Everybody who has anything to do with the construction market talks proudly about the trophy jobs in their town or city. Think about all the excitement in the 20 cities that made Amazon’s first cut for its second headquarters, which the company says will bring 50,000 jobs and construction spending of more than $5 billion to one lucky city.
While once-in-a-lifetime construction projects like Amazon’s new headquarters, Apple’s recently opened headquarters in Cupertino, CA, or Hudson Yards, New York’s largest construction project since Rockefeller Center, are exciting and hopefully profitable for all involved much smaller “run of the mill” construction projects can easily account for more than half of the business of the typical full-line electrical distributor and of many independent manufacturers’ reps and manufacturers. According to EW’s 2018 Market Planning Guide, new construction, retrofit and renovation projects will generate an estimated $54 billion of electrical product sales through electrical distributors.
When it comes to gauging the fortunes of the construction market, don’t make the mistake of looking at things strictly from a numbers perspective. Various construction forecasts for 2018 are calling for rather middling growth, and you might not think there’s all that much happening this year. The nation’s leading construction economists have the 2018 construction market pegged for growth in the 1% to 5% range and the Consensus Construction Forecast published by the American Institute of Architects came in at a 3.6% boost in nonresidential for the year.
But there’s more to construction projects than just the size of the contracts awarded. Electrical Wholesaling’s editors looked at almost 300 construction projects now in various stages of development and planning or nearing groundbreaking and saw some far-reaching trends that should form the foundation for more projects in the years to come. For instance, while it’s tough to bet on when and how any infrastructure legislation coming out of Capitol Hill may impact the construction industry, many local cities are taking things into their own hands and are already expanding existing light-rail systems or upgrading aging subways, rail stations and airports, without the promise of additional federal support. And the desire by many Baby Boomers and Millennials to move from the suburbs to downtown will continue to spark all sorts of interesting live-work-play mixed-use construction projects. We also saw plenty of stadium construction, hospital expansion and investment in universities, ports and oil and gas refineries. The chart Mega-Projects to Watch in 2018 highlights what we believe are some of the most interesting projects of year, and the pages that follow highlight some of the projects and trends that stood out from the pack. For a more complete list of construction projects that made the news in 2017, go to www.electricalmarketing.com.
When you consider that all of the projects in the chart are valued at over $100 million in total construction project costs, and that — depending on the type of project — the electrical share of the project is roughly 10% of the total cost, you quickly get a sense of the direct impact that these trophy jobs have on the electrical construction market. Let’s look at each of the key growth segments in a bit more detail.
Electrical Wholesaling gave a shout out to a few of the cities seeing the most downtown construction activity (Boston, Detroit, Milwaukee, New York, San Diego, Seattle and Washington, DC) in the Dec. 2017 feature, “Top News Stories of 2017.” Other cities seeing a ton of mixed-use development include Nashville and Charlotte, NC, which according to a Charlotte Observer article will have seven new major buildings break ground in 2018, including, “33- and 26-story office towers; a pair of 10-story hotels; a 22-story apartment tower; a 254-room luxury hotel; and a 20-story hotel that will sit atop a podium that will include a renovated Carolina Theater.”
And while these cities have enjoyed or will soon see billions of dollars in construction activity, the one city that really stood out to us is San Diego, not only because of the numbers in the project value estimates but because of the intriguing variety of the work that’s planned. Not only has the city seen an estimated $15 billion in various new construction projects over the past few years, but it has futuristic projects planned for its waterfront, at the site of the former NFL stadium for town’s recently departed Chargers football team, and a $2.6 billion buildout by the Scripps Network at its five medical campuses in the area. There are several separate plans being discussed for the Chargers’ stadium site, including San Diego State University’s $3 billion SoccerCity plan, which according to an article in the San Diego Union-Tribune would include two hotels, 4,500 housing units for students, faculty and the public, retail space, office buildings to share with SDSU departments and researchers, and about 90 acres of parkland, plazas and walkways.
NEW RAIL SYSTEMS
There’s a dizzying array of rail projects being considered or nearing groundbreaking, including everything from relatively short extensions of existing rail systems like the light-rail from Glendora, CA to Montclair, CA; two separate light-rail projects in Minneapolis, MN; a light-rail and bus combination project in Nashville, TN; the San Jose, CA BART expansion; an expansion of Boston’s Green Line; to some really gigantic projects way off in the future. The big proposals include a $16 billion bullet train that would take passengers the 239 miles from Dallas to Houston at speeds of up to 200 mph; a high-speed rail link from Vancouver, British Columbia, to Seattle and the Pacific Northwest and billions of dollars in renovation work on Washington, DC’s Metro and the infamous Long Island Railroad.
EW’s editors found news on no less than 15 different airport projects in various stages of planning or construction worth a whopping $28 billion in total construction contract value. The cities with projects underway or planned include Atlanta, Denver, Kansas City, Nashville, New York, Pittsburgh, Salt Lake City, San Diego, San Francisco, Seattle, Tampa and Washington, DC. New York has two projects in the works — the $4 billion expansion of LaGuardia Airport and the plan for a $10 billion renovation of JFK International. While most of the other airport jobs that made the news over the past year are renovations of existing facilities, Kansas City is looking at a $1 billion project that would replace its existing three terminal buildings with one brand new terminal. According to Airports Council International (ACI), the need for new or renovated airport facilities stretches far into the future. From 2017 to 2021, ACI estimates there’s $100 billion in total work that needs to be done, including $38 billion in terminal work, the sweet spot for the electrical construction market.
STADIUM FOR THE STARS
Over the past decade, the surge of stadium construction has gone unabated. And it doesn’t seem like it will slow down anytime soon, judging by the number of sports facilities underway or planned for professional teams. The biggest of the new stadiums in the planning stages right now is the $2 billion facility for the NFL’s Oakland Raiders in Las Vegas, NV. Other large stadiums now under construction include the $1.6 billion facility being built for the NFL’s Rams in Inglewood, CA, and San Francisco’s $1 billion Chase Center sports arena and office complex, which includes a healthy dose of mixed-use construction. Cities with other stadiums planned or underway include Arlington, TX (baseball and mixed-use); Casa Grande and Pinal Counties, AZ (motorsports); Chicago (soccer); Cleveland (basketball retrofit); Lexington, KY (minor-league baseball); Miami (soccer); New York (soccer); San Diego (soccer); and St. Paul, MN (soccer). It’s interesting to note how many of the new stadiums are for professional soccer teams.
College and university enrollment looks like it will continue to increase slowly over the next five years at an annual rate of 1% to 2%, according to forecasts from the National Center for Education Statistics. In 2018, NCES expects an increase of 438,000 students to 21,410,000 students enrolled in two-year and four-year colleges and universities. To handle these increases, there’s no lack of new campus construction planned and underway. As you can see in the chart Mega-Projects to Watch in 2018, some of the largest projects now underway are at Purdue, Stanford, New York University and the University of California at Merced. The $1.2 billion West Campus project at Purdue University in West Lafayette, IN, is a mammoth development that will take 20 years to complete. According to a post at www.jconline.com, Purdue hopes that the project will eventually include “a hotel and conference center; housing; office, retail and restaurant space; parks; and room for industrial and research facilities.”