Ever since the economy took a nosedive in 2008, every industry has been hoping the next year will finally be the one in which business will improve. In particular, the design and construction industries hope that building owners and organizations will start spending—not just tackling deferred maintenance but constructing new buildings and/or making much needed improvements to and expanding existing buildings. If you’ve been paying attention to some leading construction and design indicators, then you know there is evidence that 2015 may be the year for which we’ve all been somewhat impatiently waiting.
At a score of 53.7, the October 2014 Architecture Billings Index (ABI) released by the Washington, D.C.-based American Institute of Architects suggests the coming year will be strong. The ABI reflects the approximate nine- to 12-month lead time between architecture billings and construction spending. Any score above 50 indicates an increase in billings.
“Though it has been slow in emerging, we’re finally seeing some momentum develop in design activity for nonprofits and municipal governments, and, as such, we’re seeing a new round of activity in the institutional sector,” said AIA Chief Economist Kermit Baker, Hon. AIA, Ph.D.
In November 2014, New York-based Dodge Data & Analytics released its 2015 “Dodge Construction Outlook”. The report predicts 2015 total U.S. construction starts will rise 9 percent to $612 billion, which is a larger increase than what the organization predicted for 2014 (5 percent to $564 billion).
“The economic environment going forward carries several positives that will help to further lift total construction starts,” noted Robert Murray, Dodge Data & Analytics’ chief economist and vice president. “Financing for construction projects is becoming more available, reflecting some easing of bank lending standards, a greater focus on real-estate development by the investment community and more construction bond measures getting passed. While federal funding for construction programs is still constrained, states are now picking up some of the slack. Interest rates for the near term should stay low, and market fundamentals (occupancies and rents) for commercial building and multifamily housing continue to strengthen.”
Meanwhile, the retrofit staff has been conversing with customers and readers who stated their own businesses are improving. For example, an LED lighting manufacturer said 2014 was a banner year with sales up 50 percent from 2013, so the company is expecting 2015 to be even better. Similarly, a plumbing products manufacturer reported its commercial products division surpassed its 2014 projections by 20 percent. This company, too, is expecting more growth in 2015.
Architects and contractors also are experiencing a surge in business. A partner in a full-service architectural and interior design firm based in the Northeast told me his business is going “gangbusters”. The firm has been hiring and has a number of additional architect positions to fill. He also mentioned he and his partners are considering opening several satellite offices up and down the East Coast.
What do you think? Is 2015 going to be a breakthrough year for your business? Please tell us via social media, email or snail mail. Let’s create momentum for a successful New Year!