Construction & Demolition Contractors Expect Strong Economy in 2018

downtown portland oregonConstruction is expected to grow in the Pacific Northwest, which is great news for demolition companies in Oregon. While 2017 was a good year for construction, it didn’t see the double-digit growth the industry experienced between 2012 and 2015. Forecasters expect a moderate rise of 3 percent to $765 billion for construction starts, which is a sign of a mature stage of expansion. As 75 percent of firms plan to expand their payrolls, Portland demolition contractors feel optimistic that economic conditions will remain strong as demand continues to increase.

2017 Construction Starts and 2018 Forecasts

Despite not seeing the year-over-year growth in starts and spending as experienced in previous years, 2017 shaped up to be a good year for Portland demolition and construction services. Construction spending rose about 3 to 5 percent thanks to an increase in private residential construction.

Construction spending and starts are forecasted to keep the momentum through 2018. Demand for all types of construction services is expected to continue expanding because of business-friendly regulatory conditions and the hope that the current administration will promote infrastructure investments. According to a survey by Associated General Contractors of America and Sage Construction and Real Estate, 44 percent of contractors expect the market for all types of contractors to expand in 2018, representing the highest net positive reading in the survey’s history.

Segments contractors felt the most optimistic about:

  • Private office markets
  • Transportation construction
  • Retail construction
  • Warehouse construction
  • Lodging construction
  • Water-related construction
  • Sewer construction
  • K-12 construction
  • Highway construction
  • Hospitality construction

Contractors felt less optimistic about the following segments:

Construction workerHow does this construction forecast benefit Oregon demolition contractors? Before new construction can start, demolition crews must first prepare a site and ensure its health and safety. When the construction industry grows, the demolition industry tends to follow suit.

Dodge Data & Analytics attributes growth in construction to moderate job growth and an upward trend in long-term interest rates. The firm expects:

  • Employment growth and rebuilding efforts after Hurricanes Harvey and Irma will translate into a rise in single-family housing construction.
  • Multifamily housing construction will wane following its peak in 2016 in metropolitan markets and more cautious bank lending.
  • The construction of commercial buildings will experience gains greater than those seen in 2017.
  • Office construction is expected to experience a boost thanks to the development of downtown markets. Similarly, greater e-commerce demands will spur the growth of warehouse construction.
  • The construction of educational facilities and institutional buildings will remain on an upward track.
  • Contrary to the survey findings by the Associated General Contractors of America and Sage Construction and Real Estate, Dodge Data & Analytics expect transportation terminal projects to stay at a high level, but they won’t experience the growth seen in 2017.
  • The construction on manufacturing plants will experience modest growth in regard to square footage.
  • With bridge and highway improvement projects underway, as well as the reconstruction efforts related to the 2017 hurricane season, public works construction rates will improve.
  • The construction of gas plants and electric utilities will fall for the third year in a row to 13 percent as new generating capacity comes online.

Trends to Watch in 2018

Construction and Demolition Job Growth

It’s no secret that Oregon demolition and construction industries have experienced continued labor shortages. As the demand for construction and demolition projects increase, firms will continue to struggle to find skilled talent.

The U.S. Department of Labor’s Bureau of Labor Statistics reports that employment in construction and extraction occupations is expected to grow 11 percent between 2016 and 2026, which is faster than average. A survey conducted by the Associated General Contractors of America found that about 75 percent of participating firms plan to expand their workforce. At the same time, 78 percent are struggling to fill skilled labor positions.

Green Projects

recycle iron and scrap metalThe push for eco-friendly or sustainable elements in construction and demolition projects will be a major trend in 2018. Some analysts have their eyes on mass timber construction in real estate developments.

Recycling more materials during the demolition process will gain even more traction throughout the year. Demolition companies in Portland will see a rise in recycling to divert building materials collected from demolition, remodeling and renovation project from landfills and help lower client costs. If there are materials that cannot be recycled, the best Oregon demolition contractors will help a client determine if they can be resold, donated or reused.

Taking Advantage of Technological Advancements

With drone and 3-D technologies improving, construction and demolition crews are finding clever ways to use the devices. 3-D printing is making headlines in the construction industry as contractors employ the technology to build houses and buildings. While 3-D printing doesn’t outpace traditional construction methods and materials yet, they’re getting close.

The use of drones is also becoming popular on sites because they’re a cost- and labor-saving tool. In 2018, demolition contractors will use drones to explore worksites without compromising worker safety, capture views at specific elevations, and inspect buildings for structural integrity without exposing workers to toxins. Portland demolition contractors will also use drones to survey sites efficiently and effectively, particularly in areas that are more dangerous or difficult to examine because of size or accessibility issues.

As federal offices continue to support infrastructure investments, support the development of a skilled workforce, and reduce regulations, 2018 is poised to be a strong year for the construction and demolition industries.

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