and construction firms in 2021. Utility-scale solar is one of the top growth industries that requires specialty contractors. Construction companies that support the call to meet green building standards will be in the best position to succeed going forward.
As more people trade in their high-density lifestyles in favor of suburban living, the demand for multifamily housing is expected to rise steadily over the next decade. Since construction has been held back in many areas, it is creating a pent-up demand that could lead to labor challenges when jobs are released this year. Stay tuned for updates regarding The Build Back Better Initiative aimed at boosting infrastructure spending.