Business View - December 2014 9
Commercial building will increase 15 percent, slightly
faster than the 14 percent gain estimated for 2014.
Office construction has assumed a leading role in
the commercial building upturn, aided by expanding
private development as well as healthy construction
activity related to technology and finance firms. Hotel
and warehouse construction should also strengthen,
although the pickup for stores is more tenuous.
Institutional building will advance 9 percent, continu-
ing the moderate upward trend that's been estab-
lished during 2014. The educational building category
is now seeing an increasing amount of K-12 school
construction, aided by the financing made available by
the passage of recent construction bond measures.
Healthcare facilities are expected to show some im-
provement relative to diminished activity in 2014.
Single family housing will rise 15 percent in dollars,
corresponding to an 11 percent increase in units to
700,000 (Dodge basis). It's expected that access to
home mortgage loans will be expanded, lifting hous-
ing demand. However, the millennial generation is only
gradually making the shift towards homeownership,
limiting the potential number of new homebuyers in
the near term.
Multifamily housing will increase 9 percent in dollars
and 7 percent in units to 405,000 (Dodge basis). Oc-
cupancies and rent growth continue to be supportive,
although the rate of increase for construction is now
decelerating as the multifamily market matures.
Public works construction will improve 5 percent, a par-
tial rebound following the 9 percent decline estimated
for 2014. Highway and bridge construction should sta-
bilize, and modest gains are anticipated for environ-
mental public works. Federal spending restraint will be
offset by a greater financing role played by the states,
involving higher user fees and the increased use of
public-private partnerships.
Electric utilities will slide 9 percent, continuing the
downward trend that's followed the exceptional vol-
ume of construction starts that was reported during
2011-2012. With more projects now coming on line,
capacity utilization rates will stay low, limiting the need
for new construction.
Manufacturing plant construction will settle back 16
percent, following the huge increases reported during
both 2013 (up 42 percent) and 2014 (up 57 percent)
that reflected the start of massive chemical and ener-
gy-related projects. Next year's volume remains quite
high by recent historical standards.
