Published in Last Word
Reed Construction Data predicts that a number of factors are going to lead to sustained growth in U.S. construction starts over the next four years, raising the total dollar volume to as much as $700 billion by 2018.
The first factor may interestingly be the end of the Federal Reserve's bond-buying program and stated intention to start raising interest rates. This could drive buyers into the markets to take advantage of low rates while they last.
Employment is also on an upswing, which Reed projects will drive increased demand for residential and commercial construction. Commercial construction will also be fueled by a decline in the cap rate for leasable properties, which will tempt owners to build rather than buy.
Manufacturing is also beginning to return to the U.S., driven by growing labor costs abroad and falling energy costs at home, which could lead to increased industrial construction.
Even modest population growth will likely increase investment in new public construction, especially as states and municipalities find uses for tax revenue that has bounced back after falling during the recession. Possible risks to this growth include a possible worsening of the Ukraine crisis, credit crisis in China, and extreme weather.
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