News in general is crazy. Trends are apparent. The commercial construction industry trends and news is no different than the rest of business news these days.
I think our intuition tells us so.
Commercial Construction news is certainly confusing at best but the trends I see tell me the road will be rocky in future months.
Below are a few links to recent articles (mid-April 2023) illustrating the mixed signals in the commercialconstruction business.
The first article (1st) talks about how the construction industry employment has decreased 9,000 people in March 2023. The biggest hit was the residential market, to nobody’s surprise. But is this a trend we need to watch?
I think so.
Usually, these numbers are lagging the actual market trends. We’ve seen this coming with the increases in mortgage rates. The second (2nd) article conflicts the first… but again, this is lagging and a bit older data.
But what does this mean for the commercial construction market?
The third (3rd) article about banks being spooked and getting stingy with loans to small businesses can be an indicator we are in for a commercial slowdown. Small businesses will have more difficult time growing and servicing payrolls with tighter money supply.
New commercial project shrinkage can’t be too far behind with a tighter money supply.
The fourth (4th) article is from MSN discussing the commercial real estate possible broad correction as lenders retreat in making new loans. Investors are looking for bigger returns (Cap rates) as interest rates rise. This increase in cap rates and more vacancies leads to lower real estate prices.
Lenders are taking notice of these prices and a softer lease market, so tightening is inevitable.
How does all this affect your construction business?
Look at Principle 4 in my “Goldmining in the Commercial Construction Business System” …. Adapt or Fail. Find the industries that are growing. Typically, the civil work is steady during a recession.
Is there another product/service you can develop to increase your market share during these turbulent times?
Bottom line, you need to be a bit of a trends forecaster as well as a construction business expert. That’s why I’ve started this trends/news section of my blog and YouTube channel… to help you adapt to a changing industry.
1st) https://www.constructionbusinessowner.com/news/construction-employment-decreases-9000-march-says-abc