COVID-19 took a sledgehammer to the construction industry, putting millions of people out of work, and bringing projects to a halt. But a new report from Research And Marketing suggests that the sector will bounce back once the pandemic passes, and set new records.
Data from the research outfit suggests that the US construction industry will grow at 5 percent CAGR over the next four years, until 2024, reaching a total value of $1.428 trillion. Despite the need for social distancing, data suggests that the demand for buildings will grow faster than the rest of the economy. Commercial construction will grow at an impressive 6.3 percent CAGR – significantly faster than the historical rate.
The surge in mixed-use construction
A surge in mixed-use buildings currently dominates the US construction industry. Investors are finding that they can make higher returns if they create spaces for occupation by both private residents and commercial enterprises – the combination works well.
In the US, more than 35 percent of construction projects are mixed-use, with the market particularly strong in coastal states.
Permits are also growing apace across the US. Authorities are becoming more lenient as the Trump administration continues to roll back regulations that prevented companies from building in particular areas. The residential sector will likely see more growth in the future, thanks to surging house prices relative to wages.
Other sectors stand to benefit too. The reprographics industry sees a vast surge in orders, owing to construction companies’ need for architectural designs and prints. Portable sanitation companies are also seeing a rise in demand because of the need for clean, on-site facilities.
The need for growth is rising
The Research And Marketing report highlights the need for growth in the construction industry as the population of the United States rises. Public investment in affordable housing is becoming an emerging theme and an important source of revenue for the sector.
Whether the market will continue to grow as predicted by the report remains to be seen. The research outfit began compiling the data for its study before the coronavirus became an issue earlier in the year. Commercial property is likely to grow less rapidly now. Companies are unwilling to bring people together to a central office. Residential properties will likely see continued investment. Meanwhile, people strive to improve their living conditions by spending more time at home.
For those interested, the report detailed construction industry trends at both the national and the local level. City-level analysis shows hot spots around the country where new projects are steaming ahead. It also allows companies to spot market opportunities using the latest available data.
We still don’t know how consumer behavior is going to respond long-term to the pandemic. We’ve experienced short-term disruptions and changes in practice, but how long that will last remains to be seen. People may return to their pre-crisis habits within a couple of years, implying little change to the industry trajectory. Alternatively, we could see a wholesale shift away from the office, dramatically changing the sector for the foreseeable future.