US Construction Market Report 3Q 2023
Trends and opportunities
The global construction industry continues to embrace innovative and more sustainable solutions for every stage of a project lifecycle, with the US pioneering many of these changes.
Some examples of trends and opportunities for the US construction industry include:
Construction technology and digital tools
Adoption of digital tools like Building Information Modeling (BIM), drones and the Internet of Things (IoT) sensors are rising to enhance project collaboration and visibility. IoT solutions, in particular, are thriving and being delivered by US-based companies such as Cisco and IBM.
North America alone estimates 5.4 billion IoT connections by 2025 — paving the way for more smart buildings and potentially even cities in the longer term.
Digital infrastructure will become a necessity in construction projects, illustrated through the use of digital twins, which are being leveraged more frequently for design coordination and construction management.
Now leveraged more frequently for design coordination and construction management, digital infrastructure provides value right across the project and asset lifecycle from day one — an approach supported as best practice by the likes of McKinsey & Company, which sees a role for digital twins to support the engineering process by creating a digital prototype of the final development even in the very early stages of a project.
Increasingly essential for stakeholders, sustainability targets input into the model.
Engineering teams can use a digital twin to validate their complex asset designs and adjust accordingly through time from a shared single platform. Advantageous from a sustainability angle, this validation enables digital twins to combine with predictive analytics and AI tools to help companies design greener, more efficient plans from the outset.
Adoption of net zero standards
Over 100 major companies have committed to carbon-neutral construction, as the adoption of net zero standards increases.
A recent World Green Building Council report identifies solutions to achieving net zero in buildings, including setting strong targets, access to sustainable finance, accurate data collection and deep retrofitting of existing buildings.
Retrofitting buildings can be achieved in an environmentally friendly way. Organizations such as the EPA highlight the potential of energy recovery. Converting non-recyclable waste materials into electricity and heat can generate a renewable energy source and reduces carbon emissions by offsetting the need for energy from fossil sources, as well as avoiding methane emissions from landfill.
JPMorgan is an example of how following ESG guidelines is now at the forefront of decision-making at the highest corporate levels. The firm recently unveiled the retrofit of its Polaris building in central Ohio — recycling 80% of the building materials from the renovation and achieving a green building certification of LEED Gold status.
In addition, the installation of 700 solar modules on the building’s rooftop and more than 32,000 solar panel carports in the campus parking lots enables the building to meet 75% of its electricity needs independently.
Modular and offsite manufacturing
Modular construction and offsite manufacturing continue to gain momentum, as benefits that include minimized waste, customization and improved safety enable the industry to navigate headwinds such as labor shortages.
The size of the North American modular construction market reached $25.9 billion in 2022. It is likely to reach $35.7 billion by 2028.
However, the public perception of modular buildings — viewed as less desirable and lower quality — will still take time to change. This is particularly the case in the residential market for potential homebuyers. Developers finding land with the proper zoning to allow prefabricated houses is another challenge.
Supply chains have a vital role to play in maintaining momentum. For instance, an offsite factory’s ability to source a guaranteed supply of timber directly from a lumber business rather than through individual contractors should lead to smoother operations.
Flexibility and adaptability
The United Nations (UN) says the construction sector must shift its focus to repurposing existing buildings, rather than building new ones, to reduce carbon emissions — achieving a 50–75% saving on emissions in the process.
A National Bureau of Economic Research working paper highlights the opportunity available in the office sector, whereby 11% of US office buildings could be suitable for conversion to green multifamily properties.
In August, New York City mayor, Eric Adams, announced plans to convert more buildings in Manhattan to residential spaces by rezoning manufacturing areas in Midtown and by allowing the conversion of buildings built as recently as 1990 into housing.
Building owners will welcome rezoning policies and tax incentives to help propel conversions in other areas of the country.
In addition to housing, empty office space can often be ripe for conversion to other uses, such as hotels and laboratories. The intricacies of a building, though, can make a proposed conversion a challenging prospect often when ceiling heights are unsuitable or mechanical, electrical and plumbing services are insufficient.
Yet overcoming these challenges where feasible can still be less expensive than building from scratch and helps satisfy the UN’s sustainable development goals.
