The Winter 2019 edition of the Electronic Systems Outlook report is now available! This year, we predict a 1% increase in total construction spending over 2019.
Similar to last year, the following markets are expected to see the biggest construction growth in 2020 (meaning more opportunities for integrators):
- Lodging
- Corporate offices
- Government
The education market fell from this list for 2020; otherwise, these three markets were the largest in 2019 as well. All have forecasted growth rates of 5% or more in 2020. Most other segments are likely to grow (roughly with the rate of inflation) and therefore be considered stable. Construction numbers for manufacturing, retail, and houses of worship markets are expected to decline this year (down by up to 5% from last year).
It’s always fascinating to examine the drivers behind these construction ebbs and flows. Summarized from the Electronic Systems Outlook Winter 2019 report, here are the trends currently impacting construction in each market …
CORPORATE
- Office vacancy rates are at the lowest levels we’ve seen in almost two decades
- Downtown markets are experiencing large rent increases
- Widespread labor constraints and slowed employment growth are expected to weigh on future spending
- Demand for data center investments continues to expand rapidly
EDUCATION
- Maintenance needs and backlogs are outpacing tax revenues and local bonding support
- Safety is becoming a core element of facility design and demand for renovation expenditures
- An increasing percentage of the U.S. population is under 18 years old
- K-12 spending growth is expected to outpace college/university spending growth
GOVERNMENT
- Tax revenues are rising and support for local bonds can be difficult
- High-growth metropolitans are in need of updated facilities and infrastructure
- Continued fiscal constraints, tied to ever-increasing pension and Medicaid needs, continue to weigh heavily on capital programs
HEALTHCARE
- There’s increasing private-investor interest in medical office buildings and specialty care facilities
- Within the next decade, all Baby Boomers will be 65 or older
- New technologies and services (such as telehealth and wearables) are expected to temper demand for long-term care facilities and traditional hospitals
HOUSES OF WORSHIP
- Lean design and delivery teams are combining more community/gathering spaces with a return to value-led traditional architecture
- Increased wages and income levels bolster industry revenue growth
- A declining share of Americans are donating to religious organizations, paired with declining attendance over time
LODGING
- Business travel, RevPAR, and occupancy rates are all expected to remain healthy in 2020
- Occupancy is starting to balance alongside ongoing added supply and slowing employment growth
- Another round of casinos is in the pipeline, in addition to significant transportation projects, which indicates support for long-term elevated spending in select markets
MANUFACTURING
- Trade tensions, new tariffs, and oil price volatility continue to generate uncertainty, resulting in wavering consumer sentiment
- Increased business investment tied to domestic oil and gas production and chemical manufacturing, especially along the Gulf Coast
- Continued softening in industrial production is expected; consumer spending and business inventories are up
RETAIL
- There’s a continuing rise in e-commerce as big-box home improvement retailers announce major investments
- Demand for warehouse and distribution continues to expand with facilities servicing a mix of core trades routes and last-mile logistics; a strong U.S. dollar supports increased imports
- Brick-and-mortar retail continues to evolve and shift into mixed markets, including travel, leisure, and entertainment
Want to know more? Members: Download the report now (at no cost) and uncover what these trends will mean long-term for you – and explore the technology being incorporated into these upcoming construction projects. (If you’re a non-member who wants a copy, contact us.)