5 Commercial Construction Trends to Watch in 2018

After another successful trip around the sun, it’s time to dust off the old crystal ball and take a look at the top trends to keep an eye on for the commercial construction industry in 2018. In 2017, we saw construction spending hit an all-time high in November and the industry is expected to carry that momentum into 2018.

Here are the top 5 commercial construction trends worth keeping an eye on in 2018:

Continued Labor Shortages

Ever since the construction industry started recovering from the Great Recession, it has dealt with labor shortages throughout areas of the country. This is expected to continue in 2018 as firms struggle to find enough skilled craft workers to meet the growing demand in order to keep pace with the increase in construction spending and starts expected this year.

The construction industry added 210,000 jobs in 2017, with 30,000 of those, mostly specialty trade contractors, being added in December. This is up from the 155,000 added in 2016 but still down from the 336,000 added back in 2015.

A recent survey by the Associated General Contractors of America (AGC) shows that 75% of firms surveyed are planning to add headcount in 2018. That’s good news, except when you consider that 78% of firms are currently having a hard time filling skilled labor positions and 82% of firms expect it to remain difficult or become harder to do so.

With the recent reduction in the corporate tax rate, it will be interesting to see if construction firms invest those savings into creating training programs to lure more workers to the industry or by increasing wages to attract more workers.

Offsite Construction

Offsite construction, both modular and prefabrication, is a construction method that got a lot of hype a few years ago but interest appeared to be waning. That doesn’t seem to be the case anymore as a renewed interest in both prefab and modular construction is growing.

For most clients of offsite construction, the big draw is the condensed construction schedule. Building in a controlled environment in an assembly-line fashion means no weather delays and creates a safer environment for workers since it eliminates having workers at height, eliminating many of the fall hazards common on traditional construction sites.

Last year, hotel giant Marriott committed to having 13% of their hotels built this year using modular construction. That means that 50 of the hotel deals Marriott expects to sign this year will be built with prefabricated modular guestrooms or bathrooms.

Another great example of the renewed interest in offsite construction is Katerra, a start-up formed in 2015 and already valued at over $1 billion. They handle design, material sourcing and supply, prefabrication and onsite construction of a project.

Technology to Address Labor, Safety and Productivity Issues

While the industry as a whole continues to be slow to adopt and underinvest in technology, those firms that do are reaping the benefits. Construction technology is going to continue to make inroads to solving some of the industry’s major problems: safety, productivity and labor shortages.

We are seeing robots, drones and autonomous construction equipment hitting jobsites. They are performing tasks that previously required skilled workers and are helping reduce the number of workers being placed in dangerous conditions. Drones are conducting site surveys and inspecting bridges. Autonomous equipment is being used for earthmoving and site work operations. Robots are handling monotonous, repetitive tasks like laying bricks and tying rebar.

Building Information Modeling (BIM) and other construction software are being integrated with virtual and augmented reality to help visualize projects, perform clash detections prior to construction, increase productivity and improve communication and collaboration. VR simulators are also being used to train construction workers on heavy equipment.

Wearables for monitoring workers in order to keep them safe as well as track movement to improve productivity is another tech trend to keep an eye on in 2018.

Sustainability

We’ve almost reached a point where almost all construction projects these days incorporates some sustainable or green elements into them. Whether it’s a completely net-zero building or just a few green components, sustainability will continue to be a major trend in 2018.

One major trend to keep an eye on is mass timber construction. Real estate developer Hines, which completed the 220,000-SF mass timber T3 in Minneapolis in 2016, has plans for two more mass timber buildings, one in Chicago and one in Atlanta. Other mass timber projects being planned or under construction include a new residence dormitory at the University of Arkansas and a new basketball arena for the University of Idaho.

Recycling construction waste is another sustainable measure gaining traction. Waste from demolition and renovation projects are being diverted from landfills and recycled. For example, concrete can be crushed up and used as an aggregate base for roads.

With all the hurricanes, flooding and wildfires we saw in 2017, this year may be the year that we start talking about sustainability and resiliency together. Not only building to reduce our environmental impact, but also designing more resiliently to protect buildings and infrastructure from being completely destroyed by natural disasters.

Subdued Growth

Construction spending and starts are expected to remain strong in 2018, but again the amount of growth is forecast to be a bit more subdued.

ConstructConnect’s construction starts forecast for 2018 is a 4.8% increase to $773.1 billion. Commercial construction (offices, parking garages and transportation terminals) is expected to have a 12.4% increase in starts next year with conservative growth out through 2021.

Industrial, which includes manufacturing facilities and warehouses, is expected to see a 5.6% decrease in starts in 2018 after seeing a 22.8% increase in 2017. Retail construction starts are expected to decline another 2.8% in 2018 after experiencing a 16.5% drop in 2017.

ConstructConnect’s forecast for total construction spending is expected to increase 5.6% to $1,301.3 billion in 2018. Total nonresidential construction is expected to grow 3.9% to $737.2 billion and total residential is forecast to increase 7.8% to $564.1 billion.