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    Home » Trends » LGE Construction Report Shows Causes for Optimism
    Trends

    LGE Construction Report Shows Causes for Optimism

    BEX StaffBy BEX StaffSeptember 2, 2022No Comments4 Mins Read
    Credit: LGE Design Build
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    By LGE Design Build

    LGE Design Build has released its third quarter Construction Delivery Outlook report that analyzes trends and data to create construction forecasts expected to shape and influence the industry into 2023.

    The report examines obstacles and opportunities in various sectors in construction, including labor, supply chain, material costs and demand.

    A summary of the Construction Delivery Outlook key findings include:

    Construction Labor

    Labor markets continue to present challenges and the effects are being felt across many sectors of the economy. In the construction industry, the unemployment rate has been in steady decline since the height of the pandemic and is finally below pre-pandemic levels. More positive indicators show that demand for architectural work and construction have been growing.

    Other notables:

    • From April to July 2022, the construction unemployment rate fell from 4.6% to 3.5%, well below the pre-pandemic mark of 5.5%;
    • In July, total construction employment rose by 32,000 hires; however, the nonresidential construction sector has yet to surpass its pre-pandemic levels;
    • According to the U.S. Department of Labor, the construction industry is looking to add approximately 650,000 workers in 2022;
    • Skilled trades have struggled to fill positions, and fewer than 45,000 apprentices completed their programs in 2021;
    • Nearly 90% of construction firms have encountered project delays, with 60% of those firms citing labor shortages as a reason.

    Supply Chain

    Recent figures show there is cause to be optimistic about the current conditions of the supply chain. The once “perfect storm” that was causing all the issues seem to be dissipating as shipping delays on water and land are becoming less frequent.

    Other notables:

    • Since the beginning of the year, there has been an 80% reduction in the number of ships that are waiting in U.S. ports;
    • Shipping containers are no longer in short supply and there is even a current surplus of approximately six million containers across the globe;
    • The unemployment rate in the transportation sector fell below pre-pandemic levels in July as it hit 4.2%. In that same month, approximately 3,500 trucking jobs were added;
    • The Infrastructure Investment and Jobs Act could add additional strain to the supply chain on a national level, as a provision within the act requires that all materials for roads and bridges be sourced domestically;
    • The construction of three semiconductor plants in Arizona have made it difficult for local subcontractors to source materials.

    Material Costs

    Final construction costs are expected to remain high for at least another quarter, but material costs are expected to decrease even more as additional supply chain solutions are put in place. The cost of steel, specifically, is expected to continue to decrease in cost as the year progresses.

    Other notables:

    • Lumber has been one of the most volatile materials, with drastic price fluctuations since September 2020. However, the price of lumber has now lowered 16% over the first half of 2022;
    • While flat glass has somewhat stabilized nationally, LGE has seen a staggering 40% increase in the price of glass for storefront systems in the Southwest in the past quarter;
    • Prices on steel mill products have dropped more than 14% after spiking drastically in May as demand continues to wane.

    Most In-Demand U.S. Markets for Industrial Construction

    • There is nearly 44MSF of industrial construction taking place in the Phoenix metro area, which is second only to Dallas with just shy of 57MSF under construction.
    • When it comes to completed projects for the first half of 2022, the Dallas market has delivered 15.9MSF, which is considerably higher than the next two markets, Indianapolis and Phoenix, which produced 7.9MSF and 7.7MSF, respectively.

    Also of note, the effects of labor issues, supply chain delays and material volatility have been impacting more than just construction teams. Architectural teams have been experiencing long lead times due to the changing expectations of municipalities’ design review boards, along with prolonged entitlement and permit review processes.

    Click here to view the report data.

    apprenticeships approval delays architectural demand construction demand Construction employment Construction Outlook COVID David Sellers design review boards economic indicators entitlement process delays glass IIJA Industrial Infrastructure Investment and Jobs Act labor shortage LGE Design Build lumber market demand materials costs materials sourcing pandemic permit review project delays skilled trades steel supply chain trends U.S. Department of Labor Unemployment warehouse/manufacturing
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