The Top 6 Construction Trends For 2016

Originally published by the Capterra Construction Management Blog

When writing about how well construction would perform in 2015, I didn’t realize that the industry would explode as it did.

For example, spending on nonresidential building was around $360 billion in 2015. In 2016, that number is expected to climb to $390 billion.

To be clear, that means that stakeholders will spend the equivalent of about 87 times Donald Trump’s net worth in 366 days, setting a new record for the industry.

That means little is going to stay the same.

With that in mind, let’s jump into how the construction industry will evolve over the next year.

1. Get ready to pay your workers more.

Let’s start with the good news: unemployment in the construction industry has taken a nosedive.

In an annual survey of construction employment, the Associated General Contractors of America found that construction employment is currently at its highest level since January 2009. The organization also expects the latest 5-year highway bill to increase labor needs in the heavy and civil engineering construction sectors.

The bad news is that the construction industry is already struggling with labor shortages. The Wall Street Journal explains:

Wages, particularly in residential construction, are still too low to attract enough qualified workers to the physical and sometimes dangerous work of building houses. Tightened immigration policies, meanwhile, are deterring foreign labor from returning to the U.S. And efforts to train and recruit young trade workers atrophied in past years as many school districts focused less on certain vocational training.

Some have started to feel the pressure to raise wages already. For example, The Orange County Register reports that construction bosses are “raising wages at the fastest pace in six years” nationally.

While that’s great news for construction workers, these figures have construction managers weary. It will become an even greater struggle to find skilled hires, and they will be digging far deeper into your company’s wallet.

2. You’ll start to ask where to park your car.

How Americans get from place to place has changed dramatically over the past ten years, and the difference is generational. Motorists over the age of 75 have registered “six times as many new cars as those 18 to 24.” In fact, Millennials are largely forgoing cars, and teenagers aren’t even getting licenses.

Guess what that means for construction?

For one, PriceWaterhouseCoopers [PDF] believes that there will be far fewer parking projects available to the construction industry. They write,

The urbanization trend and gen-Y preferences already are suggesting that existing parking represents a suboptimal use of land… Even if we still have a ways to go before we reach the point where we forget that the gas is on the right and the brake is on the left, we will be seeing change trending in the parking patterns of real estate developments.

While the shift away from parking lots will be a slow burn, new construction will start considering how parking lots can be turned into some other functional structure in the near future.

3. Expect the custom restaurant boom to continue.

Restaurants that offer a “unique experience” continue to appeal to foodies attracted to organic/locally-sourced consumables. The National Restaurant Association [PDF] found that 76% of consumers are more likely to visit a restaurant that offers healthful options and more than seven in 10 restaurants are single-unit operations.

Considering that restaurant industry sales have skyrocketed 20% over the past five years, more green restauranteurs are going to stepping into the industry.

Considering that GREEN, GREEN, GREEN is still hot in new builds and that environmentalists are storming the food industry, expect more custom and renovated restaurant builds to be LEED certified. These restaurants will also want a more “rustic” and organic aesthetic.

Construction Informer explains:

Connect the outside with the inside using custom design elements, such as steel fabricated doors, instead of typical aluminum storefronts. Natural light is always popular, and when you let it flow inside it helps reduce the lighting load. Color can only go so far, but finding a way to include elements of the outdoors in the design adds for another layer of complexity in the finished project….
This can be tedious for contractors, but incorporating and combining mechanical features can pay off in a big way. Open kitchens or ceilings are examples of this restaurant construction trend this year. But, plumbing or infrastructure that’s exposed needs to look flawless. That’s where great attention to detail from the contractor comes into play. Adding a rustic look, like exposed plumbing or light bulbs, instead of floodlights, can have a refined and industrial effect without looking incomplete.

These stripped-down, green restaurants are the future. Start bidding for them now.

4. Housing will continue to be all about renovations, renovations, renovations.

Sorry residential contractors: new builds still can’t compete with renovations. According to a survey conducted by Houzz, a home design website, more than half of homeowners 60 years and older say they have no plan to move in their future.

But that doesn’t mean that their living space will stay the same.

Surprisingly, younger homeowners (younger than 34) are renovating at about the same pace.

When working with these two crowds, remember that they both have different approaches to technology.

For retiring Boomers, make sure that you pair your tech with a personal touch. Show them BIM sketch ups and demonstrate that you have your processes down with construction management software.

As for the younger generation, don’t assume that their youth equates to frivolous spending. Millennials are notoriously frugal. When bidding for a new renovation, walk them through how you created your estimates (most easily done through construction estimating software) so that they don’t balk at the costs.

5. Millennials will continue to shy from buying first-time homes.

Unfortunately, the number of young people who already own homes is very low. Remember: about one in three Millennials still live with their parents.

Those who are buying first-time homes have one thing in common: wealthy parents, according to The Atlantic.

Zillow, from the article above, found that,

There is the group that the Zillow study dubs “double lucky.” These are the select few whose families had enough money to not only help them with college, but to then also assist them with a down payment on a home. This group accounts for more than half of the Millennial homeowners in the Zillow’s data, though they account for only 3 percent of the total Millennial population. Only about 9 percent of Millennials whose parents were able to contribute to their post-high school education were also able to help them purchase a home — and the group that had such significant help is an incredibly low percentage of the total Millennial population.

For builders hoping to target first-time homebuyers, don’t focus on the traditional group of 20-somethings that are first-time homebuyers. Instead, look up the age ladder, at 30- and even 40-somethings, who have paid off their loans and are looking to buy.

6. Construction companies will invest in security.

“Security” comes in two brands for this particular trend: worksite security and cybersecurity.

According to the Great American Insurance Group [PDF], “Although exact figures are not available, all reliable estimates are that losses due to theft and vandalism are in the billions of dollars.”

This means that construction companies are going to start getting more serious about jobsite surveillance.

Construction Executive recently published a piece called “Stopping Jobsite Theft With Remote Interactive Surveillance.” The piece–notably written by the VP of sales and installation director of a surveillance company–noted that construction companies are switching over to “smart” cameras instead of traditional security guards and stationary recording devices. When something moves, the camera moves.

Everything that happens on site will be recorded. In the long term, these solutions are ultimately cheaper than covering for lost assets and hiring security personnel.

Additionally, the construction industry is continually the target of phishing scandals. The latest print issue of Construction Executive explains that phishers have started copying common construction vendors and subcontractors’ emails and changing one letter. These thieves then email high-level executives at multinational construction firms asking for compensation on completed work. Because these executives haven’t worked with these companies directly but recognize the name, they approve the proposed invoice to the hackers.

Luckily, many construction companies have already invested in cyber insurance for such problems. Expect this investment to become more commonplace as 2016 creeps on.

More?

I’m sure that there are plenty more trends sure to impact the construction industry in 2016. What did I miss? What would you add? Leave your thoughts in the comments below!