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United States Construction Outlook | Q3 2016

Led by growth from a number of key indicators like spending and pipeline, the U.S. construction market flexed its muscle in the third quarter across every region and property type, though some uncertainty is beginning to creep in.

Despite construction spending at cyclical highs, the labor crunch remains a major challenge for companies looking to hire given a lack of available skilled workers. And as material and labor costs continue to rise, we expect to see significantly slower growth by the end of 2017. This coming shift will force many firms to shrink budgets and consolidate services to clients, creating more competition for projects in the near future.

Our Q3 U.S. Construction Outlook explores the current state of the construction industry and expectations for the coming months. Specifically, we take a look at how economic risk, labor shortages and new technologies are impacting both firms and markets. And, we dig into four key sectors: office, industrial, hospitality and retail.

Get an overview of our findings with the resources here, or download the complete report for the full picture.

Here are three things to keep a pulse on in the coming months:

  • Risk


    What impact will the economy have on new construction? Signs of slowing growth is causing financiers, developers, and contractors alike, to take a more cautious look at their risk.

  • Labor


    A lack of available construction labor remains a major challenge across all U.S. markets, with labor costs expected to continue to rise over the next year.

  • Tech


    New design, productivity and sharing tools are revolutionizing how work is done, as early adopters find huge success with Building Information Modeling (BIM), the sharing economy and cutting edge hardware.

Market comparisons: Click through the tables below to see office space under construction and cost by market.

Under construction (s.f.)

After delivering 12 million square feet of new supply, developers broke ground on more than 20 million square feet of projects, bringing the total pipeline to 101 million square feet. 65% of the total pipeline is in just 10 markets.

Market Under construction (s.f.)
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Market Cost Index Cost Rank % Natl avg.
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 Sector snapshots

Office

Despite slowing growth, quarterly activity was strong across the board. Preleasing is up and the construction pipeline is at its highest level of this cycle.

Industrial

Deliveries are on pace to beat 2015 levels, with growth remaining steady as the sector hits its lowest vacancy rate in over 16 years.

Hospitality

Metrics suggest stability is coming back to the lodging industry as occupancy remains at historic highs and transaction volume soars.

Retail

Though store closings are at a cyclical high, the impact on real estate has been limited, thanks largely to increased apparel store demand and e-commerce disruption.

 Additional resources

Construction chart of the week

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

Project management news and trends

See what our experts on construction management are talking about. From reviews of recent projects to leading industry research, we'll keep you in the know on all things project management.