If you’re a developer or investor thinking to embark on a large construction project, 2018 may be your year. All indicators point to a boom for the construction industry in 2018, according to a recent report by CNBC. With an ample and eager labor force, plentiful materials, reasonable costs and overall optimism, this may be the best window of opportunity developers have seen in years.
What is causing experts to predict such a bounteous year for construction? Let’s take a look at a few of the indicators.
· A significant spike in hiring. The Bureau of Labor Statistics indicates that hiring within the construction sector increased by 35 percent between 2016 and 2017, amounting to at least 210,000 new jobs. Thirty thousand of those new hires occurred in December alone, this despite a disappointing jobs report overall for the month—and the demand for labor shows no signs of slowing. When construction companies hire at these rates, it suggests an increased demand for new construction.
· Construction spending is at record highs. The amount of money spent on construction has been increasing every month for the past several months. Recent reports from the Commerce Department place November spending estimates at nearly $1.26 trillion, an all-time high.
· Increased optimism in the industry. Between the lessening regulatory restrictions, business-friendly tax overhauls and a growing economy, optimism within the construction sector is quite high—and equally so among developers who hope this less restrictive climate will result in modest pricing, abundant resources and ultimately higher profits.
Commercial Construction May Dominate
Looking deeper at the numbers, while construction overall is expected to increase this year, the biggest gains are expected to fall to the commercial and office sectors, which have not grown significantly in the past few years. Residential developments and multi-family units, which have benefit from increased lending over the past several years, may see a leveling off on their growth rates as interests shift more toward the commercial side. One contributing factor may be the tax code overhaul, which is significantly favorable to businesses and may lead to increased demand for commercial space.
Benefiting from a Boom: Take Advantage Early
Developers and investors who want to make the most of a construction boom are wise to get in on the opportunity sooner, rather than later. The reasons are simple: 1) Labor, materials and financing are likely to be more abundant in the beginning; and 2) You have the benefit of modest costs before increased demand drives prices upward.
If you have a plan to develop a multi-level office, commercial or residential building in New York, Massachusetts or Connecticut, we’d love the opportunity to help you take advantage of a positive construction climate. For more information, give Wellbuilt a call at 1.917.475.1207