Separate Construction Outlooks Predict Good Times Ahead for Commercial Developers
Industry reports released recently, including a new index launched by the U.S. Chamber of Commerce and materials supplier USG Corp., reveal a strong expected performance by the U.S. commercial construction industry, along with optimism among contractors that new projects will be added throughout next year.
An overwhelming majority of respondents, 96%, surveyed for the new USG + U.S. Chamber of Commerce Commercial Construction Index (CCI) is confident that revenues in the commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – will increase or remain stable this year.
This CoStar report on national and Philadelphia commercial properties is being offered through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm.
The CCI, a quarterly index designed to gauge the outlook and sentiments specifically for the commercial construction industry regarding U.S. and Philadelphia commercial real estate properties, sprang from a partnership between the Chamber, USG and Dodge Data & Analytics, “was born out of a need to understand the issues that affect commercial construction,” said Jennifer Scanlon, USG president and chief executive officer.
About 40% of contractors surveyed for the CCI expect an increase in revenue this year with 3% expecting a decrease. The index measures such specific indicators in the U.S. and Philadelphia commercial real estate markets as construction work backlogs, new business pipelines, revenue projections, workforce issues, and access to construction financing.
Several mixed-use megaprojects involving national and Philadelphia commercial real estate listings are moving toward vertical construction in urban metros across the U.S., including the planned $1.6 billion expansion of Penn Station in Manhattan; The Eleventh, a $1.25 billion project on a full block at Manhattan’s High Line; and the $1 billion redevelopment of Chicago’s Union Station, just to name a few.
In a separate report, the Associated Builders and Contractors (ABC) Construction Backlog Indicator (CBI) reported construction backlogs in the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – increased to nine months during the first quarter, up 8.1% from the fourth quarter of 2016 and up 4% on an n annual basis.
“For the first time in the series’ history, every category, firm size, industry and region registered quarterly growth in the CBI,” said ABC Chief Economist Anirban Basu commenting on the report intended to serve as a leading construction spending indicator. “Among the big winners were firms in the western U.S. and those with annual revenues between $30 million and $50 million. This was a terrific report.”
Basu cautioned that some contractors working on projects involving U.S. and Philadelphia commercial real estate listings registered concern for conditions in 2019 and 2020, citing the already lengthy duration of the economic recovery; evidence of saturation in some CRE markets; cuts in public spending; and tightening monetary conditions.
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