Eventually the pandemic will be a distant sight in your rear-view mirror. And when that joyful time is here, hopefully you will have learned something from the nightmare about crisis management and blending teleconferencing technology, virtual sales strategies and other new-age business capabilities that will help you add a few new skills to our toolboxes for 2021’s challenges.
As the electrical industry crawls out from under the economic wreckage of 2021, electrical distributors, manufacturers and reps may spot some sales opportunities in single-family housing, data center, warehouses and renewables, as well as in those evergreen hot markets across the Sunbelt that never seem to slow down as much as metros in other regions.
Richard Branch, chief economist for Dodge Data & Analytics, offered the following forecasts for key segment of the construction market:
Single-family construction. The dollar value of single-family housing starts will be up +7% in 2021 and units will grow +6% to 928,000 (Dodge basis). Historically low mortgage rates and a preference for less dense living during the pandemic are clearly overpowering short-term labor market and economic concerns.
Multi-family construction. This market segment “will pay the price for single family’s gain,” Branch said in a Dodge press release. “The large overhang of high-end construction in large metro areas combined with declining rents will lead to a further pullback in 2021. Dollar value will drop -1% while the number of units started falls -2% to 484,000 (Dodge basis).”
Commercial building. The dollar value of commercial building starts will increase +5% in 2021. “Warehouse construction will be the clear winner as e-commerce giants continue to build out their logistics infrastructure,” he said. “Office starts will also increase due to rising demand for data centers as well as renovations to existing space. Retail and hotel activity will languish.”
Institutional construction. In 2021, institutional construction starts will increase by +1% as growing state and local budget deficits impact public building construction. Education construction is expected to see further declines in 2021, while healthcare starts are predicted to rise as hospitals seek to improve in-patient bed counts.
Industrial construction. The dollar value of manufacturing plant construction will remain flat in 2021. Declining petrochemical construction and weak domestic and global activity will dampen starts, Branch said, although he expects a small handful of project groundbreakings will level out the year.
After thinking through how Richard Branch’s forecasts for these key segments of the construction market translate to your local market or your company’s business mix, spend some time with EW’s National Factbook on the following pages to get a sense of which way the key metrics measuring the economic health of the electrical wholesaling industry are pointing as we get ready for 2021.