A Brief Forecast of the Construction Industry Q2 2022
The construction industry in the Southwest continues to follow a positive trajectory. Growth is occurring across almost every commercial construction sector, namely industrial, office, mixed-use, retail/hospitality, healthcare, and adaptive re-use/tenant improvement. While both the office and retail sector were hit hard by the pandemic, they have both since recovered.
Confidence has returned to the construction industry and the growth is forecasted to continue, but not without its fair share of obstacles:
CONSTRUCTION LABOR
When COVID hit and the shutdown took place, many of the older workers used it as an opportunity to enter early retirement. Without having enough younger workers to replace them, especially in the more skilled construction trades, many general contractors are placing more emphasis on training and mentorship to fill that gap.
SUPPLY CHAIN ISSUES
Even though demand for construction projects remains high across the United States, the challenge of sourcing building materials continues to linger. Every sector continues to be affected by these supply chain issues, and the newly-passed Infrastructure Investment and Jobs Act will compound these issues for nongovernment construction projects.
COST OF BUILDING MATERIALS
Inflation and other factors have continued to drive up the costs on all building materials. Over this past year, we have seen a 20 percent increase in the overall cost of these materials. Skyrocketing gas prices have also contributed to the cost of doing business. As the ongoing war in the Ukraine continues to unfold, there doesn’t seem to be any indication that this problem will be alleviated any time soon. Not only have general contractors been forced to find creative solutions to sourcing their construction materials, but they also need to find alternative ways to ship them.
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