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United States Construction Outlook | H1 2017

Throughout the first half of 2017 the construction industry has demonstrated stability in the face of adversity, with private construction investment leading the way. Amidst political and economic uncertainty and widespread fear of overbuilding, all indicators in the industry point towards continued sustainable growth.

Six months into the new presidency, many are surprised to find not much has changed in the construction world under the new administration. Discord and gridlock within political parties and shifting priorities on Capitol Hill have led to significantly less progress on public and government spending than many expected.

While spending on construction is up a sizeable 5.7 percent year-over-year, spending growth in the last three months remained relatively flat. The recent minimal growth is being driven by both the continued lack of qualified construction workers as well as a decline in infrastructure spending.

Materials costs have packed a few surprises of their own in 2017, with second quarter costs increasing by 4.4 percent year-over-year. While construction pipelines across the U.S. continue to drive steady demand for materials, cost increases in the first half of 2017 have largely been driven by political rhetoric around changing trade policy. Learn more in our H1 2017 Construction Outlook.

The three biggest industry challenges (and the opportunities they present):

  • Challenge: The ongoing labor shortage

    Reaching historic lows, unemployment in the construction industry sits at 5.3 percent while hourly wages continue to grow and outpace inflation.

  • Opportunity: Increase productivity, embrace tech and rethink how the industry operates

    Streamlining communications, workflows and document transfer between architects, engineers, project managers and others can help stakeholders do more with less manpower and quicker.

  • Challenge: Rising costs of materials

    Over the last 12 years, materials costs have grown by nearly 30 percent.

  • Opportunity: Adopt technology and make more with less

    With the advent of building information modeling (BIM), artificial intelligence (AI), modular construction and other technologies, developers and general contractors today can build with incredible efficiency.

  • Challenge: The worries of overbuilding

    After years of positive growth, many in and outside the industry are beginning to wonder – when’s the next slowdown, and what should you do about it?

  • Opportunity: It’s time to start planning

    Anyone in the construction industry needs to create a contingency plan for if and when the economy begins to slow. While the plan shouldn’t go immediately in to effect today, having it close by is a necessity.

 Sector snapshots

Office

Rising concession packages, rising vacancies and rising absorption are all in the office tenant’s favor.

Industrial

Focus has shifted towards sustainability in renovated and newly constructed facilities.

Retail

With consumer buying habits rapidly changing, retailers have to focus on innovating and creating the best customer experience.

Hospitality

Modular construction and unique partnerships are just some of the solutions hotels are using to keep project timelines moving.

Healthcare

With healthcare policy in flux, the industry is taking a few measures in anticipation.

Sports facilities

Technology plays a much larger role in fan experience. The days of “seat ‘em and feed ‘em” no longer exist.

 Additional resources

Snapshots

Get the latest on what's happening inside the construction industry directly from the desk of JLL's research team.

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