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AGC's 2024 Construction Outlook. Infrastructure is Bright but Office-Geddon is Not



The Associated General Contractors of America has issued its 2024 Construction Outlook. According to its survey of construction contractors throughout the United States, contractors have a mixed outlook for 2024 with firms predicting transitions in the demand for projects, the types of challenges they will face and technologies they plan on embracing. According to the survey, contractors continue to cope with significant labor shortages, the impact of higher interest rates and input costs and a supply chain which, while better than in past few years, is still far from normal.


Of the 17 categories of construction types included in the survey, respondents expected a net positive growth in 14 of those categories, with infrastructure projects leading the net positive readings following the passage of the Infrastructure Bill in 2021, and commercial retail and office leading the net negative readings as a result of  the continuing office-geddon :


National



 

For California, the 2024 Outlook looks similar to the national outlook but somewhat exaggerated at either ends with 55% of respondents expecting net positive readings for transportation and 44% of respondents expecting net negative readings for private office:


California



 

On the employment front, construction firms took steps in 2023 to attract and retain workers, with 63% of respondents indicating that they increased base pay rates more than they did in 2022, 25% of respondents indicating that they provided additional incentives or bonuses, and 24% of respondents indicating that they increased their portion of benefit contributions and/or improved employee benefits.


Postponed and cancelled projects continue to be a concern by contractors. Nearly two-thirds of respondents reported projects that were postponed or cancelled in 2023, with 36% reporting  postponed projects that were not rescheduled, and 37% reporting postponed projects that were rescheduled.


Supply-chain problems have become less of a concern with only 23% of respondents reporting on supply-chain problems. However, 64% of respondents noted concern with rising interest rates and financing costs going into 2024. In addition, 63% percent of respondents identified insufficient supply of workers or subcontractors and 62% identified the likelihood of an economic slowdown or recession as a concern in 2024. Finally, 58% of respondents identified direct labor costs, 56% of respondents identified worker quality, and 54% of respondents identified material costs as concerns for 2024.


On the technology front, nearly 40% of respondents said that they will either increase their investment in drones or make an initial investment in drones. In addition, 30% of respondents said that they will either increase their investment in artificial intelligence or make an initial investment in artificial intelligence. I have to say, I'm pretty surprised at that number. Finally, nearly 30% of respondents stated that they plan to make more use of offsite production or to start using offsite production.


So there you have it. Hopes, dreams and aspirations with a fair bit of hand-wringing thrown in for good measure.

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