Construction Outlook in 2016
Seeing the construction pipeline dry up after the Great Recession was so traumatic that fewer people trust economic forecasts while ironically the interest in them has increased. It seems it’s not just the magic word “growth” that people want to hear; people also need evidence of growth.
The good news according to Benjamin Ayers, dean of the Terry College of Business at the University of Georgia is that in Georgia, “the economy will continue to grow, and it will expand faster than the nation’s economy.” Ayers’ forecast is based on the state’s economy getting “more leverage from the housing recovery,” faster population growth and continued low oil and gas prices.
What is the Reality on Main Street?
It is great to hear the word “growth,” but what is the reality on Main Street? Baron Worthington of Vulcan Materials Company describes the construction cycle as typically expanding for 3 to 9 years, followed by a construction recession ranging from 2 to 6 years. The reality is that the Great Recession hit the construction industry so hard in 2008 that even though Georgia has experienced growth during the last 5 years, construction demand still lags well below normal demand levels.
Worthington’s assessment is reflected by Dodge Data & Analytics which shows single family housing starts in Georgia gaining momentum in 2015, while multi-family housing starts fell. Dodge Data & Analytics also demonstrates that for Georgia the 20-year average of housing starts per 1,000 people should be 7.6 per year. In 2015, they were at 5.7 starts per 1,000 people, even as the industry has been slowly growing since 2009.
What Does 2016 Look Like?
So what does 2016 look like? For the state of Georgia, private demand far exceeds public demand for construction services, but the continued recovery of state revenues should help improve public construction spending. For a company like Stafford Builders, this is good news, as many recent projects such as the John Drew Smith Tennis Center, Hunt School Village, Bayside Village, and the Bibb County Central Kitchen are built with public funds.
Stafford Builders has continued to grow throughout these difficult past years, building a solid reputation for working with both private and public customers in meeting and exceeding their expectations. As we not only hear the magic word “growth,” but see evidence of economic expansion, Stafford Builders has demonstrated it will be a key contributor to Georgia’s growing economy in 2016.