U.S. construction will continue to grow at a steady 3 to 3.5 percent during 2006, according to the industry analysts and economists who gathered to present their forecasts for the next year and beyond at Reed Construction Data’s® BuildingTeam Summit held at the Willard Intercontinental Hotel on Oct. 27 and 28, 2005, in Washington, D.C.
In a message delivered to more than 185 construction professionals during the two-day conference, six experts and two panels of industry leaders cited American innovation as a key component in achieving sustained growth. Experts emphasized innovation in the areas of architectural design, capital investment and business practices as the critical elements necessary for the construction industry to exceed the economic gains projected for the U.S. economy as a whole.
Their consensus is 2006 will continue the economic recovery seen in 2005, despite higher inflation driven by rising fuel costs. It was forecasted that the next two years will see a strengthening economy, accompanied by positive growth for several sectors of the building industry including commercial, public and other nonresidential construction markets.
“The Reed Construction Data BuildingTeam Summit is an exceptional event that provides a comprehensive outlook on the design and economic trends shaping the year ahead for architecture and construction,” said Jim Cramer, moderator for BuildingTeam Summit and president/CEO of Greenway Group, Inc. “It’s an opportunity for experts and industry leaders to share their insight with the people who will benefit the most—the members of the architecture, engineering and construction community. For them the conference is the essential economic and business planning tool for the upcoming year.”
“As an attendee of the conference for the last seven years, I found the BuildingTeam Summit very compelling this year, especially the message delivered by Lou Dobbs. The conference was an excellent forum for economic, construction market and trend information. It was comprehensive with first class economic speakers and a panel of professionals from the construction industry that shared wonderful innovative and proactive ideas for the construction industry,” stated Rita Thompson, manger, government relations, Clark Construction Group, LLC.
“Reed’s BuildingTeam Summit is an industry leading forum. The dual focus on the economy and innovation in our industry was outstanding and engaged superb, knowledgeable speakers who very effectively conveyed their important message,” said Gordon Mills, FAIA, Chairman and Chief Executive Officer, Durrant Group.
Thom Mayne, world-renowned architect and 2005 Laureate of the Pritzker Architecture Prize, shared his vision of the future of architecture in America and abroad during his address, The Future of Building Design, to attendees during the pre-conference dinner. According to Mayne, leading the global architectural community will require greater innovation on the part of American designers and builders in terms of both design and materials used.
Keynote speaker Lou Dobbs, anchor of CNN’s Lou Dobbs Tonight, delivered a message covering the U.S. economic outlook for 2006. Dobbs projects steady economic growth of 3 to 3.5 percent for the coming year in spite of a rising national trade deficit, which will increase for its 29th consecutive year, and the impact of rising inflation rates. Dobbs cautioned against the increasing trend of outsourcing jobs abroad, citing the practice of cutting costs with cheap labor as a “race to the bottom” that stunts innovation and will ultimately cause damage to the U.S. economy in the long run. Dobbs also addressed the current rush to invest American capital abroad, in nations such as China, instead of at home, suggesting that business leaders in the United States should question the wisdom of turning over our emerging technology to the fastest emerging economy in the world today.
Clayton Christensen, Ph.D., professor, Harvard Business School, addressed innovation in the industry explaining that innovation in business is not as intrinsically random or risky as historically believed. Christensen’s message stresses that if decision makers incorporate solid business theories on how business works, when building business plans, they can achieve greater success, with greater frequency. He also discussed models of innovation that are both disruptive and helpful to businesses and how they can learn to identify opportunities to improve products and services in meaningful ways.
Jim Haughey, Ph.D., director of economics—Reed Business Information, presented information on the 2006–2007 U.S. construction outlook for residential, commercial and heavy construction. According to Haughey, new residential construction has peaked and new housing starts are projected to slow to 1.8 million units moving into 2007. Spending on non-residential and heavy construction is projected to increase as federal highway funding becomes available and the cost of materials resumes rising.
Growth in real construction activity will ebb to nearly the same level as the overall growth in the economy, but the nominal value of construction spending is expected to expand rapidly due to price of materials increases spurred on by a progression of inventory cycles in steel and lumber; a general rise in inflation as credit, oil and natural gas prices spill over into all products; and the impact of two Gulf hurricanes on materials demands.
Bret Wilkerson, CEO Property & Portfolio Research, addressed the outlook for the commercial real estate sector stating that commercial real estate is still doing well and the economy will continue to grow moving into 2006. Wilkerson cited four main factors driving capital to commercial real estate: worries over rising inflation; shifting demographics as Baby Boomers begin retiring and the need for office space decreases and sales of second homes increases; strong relative performance, and decent growth in rents.
Wilkerson also reports that retail construction will experience the most growth in terms of construction, and industrial space will experience growth in big boxes and warehouses.
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Reed Construction Data is a provider of construction information products and services designed to advance the businesses of its customers with timely, accurate and actionable project, product and cost data. Reed Construction Data collects, adds value to and distributes construction industry information through a suite of print and online references for architects, engineers, contractors, manufacturers, distributors and other professionals in the construction industry. Founded in 1975, Reed Construction Data is an active participant in the construction industry, partnering with its customers and industry associations to meet customer information needs. For more information, visit www.reedconstructiondata.com or call 877.REED411.
