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Construction Trends

Nonresidential Construction Index Continues to Rise


FMI, the largest provider of management consulting and investment banking to the engineering and construction industry, announces the release of the “2013 First Quarter Nonresidential Construction Index” report. The NRCI of 58.1 is a 2.6-point improvement over the fourth quarter of 2012.





The improvement reflects fundamental bright spots in the economy. “Optimistic but not bullish” is the way one panelist described his outlook on hiring for his company in 2013. Reflective of this is that 45 percent of NRCI panelists expect to increase full-time direct employees by as much as 5 percent. Most noting that hiring will be based on current staff reaching a level of consistently over full work capacity. Only 9 percent report that they expect to decrease the number of full-time direct employees.




In addition, NRCI panelists are slightly more optimistic than last year at this time for growth in nonresidential construction. Nearly 50 percent expect modest growth for 2013, with 18.4 percent predicting that industry growth for the year could reach as high as 5 percent. However, backlogs for NRCI panelists are unchanged, holding steady at a median of 9 months.





Dodge Momentum Index Takes February Jump


The Dodge Momentum Index rose 6.3 percent in February, according to McGraw-Hill Construction, a division of The McGraw-Hill Companies. The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year. February’s strong gain brought the index to 102.9 (2000=100), 23.4 percent higher than a year earlier. The increase was the third consecutive monthly gain and the first time the index has surpassed the 100 mark since 2010. In fact, the index is now at its highest level since April 2010, suggesting that the recovery for nonresidential building may be finally gaining some traction.





February’s increase for the Momentum Index was due to an 11.9 percent surge in commercial projects; the institutional portion of the index remained mostly unchanged. The improvement in the commercial segment was driven primarily by robust gains for new office and store projects. Some of the larger commercial projects entering the planning phase in February included a $150 million General Motors Data Center in Milford, Mich., the $110 million Gateway Plaza office building in Richmond, Va., and the $90 million Tower Two Office Building at North Hills in Raleigh, N.C. The largest project by far to boost the commercial component of the index was a $400 million tenant improvement project to finish the American Dream Mall in New Jersey. The sprawling complex near the Meadowlands has sat dormant since 2009, but Governor Chris Christie is pushing its new owners to quickly resume construction.





Builder Confidence Virtually Unchanged in February


Builder confidence in the market for newly built, single-family homes was virtually unchanged in February with a one-point decline to 46 on the National Association of Home Builders/Wells Fargo Housing Market Index, released Feb. 19.




Holding above the critical mid-point of 50 for a third consecutive month, the HMI component gauging current sales conditions fell by a single point to 51 in February. Meanwhile, the component gauging sales expectations in the next six months rose by one point, to 50, and the component gauging traffic of prospective buyers slipped four points, to 32.





Three-month moving averages for each region’s HMI score were mixed in February, with the Northeast up three points to 39 and the West up four points to 55 and the Midwest and South each down two points, to 48 and 47, respectively.





Nationwide Housing Affordability Increases at Year-End 2012
Exceptionally low interest rates helped ensure a slight gain in nationwide housing affordability amid relatively stable house prices in the final quarter of 2012, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index, released Feb. 21.





In all, 74.9 percent of homes sold between the beginning of October and end of December were affordable to families earning the U.S. median income of $65,000. This was up nearly a percentage point from the 74.1 percent of homes sold that were affordable to median-income earners in last year’s third quarter.





“The most recent housing affordability data should be encouraging to many prospective home buyers, because it shows that homeownership remains within reach of median-income consumers even as most local markets appear to be on a recovery path,” said NAHB Chairman Rick Judson, a home builder from Charlotte, N.C. He noted that the most recent reading of the NAHB/First American Improving Markets Index found that 259 out of 361 metros currently qualify as improving, including representatives from all 50 states and the District of Columbia.





“The median price of all new and existing homes sold in the fourth quarter of 2012 was $188,000, essentially unchanged from the previous quarter’s $189,000 that marked a nearly three-year high,” noted NAHB Chief Economist David Crowe. “It is noteworthy that affordability remains historically high thanks to favorable mortgage rates even as national home price indexes show some rise in values.”





Ogden–Clearfield, Utah held its position as the nation’s most affordable major housing market for a second consecutive quarter at the end of 2012. There, 93.7 percent of all new and existing homes sold were affordable to families earning the area’s median household income of $71,500—up slightly from the 93.2 percent of homes affordable to median-income earners in the third quarter.





Also ranking among the most affordable major housing markets in respective order were Dayton, Ohio; Indianapolis–Carmel, Ind.; Lakeland–Winter Haven, Fla.; and Syracuse, N.Y.





Among smaller housing markets, Fairbanks, Alaska, remained at the top of the affordability chart with nearly all homes sold in the quarter—99.6 percent—affordable to those earning the median income of $92,900. Other small housing markets at the top of the index included Cumberland, Md.; Springfield, Ohio; Monroe, Mich.; and Mansfield, Ohio, in that order.





After 18 consecutive quarters at the bottom of the affordability chart, New York–White Plains–Wayne, N.Y.–N.J. switched places with San Francisco-San Mateo-Redwood City, Calif., which had been the second-to-least affordable market. Just 28.4 percent of homes sold in San Francisco during the fourth quarter were affordable to families earning that area’s median income of $103,000.




Other major metros at the bottom of the affordability chart included Santa Ana–Anaheim–Irvine, Calif.; Los Angeles–Long Beach–Glendale, Calif.; and Honolulu, Hawaii, in that order.




The least affordable small housing market in the fourth quarter was Ocean City, N.J., where just 43.5 percent of homes sold were within reach of families earning the median income of $71,100. Other small metros at the bottom of the affordability chart included San Luis Obispo–Paso Robles and Santa Cruz–Watsonville, Calif., followed by Dover, Del., and Santa Barbara–Santa Maria–Goleta, Calif., respectively.




Please visit www.nahb.org/hoi for tables, historic data and details.





January Construction Starts Retreat 12 Percent


The value of new construction starts dropped 12 percent in January to a seasonally adjusted annual rate of $469.1 billion, according to McGraw-Hill Construction, a division of The McGraw-Hill Companies. The decline brought the level of contracting back to the average pace that was reported during 2012. Much of January’s downturn was due to decreased activity for nonresidential building and housing. On an unadjusted basis, total construction starts in January were reported at $33.1 billion, up 11 percent from the same month a year ago.




The January statistics lowered the Dodge Index to 99 (2000=100), down from December’s 112, and the same as the reading of 99 for the full year 2012.




Nonresidential building in January fell 20 percent to $150.6 billion (annual rate), retreating after the 33 percent jump that was reported in December. On the institutional side, the educational building category in January dropped 9 percent, following a brief upturn in December. Healthcare facilities in January plunged 35 percent, down from December. Most of the smaller institutional categories showed weaker activity in January, including declines for transportation terminals, down 54 percent; public buildings, down 39 percent; and churches, down 35 percent. The one institutional category able to report a January gain was amusement-related work, which rose 13 percent relative to December.




On the commercial side, office construction in January retreated 27 percent from December. Store construction in January decreased 19. Hotel construction ran counter to the generally downward trend, jumping 97 percent in January. Warehouse construction also strengthened in January, rising 11 percent. The manufacturing plant category in January dropped 39 percent from its heightened December amount.




Residential building, at $172.7 billion (annual rate), dropped 11 percent in January. Much of the decline reflected a steep 30 percent retreat for multifamily housing, following elevated contracting for this category in December. The January pace for multifamily housing was down 13 percent from its average monthly rate during 2012. Single-family housing in January slipped 5 percent, pausing after the steady improvement that was shown over the course of 2012. The January pace for single-family housing was still up 11 percent from its average monthly rate during 2012, and up 33 percent on a raw (not seasonally adjusted) basis from the same month a year ago.




The 11 percent increase for total construction starts on an unadjusted basis, for January 2013 relative to January 2012, was due to this performance by major sector: nonresidential building, down 1 percent; residential building, up 27 percent; and nonbuilding construction, up 8 percent. By region, total construction for January 2013 relative to January 2012 revealed increased activity in the South Atlantic, up 36 percent; the Northeast, up 30 percent; and the South Central, up 24 percent. Decreased activity in January on a year-over-year basis was reported for the Midwest, down 4 percent; and the West, down 16 percent.





U.S. Demand for Green Building Materials to Reach $86.6 Billion in 2017


Through 2017, a rebound in construction activity will propel growth in green building materials demand 11 percent annually to $86.6 billion. In addition to the lift supplied by general construction activity, continuing consumer interest in environmentally friendly products will increase the market share of most green building materials relative to non-green alternatives. Growth in residential construction will promote base demand for such products as carpeting, gypsum board, concrete and metal building products, while products that contribute to the earning of LEED® certification will see an additional boost in sales. These and other trends are presented in “Green Building Materials,” a new study from The Freedonia Group, Inc., a Cleveland-based industry market research firm.





Over the forecast period, builders and architects will increasingly opt to earn high levels of LEED certification by specifying the use of materials that earn LEED points. Residential HVAC systems, concrete made with fly ash, and lumber harvested in a sustainable manner can all contribute to LEED certification, and all are forecast to see above-average gains in demand.
Solar power products saw explosive growth between 2002 and 2012, driven by increasing installation of rooftop-based solar power modules connected to electricity distribution systems. Going forward, favorable tax incentives and strong interest in the use of renewable energy sources will promote demand for LEED-eligible solar power products.
Green building products such as recycled concrete, Energy Star-compliant HVAC systems, and permeable pavement are forecast to see substantial gains through 2017. Recycled concrete will see rising use, as concrete made with fly ash and other additives features superior performance properties and is less costly than concrete made solely from cement and aggregates. Demand for green building systems will be spurred by strong residential demand for Energy Star-compliant HVAC systems that lower utility bills. Permeable pavement demand will be supported by interest in reducing water runoff and minimizing strains on older sewer and water systems.
“Green Building Materials” (published 02/2013, 405 pages) is available for $5,100 from The Freedonia Group, Inc., 767 Beta Dr., Cleveland, OH 44143-2326. For details, contact Corinne Gangloff by phone (440) 684.9600, fax (440) 646.0484 or e-mail pr@freedoniagroup.com. Information may also be obtained through www.freedoniagroup.com.





World Demand for Power Tools to Exceed $28 Billion in 2016


World power tool demand is forecast to increase 4.5 percent annually through 2016 to $28.1 billion. The primary factor in growth will be recovery in the bedrock US market, especially as a rebound in US housing starts increases the number of professional tool users. Cordless electric tools will post the strongest gains, as these types continue to displace plug-in models due to their convenience and to improvements in lithium-ion battery performance. These and other trends are presented in “World Power Tools,” a new study from The Freedonia Group, Inc., a Cleveland-based industry market research firm.





Outside of the United States, the best opportunities will exist in the developing countries of Asia. India will post the fastest gains, due to robust growth in construction; however, the nation will continue to comprise less than 2 percent of world demand. China will also record healthy growth, and is expected to overtake Japan as the second largest market behind the United States. Power tool demand will continue to be greatest in industrialized countries, a byproduct of their sizable professional markets, as well as relatively affluent consumer bases.





Cordless electric tool demand will experience the most robust growth through 2016, advancing 8.3 percent per year. Due to their inherent convenience and mobility, cordless tools will continue to replace plug-in models. Technological improvements in the battery industry have increased the power and running time of cordless equipment, allowing these products to overcome historical price and performance disadvantages. Due to their lower weight and smaller size, lithium-ion batteries are rapidly displacing nickel-cadmium models.




In the aggregate, electric power tools account for the majority of all power tool demand, as they are used extensively by both professionals and consumers in most applications. Demand for pneumatic tools, which are used almost exclusively by professionals, will be spurred by rising motor vehicle production and construction spending. Demand for engine-driven and other tool types (e.g., hydraulic, powder-actuated) will benefit from a recovery in the world’s forestry industry, as lumber is a key material used in the construction industry. The continued need for these tools in niche applications, such as metal joining, will also support advances.




“World Power Tools” (published 02/2013, 377 pages) is available for $6,300 from The Freedonia Group, Inc., 767 Beta Dr., Cleveland, OH 44143-2326. For details, contact Corinne Gangloff by phone (440) 684.9600, fax (440) 646.0484 or e-mail pr@freedoniagroup.com. Information may also be obtained through www.freedoniagroup.com.





Schools & Universities Report Health & Productivity Benefits from Green School Efforts


According to a report released Feb. 27 by McGraw-Hill Construction entitled “New & Retrofit Green Schools-The Cost Benefits and Influence of a Green School on its Occupants,” both K-12 and universities are reporting significant benefits from their green school efforts—both in improved child health, wellbeing and performance, but also teacher and faculty satisfaction. These results are accompanied by reported financial benefits from green school activities.




According to the study, nearly all K–12 school (91 percent) and university (89 percent) respondents report that green schools have improved the health and well-being of their students. Additionally, 70 percent of K–12 schools and 63 percent of university leaders report green efforts as raising test scores of their students.




Leaders also report other benefits from their green schools efforts:




• 83 percent of K-12 and 85 percent of university leaders report increased faculty satisfaction as a result of teaching in a green school.




• Nearly a third (32 percent) of K -12 school leaders report reduced student absenteeism.




• 48 percent of K-12 and 56 percent of university leaders who increased access to natural light and views into their classrooms reported increased student engagement.




• 44 percent of K-12 and 51 percent of university leaders who included improved acoustics in their green projects noticed improvement in student attentiveness as a result of those improvements.




McGraw-Hill Construction’s Dodge Green Construction Outlook, drawn from proprietary project data reported in November that 54 percent of education construction was green in 2012—up from 30 percent in 2008, and it is expected to grow, which reinforces the importance of this study and the benefits green buildings can offer.




The report also includes opinions from the design and construction community, and reports from their clients mirror the results from the schools and universities directly. Eighty-five percent of architects report a positive impact on health and well-being from their green school projects, and 85 percent of them are reflecting student mobility and health concerns into the design of their buildings.





People in the News


CertainTeed Corporation is bolstering its capacity for industry-leading innovation through the appointment of Minas Apelian as vice president of research and development. In this newly established position, Apelian will lead the design, development and execution of next generation products and technologies across all CertainTeed business units. Apelian will also engage in global collaboration through CertainTeed’s parent company, Saint-Gobain, which was recently recognized as one of Thomson Reuters Top 100 Global Innovators.




Companies in the News


National Gypsum is sponsoring the DIY Network’s Blog Cabin, using the sponsorship as a platform to introduce an extensive PURPLE® Evolve Your Walls™ campaign to a consumer audience.





DIY Network’s Blog Cabin is an interactive TV series returning for its seventh season, airing July 29–Sept. 17. The series invites viewers and fans to design the 2013 Blog Cabin by voting on all of the major design elements, including color palette, fixtures and amenities, in hopes of winning the finished product, an exclusively-designed vacation home situated on North Carolina’s Crystal Coast. Blog Cabin is featured on six special episodes of the most popular DIY Network shows. National Gypsum’s PURPLE products will be used throughout the home and showcased in a special episode of “Mega Dens.”




As part of the sponsorship announcement at the INTEX Expo, National Gypsum introduced the PURPLE Evolve Your Walls logo and tagline that will be used to promote its family of PURPLE products.




Products in the News


Sto Corp. has announced that Sto VaporSeal has completed the ABAA (Air Barrier Association of America) Material Evaluation process and has been deemed an “ABAA Evaluated Material” and part of an “ABAA Evaluated Assembly.”




The listing for Sto VaporSeal can be found on the ABAA website under the Air Barrier Materials section at www.airbarrier.org/materials/index_e.php, Air Barrier Assemblies at www.airbarrier.org/materials/assemblies_e.php and in the appropriate fluid-applied ABAA air barrier master specification.





New on the ’Net


ClarkDietrich Building Systems has launched its new mobile application, ClarkDietrich iTools, which gives contractors and architects access to a broad range of data, including cost-saving calculators, design tools, ClipExpress Navigation, LEED® request forms and product literature directly from their mobile devices.




ClarkDietrich iTools’ intuitive features equip the building community with yet another resource from ClarkDietrich to help evaluate purchasing decisions and assists in product selection for steel framing projects. The cost-saving calculators use applicable project data to give an instant comparative pricing model for both materials and labor for many of ClarkDietrich steel framing products. ClarkDietrich iTools also provides direct links to product pages, instructional videos and SubmittalPro®, where contractors can view technical data sheets and generate submittals.




The new ClarkDietrich iTools app also includes access to the ClarkDietrich iprostud.com interior walls and ceilings design tool. Developed for contractors using the ProSTUD® Drywall Framing System, it allows building professionals to view ProSTUD data, calculate ProSTUD limiting heights and email final submittal documents directly from their mobile device. iProSTUD.com has also been updated to include ceiling spans.




ClarkDietrich iTools is now available in both desktop and mobile formats at iTools.clarkdietrich.com.





CertainTeed Corporation has launched a new online tool designed to connect homeowners and contractors. The new “Need an Estimate — Find a Pro” tool provides homeowners with a quick, simple way to find local contractors and secure estimates for exterior home renovation projects. For contractors, the tool leverages homeowner traffic on the CertainTeed website to provide them with inquiries from potential customers.




To use the tool, homeowners type their name, phone number, email and ZIP code into the designated fields. From there, the system provides the names and contact information of three local credentialed contractors, with the option to request additional information. Within seconds, the request is sent to the contractor through a sales support tracking program.




The new tool can be found on any roofing, siding, fence, railing, decking and insulation product page at certainteed.com.





Armstrong Ceiling & Wall Systems has unveiled a refreshed “website-within-a-website” designed to make acoustics easy to understand for architects, interior designers, building owners, facility managers, and contractors.




Titled “Sound Design,” the new site includes five distinct videos that visually explain how acoustics play an integral role in any space. It also clarifies how the right combination of sound absorption, sound attenuation (blocking) and aesthetics can result in an enhanced indoor environmental quality.




A page titled “Acoustics 101” describes the fundamental properties of sound and defines the most common acoustical terms and concepts. The site then examines how a balanced acoustical and aesthetical design can be attained in three different market segments: office, healthcare, and education.




Each of the market segment pages features a video that shows how different material selections influence the acoustic environment. Each segment page also includes a chart showing “Good,” “Better” and “Best” ceiling solutions for a space.




The site also includes a chart that allows visitors to hear the difference a ceiling treatment can make in a space. To access “Sound Design,” visit armstrong.com/acoustics.

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