Beyond the Build

Construction Trends

Construction & Real Estate Seem to be Lowering the Handicap

Most years, things slow down around Christmas. Many people take time off to be with family, and the last two weeks of December are usually touch and go. Except this year. Five days before Christmas, we still have phones ringing, email notifications chiming and bids churning.

From our boots on the ground perspective, it seems the real estate and construction industry continues to gain traction. It’s not where it was a few years ago–thank goodness. Moderate growth is fine with me, and saves a ton of headaches along the way.

I believe we’re getting teed up for a good year.

  • All of our subcontractors in the region are busy, some of them saying “we haven’t had this many projects to look at in 5 years.”
  • The design firms we are working with are hiring again and have good business, an indicator of projects 6 months to a year out.
  • I talked with the president of a major home brokerage firm this week and she said there is no excess lot capacity in the market. Home and multi-family starts are probably going to end up around a million this year. While that is still under the average 1.5 to 2.0 million of the last few decades, it is definitely better than the half million starts we were seeing in recent years.
  • Retail sales and industrial production exceeded expectations last month.
  • The overnight shipping industry is looking better.
  • The Federal Reserve announced Wednesday that it would start to taper the stimulus package, cutting bond-buying by $10 billion a month beginning in January. I found it somewhat interesting that the same day, the Dow and S&P 500 ended at record highs. Hardly a coincidence. It seems the investment community also believes inflation is in check for now.

If things keep moving the way they are now, 2014 is looking good. It sounds like what we are hearing from our contacts has some tailwind.

 

Merrill Stewart Jr.

Merrill Stewart is Founder and CEO of The Stewart/Perry Company, a commercial building contractor based in Birmingham.