ConstructConnect: Regarding the current conditions, is construction spending for 2017 still on track to grow 6.3% over 2016? Why or Why not?
2017 has been a bit disappointing. It hasn’t been as strong as we would have hoped. Residential has not taken off to the degree one would have thought. The unpredictability with the infrastructure program and tax plan, which have not materialized yet, has been holding back spending plans.
There are some categories that have been really weak this year. Retail has really struggled this year. Just pick up a paper and you’ll see a retailer filing for bankruptcy.
Two categories that have been exceptionally strong are hotel/motel and stadium construction.
ConstructConnect: What do you anticipate as the top challenges facing the commercial construction industry in 2018? Opportunities?
Alex: As much as anything, it’s government policy. As things stand right now, it’s very hard to base investment decisions on really firm foundations because you don’t know what’s going to happen. For example, if you’re in the healthcare sector, are there going to be changes to the Affordable Care Act or is that behind us? Can we make assumptions on funding based on the Affordable Care Act? So, industries are dealing with uncertainties which makes investment decisions very challenging.
Half of preparing for the future and being successful is forecasting. The other half is being aware of these technologies that are coming that provide tremendous opportunities. It’s so important for businesses to keep up with technology. I’ve never known a time when everything has been in flux to the same degree. The shifts that are happening are incredibly fast. And the construction industry really needs to get up to speed with technology.
In terms of growth opportunity, heavy engineering is seeing a lot of activity.
I still think single-family housing—at some point—is going to take off. The aging population is another tremendous opportunity and the services, products and healthcare facilities they’ll be requiring.
ConstructConnect: How do you see the recent natural disasters (hurricanes, earthquakes, fires) impacting the construction industry?
Alex: Two of the top four states were hit. I’m not sure if many know that one in every three Americans lives in either Texas, California, New York or Florida. Those states are that dominant. So the hurricanes hitting two of those four will have huge impacts. Construction labor was in short supply heading into these most recent natural disasters so it’s going to become even a larger problem. Construction workers will be in very high demand. The cleanup activity is going to have an impact on demand for labor and building materials.
While the cleanup and repair will help stimulate the economy, the business losses are very hard to recover. The time people were out of work, the time businesses were closed. That’s hard to get back. In terms of the economy, the net effect will more likely be negative than positive.
ConstructConnect: What markets do you see having the highest growth potential/opportunities in commercial construction for 2018?
Alex: Infrastructure work and anything to do with engineering category is really happening. We expect it will continue to be. We need to stay competitive on a world scale with infrastructure. Economies today are all about logistics. Moving goods, services and people faster, cheaper, safer and greener, that’s what economies are all about. It’s about roads, highways, bridges, port facilities, moving water through pipelines, moving information digitally. That’s where it’s all at.
Thank you, Alex. It’s been an interesting discussion. I look forward to hearing more in November.
