Latest from Editorial Commentary

Photo 68138914 / Haiyin / Dreamstime

EVs Hit a Rough Patch

Jan. 29, 2024
Ewweb 1551 606ewtntjimlucy595
Ewweb 1551 606ewtntjimlucy595
Ewweb 1551 606ewtntjimlucy595
Ewweb 1551 606ewtntjimlucy595
Ewweb 1551 606ewtntjimlucy595

Times & Trends: The Haves & the Have Nots

Nov. 10, 2016
Some major megatrends seem to be driving an awful lot of the business to a relatively small number of local markets.

As you dig into the data EW’s editors have compiled for the 2017 Market Planning Guide on page 16 and at www.ewweb.com, you will probably be struck by the wide variances in the economic fortunes of individual regions, states and local market areas.

While our national forecast for the electrical wholesaling industry is 3.1% growth in 2017, the economic conditions in the 300-plus Metropolitan Statistical Areas (MSAs) seem like they vary more than ever. Although individual MSAs have always marched to the beat of their own economic drums, it seems like the U.S. economy is evolving into a land of haves and have nots, with some metropolitan areas seeing growth far outpacing the national average and others struggling to maintain much growth at all.

Some of this variance is due to several economic mega-trends that have been sweeping across the nation for years. But it seems like their impact has been more pronounced in recent years, as individual areas are recovering from the Great Recession at drastically different rates. These are some of the key mega-trends to consider.

You can learn an awful lot about which markets will see the most residential construction by following population trends. The MSAs with the highest percent of population growth from 2010-2015 according to the U.S. Census Bureau often end up as leaders in percent-growth of building permits. For instance, MSAs like The Villages and Cape Coral-Ft. Myers in Florida and Austin, Texas, are Top 10 for percent-increase in population, and they also show up as leaders in various  residential construction rankings.

A handful of cities seem to be attracting an unusually large share of commercial construction activity. When you look at the commercial construction pipeline over the past few years, much of the work is flowing into New York, Boston, Washington, the Carolinas, Miami, Orlando, Tampa, Dallas, Austin, Colorado’s Front Range, the San Francisco Bay Area, Seattle and most recently Chicago. Sure, other cities see some nice construction projects, too, but not with the same frequency as the cities and areas mentioned in this list.

Much of the single-family construction is happening in the Sunbelt, vacation destinations and a fairly select group of suburbs. Florida’s Gulf Coast and Orlando, South Carolina’s coast, the Atlanta metro, Dallas, Austin, Phoenix and Colorado’s Front Range account for a huge amount of the nation’s total single-family construction activity. In fact, with 87,364 combined single-family building permits through August, Texas and Florida together account for 17% of the nation’s 510,590 single-family building permits. Also, the 25 largest markets in single-family building permit activity account for 42% of all permits through August.

Take away the construction of multi-billion dollar oil, gas and chemical plants and the activity that fracking injected into the industrial market looks pretty darn soft. One big exception to this rule is Michigan’s auto industry, which has seen several large projects started up over the past few years and is the beneficiary of $780 million in new construction started up at two Ford and General Motors facilities earlier this year.

Overbuilding in retail markets coupled with the impact of online shopping point toward a dismal retail construction picture for many local markets. While many urban and suburban mixed-use construction projects seem to have a retail element, there has been a definite slowdown in big box and mega-mall construction.

Don’t despair if you aren’t located in one of these fast-track markets. Hot economic markets are never secrets. They attract all sorts of new competition once they heat up, and super-heated business cycles don’t last forever. If your company survived the Great Recession in a market that traditionally has slower but steadier growth prospects than the high flyers, you have been through a lot worse.