AECCafe Industry Predictions for 2024 – PlansforLess

By  PlansforLess Team

2024 Plans4Less Outlook

1. Fed doesn’t need a recession to cut rates

The Federal Reserve is willing to cut rates even if the U.S. economy doesn’t dip into a recession in 2024, Chair Jerome Powell said. “It could just be a sign that the economy is normalizing and doesn’t need the tight policy,” he said. With the “soft landing” seemingly having occurred, we see the markets continuing in a positive direction.  The 2024 interest rate schedule plotted by the Fed’s Powell should be a net positive for both commercial and the more interest rate sensitive residential real estate markets.

Outlook: We think the economy as a whole will continue to grow in 2024 and we feel the idea of a recession is in the rear view mirror. GC’s, Subs, Architects and Engineers will be heading into a fertile macroeconomic environment in 2024.

2. Housing Market :

Many homeowners and wannabe buyers stood still in 2023, waiting for rates to drop before they made a move. More listings will hit the market next year, bringing some options to prospective buyers. First-time buyers will especially be challenged by affordability and will continue to lose out to cash buyers.  Experts predict more listings will hit the market in 2024, but demand and competition will be fierce.

Outlook: Extreme supply  shortage: On the other side of the ledger is this dearth of inventory. New construction has been slow to fill the supply vacuum but we see that picking up in 2024 as building costs start to come back a bit as oil continues to fall and other industrial costs fall.  Additionally, the Fed’s interest rate cuts will start to have an effect on material costs in Q3 and Q4 next year.

3. Construction Jobs – This is Now a Long Term Labor Problem

According to an outlook from Associated Builders and Contractors, a trade group for the non-union construction industry, construction firms will need to attract an estimated 546,000 additional workers on top of the normal pace of hiring in 2024 to meet the demand for labor. This backlog of openings is not a short-term labor problem.

Outlook: Since the pandemic, online construction-industry job applications have basically been flat. We do not see this employment problem getting any better in 2024. And now is not the time for flatline demand as Joe Biden’s Infrastructure Bill is fully funded and spending & projects have started and with even more jobs are being created. It’s a perfect storm. This is a tough problem to solve. Like “herding cats”. The savviest recruiting GC’s and Subs will be the winners here. Remember, when the sun rises each day, the commercial construction industry has a net negative 546,000-650,000 additional workers needed – OUCH!!

4. Commercial Construction/Commercial Markets

High vacancy rates and slower rent growth remain the dominant trends of the current market. A shifting workforce, economic uncertainty, supply chain challenges and rising costs are some of the headwinds facing the commercial markets in 2024. We are seeing more use of technologies like drones and AI.

“We love our paper plans”: didn’t see that coming!! We are hearing this more and more from our clients, new clients and prospective clients. Paper plans provide a source for meeting and collaboration on a job site, act as a backup for digital, no need for wifi, and for a lot of folks provide a visceral experience. Large format paper blueprints are holding a steady to increasing line item in the commercial and residential construction industries.

Outlook:We see the nearly $2 Trillion Commercial/Residential Construction business growing over 2% in 2024.

5. Black Swan = China and Taiwan, China & Russia & Ukraine, China’s New Covid Strain hits US

Yup, every Black Swan event has China playing a part. Taiwan is fast approaching their next presidential election in January 2024. The feeling is that Xi JinPing will attempt to pressure the next President and demonstrate his military prowess to attempt to subjugate Taipei to his wishes. A lot of strategists and diplomats feel it is not a matter of if or when but basically how Xi will make his “invasion” of Taiwan”.

China has basically been at arms length from Putin and his war with Ukraine especially in relation to the deep end of the pool that Joe Biden is swimming in with Zelensky. Of big concern, the longer Putin is extended in this war the greater will be the pressure he puts on Xi to lend a friendly hand to an old comrade in arms.

China battled the XBB strain of covid starting in February of 2023 and were documenting 65 million new cases per week. Unfortunately, the next Pandemic or other worldwide man-made catastrophe is just a matter of time. But I think a well trained eye should be kept on the centers for the Chinese Center for Disease Control and Prevention.

Outlook: The geopolitical climate is as unsteady as ever. Oh and we have an election coming in the U.S. which some are claiming will be the last time we vote as a democracy! So we all travel at our own risk here in the construction biz.

This entry was posted on Monday, January 8th, 2024 at 5:30 pm. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.