Construction Firms Welcome 2018 With Confidence

By Barbra Murray

Kenneth Simonson, Associated General Contractors of America

The construction industry has entered 2018 with expectations of a successful year ahead, according to a survey by the Associated General Contractors of America and Sage Construction and Real Estate. Most notably, construction firms anticipate demand for construction services to continue on the upswing across the board.

Construction firms have reason to be confident. “This optimism is likely based on current economic conditions, an increasingly business-friendly regulatory environment and expectations the Trump administration will boost infrastructure investments,” Stephen Sandherr, CEO of the Associated General Contractors of America, said in a prepared statement.

AGC and Sage queried more than 1,000 construction firms of varying sizes from across the country for the survey. The numbers tell the story, starting with the 75 percent of respondents who indicated that they will expand the size of their staff this year. Another notable figure: 44 percent. Survey participants revealed fervent enthusiasm about the ongoing demand for construction services, with a net positive reading—the percentage of respondents who expect a market segment to expand vs. the percentage who expect a market segment to contract—of 44 percent, marking the highest net positive reading since AGC began conducting the Outlook survey.

While construction firms anticipate growth across all property sectors, they do have their preferences. They’re most keen on the private office market sector, which garnered a 22 percent net positive reading. The transportation/retail and warehouse/lodging segments each had a 21 percent net positive reading, while both the multifamily and public building property types recorded a 16 percent reading. Federal construction brought up the rear with an 8 percent net positive reading—but positive is positive.

“I was impressed that contractors are optimistic about every type of project, including federal work that has not increased on net in several years,” Kenneth Simonson, chief economist with the Associated General Contractors of America, told Commercial Property Executive.

High Hopes, With A Few Worries

It’s a rare forecast that is 100 percent sunny, and findings from the AGC/Sage survey are no exception, as construction firms remain realistic about challenges. In their bid to increase headcounts, 82 percent of survey participants predict that efforts to recruit construction employees will become more difficult or remain as challenging in 2018. A notably lower 76 percent of survey respondents expressed this concern in 2017.

Participants noted additional apprehensions. “While workforce issues remain their top concern, many contractors are also worried about competition and the impact of decisions made in Washington on their operations,” Simonson said in prepared remarks. Thirty-nine percent of survey respondents indicated that growing competition for projects is a concern going into 2018, and 28 percent pointed to potential increased federal regulations as a troubling issue. 

Challenges aside, the message from the construction industry remains clear. As noted in the survey conclusion, “Contractors expect 2018 to be an even better year for the construction industry than 2017.”