Constructing The Future
June 20, 2015 |
Written by: Larry Seratt
President, Serco Contracting, Inc.
Like many areas of real estate, the construction market took a downward dive during the 2008 recession. Having been in the construction industry since the early 80’s, it’s not a light statement when I say 2008 was devastating for careers and companies alike – but especially construction. Several contractors who had construction businesses for over 25 years were forced to close their doors due to the market downturn. Many other construction companies had to drastically downsize to keep floating. One example is a contractor that I know personally who downsized from 40 employees to 4 employees. After he downsized, his role also significantly changed from overseeing day-to-day office jobs, to picking up tools and help his skeleton crew. With all of that said, we are seeing the market finally starting to turn around –and the projections are bright.
According to Redd Construction Data, construction rose approximately 5% in 2014 and is estimated to rise 9% in 2015. This ultimately means new construction will nearly double this year which is great for everyone in the industry. A trend that I have noticed over the past two years, aside from new builds, is the increase in demand for residential remodels and renovations. Prior to 2014, the majority of projects were commercial and concrete related. Due to the influx of jobs, I have shifted my focus toward the trend of residential projects that create an increase in home resale values.
What will the future hold in the construction sector? I predict residential homes will match every requirement necessary for sustainability. I am seeing more and more builders incorporate items such as reclaimed materials into their new builds in order to cater to the environmentally-conscious millennials who will soon be buyers. Due to the scarcity of land in Phoenix metro, I also see much of new construction taking place in infill areas such as multi-level structures built between existing buildings. Another concept that is beginning to take off is communities constructed in rural areas in an attempt to get away from the hustle and bustle of city life – which may cater to the increasing amount of baby boomers. A great example of rural building is the community Trilogy located right outside of Wickenburg.
With increased construction projected through 2015 through 2019, it presents a great opportunity for both commercial and residential real estate. As always, an increase in construction activity equals an increase in real estate activity and a healthier market. Construction is a field I have loved for decades and I’m happy to see the corner turn toward the positive. The year 2015 in the construction industry has been busy – I’m also seeing many people enter or reenter the industry again to return to what I believe is a rewarding career.