The construction industry remains at a crossroads, says Ken Simonson, chief economist at Associated General Contractors (AGC) of America. The economic relief will continue, Simonsen said during a recent webinar entitled U.S. Construction Outlook: Rotation or Retreat. However, the medium- and long-term outlook for the construction industry points to project slowdowns and increased difficulty finding workers.
This data surrounding the glass and glazing industry is cause for even greater optimism. The newly released 2023 Glass and Glazing Industry Outlook (CGIO) report from Key Media & Research (KMR) (parent company of USGlass magazine) indicates the value of nonresidential glass and glazing activity was nearly $22 billion in 2022 and is projected to eclipse that mark in 2023.
The report also states glass fabricators/manufacturers and glazing system suppliers predict higher sales in 2023 than in 2022.
Medium-Term Construction Outlook
Simonson reports that multifamily, warehouse, retail, office, university and lodging are at risk from a slowdown and rising rates. He adds several forms of recently-passed legislation should boost the infrastructure and manufacturing sectors, but the money will be slow to turn into construction awards and spending.
“My expectation is that the economic activity will continue, but there is still a risk of recession,” says Simonson. “It’s touch and go … On the positive side, data center projects are still going strong, as well as manufacturing and power construction projects.”
KMR’s CGIO reports contract glaziers are optimistic about growth within the institutional sector, including educational, public and healthcare buildings.
Long-Term Construction Outlook
The labor shortage trend will likely continue long-term, says Simonson. He expects the problem to continue far longer than material cost increases and supply chain issues.
“It has become hard for construction companies to compete at a time when other industries are offering flexible working conditions,” says Simonson.
Other long-term concerns center around slower demand growth for most construction as population growth slows. This could impact residential home construction and education, both K-12 and higher education. Simonson adds concerns linger as to whether offices will remain decentralized, and it remains unclear if urban/rural or state-to-state migration remains or reverse.
Construction Starts Forecast
Alex Carrick, the chief economist at ConstructConnect, a provider of software solutions for the preconstruction industry, reports a gradual increase in construction starting in 2024. His company’s data indicates unsteadiness in 2023, followed by steady growth beginning in 2024 and culminating in 2025.
Carrick says the growth will be led by an increase in residential project starts, which is expected to grow 29.2% by 2025. Despite the anticipated growth, he points out that residential, industrial and total nonresidential building starts are slated to fall in 2023. Overall, total construction starts are predicted to decrease by -4.8% in 2023 and gradually increase until 2025 before moderating.
“We expect a decline this year of about 5%,” says Carrick. “Much of that will be because of the pullback of residential as interest rates climb.”
