Optimism Quotient was an exceptionally high 130 in 2015; Still a highly-optimistic 108 for 2016
For those of us who make our homes in Middle Tennessee, we are well aware of the booming growth in the construction industry. It’s hard to sneeze and miss a crane around these parts.
In fact, the surge is so strong that it was reported in the New York Times in October 2015 that more than $2 billion will be spent in Nashville alone on more than 100 construction projects that are either new this year or already in the works.
(Read the New York Times story: http://www.nytimes.com/2015/10/14/realestate/commercial/nashvilles-skyline-being-rebuilt-by-building-boom.html?_r=0)
This is great news for the construction industry. But the good news isn’t just for Middle Tennessee. In fact, it extends throughout most of the country.
A report published in early May by Construction Market Data (CMD) forecasted that nonresidential construction starts in the United States will increase year-over-year by 7.4 percent, above the previously forecasted mark of 6.5 percent from Q1.
Here are some of the highlights of the report:
- Office buildings, hospitals and healthcare facilities, and transportation terminals are likely to see the fastest gains. But civil engineering projects like roads and bridges will also contribute to the industry’s growth as well.
- There is consistency in growth across market segments, as the report showed positive growth between February and March in all of its reporting areas — 11.3 percent in commercial, 27.2 percent in institutional, 20.7 percent in heavy engineering, and 5.2 percent in industrial.
- The construction industry is expected to be one of the primary drivers of the U.S. economy this year.
- Industry growth should continue as interest rates remain low, making financing attractive.
- By 2020, the total value of construction starts is forecasted to reach $700 billion.
So, what does all of that mean? It means that while the Optimism Quotient numbers are slightly lower than in 2015, it’s OK to continue to be confident about our construction future. (The Optimism Quotient was an exceptionally high 130 in 2015, but is still a highly-optimistic 108 for 2016, according to Wells Fargo Equipment Finance.)
It also means that in many cases, you can be a bit more selective on projects. This is both because of the increase in the number and volume of projects — both a good thing! — as well as one of the bigger problems in the industry at the moment in the lack of human capital. Because of the reduced inventory of workers, it’s important to choose your projects wisely.
But, despite that challenge, hold your heads up! It’s a great time to be working in construction.
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Read more about the Optimism Quotient:
Read more about the CMD report: