Are There Any Bright Spots in 2010?

Believe it or not, the answer is "yes." While the year behind us was rough - and 2010 will continue to be a struggle - there are pockets of opportunity out there worth exploring.

It's no secret that expectations are for ongoing declines in nonresidential construction. How steep a decline is unclear. Forecasts range anywhere from 2% to as much as 16%, depending on which leading indicators economists follow, and how they define "nonresidential." In other words, where the year will end up is anyone's guess.With that said, there appears to be fairly uniform agreement about which markets will be affected most. Substantial weaknesses are expected in lodging, retail, parking garage, amusement, private office, warehouse and industrial/manufacturing construction.

On the flip side, public works construction (water, sewer, etc.) is expected to grow as projects funded by the American Recovery and Reinvestment Act (ARRA) finally start to break ground. Government building construction is also expected to see gains due to ongoing federal government support.

Green building construction offers substantial opportunity for 2010 and beyond. According to data from McGraw-Hill, starts in green building construction increased fivefold between 2005 and 2008, and should triple by 2013 to $140 billion in construction spending. Whether it's new green projects or renovations to existing structures to make them more energy efficient, this is definitely a market to watch.

Of course, the major bright spot for 2010 is again transportation construction. The American Road & Transportation Builders Association expects the value put in place to reach $90.5 billion, up from $83.9 billion in 2009. The $41.2 billion in 2009 federal highway obligations, plus the additional $26.7 billion available through the ARRA, will serve as the foundation for this growth.

"Funding from ARRA is going to help drive growth in the highway, street and bridge construction market," says Alison Premo Black, vice president of policy and economist. "ARTBA is forecasting real growth of 8% for 2010."

That growth could be even more pronounced if a jobs creation package, passed by the House on December 16, takes hold. The House package provides an additional $36 billion to roads and rails, as well as extends the current highway and transit law through the end of September, allowing time for substantive debate. If we're lucky, the Senate is already reviewing and revising the House package, with the intention of passing its own version in the near future. Looking outside nonresidential construction, single-family housing is forecast by some to soar by 30+% in 2010. Residential contractors jumped into commercial construction when housing tanked - now it's your turn.

Clearly, there are opportunities out there. Take a look at your current business mix and equipment fleet, and examine how you can capitalize on available projects in potential growth markets. If needed, bring expertise on board to help you effectively capture and complete work outside your traditional business niche. Do what it takes to remain viable in 2010, so you can reap the rewards of the anticipated construction market recovery starting in 2011.

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