Despite seasonal swings, U.S. construction continues steadily forward

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Construction Outlook | Q4 2016

To receive the full report, email the Minneapolis Tenant Representation Team

Despite growing uncertainty and seasonal swings, U.S. construction continues steadily forward
As a testament to the success of the year, construction spending in the United States for 2016 MplsConstructiontotaled nearly $1.2 trillion, or 4.5 percent more than full year 2015 levels—nearly tripling the GDP inflation rate.

What to expect in 2017?
Moving into 2017, we can expect political and policy decisions by President Trump to greatly affect how business will be conducted throughout the year and beyond.

Through midyear 2017:
Presidential policies affecting the construction industry will be passed but won’t have concrete impacts until late 2017. International trade deals, import tariffs, large-scale infrastructure projects and immigration legislation could all have profound influences on how business is done.
Construction labor will still be a pain point for the industry at large. With skilled labor shortages remaining widespread, wages will rise consequently— expect these to affect project timelines and budgets.
Large lenders will weigh risk carefully amid lagging demand for new construction loans. Lenders will adjust loan standards accordingly to encourage increased borrowing while still mitigating risk.

By year-end 2017:
• Regional slowdowns will begin to weigh on the national construction industry as a whole. With the volume of new construction starts in the Northeast and West slowing compared to 2015, national firms’ focus will turn to the South and Midwest regions to grow business.
• Business dynamics in the construction industry will transform as labor and materials costs continue to rise and firms struggle to maintain sustainable profit margins. Relationships and pricing structures between owners, developers and builders will be forced to adapt accordingly.
• Full effects of Washington’s shifting policies will be felt across the nation. Voided international trade deals and new import tariffs could drive up materials costs faster. Immigration reform could shrink the skilled labor supply and spur further wage increases. Large-scale infrastructure projects will create a premium on materials and workforce in specific markets.

To receive the full report, email the Minneapolis Tenant Representation Team

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