by Mike Dahl, LASN
The Big Picture
Overall, an economic slowdown is forecast for the near future but there are some bright spots for the industry.
First, looking ahead, the economic think tank, the Conference Board, and the Organisation for Economic Co-operation and Development, both predict the U.S. GDP will grow 2% in 2020, not the best performance of late but still an expansion.
In construction economics, though total value put-in-place is off 2.0% year-to-year, the numbers are 3.2% above 2017's amount and 22.7% higher than five years ago according to the U.S. Census Bureau. In the nonresidential category, nine of the 16 major subcategories posted better totals year-to-year and 14 showed gains over both 2017 and 2014.
The latest residential report saw building permits running 14.1% above last year and starts registered an 8.5% gain year-over-year, which bodes well for landscape design work in 2020.
Dodge Data and Analytics' most recent report on total starts noted that through the first 10 months of the year, total construction starts are only off 4% compared to the same period last year.
"Concern over the health of the U.S. economy continues to play a key role in the pullback in starts over the past few months," stated Richard Branch, chief economist for the provider of construction industry analytics. "However, solid real estate fundamentals (such as vacancy rates) in addition to stable public funding will continue to support a modest level of construction activity across both public and private projects."
And in the latest Real Estate Roundtable's 2019 Q4 Economic Sentiment Index, the majority of commercial real estate executives that responded anticipate positive market conditions in the coming year as once again, solid fundamentals will offset economic challenges.
^ Based on predictions by Kiplinger.com, businessinsider.com and conference-board.org
Architecture Billings Index
The most recent ABI, a leading economic indicator for nonresidential construction activity, registered a score of 52.0, which beat last month's score by more than two points and bested the 50.4 put up in the same period last year (any score over 50 indicates billing growth). The new project inquiries tallied 57.9 and design contracts scored 52.9.
Construction Put in Place
As seen in LASN magazine, December 2019.