Everyone’s life changed when the COVID-19 pandemic hit the United States in March of 2020. While the tristate area has dealt with all kinds of natural and man-made challenges in the past, including truly catastrophic events such as 9-11 and Hurricane Katrina, we’ve never dealt with a global pandemic before. That’s why it’s been so difficult for industry experts to analyze the impact of this event and plan for the future.
At Metro, we don’t have all the answers, but we want to share some of our opinions as well as perspectives from industry experts. We hope these reports and predictions will help our customers cope with the challenges we all face in 2021 and beyond.
Oxford Economics: The Construction Report
Oxford Economics advises corporate, financial, and government decision-makers and thought leaders, including multinational companies, financial institutions, government groups, trade associations, and universities. One of the latest reports from Oxford Economics describes what happened to the construction industry during the lockdown and predicts what’s in store.
While construction slowed in other parts of the world, Oxford Economics reports that the U.S. construction industry grew by about 5% in 2020, to $1.4 trillion. However, that growth was geographically uneven.
In the New York area, lockdowns made it tough on contractors. In the same timeframe, in other areas, especially Texas, the U.S. construction industry boomed, thanks to growth in manufacturing, power generation, and transportation.
Residential building also drove the growth numbers, with an 11% YTY growth in 2020. At the same time, commercial construction for offices, recreation, and amusement facilities was down.
While Oxford predicts a tough year for office and airport construction, they are bullish on infrastructure building. This prediction is fueled in part by the current push for more “clean” power which is likely to result in a lot of construction in the energy sector.
Spiked interest in online shopping may also continue to drive the demand for commercial construction: more and more warehouses and distribution centers will be required to meet the continually growing demand for online shopping and home delivery.
However, warehouses don’t require as many subcontractors, so specialists that focus on fixtures and interiors for retail establishments may suffer.
AIA: Construction Forecast
The American Institute of Architects (AIA) is a professional organization serving architects. Their reports and forecasts are important to a wide range of building industries, including commercial construction. The AIA reported slow activity for new building construction projects and expects the trend to continue through the remainder of the year.
It forecasts a 5.7% decline in overall construction spending in 2020. The AIA also anticipates a “reasonably healthy” recovery in 2022, with virtually all major building segments projected to see increases.
CONEXPO CON/AGG Looks to Warehouse and Distribution Center Construction to Lead the Recovery
CONEXPO CON/AGG is the organization behind one of the national leading construction trade shows, representing every major construction sector. The 2021 CONEXPO CON/AGG economic forecast notes, “Residential construction has been lifted by ultra-low interest rates and increased mobility. A move back towards ‘old-time’ commuting and sitting at a corporate desk is already being led by real estate development firms and energy companies, however, the outlook for office space construction will remain uncertain, at best, for a couple of years.”
Like Oxford Economics and the AIA, CONEXPO CON/AGG also looks to brisk construction activity in the warehouse and distribution sectors as buffers to any short-term losses in other types of commercial construction.
Metro Interior Distributors Forecasts a 12-18 Month Recovery
The industry experts at Metro Interior Distributors expect inflation and shortages to continue through the third quarter of 2021. Like many industry leaders, we expect continued volatility in prices for the next six months, settling down over the next 12-18 months.
As the world normalizes and logistics return to optimal performance levels, Metro expects prices in all categories to stabilize or even decrease. However, economic history shows us that even when prices drop, they rarely return to pre-inflation levels.
Once pandemic factors are out of play, the home construction boom will likely flatten. Additionally, astronomically high prices will convince many homeowners to hold off on new construction or renovation projects, which will contribute to increased supplies. As suppliers expand production to catch up with demand, it’s also possible that at some point, supply will exceed demand, resulting in some price reductions.
As always, the team at Metro will do our best to keep our customers informed of new market developments, upcoming price increases, and provide value engineering solutions that save our customers money without sacrificing quality.