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This $600 Billion Dollar Industry Continues to Grow

Ubermensch

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My two cents: They keep building homes. They keep building office buildings. They keep building industrial facilities. Huge opportunities all throughout this industry.

Source: About Dodge Data & Analytics: Dodge Data & Analytics is the leading provider of data, analytics, news and intelligence serving the North American construction industry. The company’s information enables building product manufacturers, general contractors and subcontractors, architects and engineers to size markets, prioritize prospects, target and build relationships, strengthen market positions, and optimize sales strategies. The company’s brands include Dodge, Dodge MarketShare™, Dodge BuildShare®, Dodge SpecShare®, Sweets, Architectural Record, and Engineering News-Record. To learn more, visit www.construction.com

Construction Industry to See More Balanced Growth in 2015 According to Dodge Data & Analytics

Dodge Outlook Report Predicts Rise in Construction Starts
for Commercial and Institutional Building, Accompanied by Moderate Improvement for Housing and a Stabilizing Public Works Sector


Washington, D.C. – November 6, 2014 – Dodge Data & Analytics (http://www.construction.com) today released its 2015 Dodge Construction Outlook, a mainstay in construction industry forecasting and business planning. The report predicts that total U.S. construction starts for 2015 will rise 9% to $612 billion, a larger gain than the 5% increase to $564 billion estimated for 2014.

“The construction expansion should become more broad-based in 2015, with support coming from more sectors than was often the case in recent years,” said Robert Murray, Chief Economist and Vice President for Dodge Data & Analytics. “The economic environment going forward carries several positives that will help to further lift total construction starts. Financing for construction projects is becoming more available, reflecting some easing of bank lending standards, a greater focus on real estate development by the investment community, and more construction bond measures getting passed. While federal funding for construction programs is still constrained, states are now picking up some of the slack. Interest rates for the near term should stay low, and market fundamentals (occupancies and rents) for commercial building and multifamily housing continue to strengthen.”

Based on research of specific construction market sectors, the 2015 Dodge Construction Outlook details the forecast as follows.

  • Commercial building will increase 15%, slightly faster than the 14% gain estimated for 2014. Office construction has assumed a leading role in the commercial building upturn, aided by expanding private development as well as healthy construction activity related to technology and finance firms. Hotel and warehouse construction should also strengthen, although the pickup for stores is more tenuous.
  • Institutional building will advance 9%, continuing the moderate upward trend that’s been established during 2014. The educational building category is now seeing an increasing amount of K-12 school construction, aided by the financing made available by the passage of recent construction bond measures. Healthcare facilities are expected to show some improvement relative to diminished activity in 2014.
  • Single family housing will rise 15% in dollars, corresponding to an 11% increase in units to 700,000 (Dodge basis). It’s expected that access to home mortgage loans will be expanded, lifting housing demand. However, the millennial generation is only gradually making the shift towards homeownership, limiting the potential number of new homebuyers in the near term.
  • Multifamily housing will increase 9% in dollars and 7% in units to 405,000 (Dodge basis). Occupancies and rent growth continue to be supportive, although the rate of increase for construction is now decelerating as the multifamily market matures.
  • Public works construction will improve 5%, a partial rebound following the 9% decline estimated for 2014. Highway and bridge construction should stabilize, and modest gains are anticipated for environmental public works. Federal spending restraint will be offset by a greater financing role played by the states, involving higher user fees and the increased use of public-private partnerships.
  • Electric utilities will slide 9%, continuing the downward trend that’s followed the exceptional volume of construction starts that was reported during 2011-2012. With more projects now coming on line, capacity utilization rates will stay low, limiting the need for new construction.
  • Manufacturing plant construction will settle back 16%, following the huge increases reported during both 2013 (up 42%) and 2014 (up 57%) that reflected the start of massive chemical and energy-related projects. Next year’s volume remains quite high by recent historical standards.
The 2015 Dodge Construction Outlook was presented at the 76th annual Outlook Executive Conference held by Dodge Data & Analytics in Washington, D.C. Copies of the report with additional details by building sector can be ordered at http://analyticsstore.construction.com/index.php/2015-dodge-construction-outlook?sourcekey=PRESREL. Additional reports and projections are available from Dodge Data & Analytics at http://construction.com/market_research.
 
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mikey3times

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Lots of opportunity here. Construction is so old-school. Figure out how to disrupt it and you have your fastlane. Build some shovels, people!
 

luniac

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What if im the door and people knock on me to get somewhere???? doorception!
 

RazorCut

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Construction is so old-school.

IMHO nothing could be further from the truth. The building industry is one of the most innovative industries there is. Always new products, new materials and new ways to do thing better and faster. It's red tape and legislation that slows down the process not the industry itself.
 

luniac

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But what if a tree falls in the forest?

Then someone makes new doors from the tree.

Therefore the tree is a door to new doors.... doorception...
 
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Ubermensch

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Then someone makes new doors from the tree.

Therefore the tree is a door to new doors.... doorception...

Replace a normal door with an energy efficient door, which looks identical to the normal door, except it's energy efficient. So your energy bills go down.

Doorception comes into play when you tell you wife you made a special deal with the president of the utility company, so she goes down on you (your reward for lowering the bills).
 
D

Deleted20833

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What about being providing a service for
the workers so they are more efficient

  • Trash removal for construction sites so the workers don't have to worry about it?
  • Lease tools so they don't have to pay full price for a machine or tool they use once in awhile?
  • Portable high rise shade so workers don't have to work in the heat
 

luniac

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Replace a normal door with an energy efficient door, which looks identical to the normal door, except it's energy efficient. So your energy bills go down.

Doorception comes into play when you tell you wife you made a special deal with the president of the utility company, so she goes down on you (your reward for lowering the bills).

but.... what if my wife IS the president of the utility company! wifeception...
 
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Ubermensch

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@Thiago Machado

I forgot to mention, in this thread, that the $600,000,000,000 number pertains only to the American economy.

The global construction industry is a multi-multi-trillion dollar industry.

Most of the opportunity will come from global construction, and China, while the USA will still have a decent chunk of the market.

In fact, I think this is the largest industry on the planet.

(@Cyriex Fact check me real quick.)
.

If not, at the least one of the largest.
 
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D

Deleted35442

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@Thiago Machado

I forgot to mention, in this thread, that the $600,000,000,000 number pertains only to the American economy.

The global construction industry is a multi-multi-trillion dollar industry.

Most of the opportunity will come from global construction, and China, while the USA will still have a decent chunk of the market.

In fact, I think this is the largest industry on the planet.

(@Cyriex Fact check me real quick.)
.

If not, at the least one of the largest.
Not just Construction, but real estate. One guy I keep in touch with got his in to real estate making millions simply by re-appraising some properties for Jones Lang La Salle in Asia. People thought he couldn't get what he appraised them for, but he did - and did it pay off. He recommended to me to also take a look at emerging market hot spots. People are weary about EMs since growth has been lackluster for many. He said to keep an eye on key growth nations in Africa and Asia. Look at Logistics and Commercial Retail buildings abroad he told me.

Construction is definitely picking up speed in areas like this. Multi-family homes are outpacing single families in homebuilding. This is from 2015, but is the latest on what S&P Capital IQ had to say:

"S&P Capital IQ expects homebuilders to see low-teen revenue growth in 2016, supported by price hikes and higher unit sales volume. Home furnishing revenues will likely benefit from sustained economic growth and potentially new retail store openings, following peer-group consolidation, while home appliance shipments will likely increase at low- to mid-single-digit growth rates. There is a divergence in gross margins and profitability among household durables sub-industries, with the biggest outlier found in homebuilding. Not only does homebuilding have the lowest gross margins, it is also the most volatile over the business cycle. Steadily improving macroeconomic fundamentals will likely continue to underpin the household durables industry in 2016, including declining US unemployment, increased consumer confidence, and low borrowing costs that further boost personal consumption and housing affordability."

This should put things in perspective:

6.10-blog-graph1.png
 

Ubermensch

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Not just Construction, but real estate. One guy I keep in touch with got his in to real estate making millions simply by re-appraising some properties for Jones Lang La Salle in Asia. People thought he couldn't get what he appraised them for, but he did - and did it pay off. He recommended to me to also take a look at emerging market hot spots. People are weary about EMs since growth has been lackluster for many. He said to keep an eye on key growth nations in Africa and Asia. Look at Logistics and Commercial Retail buildings abroad he told me.

Construction is definitely picking up speed in areas like this. Multi-family homes are outpacing single families in homebuilding. This is from 2015, but is the latest on what S&P Capital IQ had to say:

"S&P Capital IQ expects homebuilders to see low-teen revenue growth in 2016, supported by price hikes and higher unit sales volume. Home furnishing revenues will likely benefit from sustained economic growth and potentially new retail store openings, following peer-group consolidation, while home appliance shipments will likely increase at low- to mid-single-digit growth rates. There is a divergence in gross margins and profitability among household durables sub-industries, with the biggest outlier found in homebuilding. Not only does homebuilding have the lowest gross margins, it is also the most volatile over the business cycle. Steadily improving macroeconomic fundamentals will likely continue to underpin the household durables industry in 2016, including declining US unemployment, increased consumer confidence, and low borrowing costs that further boost personal consumption and housing affordability."

This should put things in perspective:

6.10-blog-graph1.png

Here's a question for you.

How much total construction will PACE create?

Empirical data shows that PACE is still in the early adopters phase.

If @OVOvince isn't talking to LED players about PACE as he goes out into the market, he is missing a chance to sound like a genius (if he knows what he is talking about).

@Thiago Machado "Sounding like a genius" is a great way to get noticed above other potential sales candidates.

Discover The Market.

Excerpt:

PACE Market Is Growing

While more than 80% of the US population live and work in states that have PACE-enabling laws, PACE is not yet widely available throughout these states. PACE is inherently a local financing tool, which means that cities and counties need to act to make PACE available by developing or joining an existing program. The market is growing and new municipalities are making PACE available to commercial and residential property owners as you are reading this.
 
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D

Deleted35442

Guest
Here's a question for you.

How much total construction will PACE create?

Empirical data shows that PACE is still in the early adopters phase.

If @OVOvince isn't talking to LED players about PACE as he goes out into the market, he is missing a chance to sound like a genius (if he knows what he is talking about).

@Thiago Machado "Sounding like a genius" is a great way to get noticed above other potential sales candidates.

Discover The Market.

Excerpt:

PACE Market Is Growing

While more than 80% of the US population live and work in states that have PACE-enabling laws, PACE is not yet widely available throughout these states. PACE is inherently a local financing tool, which means that cities and counties need to act to make PACE available by developing or joining an existing program. The market is growing and new municipalities are making PACE available to commercial and residential property owners as you are reading this.
Interestingly Andre, this isn't something that Analysts on Wall Street are even looking at too closely. So when you say this is in the "early stages" it most definitely is. I never heard of it till you told me about it. It's in 30 states and growing right now. I checked Statista, Capital IQ, and even got a friend to check Bloomberg. Little is out there right now because of the infancy of it. What you posted is def on point though. We'll talk more about it.
 

axiom

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Let's keep this thread alive. I've always found it so counterintuitively sexy to target an ancient, ripe-for-disruption market.

Construction is that market. PACE is that disruption.

Nothing has been as big for the construction industry as PACE since the New Deal during the Great Depression.

AND YET NOBODY IS TALKING ABOUT IT.

That's opportunity in the most unadulterated, punch-you-in-the-face kind of way.

4 out of every 5 retrofit jobs on large commercial buildings don't get done due to lack of funding. PACE eradicates this bottleneck by being the first program of its kind to offer a debt-free financing option to building owners with 15-30 year terms. BAM. Suddenly 80% of the market just opened up in this recession-proof industry.

Now go take your share. I sure as hell am.
 
G

Guest24480

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My dad owns a small contracting company and has too many clients right now. He can't keep up with the work. If only I could convince him to hire more people..but he doesn't want to lose control..
 
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TonyStark

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What about being providing a service for
the workers so they are more efficient

  • Trash removal for construction sites so the workers don't have to worry about it?
  • Lease tools so they don't have to pay full price for a machine or tool they use once in awhile?
  • Portable high rise shade so workers don't have to work in the heat
A high rise shade would be legit. Especially here in Texas. :cool:
 

Ubermensch

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Up $100 Billion from my post last year... This BEA$T of an industry continues to grow.

New Construction Starts in 2017 to Increase 5% to $713 Billion According to Dodge Data & Analytics

Dodge Outlook Report Predicts Moderate Growth for Most Project Types – Single Family Housing, Commercial and Institutional Building, and Public Works, While Multifamily Housing Levels Off and Electric Utilities/Gas Plants Decline

National Harbor, MD – October 20, 2016 – Dodge Data & Analytics (Construction Jobs & Bidding - Dodge Data & Analytics) today released its 2017 Dodge Construction Outlook, a mainstay in construction industry forecasting and business planning. The report predicts that total U.S. construction starts for 2017 will advance 5% to $713 billion, following gains of 11% in 2015 and an estimated 1% in 2016.

“The U.S. construction industry has witnessed signs of deceleration in 2016, following several years of steady growth,” stated Robert Murray, chief economist for Dodge Data & Analytics. “Total construction starts during the first half of this year lagged behind what was reported in 2015, raising some concern that the current construction expansion may have run its course. However, the early 2016 shortfall reflected the comparison to unusually elevated activity during the first half of 2015, lifted by 13 very large projects valued each at $1 billion or more, such as a $9 billion liquefied natural gas export terminal in Texas and a $2.5 billion office tower in New York City. As 2016 has proceeded, the year-to-date shortfall has grown smaller, easing concern that the construction industry may be in the early stage of cyclical decline. Instead, the construction industry has now entered a more mature phase of its expansion, one that is characterized by slower rates of growth than what took place during the 2012-2015 period, but still growth. Since the construction start statistics will lead the pattern of construction spending, this means that construction spending can be expected to see moderate gains through 2017 and beyond.”

“On balance, there are a number of positive factors which suggest the construction expansion has room to proceed. The U.S. economy in 2017 is anticipated to see moderate job growth, market fundamentals for commercial real estate should remain generally healthy, and more funding support is coming from state and local bond measures. Although the global economy in 2017 will remain sluggish, energy prices appear to have stabilized, interest rate hikes will be gradual and few, and a new U.S. President will have been elected. For 2017, total construction starts are forecast to rise 5% to $713 billion. Gains of 8% are expected for both residential building and nonresidential building, while nonbuilding construction slides a further 3%.”

The pattern of construction starts by more specific sectors is the following:

  • Single family housing will rise 12% in dollars, corresponding to a 9% increase in units to 795,000 (Dodge basis). Access to home mortgage loans is improving, and some of the caution exercised by potential homebuyers will ease with continued employment growth and low mortgage rates. Older members of the Millennial generation are now moving into the 30 to 35 year-old age bracket, which should begin to lift demand for single family housing.
  • Multifamily housing will be flat in dollars and down 2% in units to 435,000 (Dodge basis). This project type now appears to have peaked in 2015, lifted in particular by an exceptional amount of activity in the New York NY metropolitan area, which is now settling back. Continued growth for multifamily housing in other metropolitan areas, along with still generally healthy market fundamentals, will enable the retreat at the national level to stay gradual.
  • Commercial building will increase 6% on top of the 12% gain estimated for 2016. Office construction is showing improvement from very low levels, lifted by the start of several signature office towers and broad development efforts in downtown markets. Store construction should show some improvement from a very subdued 2016, and warehouses will register further growth. Hotel construction, while still healthy, will begin to retreat after a strong 2016.
  • Institutional building will advance 10%, resuming its expansion after pausing in 2015 and 2016. The educational facilities category is seeing an increasing amount of K-12 school construction, supported by the passage of recent school construction bond measures. More growth is expected for the amusement category (convention centers, sports arenas, casinos) and transportation terminals.
  • Manufacturing plant construction will increase 6%, beginning to recover after steep declines in 2015 and 2016 that reflected the pullback for large petrochemical plant starts.
  • Public works construction will improve 6%, regaining upward momentum after slipping 3% in 2016. Highways and bridges will derive support from the new federal transportation bill, while environmental works should benefit from the expected passage of the Water Resources Development Act. Natural gas and oil pipeline projects are expected to stay close to the volume that’s been present in 2016.
  • Electric utilities and gas plants will fall another 29% after the 26% decline in 2016. The lift that had been present in 2015 from new liquefied natural gas export terminals continues to dissipate. Power plant construction, which was supported in 2016 by the extension of investment tax credits, will ease back as new generating capacity comes on line.
 

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