AECCafe Industry Predictions for 2023 – Linarc

By Shanthi Rajan, CEO, Linarc

2023 is poised to be a dynamic year for the construction industry. Given numerous large-scale economic factors there are many ways the construction industry is expected to change in the coming year.

While no one has a crystal ball, some projections can be made with reasonable confidence. Here are ours.

Less spending on office buildings.

With much of the workforce working from home and office space vacancies skyrocketing, the demand for more office space is low. Existing resources provide plenty of space for current and future needs. Downtowns across the nation are sparsely populated and are but a shadow of what they were before the shutdown. Employees have grown accustomed to working from home and employers have relinquished their offices to save costs. The need to start new office space projects is relatively low in many areas and that’s expected to continue throughout 2023.

Per a recent SFGate article, “Today San Francisco has what is perhaps the most deserted major downtown in America.” It has a 24% office vacancy rate. Various sources including Statista cite the national average at 16.3% in Oct 2022, with pre-pandemic levels at 8.6%.

Continued spending on US infrastructure

The Infrastructure Bill from 2021 provides a safe haven for those working on repairing roads, bridges, railroads, power grid, internet, water, cybersecurity, public transport, airports, ports and more. These projects are largely protected from the ebb and flow of economic trends as their funding was secured by the US government and they’re expected to progress as planned.

Increased spending on warehouses

With more and more people shopping online, demand for warehouses will continue to increase. This includes the buildings, shelves, picking and pulling systems, on-site transit constructs such as docks to accommodate transport, and other support systems. Each company is tasked with Amazonifying itself to compete with consumers’ expectations for fast, and cheap shipping and returns.

Increased Adoption of Technology to Improve Efficiency

Fluctuating markets strain operations and working capital and construction companies need to respond. Labor shortages increase the need for companies to work more effectively and efficiently with the resources they have. In 2023 we predict construction companies will evaluate all their processes and look for ways to optimize resources, automate & eliminate time-consuming manual processes and save time.

Common areas they lose time and money on are resolving RFIs, reviewing submittals, duplicate data entry when software systems aren’t connected, processing field timecard & payroll, procuring materials, managing dispatch, adjusting the project schedule when delays occur, and budgeting and financial reporting. Construction project management platforms like Linarc are poised to address these problems for companies in 2023.

Increased Workforce Diversity

Labor shortages and shifting availability mean construction companies must expand their recruiting efforts to accommodate all demographics. This will include not just increasing the places they look for workers, but also increasing their workforce training programs. The need to stay competitive will drive companies to work harder to build a diverse and thriving workforce. This will make contractors look for qualified talent wherever available. Adopting diversity in recruitment will help reduce the pain point of labor shortages.

Changing Market Dynamics in 2023

With so many unknowns in the coming year, the largest prediction is that the market will fluctuate throughout the year. Some project an industry-wide downturn or stagnation, but if that occurs, it will by no means be universal. Some areas in construction will hold steady or even grow.

Per Building Design + Construction Manufacturing, Highways and Transportation will see the most growth, while Single Family homes and Power will see declines.

Increase in Green Construction

Per InvestmentMonitor, VCs backed 10 Green Construction companies in 2022, while only backing three from 2018 to 2021.

This trend will continue into 2023 and construction companies will be presented with more opportunities to employ sustainable building practices. These range from the design and construction of low-carbon buildings, to sustainable building materials companies, and manufacturers of prefabricated building components.

Field Technology Explosion

In the last decade, we have already seen an explosion of technology used on the field like  drone imagery, iOT, asset tracking, hi-tech safety helmets with location precision, and more.  Today, most jobsites have high-speed network connectivity. This will hasten the transformation of field engineers, foremen and supervisors to knowledge workers with access to documents, plan sheets, schedule & budget information. Real-time connectivity with the extended project team will hasten the transition and allow for critical decisions to be made on field rapidly.

Category: Industry Predictions

This entry was posted on Saturday, January 14th, 2023 at 3:55 am. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.