Though it’s a $204 billion industry, commercial construction has had its fair share of financial uncertainty.
Residential construction steadily regained its momentum following the U.S. housing bubble. The commercial side took a little longer to see an upswing.
Yet, the industry is experiencing a resurgence this year.
There are many factors that contribute to this growth. An increase in corporate profit and multi-family structures are two of the strongest reasons.
The balance is shifting away from solely residential construction to an evener scale. As such, commercial construction’s future is not only secure — it’s promising.
Today, we’re taking a look at a few reasons why you can expect big things from this industry in 2017 and beyond. Ready to get started? Let’s dive in!
Commercial Construction and Corporate Stability
As corporate profit expands, so does a company’s construction spend. With extra dollars to spare, an expansion or new building seems more do-able.
In the fourth quarter of 2016, the U.S.’s Gross Domestic Product (GDP) rose from 1.9% to 2.1%, taking corporate profits up with it. In fact, in 2016 alone, corporate profits rose at a rate of 9.3%, the quickest ascension since 2012.
Along with a steadier bottom line, rising employment rates boost the industry’s outlook.
In 2017, the U.S. economy continues to add more jobs, lowering the unemployment rate. This means more employees to house and more offices to fill. In fact, office construction alone has increased 4.2% year over year.
Multi-Family Structures: Adding to the Growth
Corporate building projects are a key player in the commercial construction industry. Yet, they’re not the only factor. Multi-family housing structures, such as apartment buildings or assisted living facilities, also contribute.
From 2014-2020, multi-family construction (buildings with five or more units) is expected to contribute 25% of all residential building projects.
One main reason for this growth in this area is a surge in young adults opting to live in apartments/rental facilities over home ownership. In fact, while 42% of people under the age of 35 owned a home in 2007, only around a third do now.
Developers are looking to cater to this crowd. They also need to convince banks to make the investment to support construction. As such, they’re focusing a majority of their efforts on luxury residences, which is also helping the industry recover.
Today’s Manufacturing and Lodging Boom
Two other important contributors to commercial construction are the industrial manufacturing and lodging industries.
Demand for industrial space has steadily increased. Quarterly net absorption should reach 64 million square feet in 2017 alone. From e-commerce start-ups to major warehouse operations, demand for space to create is huge. And it shows no sign of slowing down. Of course, that’s a good thing for this sector.
Also, lodging construction rates are up, jumping 25.4% in 2016 alone. One reason? Consumers are frequenting hotel rooms on a higher basis. Occupancy rates are expected to reach record-breaking heights in 2017.
Commercial Painting and More: Quality You Can Trust
If you’re looking for a team to support your next commercial painting project, we’d love to help.
We’re a team of expert painters dedicated to providing top-notch quality around every corner. From residential interiors to industrial buildings, we do it all. And we bring our craftsmanship and professional service to every job we do.
Contact us today for more information, and let’s connect!