We’re here to ensure that you have the most up-to-date information about market trends and conditions. Within this report, you will find data that clarifies the ‘Why’, including the most current market conditions, the observed impact of these conditions, and proactive measures we can take to be fully prepared for what’s to come. This report focuses on the design and construction industries through the most recent data, so that together, we can enter the market better equipped and more confident.
Construction jobs grew in most U.S. metros, but Phoenix saw a decline, likely due to completed projects. The market is expected to rebound in 2025, while other cities continue to grow despite labor shortages.
Supply Chain
Global events and natural disasters continue to challenge the supply chain, yet signs of recovery and stabilization are emerging. Despite disruptions from wildfires and hurricanes, the supply chain remains resilient, and infrastructure development is expected to drive steady growth through 2028.
Material Costs
Material costs steadied in Q4 2024 due to increased confidence after the Federal Reserve lowered interest rates in September. This stability comes as demand for materials is expected to grow, especially for public infrastructure projects throughout 2025.
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This holiday season, we set out on a heartfelt mission: to fill 10 LGE Design Build trucks with toys for the families at the Phoenix Children’s Hospital. Phoenix Children’s is one of the nation’s leading pediatric healthcare systems, providing world-class care to children and families. With a commitment to excellence, innovation, and compassionate care, the hospital offers comprehensive medical services, cutting-edge research, and specialized programs tailored to meet the unique needs of young patients. The Toyland event is part of Phoenix Children’s Child Life Toy Program, which provides toys not just for the holidays but year-round for children undergoing treatment. Community support and donations play a crucial role in sustaining this program and bringing comfort to young patients throughout the year
Thanks to the incredible generosity of our community and extraordinary donors, our LGE headquarters in Phoenix, AZ, became a hub of holiday cheer as mountains of toys were collected. A heartfelt thank you to everyone who contributed—individuals, companies, and families. Because of your kindness, we not only met our goal but filled the trucks with the help of our Creation team and delivered them directly to the hospital, thanks to our dedicated LGE Superintendents. We know the families at Phoenix Children’s were thrilled to unwrap these special gifts, and we are so grateful to have shared them to spread the magic of the season.
As we delve into construction trends in Q2 2024, it’s evident that there are notable improvements in both cost management and project schedules. This positive trend signifies a favorable environment for our endeavors, fostering efficiency and enhancing overall project outcomes.
One key aspect of our analysis reveals a reassuring stability in crucial construction materials such as structural steel, lumber, and concrete. The absence of significant issues in these essential materials bodes well for our projects, allowing for smoother execution and minimized disruptions.
Furthermore, the report sheds light on the robust activity observed in terms of volume of contracts and the emergence of new sites. Despite the challenges posed by the evolving market dynamics, there is a palpable sense of momentum as businesses forge ahead with their development initiatives.
We are particularly encouraged by the leveled market conditions and the forward momentum observed across various sectors. With capital being deployed and debt placed on significant developments, there is a sense of optimism prevailing in the industry, underpinning our confidence in the future outlook.
Anticipated rate cuts, coupled with the easing of supply chain pressures, further bolster the prospects of construction activities in the upcoming quarters. These developments pave the way for a more conducive environment, fostering growth and innovation within the construction landscape.
I invite you to download our newest Construction Delivery Outlook report. This comprehensive analysis, focusing on design and construction trends, provides essential insights for confidently entering the Dallas and Phoenix markets.
Here’s to 30 years of architecture and construction, and to many more years of transforming visions into reality!
As LGE Design Build celebrates its 30th anniversary, it’s not just a time for reflection but also a moment to look forward to the future. With a foundation built on innovation, sustainability, and client satisfaction, LGE is excited for continued success in the years to come. Established in 1994, LGE Design Build has experienced significant growth by undertaking diverse projects, creating company culture, and expanding into Texas with a new team.
LGE’s ability to adapt to evolving industry trends and embrace emerging technologies has set it apart. Each project that we have done reflects not only the company’s quality but also its dedication to creating spaces that stand out from the rest. We illustrated a handful of our favorite projects from over the years to help us celebrate all year long.
We look forward to forging new partnerships, exploring uncharted territories, and pushing the boundaries of what is possible in architecture and construction. The lessons learned from our past endeavors will serve as stepping stones, propelling us forward into a future brimming with potential.
FAQs
What is design-build in the context of construction and architecture? Design-build is a construction and project delivery method where the design and construction phases are integrated into a single, streamlined process. It involves a single entity, such as LGE Design Build, being responsible for both the design and construction aspects of a project.
How has LGE Design Build evolved over the 30 years, and what makes their approach unique? LGE Design Build has evolved through significant growth, diverse projects, the establishment of a distinct company culture, and expansion into new territories like Dallas, Texas. With architecture and construction under one roof, LGE can uniquely adapt to industry trends, embrace emerging technologies, and maintain a commitment to quality and client satisfaction.
What is the significance of LGE expanding into Texas with a new team? The expansion into Texas signifies a strategic move to broaden LGE’s geographical reach and potentially tap into new markets. The Dallas and Phoenix commercial real estate markets share similarities in their robust population growth, economic diversity, and business-friendly environments, fostering demand across various sectors. Both cities also benefit from strategic logistics, job growth, and urban development initiatives, contributing to a positive climate for commercial real estate construction and design.
What role does company culture play at LGE Design Build, and how does it contribute to their success? Company culture is a significant factor in LGE’s success. LGE works hard to represent its core values of proactiveness, communication, quality, and dependability. We believe this creates employee satisfaction, client satisfaction, and translates into high-quality work.
Dallas and Phoenix stand at the forefront of local trends in construction and real estate. Dallas, ranking as the nation’s third busiest city, is currently experiencing a construction boom marked by rising costs and labor shortages. In Phoenix, now a rising tech hub, major projects from industry giants like Google and Intel reflect the city’s efforts to attract stability. The growth of the semiconductor industry in Phoenix reflects a pivotal role for technology without direct reference to national initiatives. However, labor shortages remain a shared challenge impacting construction and manufacturing locally.
Over-the-year percent change for total nonfarm employment in the United States and the Dallas metropolitan area, November 2020–November 2023.
Both cities defy national trends in industrial space occupancy, showcasing adaptability within their specific economic landscapes. The Dallas-Fort Worth region’s remarkable rise aligns with its resilience to overall economic slowdowns, rather than being part of a national economic strategy. Phoenix’s leadership in occupied space gain reflects local interest in strategic locations with expanding consumer bases.
As this document explores office real estate, construction trends, and supply chain challenges, it presents a localized view of how Dallas and Phoenix navigate economic shifts. From the cautious optimism in Phoenix’s office real estate to Texas’s defiance of remote work trends through continued construction, this narrative captures the unique positioning and challenges faced by these cities within their local economic contexts as of the closing quarter of 2023.
In the ever-evolving world of commercial real estate and construction, staying informed about the latest developments is essential. At LGE Design Build, we are committed to providing you with insights into the dynamic landscapes of these industries. In this blog post, and in our Q3 Construction Delivery Outlook, we’ll explore the recent trends and challenges in two vibrant markets: the Dallas-Fort Worth Metroplex and Phoenix. From building costs to market dynamics, we’ll delve into what’s shaping these regions.
Dallas-Fort Worth Metroplex: A Hub of Growth
Healthcare, Education, and Immersive Entertainment
The Dallas-Fort Worth Metroplex is experiencing remarkable growth, particularly in sectors like healthcare, education, and immersive entertainment venues. As these industries expand, so does the need for cutting-edge construction and innovative design solutions.
Tenant Improvement Projects on the Rise
One significant trend we’ve observed is the increasing demand for tenant improvement projects. Businesses are seeking customized office and industrial spaces to meet their unique needs. This trend highlights the adaptability of the market and the importance of flexible design and construction solutions.
Expanding Texas Triangle
The Texas Triangle, which connects urban centers like Austin, Dallas Fort Worth, Houston, and San Antonio, is growing at an impressive pace. This expansion brings both opportunities and challenges for state authorities as they strive to maintain infrastructure and accommodate the influx of businesses and residents.
Cost Trends
From Q3 2022 to Q3 2023, LGE has noticed an average decrease of 10% in building costs. However, it’s important to note that sitework and electrical costs have either remained stagnant or seen slight increases. These fluctuations in costs emphasize the need for careful budgeting and cost management in construction projects.
Phoenix: Weathering Challenges
Rising Interest Rates and Water Supply Concerns
In Phoenix, rising interest rates and brief unfounded concerns over water supply shortages have influenced the real estate market. While these factors have caused a measured slowdown, Phoenix remains in the top 10% of the market, with net rent increases of 137%. This demonstrates the resilience of the Phoenix real estate sector.
Thriving Construction Sector
The construction sector in Phoenix is thriving, driven by multiyear manufacturing plant projects and a growing economy. However, a persistent shortage of skilled workers is impacting construction costs. As the demand for construction continues to rise, addressing the labor shortage will be crucial for controlling costs and meeting project deadlines.
Challenges and Opportunities Ahead
Both the Dallas-Fort Worth Metroplex and Phoenix markets present unique challenges and opportunities. At LGE Design Build, we closely monitor several key factors that shape the commercial real estate landscape:
Economic Conditions: Fluctuations in the economy can impact the willingness of businesses to invest in new construction projects.
Supply Chain Disruptions: Ongoing disruptions in supply chains can affect the availability and pricing of construction materials.
Material Pricing: Keeping an eye on material pricing trends is essential for cost-effective project planning.
Inflation: Inflation can lead to increased construction costs, making it vital to factor in inflation rates when budgeting.
As these factors continue to evolve, we remain committed to providing you with the latest insights and solutions for navigating these dynamic markets.
Download the Q3 Construction Delivery Outlook Report
The commercial real estate and construction industries in the Dallas-Fort Worth Metroplex and Phoenix are characterized by growth, challenges, and opportunities. By staying informed and adapting to market trends, businesses can position themselves for success in these vibrant markets. At LGE Design Build, we are dedicated to helping you navigate these dynamic landscapes, download our Q3 Construction Delivery Outlook for the latest research available.
The construction industry continues to remain highly active across the nation, particularly in our core markets of Dallas and Phoenix. At LGE, we are dedicated to delivering cost-effective projects and innovative solutions, even amidst ever-changing market conditions. Our team remains focused on providing exceptional service and successful project outcomes, no matter the challenges we face.
A summary of the Construction Delivery Outlook key findings include:
Construction Labor
Construction labor shortages are not expected to disappear anytime soon. Contractors are experiencing significant demand for mega-projects related to chip manufacturing plants and clean energy facilities, while still struggling with a shortage of younger workers entering skilled trades.
Supply Chain
Over the past six months, there has been an improvement in freight and supply chain issues. However, suppliers are now faced with the challenge of balancing softening demand while simultaneously dealing with the effects of past price increases and maintaining competitiveness.
Material Costs
Unpredictability within the supply chain is impacting all aspects of the construction process, including raw materials and transportation. The ongoing war in Ukraine has also led to supply barriers and increased export prices for materials such as copper and aluminum.
Demand by Product Type
There are significant variations in the year-over-year percentage changes for type of structure in square feet millions for each category of construction in the U.S. between 2022 and 2023. The industrial construction market experienced an increase in activity in 2022 with a year-over-year growth of 84.8%. However, this is followed by a significant projected decline of 28.9% in 2023.
View the full Construction Delivery Outlook report by downloading it below.
