A recent report by professional services and investment management company Jones Lang LaSalle (JLL) predicts U.S. construction growth will outpace the regular economy, partially due to activity in cities such as Atlanta, Austin, Texas; Chicago, and Charlotte, N.C. However, rising labor costs are still a concern.
Post-recession construction activity was high in 2015, with office space under construction peaking at 92.8 million square feet. Construction costs are up in primary markets due to rising wages, while materials prices remain relatively low in the short term.
Construction will continue its growth trajectory, but it will slow, JLL says, along with economic growth nationwide. Three trends are leading to a softer 2016: The upcoming election’s effect on consumer behavior, the Federal Reserve increasing interest rates and a labor shortage of trained construction employees, especially in trade positions. However, demand from downstream markets will bolster the industry and construction profit margins should continue to rise, keeping construction growing at a faster rate than the overall economy.
The national construction backlog in Q3 of 2015 was around eight-and-a-half months, down for every region but the south.