Strong building sector conditions are set to roll on in the United States as the industry in that country continues to benefit from growing momentum in residential and commercial construction, new forecasts report.
In its Construction Outlook report, Dodge Data & Analytics says that following a five per cent increase this year, the overall value of construction spending which takes place throughout the United States will rise by nine per cent in calendar 2015 as financing for projects becomes easier to obtain, investors shift to real estate as an asset class and more construction bond measures are passed.
Leading the way will be the office, institutional, single-family housing, multi-family housing and public works sectors, in which spending is tipped to rise by 15, nine, 15, nine and five percent, respectively. These rises are due to strong activity in the technology and finance area, improved access to home mortgage loans, more building of new schools, respectable levels of residential tenant occupancies and rent growth and a stabilisation of levels of highway and bridge construction as well as an increasing financing role on the part of states.
Construction of energy and electricity facilities,however, will continue to fall as more capacity comes onto the market following a surge in building activity several years ago. Manufacturing plant construction, meanwhile, will settle back 16 per cent following a massive ramp up in chemical and energy related projects over the past two years.
Dodge & Data analytics chief economist and vice president Robert Murray said the forecasts reflected a broadening of the recovery across different sub-sectors.
"The construction expansion should become more broad-based in 2015, with support coming from more sectors than was often the case in recent years," he said.
The forecast comes amid growing indications of a likely increase in near-term building activity: the Architecture Billings Index – a widely considered a reliable indicator of likely commercial and multi-residential construction activity around nine months in advance – is at its highest level in years, while the backlog of work building contractors are reporting as having on the books is higher than at any other time in history.
Having slumped several years ago in the aftermath of the global financial crisis, building activity throughout the United States has increased by almost a quarter over the last three years, but the industry remains frustrated at what it sees as a state of continued underinvestment in public assets notwithstanding long term infrastructure needs.
A report card on the nation’s infrastructure issued last year by the American Society of Civil Engineers gave the nation an overall D-plus grade for the state of its infrastructure and indicated that one in nine bridges were rated structurally deficient while many of its water systems dated back to the early 1900s.
Because of this, industry lobby groups are urging both political parties to act on necessary reform now that the mid-term elections are out of the way, including by passing existing legislation which would streamline procurement rules for public sector construction projects and by reinstating expired tax breaks for energy efficiency upgrades.
“Voters in yesterday’s mid-term election sent a clear message to Washington,” American Institute of Architects president Helene Coombs said. “They are fed up with dysfunction and want Congress and the White House to work together to get things done.”