Another Year of Growth Projected for the Construction Industry
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According to Dodge Data & Analytics’2015 forecast, the total value of new construction starts for the next year could reach $612 billion. That’s a 9 percent increase over 2014, which Dodge experts estimate will finish strong with a $563.9 billion total.
Considering that 2014’s actual total new starts beat Dodge’s original estimate by $13.9 billion for a 5 percent increase over 2013, many in the construction and construction lending industries are hopeful that growth in 2015 will also exceed expectations.
Since 2012, total construction starts have been climbing steadily. However, while in prior years residential sectors have been responsible for most of the growth, we are now beginning to see more of a contribution from other sectors. This makes the projected improvement for 2015 more diversified and less vulnerable, according to Dodge’s VP of economic affairs Robert Murray.
Residential Construction Starts Tapering Off
The residential construction sector will continue to grow in 2015, but at a more gradual pace. Single-family homes made a large jump in 2013, logging a 26 percent increase in new starts. However, Dodge’s 2015 predictions only forecast a 4 percent increase in this sector. Multi-family housing, which has been leading the recovery from the recession for many years, is expected to flatten out from 22 percent growth in 2014 to 9 percent in 2015.
Commercial Construction Starts Improve
According to Murray, office building construction has become the single most influential contributor to improved growth in the commercial construction sector. New office starts rose 23 percent in 2014 and are predicted to rise 19 percent in 2015. Retail starts have been lagging behind, with only a 2 percent increase in 2014, but 2015 is expected to bring dramatic improvement in the area of 11 percent. Institutional construction is another area that has been flat for years but is expected to grow in 2015. In 2014, this sector grew 4 percent and in 2015 growth should more than double to 9 percent.
Balance Your Portfolio with Our Fund Control Software
As a construction lender, you have no doubt kept careful tabs on all of these industry trends. Now you may need to adjust your portfolio balance to take advantage of new opportunities. ECL’s fund control software suite can help. This streamlined, single-entry software not only makes adding and managing new loan accounts easy, it also includes a variety of customizable reporting and stress testing features to help ensure your portfolio is balanced over the sectors you are most interested in.