As we enter 2024, there are positive signs of growth, stability, and opportunity within the construction industry. According to Construction Dive*, a remarkable 20% surge in construction starts was noted in December 2023, putting an end to three consecutive months of declining activity. This is a clear sign that the planning queue is stabilizing, according to Richard Branch, chief economist for Dodge Construction Network.
However, it’s important to note that overall construction activity was still 4% lower compared to 2022. Despite this, the momentum seems to be shifting positively with the anticipation of lower interest rates in 2024. This should spur construction activity onwards, offering a brighter outlook for the year ahead.
Looking at specific sectors, manufacturing construction starts saw a significant rebound of 75% in December, driven mainly by electric vehicle battery factories and semiconductor fabrication plants. Commercial starts also showed strong growth, increasing by 48%, as retail, office, and warehouse projects all posted sizable gains.
Institutional starts, primarily comprised of healthcare and education projects, rose by 22% in December, with education, public building, and recreation construction leading the way. However, healthcare-related construction was the only sector that experienced a decline during this period.
Residential building activity also ended the year on a high note, jumping 8% in December, with multifamily starts leading with a 22% increase in activity. This is a promising sign considering the total residential construction dropped 13% in 2023.
The American Institute of Architects’ Architecture Billings Index, a leading indicator of construction activity, also displayed positive signs with fewer firms reporting a decline in billings. This is a promising sign for construction activity in the upcoming nine to 12 months.
The construction industry continues to face challenges, including labor shortages and tight credit. However, the positive trends, particularly seen in the manufacturing, commercial, and institutional sectors, as well as the promising outlook for residential construction, suggest 2024 will be a more promising year for the construction sector.
These positive indicators offer ample opportunities for growth and investment for architects, investment companies, businesses considering building, and other stakeholders in the construction industry. The Highland Group, a leading general contractor, design-build, and real estate development firm serving the Southeastern United States, is committed to leveraging these opportunities to deliver exceptional results for their clients.
Josh Brock, PMP, VP of Preconstruction at The Highland Group, reflected on the company’s recent performance, saying, “We saw tremendous growth as a company in 2023, primarily due to our team’s success with adapting to project specific challenges. Every project seemed to require a little more effort to meet strained budget requirements imposed by market conditions, which extended the preconstruction phase of the project life cycle. The development growth opportunities were and are still plentiful, but the list of resilient general contractors is few. At The Highland Group, we are well positioned for the task ahead and continue to harness the momentum generated during those late quarter successes. I embrace the commitment ahead to provide consistent and innovative service to our current and future Clients, while making a lasting and positive impact on the industry.”
With such committed and resilient teams, businesses like The Highland Group are poised to take advantage of these positive trends and overcome the challenges that lie ahead, contributing to the overall growth and stability of the construction industry.
* Construction Dive: Construction Starts Jump 20% by Sebastian Obando: https://www.constructiondive.com/news/construction-starts-december-2023-dodge-activity/704995/
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A premier real estate development and commercial construction firm, offering expertise in various services such as preconstruction, general contracting, construction management, and design-build delivery. We are on a mission to develop leaders with high standards that make a positive impact on our company and the communities where we operate by fostering trust and building exceptional projects.
Proudly serving clients across the Southeastern US since 2005, The Highland Group has established offices in three locations: Gulf Coast Region (501 South McKenzie Street, Suite 2, Foley, Alabama, 36535), Tennessee Valley Region (1300 Meridian Street North, Suite 300 Huntsville, AL 35801) and Florida Panhandle Region (130 Richard Jackson Blvd., Suite 104A, Panama City Beach, Florida, 32407).
Find out more about us at www.TheHighlandGroup.com