While many trends have been on the rise within the commercial construction industry, there are many more logistical predictions for this industry due to social, economic, and political changes within the United States and abroad. The following are a few predictions for commercial construction for 2023:
Inflation
Rising inflation throughout the United States has been affecting nearly every industry and individual alike, and commercial construction is no exception. CBRE Group, Inc., a notable commercial real estate services and investment firm, reports that commercial spending is predicted to increase by 6% in 2023. While historically, this isn’t a largely concerning increase, one major factor is increased costs associated with materials. The Bureau of Labor Statistics reported a 20.4% year over year increase in building material costs, leading to higher project costs overall.
Multifamily Projects
Due to several factors, including rising inflation, lasting effects of the COVID-19 pandemic, high home interest rates, and low vacancy rates, in 2023 you can expect to see an increase in multifamily projects within the commercial construction industry. As fewer homeowner applications appear in 2023, the demand for multi-unit complexes increases, providing numerous opportunities for commercial construction companies to meet this growing need and address low vacancy rates.
Increased Demand
Despite inflation and rising construction costs, demand for construction is predicted to increase by 6% to reach $1,419,192 million in 2023 according to the American Institute of Architect’s AIA Consensus Construction Forecast, following the 9% predicted increase in 2022. This means that, while labor shortages and supply chain disruptions will remain a persistent concern, the actual demand for new construction remains and increases.
While the United State faces numerous economic challenges, the commercial construction industry has a more or less positive outlook entering 2023. Equipped with new digitalization practices, enhanced technologies, and a growing need for construction projects, commercial construction remains critical for meeting the ever-changing needs within the United States.
GCI has served clients across the Northern Great Lakes Region for 125 years in a wide range of projects and industries. To discuss your next project, contact us at gcfirst.com.