Construction industry forecaset for the next 5 years

After nearly four years of steep contraction and then two years of flat revenues, the “embers of optimism” are returning for the construction industry in 2014 and beyond – and it goes beyond residential housing.

That’s according to a new report out by Curt Young, an investment banker with FMI Capital Adivisors, the Raleigh-based investment banking firm that deals almost exclusively with engineering and construction firms across the country. FMI Capital Advisors is a subsidiary of FMI Corp.

Young’s report, based on forecasts by FMI’s research services group, shows that while no one expects the engineering and construction industry to recover immediately all of its losses occurred over the last six years, there remains a strong desire to grow.

“Both public and private companies are under pressure from their stakeholders to get their trend lines pointed in an upward direction and capitalize on the first hint of opportunity,” he writes.

Some companies are doing this by expanding into more regional territories. We’ve seen that happen lately in the Triangle as companies like Samet Corp., Shealy Electrical Wholesalers and Angler Environmental have set up new offices in the Triangle in recent months.

Others are seeking greater exposure in new market sectors, such as energy, oil and gas, and health care.

According to the FMI report, here’s the forecast for strong markets in the construction industry over the next five years:

  • Single family residential will grow 17.9 percent in 2014, but it will taper down to an average 15 percent growth each year through 2017.
  • Multifamily residential will grow 28.9 percent in 2014, but it will slow to an average 13.9 percent growth each year through 2017.
  • Lodging will grow 9.8 percent in 2014, and it will average 7.6 percent growth each year through 2017.
  • Manufacturing will grow 6.5 percent in 2014, and it will average 6.9 percent growth through 2017.
  • Health care will grow 3.9 percent in 2014, but it is forecast to ramp up in 2016 and 2017 to 8.4 percent and 9.1 percent growth each year respectively with an average five-year growth rate of 6.7 percent through 2017.
  • Power and energy construction will grow 4.6 percent in 2014, but it is also expected to ramp up to 9.4 percent growth in 2016 with an average five-year growth rate of 7.4 percent through 2017.

The weak markets in the construction industry are still those that depend mostly on government spending, such as streets and highways, water and wastewater, and conservation and development. Each one of those sectors is forecast to grow less than 3 percent on average each year over the next five years.

The office building market is forecast to grow 3 percent in 2014 and ramping up to a 6.8 percent growth in 2016, according to the report.

 

this report is provided by: BizJournals.com