There is an abundance of information concerning the evolving trends in the construction industry. From our recent Benchmark Report, I’ve identified four key trends that are particularly relevant as we look towards 2023 and beyond.
The impending global recession is expected to impact different segments of the construction industry in varying degrees. Deloitte forecasts differentiated growth rates across these segments. For instance, while residential construction spending has seen a decrease of 7% so far in 2022, building construction spending is projected to increase by over 9% this year and another 6% in 2023 according to the American Institute of Architects (AIA). Inflation, too, is driving the costs of materials upward, with CBRE’s new Construction Cost Index predicting a 14.1% YoY increase in construction costs by the end of 2022.
Federal Infrastructure Funding
The American Society of Civil Engineers’ 2021 report card gave the United States a C-, indicating a need for $2.7 trillion in infrastructure spending. The Infrastructure Spending and Jobs Act, which includes long-term investments in transport, energy, utilities, and climate-related initiatives, is set to expand infrastructure spending in the U.S. in 2023. Additionally, the CHIPS and Science Act will provide $52.7 billion of new funding for semiconductor research, development, manufacturing facilities, and workforce development.
Historically low unemployment rates in the U.S. have made finding qualified workers a significant challenge for construction companies, potentially constraining the industry’s growth. Factors such as an aging labor force and immigration restrictions are expected to compound these labor supply issues in the coming years.
Continued Improvement in Technology
Technological advancements are set to continue benefiting the construction industry. New materials like self-healing concrete, flexible concrete, and transparent aluminum are reducing construction costs, while software solutions like Building Information Modeling are revolutionizing project management. Moreover, drones, 3D printing, artificial intelligence, and the Internet of Things are emerging as game-changers for the industry.
Despite these challenges, I am optimistic about the future. With strategic planning, innovation, and the right partnerships, I believe we can transform these hurdles into opportunities.