To paraphrase a comment I heard early on January 2nd on Bloomberg, “Congress didn’t even move the cliff. They just let us fall to a lower ledge.” Most of us would happily compromise some of our political positions to achieve some stability and avoid any more cliffs.
In spite of congress and the challenges they throw at us by not making decisions the development/construction industry is starting to make a comeback.
We all see the headlines Ð Housing starts are up, Unemployment is down, and the Cost of borrowing is so low that these rates haven’t been seen in over 40 years. Along with more construction activity we are also seeing a general escalation in construction costs. However, according to Turner Construction’s fourth quarter 2012 “Construction Cost Index” the cost of construction now is still 9% below 2008 levels.
In a recent presentation in Seattle before the Washington State Chapter of NAIOP, Cliff Hill, Senior Director of Operations for McGraw Hill Construction/Dodge outlined the company’s forecast for construction growth in 2013. While somewhat offset by a reduction in infrastructure construction, his presentation noted that there will be significant growth in several specific construction markets. Mr. Hill’s information forecasts construction growth in Washington State for 2013 as compared to 2012. These increases were:
Single family housing 15%
Multifamily Housing 12%
Retail Development 38%
Office Buildings 18%
Manufacturing 77%
Warehouse 16%
Healthcare 22%
Hotels 68%
Public Buildings 18%
While the cliffs keep moving, there is significant optimism in the construction industry for continuing growth and activity in the coming year. The cost of money is extremely low, construction costs are still reasonably low, and architects/engineers, contractors and suppliers all have capacity to take on new projects. If you have been thinking of starting a construction project, now is the time to start talking about it. Give me a call at 425-881-7506.