According to the Construction industry Consensus Forecast in 2017, the best performing commercial markets of 2016 and 2017 will be hotels, office, and retail. For the institutional market, the big performers will be amusement/recreation, education, and healthcare.
“We’re already starting to see an escalation in materials creep back in. We knew it would be coming, and we knew it would be a big factor in 2017.” Stuart Meurer
New Jersey’s real estate market has been fundamentally strong till 2016 and is balanced to retain its vitality in the coming year. New Jersey’s industrial sector is in the midst of the greatest burst of construction since 2014.
The state’s retail market is positively impacted by the significant influx of national retailers to transit-oriented locations and even college campuses.
The state’s suburban vacancy rate has stubbornly remained around 30 %. There has been persistent demand for office space in amenity – rich areas, and lack of speculative construction has pushed vacancy rates down to the teens. It is expected that information technology companies will generate significant activity in 2017.
The banking and pharmaceutical services sectors are expected to have a demand for office in Northern and Central New Jersey. In 2016, the high-tech sector accounted for one-quarter of leasing activity which is up from 20.0 percent of transactions three years ago.
At the end of 2016, 6.9 million square feet of industrial area was under construction and is ready to deliver in 2017. To meet the growing demand the developers continue to break ground on new sites.
As the supply is historically constrained, this year in 2017 is considered as the best year for new construction as more developers are expected to break ground. In 2014, the New Jersey’s reached cyclical high water mark with 8.0 million square feet of new construction.
Retail market easily complements other uses and asset classes. There is a dense population in Northern New Jersey that has established a stable occupancy in retail shopping centers and free-standing properties. Retailers want to find ways to bring their goods and services to market. In the 3rd quarter of 2016, the state’s retail sector recorded a vacancy rate of 5.1%.
Retail can also help to enhance large industrial properties and is typically at grade beneath residential units. The experts from various sectors of the construction sectors described the new technologies, project delivery methods and workforce management trends they expect to shape the industry this year.
Some other Trends Related to Construction Industry
Collaborative project delivery methods will become more popular:
The three of the most often-cited methods that are changing the industry and are probable to gain ground in 2017 are:
Integrated project delivery
The experts are in need of more collaborative approaches to become more common for projects.
The labor shortage will continue to plague the industry:
One major concern that the industry has to overcome is the shortage of skilled labor. The firms across the U.S struggle to staff their job site. The industry hopes that this would fade away eventually. The huge chunk of construction workforce was forced to leave the industry during the recessions when their work disappeared, thus this labor shortage trend is persistent. In the past years, the construction industry eliminated more than 40% of its workforce and sadly, a significant portion of those workers haven’t returned.
Offsite/modular construction will gain a stronger foothold in the market:
The experts predicted that the building methods will grow in 2017 as time, labor and quality concerns are making changes to traditional construction methods. Offsite construction is something that will gain a stronger place in the market. It will suppress the schedule and will help to maintain quality control if are fabricating a module in a factory.
IT holds the potential to revolutionize the job site:
Some of the aspects of the construction tech landscape are:
Equipment and employee tracking
Job site information
The Internet of Things takes care of all these aspects. IT is helping the individual to improve site operations as contractors and subs continue their quest to cut costs and improve efficiencies.
Construction costs will rise due to materials and labor:
The industry experts have some other concerns regarding the 2017 trends, about the escalating costs of doing business. The rising material and labor cost will make the firms to struggle to maintain their margins in the coming year. Due to relatively flat growth in the construction industry since several years, contractors have been expecting an approaching bump in material costs.