Building Chicago - Spring/Summer 2012 - (Page 13)
By Andy Cole
Questions Abound In
or those who believe in the Mayan Calendar’s prediction that the end of the world is coming before the end of 2012, the state of the construction market probably isn’t the biggest concern right now. They’re busy finishing off their “bucket lists,” worrying about family members and – after viewing the Super Bowl ads – probably buying a Dodge Truck. For the rest of us, there’s the AGC of America’s ﬁnancial tools and resources. Through Chief Economist Ken Simonson and a constantly updated online pressroom, the AGC delivers members the latest construction statistics and lets contractors know what those numbers mean to them. Before the New Year, a Simonson webinar offered his insights to construction’s prospects for 2012. “We’re going to see continuing problems for the ofﬁce and retail markets and a lot of uncertainty still out there,” Simonson said. “At the same time, power, manufacturing, warehouse, hospitals... all those markets show the potential for signiﬁcant growth.” On the negative side, anticipated cuts for Federal and state budgets for construction will hamper recovery efforts, and while prices for materials have stopped rising quickly, they’re still rising faster than the overall consumer price index.
A map of shifts in industry employment over the last year gives a sunny disposition for every Midwestern state except Wisconsin. Construction employment in Illinois rose two percent, while Michigan, Ohio, Indiana and Iowa each saw four percent jumps. Construction employment in Wisconsin dropped nine points.
Positively, industry unemployment continues to inch its way down, and projections for total construction spending through 2016 show increases between 6-10 percent each year. Educational, retail and manufacturing were each up at least 10 percent from October of 2010 to October of 2011. Continued growth in retail isn’t expected, but what is anticipated is the housing market beginning to crawl out of its long slumber, paced by a steep increase in apartments. “I think apartments are going to continue to boom,” Simonson said. “The single family market, however, is just as big of a mystery as ever.” A map of shifts in industry employment over the last year gives a sunny disposition for every Midwestern state except Wisconsin. Construction employment in Illinois rose two percent, while Michigan, Ohio, Indiana and Iowa each saw four percent jumps. Construction employment in Wisconsin dropped nine points. A Data Digest publication from mid-January conﬁrmed that prices for materials are dropping nationwide, but Simonson doubts the impact on construction’s ﬁnancial health overall for a number of reasons. “Any relief contractors might get from the recent declines in materials prices is being offset by their inability to increase prices for new construction projects,” he said through an AGC press release. “With overall demand relatively weak and public sector investments in construction declining rapidly, construction remains a buyer’s market.” The National Association of Realtors reports that Chicago’s ofﬁce vacancy rate of 18.8 percent is above the national average, with the industrial space vacancy rate (11.1 percent) just below the national mark. The organization projects that vacancy rates for all sectors will dip slightly through the next two years. Numbers presented at an NAIOP event in early January by Marquette professor Mark J. Eppli told much of the same story. The Urban Land Institute anticipates increases in renting households to be 350,000 per year between 2010 and 2020. Illinois has also seen a decrease in renters leaving the state in each of the last three years, pointing to positive things for Chicagoland’s apartment construction market. Nationally, apartment vacancy rates reached a high of eight percent in 2009, but have since dipped steadily to just under ﬁve percent. Eppli’s presentation also underscored that jobs recovery from the 2007 recession is dramatically slower than recovery from any of the other 10 periods of recession since World War II. A Building Chicago Spring/Summer 2012 • 13
Table of Contents for the Digital Edition of Building Chicago - Spring/Summer 2012
A Message from the Builders Association President
Do You Know Where Your Information is Today? …you may want to get some cloud cover.
Public-Private Partnerships in the U.S. The perfect storm.
Four Sustainability Trends to Watch in 2012 Sustainable development enters a new phase.
Member Projects Continuing to “Build Chicago.”
Questions Abound in Financial Outlook Prospects and predictions.
Index of Advertisers
Building Chicago - Spring/Summer 2012