2014 Construction Outlook and What It Means to You

2014 construction outlook with Panduit's Jeff MehrerHello everyone, my name is Jeff Mehrer.  I’m Panduit’s Director of Marketing Solutions for Global Construction with 20 years’ experience in the industry. Today I would like to talk about North America’s 2014 construction outlook for the non-residential construction market. In future blog posts, I will be providing guest commentary on different global construction topics geared towards specific vertical markets, such as shipbuilding and oil & gas.

There are several companies out there with fancy algorithms and software predicting where the commercial/industrial construction market is headed in 2014. For me to holistically choose one over the other is like predicting the winning lottery numbers. However, what I can provide to you are some of the more interesting points that I have found throughout my research on this topic:

  • Because design activity generally leads construction activity by 9 to 12 months, Kermit Baker, Chief Economist with American Institute of Architects, points to the pronounced upward trend in architecture billings over the past year as an indication of construction growth in the coming year. In fact, architecture billings are showing their strongest growth since the recession began.
  • The United States will attract more new industrial construction in 2014 than over the past few decades.  McGraw Hill Construction is looking for an 8% increase in the construction of manufacturing buildings to $14.9 billion.
  • The AIA is projecting a continuation of the Commercial/Industrial recovery in 2014 (+11.5% & +6.3% respectively), and Institutional recovery begins (+5.6%).
  • McGraw Hill Construction also projects that warehouse and hotel construction will again lead commercial building activity in 2014 as improving market fundamentals and more readily available construction and development lending should fund more commercial development activity next year.
  • With the expected recovery of the automotive industry and ongoing shale oil and gas exploration and mining, several experts predict that the 2014 construction outlook in the manufacturing sector is geared for growth. In fact, the exploration and mining of shale oil and gas generates a lot of construction growth opportunity. Specifically, these opportunities will be seen in the areas of LNG export terminals, fueling stations, petrochemical, power and steel plants
  • Due to the unknowns surrounding the Affordable Healthcare Act, healthcare construction will remain somewhat flat. The experts agree that the types of facilities being built will be a mix of standalone emergency care, outpatient surgery and urgent care centers
  • Other risks that could limit 2014 construction growth:
    1. Uncertainty surrounding the federal budget and debt ceiling;
    2. Expected sharp cuts to federal government spending in the near future
    3. Energy and oil costs

Despite the differing numbers from one source to another, the data above will lead you down the path of 2014 being a year of solid progression in the construction market. Yes, economic uncertainty still looms, and that does have some potential market makers lightly pulling back the reins. However, a lot of that uncertainty is centered around the results of actions coming out of our nation’s capital. The mid-term elections should keep both sides closer to the center aisle, hopefully limiting any potential drag from sharp legislation through November.

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