It’s late November, which means it is market forecast season for the AEC industry. Construction outlook reports from the American Institute of Architects, Associated Builders and Contractors, ConstructConnect, Dodge Data & Analytics, and FMI are beginning to roll in. And if the early prognostications are any indication, 2018 is shaping up to be a little less rosy for the nonresidential and multifamily construction markets.
Dodge suggests the U.S. construction industry has shifted into a “mature stage of expansion.” The 11-13% annual growth in construction starts we witnessed in 2012-15 will slow to 4% in 2017 and 3% in 2018. ConstructConnect is calling for 2-3% growth in nonresidential building starts between 2018 and 2021. FMI is a bit more bullish: 5% growth in nonresidential construction spending in 2018, then 4-5% in 2019-21.
Despite the tepid outlook by construction economists—and numerous reports throughout 2017 that pointed to a looming growth slowdown for several major building sectors—optimism among AEC professionals has not waned. In fact, it has strengthened, according to a November 2017 survey of 356 architects, engineers, and contractors by Building Design+Construction.
While it has been an erratic and drama-filled first year for the Trump Administration, the vast majority of AEC professionals are not overly concerned that the Trump-led White House will negatively impact their businesses.
Six in 10 survey respondents predict that 2018 will be an “excellent” or “very good” business year for their firm. Barely half (50.3%) felt the same way this time last year, according to BD+C’s 2016 survey. Same for revenue forecasts: 62.0% predict their firm’s revenue will increase next year, and only 6.1% are calling for a drop in revenue. This is a markedly rosier outlook than last year’s, when 55.3% of respondents forecasted revenue growth and 11.5% anticipated a drop.
And while it has been an erratic and drama-filled first year for the Trump Administration—travel ban, Russian election interference probe, border wall financing fiasco, Paris Agreement withdrawal—the vast majority of AEC professionals are not overly concerned that the Trump-led White House will negatively impact their businesses. Just 16.6% of respondents cited “business impacts from the Presidential election” as a top-three concern heading into 2018. This sentiment is a somewhat dramatic turn from the post-election attitude, when nearly a third (31.7%) indicated that Trump was a major concern heading into 2017.
So, what are the top AEC business concerns for 2018? Competition from other firms (54.3%), general economic conditions (43.5%), price increases in materials and services (33.8%), and insufficient capital funding for projects (25.8%) top the list. Trump was at the bottom, along with avoiding benefit reductions, avoiding layoffs, and keeping staff motivated.
When asked about their top business development strategies for the next 12-24 months, respondents most often cited: an increase in marketing/PR efforts (47.4%), selective hires to increase competitiveness (46.3%), investment in technology (44.3%), staff training/education (43.5%), and launching a new service or business opportunity (38.0%). At the bottom: open a new office, strategic acquisition, and acquiring a new service or business opportunity.
Multifamily housing and senior living developments head the list of the hottest sectors heading into 2018, according to survey respondents. Well more than half (57.4%) indicated that the prospects for multifamily work were either “excellent” or “good” for 2018; 55.9% said the same for senior living work. Other strong building sectors: office interior/fitouts (55.2%), healthcare (50.1%), office buildings (44.5%), industrial/warehouses (44.1%), data centers (42.3%), and hotels/hospitality (41.3%). At the bottom of the list: religious/places of worship, sports/recreation, transit facilities, and cultural/performing arts buildings.
Related Stories
Sports and Recreational Facilities | Dec 15, 2023
San Antonio Spurs’ new practice facility aims to help players win championships and maintain well-being
Designed by ZGF, the Victory Capital Performance Center uses biophilic design to promote better health and wellness on and off the court.
Affordable Housing | Dec 14, 2023
What's next for affordable housing in 2024?
As 2023 draws to a close, GBBN’s Mary Jo Minerich and Amanda Markovic, AIA sat down to talk about the future. What’s next in terms of trends, technology, and construction of affordable housing?
75 Top Building Products | Dec 13, 2023
75 top building products for 2023
From a bladeless rooftop wind energy system, to a troffer light fixture with built-in continuous visible light disinfection, innovation is plentiful in Building Design+Construction's annual 75 Top Products report.
Giants 400 | Dec 12, 2023
Top 35 Veterans Affairs Facility Architecture Firms for 2023
LEO A DALY, Page Southerland Page, Guidon, and HDR top BD+C's ranking of the nation's largest Veterans Affairs facility architecture and architecture/engineering (AE) firms for 2023, as reported in Building Design+Construction's 2023 Giants 400 Report.
Giants 400 | Dec 12, 2023
Top 40 Military Facility Architecture Firms for 2023
Michael Baker International, HDR, Whitman, Requardt & Associates, and Stantec top BD+C's ranking of the nation's largest military facility architecture and architecture/engineering (AE) firms for 2023, as reported in Building Design+Construction's 2023 Giants 400 Report.
Office Buildings | Dec 12, 2023
Transforming workplaces for employee mental health
Lauren Elliott, Director of Interior Design, Design Collaborative, shares practical tips and strategies for workplace renovation that prioritizes employee mental health.
Giants 400 | Dec 11, 2023
Top 150 Local Government Building Architecture Firms for 2023
Gensler, HOK, Stantec, and Skidmore, Owings & Merrill top BD+C's ranking of the nation's largest local government building architecture and architecture/engineering (AE) firms for 2023, as reported in Building Design+Construction's 2023 Giants 400 Report.
Giants 400 | Dec 11, 2023
Top 90 State Government Building Architecture Firms for 2023
Page Southerland Page, Skidmore, Owings & Merrill, Stantec, and NORR top BD+C's ranking of the nation's largest state government building architecture and architecture/engineering (AE) firms for 2023, as reported in Building Design+Construction's 2023 Giants 400 Report.
Codes and Standards | Dec 11, 2023
Washington state tries new approach to phase out fossil fuels in new construction
After pausing a heat pump mandate earlier this year after a federal court overturned Berkeley, Calif.’s ban on gas appliances in new buildings, Washington state enacted a new code provision that seems poised to achieve the same goal.
Green | Dec 11, 2023
U.S. has tools to meet commercial building sector decarbonization goals early
The U.S. has the tools to reduce commercial building-related emissions to reach target goals in 2029, earlier than what it committed to when it signed the Paris Agreement, according to a report by the U.S. Green Building Council.