Construction market to increase 11 percent in 2010, according to Outlook report

McGraw Hill Construction
October 16, 2009
COMMERCIAL, RETAIL, FABRICATION : FORECASTS, MEETINGS AND EVENTS

McGraw-Hill Construction, part of The McGraw-Hill Cos., today released its 2010 Construction Outlook, a mainstay of business planning for construction and manufacturing executives, which forecasts an increase in overall U.S. construction starts for next year, according to an Oct. 16 release. Due to improvement for housing from extremely low levels and broader expansion for public works, the level of construction starts in 2010 is expected to climb 11 percent to $466.2 billion, following the 25 percent decline predicted for 2009.

“The U.S. construction market in 2010 will be helped by growth for several sectors, following three straight years of decline that brought total construction activity down 39 percent from its mid-decade peak,” said Robert A. Murray, vice president of economic affairs, McGraw-Hill Construction, addressing more than 300 construction executives and professionals at the 71st annual Outlook 2010 Executive Conference in Washington, D.C., Oct. 16. “The benefits from the stimulus act will broaden in scope, lifting not just highway construction but also environmental public works and several institutional structure types. With continued improvement expected for single family housing, after reaching bottom earlier this year, the overall level of construction activity should see moderate expansion in 2010.”
 

Highlights of the 2010 Construction Outlook include:

  • Single family housing for 2010 will advance 32 percent in dollars, corresponding to a 30 percent increase in the number of units to 560,000 (McGraw-Hill Construction basis).
  • Multifamily housing will improve 16 percent in dollars and 14 percent in units, after steep reductions in 2008 and 2009.
  • Commercial buildings will drop 4 percent in dollars, following a steep 43 percent drop in 2009. The weak employment picture will further depress occupancies, making it even more difficult to justify new construction.
  • Institutional buildings will begin to stabilize after losing momentum in 2009. Square footage will retreat another 2 percent after sliding 23 percent this year. The dollar amount of construction for this sector will edge up 1 percent, helped by a growing amount of energy-efficiency upgrades to federal buildings and continued strength for military buildings.
  • Manufacturing buildings will drop 14 percent in dollars and 3 percent in square feet, hampered by the substantial amount of slack manufacturing capacity.
  • Public works construction is expected to rise 14 percent, given more wide-ranging strength across all project types.
  • Electric utility construction will slip 3 percent, continuing to settle back after a record high in 2008.
At the event, Frank Giunta, senior vice president and managing director, Hill International and George Pierson, chief operating officer, Parsons Brinckerhoff, offered insights to an industry emerging from the crisis:

“The stimulus funds are meant to be just that, a stimulus, not the be-all-end-all answer to infrastructure financing,” Giunta said, in the release. “Both public and private sectors need to be innovative and rewrite the rules of project finance to address tremendous construction needs with minimal financing options.”
 
“The efforts of the federal agencies at transparency and their willingness to engage with private industry is refreshing,” Pierson said, in the release. “We have to work together to meet the challenges of infrastructure and this economy.”

For more information see 2010 Outlook, visit or attend one of the regional outlook events taking place in Seattle (11/3/09), Salt Lake City (11/4/09), Denver (11/5/09), Atlanta (11/6/09), Minneapolis (11/17/09), Teaneck (12/4/09), Chicago (1/13/10), and Dallas (1/14/10). Robert Murray also will present the 2010 Construction Outlook in a net conference Dec. 16, according to the release.