By Michael Mock, VP of Industry Development, The Electrical Alliance
Economists’ projections for construction activity in the Washington, D.C. market are extremely bullish. A number of experts are confident that 2017 will be an excellent year for the industry and they are confident that 2018 will be equally strong.
These projections, in the short run, are reflected in the current increase in demand for construction services, but is this activity simply a “bubble” or part of a longer trend. Consider this recent statistic from the Washington, D.C. Economic Partnership: “The District added 13.7 million square feet of built space in 2016 with nearly that much planned for 2017.”
Other economists hold a similar view. For example, a presentation by the head economists at commercial real estate firm, Cushman & Wakefield, provides solid evidence that the current economic boom (already the third longest in U.S. history) will remain strong. They note: “No excesses in sight – the current expansion is likely to last several more years.”
Here are some of the metrics used to come to this conclusion:
- Consumer confidence has surged to its highest level since 2001. An example of this confidence is reflected in 2016 new car sales which were the best since 2006.
- The DC Metro unemployment rate is currently 3.7%.
- Increasingly tight labor markets are leading to higher wages. And, the U.S. National Bureau of Economic Research predicts an eight percent decline in construction workers if the Trump Administration’s initiative to deport undocumented workers goes forward.
The Cushman & Wakefield & PowerPoint is well worth reviewing. It provides excellent insights into which markets will continue to grow and why. It also makes insightful observations on millennial characteristics. Millennials are now the largest component of the labor force!
And, here’s one more economic tidbit: The Trump Administration is poised to keep the party going with proposals to greatly increase investment in infrastructure projects, which will very likely include numerous Private Public Partnerships. It’s been a while since our markets were so robust – Let the Good Times Roll!