Construction is one of the greatest indicators of the overall health of the economy. Luckily, for the last few years, the industry has been booming. Sustained growth is hard to maintain, however, the ever-growing need for commercial and residential units in emerging markets is helping sustain this industry even as labor shortages and material price challenges persist. It is not all bad however as wage increases for most of the industry and new methods for modular construction and drone survey systems are set to come to the market. Sustainability is becoming more and more important as owners look to save costs on energy and consumption down the road. 2018 is shaping up to be an interesting year for construction and could be a foundational year for major changes in the industry.

1. Labor shortages
The construction industry added 210,000 in 2017 with 30,000 for specialty trades added in December, up from 155,000 in 2016. In a recent survey, 75% of firms want to add to their labor force in 2018. With this new tax cut will companies prioritize training? It is something to watch out for as most firms surveyed, 78% of them that is, are struggling to find skilled labor that can handle the increase in projects. With more money flowing to companies better training programs and promises of better job security are important elements to decrease the labor shortage and retain good employees.

2. New Tech and Drones
Construction technology is creating a success gap in the industry. It has become so important to stay current on the new technology that those who want to learn and adapt are far outpacing those who don’t. Increased emphasis on safety, productivity and labor are all pushing more technological advances into the forefront of the construction site. Drones are conducting site surveys and autonomous equipment make repetitive tasks faster, like the new machines for laying brick and tying rebar. Building information modeling has also exploded because it helps form virtual visualizations of projects to improve productivity, communication, and collaboration. More technologies are being developed to monitor individual worker safety and productivity, but very few details on these products exist, so we’ll have to be patient as they come on the market.

3. Modular and Prefab Construction
Renewed interest in modular and offsite fabrication is going drive material prices all year. Katerra, a full-service construction startup was recently valued at over $1billion, and one of their biggest aspects is prefabrication production and offsite construction. Many firms are committing to building new buildings mostly with modular construction, mainly for bathrooms and smaller guest rooms. This is something the Marriot has committed to doing for their new construction projects in the coming years. This method helps avoid nature caused delays to shorten a production schedule and can save on material prices if they are sourced in a convenient region.

4. Sustainability
Most construction projects now have sustainable methods and materials in mind. Better materials are in demand as people want to use products that are sourced legally and in an environmentally safe way, despite the increased cost. Mass timber projects are becoming more popular, Such as the 220,000 SF T1 building in Minneapolis. It is one of the largest projects of it’s kind in the US and others in Chicago and Atlanta are projected to follow close behind. Recycling of construction waste is gaining traction as well. Waste from demolition and renovation are being diverted to recycling centers to be reused in other applications. Old Concrete is being used as aggregate for new roads. Plastics are being broken down and being reused for countertops and other finish products. As long as companies put a premium on recycling we’ll see some new creative products come to the market very soon.

5. Subdued growth
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. While these projections are a far cry from the actual numbers in 2017 a small retraction could be good to allow the industry to step back and train more workers for future years where skilled labor is even harder to find.

6. Increased Material Costs
Overall costs are forecasted to increase by 2-3%, after a 2017 that saw prices increase by 3-4%. Enjoy this infographic below that explains the costs of their increases in more detail.