If there’s one thing that’s true about the construction industry and its outlook, it’s that things are always changing. But how are they changing, and how can you position your construction business to take advantage of that upcoming growth? Here’s a quick look at where we expect the market to move in the last quarter of 2019 and the first quarter of 2020.
Snapshot & Predictions
Things are heating up in commercial construction, currently up by 1%. FMI Corp’s Managing Director Jay Bowman sees a positive future. The GDP is expected to continue growing for at least a couple of years, consumer confidence is high and businesses are seeing unexpectedly high earnings. With no anticipated hikes to the Fed’s interest rate, financing should remain relatively easy to obtain. Half the forecasted spending for the next few years is tied up in three segments: education, retail/restaurant and office buildings.
As was projected, residential construction has dropped, but is expected to start rebounding in early 2020. An approximate 5% drop was seen in 2019, but the market is stabilizing, and growth, especially in low-cost starter homes, will begin in the first quarter of 2020.
Public vs. Private
With education and infrastructure leading the pack in terms of growth, it’s easy to see that public projects will make up a good portion of the construction business income this year, but don’t count out private business growth just yet. Megaprojects by corporate giants such as Amazon and Microsoft often cover over a million square feet and have a budget of $1 billion or more, and have grown from 3% of project starts in 2013 to 33% in 2018.
Infrastructure investment continues to be a hot market, with conservation and development projects leading the charge at a 10% increase, water supply projects and public safety each expected to see a 9% increase and transportation and sewage/waste disposal each expected to see an 8% increase in spending.
With growth in the future and a wide range of tax benefits, it’s a great time to invest in your construction company’s equipment profile. IRS Section 179 allows you to take a significant deduction of the purchase price and depreciation on your new equipment, but it’s only available for a limited time. This means it’s important to make these purchases before the end of the year. If you need help with financing your construction equipment acquisitions, ENGS is here to help. Please feel free to contact us today to get started.