Laura Marlow Senior Director, Strategic Partnerships ConstructConnect

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2 Moderator Laura Marlow Senior Director, Strategic Partnerships ConstructConnect 27 years marketing and IT experience within the healthcare, telecom and construction industries Responsible for Corporate Social Responsibility and Sustainability initiatives Serves on the Board of Directors for Design Futures Council; executive director of AEC Cares

3 @AGCofA

4 Before we begin.. Technical issues Try F5 on your keyboard Submit a question through the console Q&A session To ask a question, enter your text in the ASK A QUESTION box and click ASK Speakers will answer as many questions as they can in the allotted time Enlarge slides Click ENLARGE SLIDES to view an expanded presentation screen Presentations Click the DOWNLOAD SLIDES button to download the PDF Certificates At the conclusion of today s webcast, click the AIA/CES Certificate widget at the bottom of the screen to print your certificate 4

5 AIA Continuing Education Systems ConstructConnect is a registered provider for the AIA Continuing Education Systems. Credit earned on completion of this program is reported to CES Records for AIA members. Certificates of Completion for all registered viewers are available upon request. This program is registered with the AIA/CES for continuing professional education. As such, it does not include content that may be deemed or construed to be an approval or endorsement by the AIA of any material of construction or any method or manner of handling, using, distributing or dealing in any material or product. Questions related to specific materials, methods and services will be addressed at the conclusion of this presentation. Learning objectives Provide outlook for the 2017 U.S. economy, including employment, interest rates, materials, foreign trade and construction starts Understand and discuss historical data and key construction forecasts for all segments of the industry Anticipate business opportunities, target growth markets, compare sales performance against market performance and create more informed and successful sales and business plans Understand the impact of current market conditions and how those will impact the performance of various construction sectors 5

6 Kermit Baker Chief Economist, American Institute of Architects Originated AIA s Architecture Billings Index and AIA Consensus Construction Forecast Panel Honorary member of the AIA Master s degree in urban planning from Harvard University; Ph.D. from Massachusetts Institute of Technology

7 Post Election Outlook for Design and Construction November 17, 2016

8 Topics Trends in the major nonresidential building sectors Construction labor issues The Architecture Billings Index and the construction outlook Election issues for construction 8

9 Recent Weakness in the Economy Seems Largely Caused by Disappointing Investment Levels Annualized growth rate, real (%) 6% GDP 4% 2% 2.6% 2.1% 1.4% 1.6% 2.0% 3.9% Nonres Fixed Investment 2.9% 1.4% 0.9% 0.8% 1.0% 1.1% 0% -2% -4% -3.3% -3.4% -6% Source: Bureau of Economic Analysis 9 99

10 Construction Recovery Continues to Plod Along, Particularly for Single-Family Residential Spending at various points in the past construction cycle ($Billions) Note: Current as of Sept., 2016; Source: U.S. Census Bureau Construction Spending Put-in-Place 10

11 Construction as Share of a State s Economy Tends to be Higher in Mountain and South Regions Construction share of gross state product, 2015 U.S. average = 3.9% Note: Figures measure value added to construction in state, not total cost of construction. Source: Bureau of Economic Analysis, U.S. Commerce Department as compiled by Associated Builders and Contractors. 11

12 2016 Y-T-D Results Show Moderating Growth Nonresidential Building Spending Billions of $, NSA, anuary - September totals % change Total Nonres. Bldg. Construction $348.3 $ % Commercial/Industrial % Lodging % Office % Commercial (retail and other) % Manufacturing % Institutional % Health care % Educational % Religious % Public safety % Amusement and recreation % Transportation % Communication % Source: U.S. Census Bureau, Value of Construction Put in Place 12

13 The Construction Labor Force Shrank by 1.8 Million Workers Since Peak and Didn t Increase with Upturn Number of Persons in the Construction Labor Force (Thousands) Notes: Data include workers age 16 and over housed in non-group quarters. The construction labor force includes workers with construction management and trade occupations in the construction industry. Source: CHS tabulations of US Census Bureau, American Community Survey. 13

14 Construction Labor force Continues to Age, Rely on Foreign Workers and Suffer From Firm Fragmentation Share of Construction Labor Force (Percent) Notes: The construction labor force includes workers with construction management and trades occupations in the construction industry. Source: CHS tabulations of US Census Bureau, American Community Surveys. 14

15 There was a Significant Decline in Residential Contracting Businesses During the Last Recession Annual change in residential building establishments (%) 10% 5% 2.9% 6.1% 5.0% 5.0% 1.0% 2.1% 2.3% 0% -5% -4.1% -4.6% -10% -7.7% -15% -13.3% Source: CHS tabulations of U.S. Census Bureau, Business Information Tracking Series. 15

16 However, Change in the Number of Businesses Masks Significantly More Churn in Births and Deaths Annual change in residential building establishments (%) Source: CHS tabulations of U.S. Census Bureau, Business Information Tracking Series. 16

17 With Ongoing Labor Shortage, Architecture Firms Report Fewer/Higher Bids From Contractors Share of architecture firms Number of bids Price of bids No noticeable decline in bids, 33.8% Fewer bids - most /many projects, 30.4% No noticeable increase in bids, 29.4% Higher bidsmany/most projects, 36.0% Fewer bids - some projects, 35.8% Higher bidssome projects, 34.6% Source: AIA Architecture Billings Index, September,

18 Though Remaining Volatile, Pace of Growth in Architecture Billings Continues to Trend Down Diffusion index: 50 = no change from previous month, seasonally adjusted Source: AIA Architecture Billings Index 18

19 Trends in New Design Contracts Also Suggests Further Although More Moderate Growth Diffusion index: 50 = no change from previous month, seasonally adjusted Source: AIA Architecture Billings Index 19

20 No Major Construction Sector Seeing Strong Growth Rates at Present Billings scores since 2012; index: 50 = no change from previous month 60 Residential Commercial/ Industrial Institutional an '12 Apr ul Oct an '13 Apr ul Oct an '14 Apr ul Oct an '15 Apr ul Oct an '16 Apr ul Oct Source: AIA Architecture Billings Index 20

21 Architecture Firms Projecting Very Modest Revenue Growth in 2017 Projected revenue change for 2017 vs Average projected growth = 2.0% Source: The American Institute of Architects ABI survey, November,

22 Commercial Gains Projected to Moderate as Growth Swings Over to Institutional Categories billions $ of construction spending on nonresidential buildings annual % change $400 $ spending level 20% $ % 14.7% 2016 % change 2017 % change 15% $200 $ % 5.6% $ % 7.5% 7.4% 5.2% $56 $67 $ % 4.5% 2.3% $40 5.0% 6.5% 6.3% $85 10% 5% $0 Total Nonres. Tot. Comm. Office Retail Tot. Instit. Health Education 0% Source: AIA Consensus Construction Forecast Panel, une,

23 Election Issues for Construction and the Economy Unusually high levels of uncertainty continuing Trade: construction materials prices Immigration: workforce issues Tax reform: increased business investment Infrastructure: $1 trillion proposal Regulations: speed up construction; reduce costs Finance: secondary mortgage market reform 23

24 Ken Simonson Chief Economist, AGC of America AGC Chief Economist since 2001; AGC Chief Economist since 2001; Fellow and past president Writes The Data DIGest weekly construction economics bulletin with 47,000 subscribers BA in economics from the University of Chicago and MA in economics from Northwestern University

25 Construction spending & employment, $1,000 Total spending, Feb. 06 (peak)-sep. 16 billion $, seasonally adjusted annual rate (SAAR) $1.15 trillion $1.21 trillion $1,200 (5% below peak) $800 $600 $400 Private Residential Private nonresidential Total 9,000 Total employment, Apr. 06 (peak)-sep. 16 thousands, seasonally adjusted 7,500 6,000 4,500 3, million 6.7 million Total (14% below peak) Nonresidential (9% below peak) Residential (21% below peak) $200 Public 1,500 $ September 2015-September 2016: total -0.2% private res. 1%, private nonres. 4%, public -8% September 2015-September 2016: total 3.4% residential 5.9%, nonresidential 1.8% 25

26 Nonresidential segments: change, forecast 2015 vs an.-sep. 16 vs forecast 2017 forecast Nonresidential total (public+private) 7% 4% 3-6% 2-6% Power (incl. oil & gas field structures, pipelines) Highway and street to Educational Manufacturing to -2 <0 Commercial (retail, warehouse, farm) Office Transportation to Health care Sewage and waste disposal to -6 Lodging ~0 Other--amusement; communication; religious; public safety; conservation; water: 10% of total to -5 Source: U.S. Census Bureau construction spending report; Author s forecast 26

27 Construction spending: industrial, heavy annual total, ; monthly, SAAR, 1/14-9/16; billion $ $120 $90 $60 $30 Power (93% private) Electric Oil & Gas $0 '08 '10 '12 '14 '15 '16 Sep. '15-Sep. '16 change: -2% (oil & gas -16%; electric 3%) $100 $75 $50 $25 Manufacturing (99% private) Other Chemical $0 '08 '10 '12 '14 '15 '16 Sep. '15-Sep. '16 change: -7% (chemical -3%; other -10%) 27 Amusement & recreation (57% private) $30 $20 Public $10 Private $0 '08 '10 '12 '14 '15 '16 Sep. '15-Sep. '16 change: 4% (private 19%; public -11%) $50 $40 $30 $20 $10 $0 Communication (99% private) '08 '10 '12 '14 '15 '16 Sep. '15-Sep. '16 change: -13% Source: U.S. Census Bureau construction spending report 27

28 Key points: power, mfg., recreation Solar, wind power are growing again; expect more gas-fired plants, natural gas pipelines into 18 Mfg decline led by completion/delay of chemical plants (ethane crackers, petrochemicals, LNG) and transportation equipment (cars, trucks, jets, railcars) Amusement & recreation spending is very lumpy a few big stadiums at irregular intervals; but funding for local, state, federal parks keeps eroding Source: Author Source: Author 28 28

29 Construction spending: public works annual total, ; monthly, SAAR, 1/14-9/16; billion $ $120 Highways (99.8% public) $30 Sewage/waste (98% public) $90 $60 $30 $20 $10 $0 '08 '10 '12 '14 '15 '16 Sep. '15-Sep. '16 change: -4% $0 '08 '10 '12 '14 '15 '16 Sep. '15-Sep. '16 change: -19% Transportation facilities (69% public) $50 $40 $30 $20 $10 $0 '08 '10 '12 '14 '15 '16 Sep. '15-Sep. '16 change: -11% (private -6%; public -13%) public private $30 $20 $10 $0 Water supply (99% public) '08 '10 '12 '14 '15 '16 Sep. '15-Sep. '16 change: -14% Source: U.S. Census Bureau construction spending report 29

30 Key points: roads, transportation, sewer/water Highway funds benefit from more travel, hence fuel purchases; gradual pick-up in state funding & P3s; little likelihood of higher federal funding Railroads slashing investment; pickup in airport projects but no increase likely in port, transit construction funding Eastern & Midwestern cities under orders to make long-term upgrades to sewer systems that should boost spending; water utilities hurt by drought, conservation but may get money for lead abatement Source: Author Source: Author 30

31 Construction spending: institutional (private + state/local) annual total, ; monthly, SAAR, 1/14-9/16; billion $ 31 Education (state & local K-12, higher; private) $100 $75 $50 $25 $0 '08 '10 '12 '14 '15 '16 Total (77% public) Sep. '15-Sep. '16 change: 3% (state/local prek-12 3%, state/local higher ed -%; private 18%) S/L prek-12 S/L higher ed Private $50 $40 $30 $20 $10 $0 Health care (private hosp, S/L hosp, other) '08 '10 '12 '14 '15 '16 Total (79% private) Private hospital S/L hospital Sep. '15-Sep. '16 change: -3% (private hospital 5%; state & local hospital -13%; other: special care, med bldg, federal 0) Source: U.S. Census Bureau construction spending report 31

32 32 Key points: education & health care Bond issues should boost funding in some districts but prek-12 enrollment nationally is flat; more children staying in cities and filling underused or charter schools, so construction no longer matches population growth Higher-ed enrollment is shrinking, so colleges need fewer dorms & classrooms; apts. (multifamily) replacing dorms (educational construction) Hospitals face more competition from standalone urgent care, outpatient surgery, clinics in stores; more investment in small facilities, short stays Source: Author Source: Author 32

33 Construction spending: developer-financed annual total, ; monthly, SAAR, 1/14-9/16; billion $ $80 $60 $40 $20 $0 Retail (private) '08'10'12'14 '15 '16 Sep. '15-Sep. '16 change: 6% $80 $60 $40 $20 $0 Office (89% private) '08'10'12'14 '15 '16 Total Private Public Sep. '15-Sep. '16 change: 23% (private 27%; public -4%) $40 $30 $20 $10 $0 Warehouse (private) '08'10'12'14 '15 '16 Sep. '15-Sep. '16 change: 7% $40 $30 $20 $10 $0 Lodging (private) '08'10'12'14 '15 '16 Sep. '15-Sep. '16 change: 24% Source: U.S. Census Bureau construction spending report 33

34 Key points: retail, warehouse, office, hotel, data centers Retail now tied to mixed-use buildings & renovations, not standalone stores or shopping centers Warehouse market still benefiting from e-commerce; more local than huge regional distribution centers likely in future Employment sets records each month but office space per employee keeps shrinking; growth mainly in cities & renovations, not suburban office parks Hotel construction likely to drop as revenue per available room slows Data centers remain a strong niche but no data available on how strong Source: Author Source: Author 34 34

35 Private residential spending: MF continues to outpace SF Billion $ ($ B) 12 month % change seasonally adjusted annual rate (SAAR): an ($238 B)-September 2016 ($454 B) $500 $400 $300 $200 $100 $ % 40% 20% 0% 12-month % change: anuary 2011 (-5.3%)-September 2016 (2.4%) -20% Multifamily (MF) (Sep. 16: $62 B) Single-family (SF) (Sep. 16: $237 B) Improvements (Sep. 16: $152 B) Multifamily: 9% Single-family: -3% Total: 2.4% Improvements: 4% Source: U.S. Census Bureau construction spending reports Source: U.S. Census Bureau construction spending reports 35

36 Residential spending forecast: 2016: 5-8%; 2017: 5-10% SF: 6-9%; ongoing job gains add to demand; student debt, fears of lock-in, limited supply will cap growth MF: 13-17%; growth slowing but should last till 2018 low vacancies, high rent growth encourage investors millennials show continued preference for cities nearly all MF construction is rental, not condo Improvements: 0-10%; Census data is not reliable and shows only a loose relationship to SF spending 2017: SF 6-11%; MF 5-10%; improvements 0-10% Source: Author Source: Author 36 36

37 37 Population change by state, uly 2014-uly 2015 (U.S.: 0.79%) decrease % % % 1.5%+ 1.5% 1.5% 1.9% 0.9% 1.2% 1.5% 1.7% 0.9% 0.3% 1.9% -0.02% 2.3% 0.6% 0.7% 0.3% 0.8% 0.6% 0.2% 0.2% 0.1% 0.5% 0.1% 0.1% -0.2% 0.3% -0.3% 0.3% 0.7% 0.3% 1.0% 0.8% 0.4% 1.4% 1.2% -0.04% 0.3% -0.1% CT -0.1% DE 1.1% MD 0.5% NH 0.2% VT -0.1% MA 0.6% RI 0.1% N 0.2% DC 1.9% 0.2% HI 0.8% 1.8% 0.5% 1.8% Source: U.S. Census Bureau Source: U.S. Census Bureau 37

38 38 State construction employment change (U.S.: 3.4%) 9/15 to 9/16: 35 states up, 15 + DC down Over -10% -5.1% to -10% -0.1% to -5% 0% 0.1% to 5% 5.1% to 10% Over 10% 9% 6% 9% 4% 11% 9% 3% -7% -9% 1% 13% -6% 7% -1% -8% 7% 3% 18% 2% -3% 5% -1% 4% 6% 2% 4% -4% -1% 2% 6% -3% 5% 3% -1% 2% 1% -6% CT -1% DE -1% MD 1% NH 4% VT 4% MA 7% RI 1% N 4% DC -1% -4% HI 11% 1% 1% 5% Shading based on unrounded numbers Source: U.S. BLS state and regional employment report 38

39 Metro construction employment change 9/15 to 9/16: 226 metros up, 58 unchanged, 74 down 39

40 Hardest positions to fill 40 % of respondents who are having trouble filling All hourly craft positions Carpenters Electricians Plumbers, roofers Concrete workers 50% 49% 53% 60% 69% Salaried field/office positions Project mgrs/supervisors Estimators Engineers 28% 31% 38%/33% 50% Source: AGC Member Survey, August % 25% 50% 75% Source: AGC Member Survey, August

41 How contractors are coping with worker shortages Raising base pay Providing incentives/bonuses Increasing contributions/benefits 20% 22% 21% 27% Hourly 43% 48% Salaried In-house training 48% Overtime hours 47% Subcontractors 39% Engage w/ career-building prog. 37% Staffing company 24% Labor-saving equip., tools, mach. 21% Unions 18% Lean construction 15% Offsite prefabrication 13% Building information modeling (BIM) 7% 0% 10% 20% 30% 40% 50% 41

42 Construction workforce indicators (not seasonally adjusted) 600,000 Construction hires, Sep Sep , , , , , Unemployment, Sep Sep ,000,000 1,500,000 1,000, , , , , , , % ob openings, Sep Sep ECI, 12-month change, Q Q % 3% 2% 1% 0% Source: Bureau of Labor Statistics Source: Bureau of Labor Statistics 42

43 Producer price indexes for key inputs, 1/11-9/16 (an. 2011=100) Diesel fuel Latest 1-mo. change: -9.8%, 12-mo.: -3% Steel mill products Latest 1-mo. change: -0.5%, 12-mo.: 1% Copper & brass mill shapes Aluminum mill shapes Latest 1-mo. change: -1.9%, 12-mo.: -5% Latest 1-mo. change: -0.3%, 12-mo.: 0.1% 43

44 Producer price indexes for key inputs, 1/11-9/16 (an. 2011=100) Gypsum products Latest 1-mo. change: 0.1%, 12-mo.: 3% Paving mixtures Latest 1-mo. change: -0.6%, 12-mo.: -6% 150 Flat glass 150 Concrete products Latest 1-mo. change: -0.2%, 12-mo.: 4% Latest 1-mo. change: -0.1%, 12-mo.: 3% 44

45 2015 summary, forecast 2015 actual 2016 yr-todate forecast Total spending 11% 4% 3-6% 2-7% Private residential 17% 6% 5-8% 5-10% nonresidential 8% 8% 7-9% 2-7% Public 5% -2% 0-3% 1-5% Goods & serv. inputs PPI -2% -1% 0-2% 0-2% Employment cost index 2.2% 1.9% % 3-4% Source: actuals: Census, BLS; forecasts: Author s estimates Source: actuals; Census; BLS; forecasts; Author s estimates 45

46 AGC economic resources ( The Data DIGest: weekly 1-page (subscribe at monthly press releases: spending; PPI; national, state, metro employment state and metro data, fact sheets: 46

47 Alex Carrick Chief Economist, ConstructConnect North American Chief Economist since 1985 for ConstructConnect and CanaData Online analyses are a popular feature of the Daily Commercial News and ournal of Commerce BA in Economics from the University of Western Ontario and an MA in Economics from the University of Toronto

48 What is there to still like about the U.S. Economy? Q GDP growth a strong +2.9%; Latest PMI of ISM 51.9%; Initial jobless claims less than 300,000 for 87 weeks in a row; OLTS openings (level and rate) quite high; Monthly average jobs growth so far this year +181,000; Inflation +1.5% y/y all items; +2.2% y/y core; Interest rates continue to be extremely stimulatory; Home prices are +5% to +7% y/y; Population growth +0.7% y/y; Stock market indices near all-time peaks; Helped by Panama Canal expansion, America is now exporting natural gas. 48

49 But here s the problem for the construction sector U.S. Put-in-place Construction Investment September, 2016 Based on 'current' (i.e., not adjusted for inflation) $s, seasonally adjusted at annual rates (SAAR) Slowing Speeding Year to date 2016/ Down Up Weighting of Year to date of 3 'Total' 0 of 3 'Total' type-of-structure (from monthly Latest 3 mons vs. categories / categories / category averages of Latest 12 mons vs. previous 3 mons 14 of 16 sub- 2 of 16 sub- (% of total $s) SAAR data) previous 12 mons (annualized) categories categories Total Construction 100.0% 4.7% 5.9% 2.9% Total Residential 40.0% 5.9% 8.2% 7.0% Total Nonresidential Lodging 60.0% 2.5% 3.9% 25.7% 4.4% 24.8% 0.2% 17.1% Office 6.1% 22.0% 21.2% 35.2% Commercial (retail) 6.2% 9.4% 7.3% 4.8% Health care 3.6% 0.2% 1.1% -0.9% Educational 7.6% 5.7% 5.7% -4.7% Religious 0.3% 5.0% 5.3% -20.0% Public safety 0.7% -7.9% -7.6% -10.2% Amusement and recreation 1.9% 8.5% 9.5% -5.1% Transportation 3.6% -4.7% -2.4% -5.0% Communication 1.6% -3.5% 3.5% 1.0% Power (electric; oil & gas) 8.3% 3.8% 2.9% -9.0% Highway and street 7.5% 1.9% 2.3% -9.5% Sewage and waste disposal 1.7% -6.7% -6.4% -32.4% Water supply 1.0% -10.4% -10.2% -21.3% Conservation and development 0.7% -4.2% -3.8% -25.6% Manufacturing 6.7% -2.8% 0.6% 20.4% In the final two columns, if there is no check mark in the cell, then the type-of-structure category has stayed within 1.0%, up or down. Data source: Census Bureau / Table: ConstructConnect. 49

50 U.S. Type-of-Structure Forecasts ($ Billions USD) Actuals Forecasts Single-family Multi-family TOTAL RESIDENTIAL (Yr/yr % change) 8.2% 10.7% 5.6% 8.9% 8.5% 6.6% 5.4% Hotels/Motels Shopping/Retail Parking Garages Amusement Private Offices Govenmental Offices Laboratories (Schools & Industrial) Warehouses Sports Stadium/Convention Center Transportation Terminals TOTAL COMMERCIAL (Yr/yr % change) -0.1% 4.0% 11.2% 6.5% 5.8% 1.6% 0.8% TOTAL INDUSTRIAL (manufacturing) (Yr/yr % change) 24.0% 14.0% -25.7% 11.1% 5.1% 4.2% 2.7% Religious Hospitals/Clinics Nursing Homes/Assisted Living Libraries/Museums Courthouse Police/Fire Prisons Military Educational Facilities MED misc TOTAL INSTITUTIONAL (Yr/yr % change) 13.6% 0.1% 9.1% 4.6% 3.9% 2.6% 2.4% Miscellaneous Non-Res Building TOTAL NON-RES BLDG (Yr/yr % change) 7.5% 3.0% 8.8% 5.7% 4.8% 2.2% 1.7% Airport Roads Bridges Dams/Canal/Marine Water & Sewage Treatment Misc Civil (Power, etc.) TOTAL ENGINEERING (Yr/yr % change) 13.7% 6.4% 3.0% 5.1% 4.0% 3.5% 3.5% TOTAL NON-RESIDENTIAL (Yr/yr % change) 9.6% 4.2% 6.6% 5.5% 4.5% 2.7% 2.3% GRAND TOTAL (Yr/yr % change) 9.1% 6.7% 6.2% 6.8% 6.2% 4.3% 3.7% Source of actuals: ConstructConnect Insight / Forecasts: Oxford Economics and ConstructConnect / Table: ConstructConnect. 50

51 U.S. Total Residential Construction Starts ConstructConnect OBS U.S. FORESTRY & LOGGING OBS U.S. REAL ESTATE 90 $500 $400 Number employed (000s) 1,600 1,550 1,500 1,450 1,400 1,350 1, Number employed (000s) Year & month Year & month $ Billions USD $300 $200 $100 Forecast $0 Year Source of actuals: ConstructConnect Insight / Forecasts: Oxford Economics and ConstructConnect / Charts: ConstructConnect. 51

52 Demographics as a Driver of U.S. New Home Construction & Resale Activity KEY POPULATION COHORT FOR FIRST-TIME HOMEBUYER DEMAND (NUMBER OF INDIVIDUALS AGED 27 TO 40) KEY POPULATION COHORT FOR MOVE-UP DEMAND (NUMBER OF INDIVIDUALS AGED 35 TO 55) Millions of People Millions of People As at December of Each Year As at December of Each Year Data source: Economy.com and Census Bureau ('Middle Scenario') / Charts: ConstructConnect. 52

53 U.S. Hotel/Motel Construction Starts ConstructConnect 1,700 OBS - U.S. RECREATION & GAMBLING $20 Number employed (000s) 1,600 1,550 1,500 1,450 1,400 OBS U.S. HOTELS & MOTELS Number employed (000s) 1,600 1,500 1,400 1,300 1, Year & month $15 1, Year & month $ Billions USD $10 Forecast $5 $0 Year Source of actuals: ConstructConnect Insight / Forecasts: Oxford Economics and ConstructConnect / Charts: ConstructConnect. 53

54 U.S. Retail/Shopping Construction Starts ConstructConnect 240 OBS - U.S. SOLELY INTERNET RETAIL SELLERS $40 Number employed (000s) Forecast $ Year & month $ Billions USD $20 $10 Number employed (000s) OBS - U.S. RETAIL (NET OF SOLELY INTERNET) 16,000 15,500 15,000 14,500 14, Year & month $0 Year Source of actuals: ConstructConnect Insight / Forecasts: Oxford Economics and ConstructConnect / Charts: ConstructConnect. 54

55 U.S. Employment in Key Sub-Sectors OBS - U.S. CALL CENTERS & TELEMARKETING OBS - U.S. BUILDING MATERIALS & SUPPLIES DEALERS 1,100 1,250 Number employed (000s) 1, Number employed (000s) 1,200 1,150 1,100 1,050 1, Year & month Year & month Data source: Payroll Survey, Bureau of Labor Statistics (U.S. Department of Labor) / Charts: ConstructConnect. 55

56 U.S. Amusement Project Construction Starts ConstructConnect OBS U.S. FOOD SERVICES & DRINKING PLACES OBS U.S. MOVIES, VIDEOS & MUSIC 11,500 $12 $10 Number employed (000s) Number employed (000s) 10,500 9,500 8,500 7, Year & month Year & month $8 $ Billions USD $6 $4 Forecast $2 $0 Year Source of actuals: ConstructConnect Insight / Forecasts: Oxford Economics and ConstructConnect / Charts: ConstructConnect. 56

57 U.S. Private Office Construction Starts ConstructConnect $30 $25 Number employed (000s) 1,500 1,400 1,300 1,200 1,100 OBS U.S. ARCHITECTURAL & ENGINEERING Year & month Number employed (000s) 1,100 1, OBS U.S. ACCOUNTING & BOOKKEEPING SERVICES Year & month $ Billions USD $20 $15 $10 Forecast $5 $0 Year Source of actuals: ConstructConnect Insight / Forecasts: Oxford Economics and ConstructConnect / Charts: ConstructConnect. 57

58 U.S. Employment in Key Sub-Sectors OBS U.S. COMPUTER SYSTEMS DESIGN SERVICES OBS U.S. LEGAL SERVICES 2,100 1,200 Number employed (000s) 1,900 1,700 1,500 1,300 1, Number employed (000s) 1,150 1,100 1, Year & month Year & month Data source: Payroll Survey, Bureau of Labor Statistics (U.S. Department of Labor) / Charts: ConstructConnect. 58

59 U.S. Warehouse Construction Starts ConstructConnect 1,500 OBS - U.S. TRUCK TRANSPORTATION $16 $12 Number employed (000s) OBS - U.S. WAREHOUSING & STORAGE Year & month Number employed (000s) 1,450 1,400 1,350 1,300 1,250 1, Year & month $ Billions USD $8 $4 Forecast $0 Year Source of actuals: ConstructConnect Insight / Forecasts: Oxford Economics and ConstructConnect / Charts: ConstructConnect. 59

60 U.S. Total Industrial/Manufacturing Construction Starts ConstructConnect OBS U.S. AEROSPACE PRODUCT MANUFACTURING $15 Number employed (000s) OBS U.S. MOTOR VEHICLE ASSEMBLY & PARTS 1,500 1,300 1, Number employed (000s) $ Year & month Year & month $ Billions USD $9 $6 Forecast $3 $0 Year Source of actuals: ConstructConnect Insight / Forecasts: Oxford Economics and ConstructConnect / Charts: ConstructConnect. 60

61 U.S. Employment in Key Sub-Sectors Number employed (000s) 1,580 1,560 1,540 1,520 1,500 1,480 1,460 1,440 1,420 OBS U.S. FOOD MANUFACTURING Year & month OBS U.S. SEMICONDUCTORS & ELECTRONIC COMPONENTS Number employed (000s) Year & month Data source: Payroll Survey, Bureau of Labor Statistics (U.S. Department of Labor) / Charts: ConstructConnect. 61

62 U.S. Hospital and Clinic Construction Starts ConstructConnect 5,200 OBS U.S. HOSPITALS $ Billions USD $30 $25 $20 $15 $10 Number employed (000s) 5,000 4,800 4,600 4,400 4,200 4,000 3, Year & month Forecast $5 $0 Year Source of actuals: ConstructConnect Insight / Forecasts: Oxford Economics and ConstructConnect / Charts: ConstructConnect. 62

63 U.S. Nursing Homes & Assisted Living Construction Starts ConstructConnect 1,500 OBS U.S. HOME HEALTH CARE $9 Number employed (000s) OBS U.S. COMMUNITY CARE FACILITIES FOR THE ELDERLY Number employed (000s) $ Billions USD $6 $3 1,300 1, Year & month Year & month Forecast $0 Year Source of actuals: ConstructConnect Insight / Forecasts: Oxford Economics and ConstructConnect / Charts: ConstructConnect. 63

64 U.S. Total Educational Construction Starts ConstructConnect $80 Forecast $60 $ Billions USD $40 $20 Number employed (000s) 1, OBS U.S. ELEMENTARY & SECONDARY SCHOOLS Number employed (000s) 1,900 1,700 1,500 1,300 1, OBS U.S. COLLEGES & UNIVERSITIES $0 Year & month Year & month Year Source of actuals: ConstructConnect Insight / Forecasts: Oxford Economics and ConstructConnect / Charts: ConstructConnect. 64

65 Demographics as a Driver of U.S. School Construction KEY POPULATION COHORT FOR KINDERGARTEN TO GRADE 12 (I.E., K TO G12) ATTENDANCE (NUMBER OF INDIVIDUALS AGED 4 TO 17) KEY POPULATION COHORT FOR UNIVERSITY AND COLLEGE ATTENDANCE (NUMBER OF INDIVIDUALS AGED 18 TO 26) Millions of People Millions of People As at December of Each Year As at December of Each Year Data source: Economy.com and Census Bureau ('Middle Scenario') / Charts: ConstructConnect. 65

66 U.S. Roadwork Construction Starts ConstructConnect $70 $60 Forecast $50 $ Billions USD $40 $30 $20 Number employed (000s) 23,500 23,000 22,500 22,000 21,500 21,000 20,500 OBS U.S. GOVERNMENT $10 20, Year & month $0 Year Source of actuals: ConstructConnect Insight / Forecasts: Oxford Economics and ConstructConnect / Chart: ConstructConnect. 66

67 U.S. Bridge Construction Starts ConstructConnect $20 $15 $ Billions USD $10 $5 Forecast $0 Year Source of actuals: ConstructConnect Insight / Forecasts: Oxford Economics and ConstructConnect / Chart: ConstructConnect. 67

68 U.S. Miscellaneous Civil (e.g., Power, Oil & Gas, etc.) Construction Starts ConstructConnect OBS U.S. OIL & GAS EXTRACTION OBS U.S. COAL MINING $36 Number employed (000s) Number employed (000s) $ Year & month Year & month $ Billions USD $18 $9 Forecast $0 Year Source of actuals: ConstructConnect Insight / Forecasts: Oxford Economics and ConstructConnect / Charts: ConstructConnect. 68

69 U.S. Grand Total Construction Starts ConstructConnect $1,000 $800 $ Billions USD $600 $400 Forecast $200 $0 Year Source of actuals: ConstructConnect Insight / Forecasts: Oxford Economics and ConstructConnect / Chart: ConstructConnect. 69

70 Owners Contemplating Investments Must Weigh New Square Footage vs Internet and Other High-tech Trends The old standby issue: Bricks & mortar retail But many more examples now: Single-family residential (high square footage per unit) Street-corner banking branches Brokerage houses Office space Hotels/motels University & college campuses Medical office buildings Pulp and paper mills / post offices Prisons Cinemas VERSUS: Online shopping (videos, music, books, travel agencies) Multi-family residential (low square footage per unit) Transactions over the Internet (PayPal; etc.) E-trading Working from home / 'hoteling' or sharing of space The 'sharing economy' (e.g., Airbnb) Proliferation & convenience of lower-cost online courses Health care Google searches / digital transfer of records s and instant messaging / comments on Facebook Ankle bracelets Netflix / itunes store Concert halls TV stations Virtual reality Facebook live 70

71 Logistics Rule The goal of improved logistics is to move goods, services and people faster, cheaper, safer and greener. The words logistics, infrastructure and productivity enhancements have become synonymous. The push for both hard (i.e., roads, sewers, pipelines, etc.) and soft (schools and hospitals) infrastructure largely comes down to striving for productivity enhancements. Soft infrastructure supplies the brains (through educational facilities) and the healthy workers (medical facilities) to create and maintain the whole supercomplicated logistics apparatus. The nation that understands and adapts to this new dynamic will prosper best. 71

72 This concludes The American Institute of Architects Continuing Education Systems portion of this program Questions & Answers

73 oin us again SPRING 2017