Trends ranging from resurgent residential markets to emerging energy markets could prove profitable to many Midwest builders and help the region's construction industry heal its wounds after a long downturn.
Like the nation at large, the region is enjoying activity in single-family and multifamily residential construction, both bellwethers of commercial construction in sectors aligned with consumer demand, says Anirban Basu, chief economist with Arlington, Va.-based Associated Builders and Contractors.
"For now, retail and hospitality appear to be the primary beneficiaries," says Basu. "Half of all jobs created in June were in those two markets. The coming year should be good for industry members most closely allied to either."
Though increasing mortgage rates could sideline single-family activity, apartment construction should remain healthy, particularly in urban areas, says Ken Simonson, chief economist with Arlington, Va.-based Associated General Contractors of America. "Younger consumers who can't afford to purchase residences in cities are less willing to 'trade miles for a mortgage,'" he says. The rub: New urban residences typically don't stimulate construction in other sectors, since related uses, including retail, are frequently already in place.
More fundamental to sustained economic recovery is cheaper energy. "The twenty-teens are shaping up to be the great technological decade of our times, primarily due to the profusion of less costly energy deriving from shale," says Basu.
Among other benefits, cheaper, more predictable supply should spur construction of factories and distribution centers in regions such as the Midwest. "The Heartland is coming back," says Basu.
To view ENR Midwest's rankings of the region's Top Constractors, click here.