by Bud LaRosa
After a fairly robust 2015, the question being asked by Boston-area A/E/C firms is, “What does 2016 look like for the industry?” The answer is (not surprisingly), “Really good.” Work seems to be abundant. Nationally, I am seeing forecasts of growth as high as 14% overall for building construction where some segments like multifamily housing are being forecast as high as 20%. These numbers are consistent with what we are seeing in Metro Boston, though I would argue Metro Boston is going to outpace the nation in 2016 in the following market sectors.
Multifamily Housing
Demographics are driving multifamily housing. Earlier this year, Millennials (ages 18 to 34) surpassed Baby Boomers as the largest demographic group in the nation (83 million vs. 75 million). This age group is the prime target market for multifamily housing, and as it continues to grow so will the demand. This trend has not gone unnoticed by the mayor of Boston, Marty Walsh, who outlined the need for 53,000 units of housing for the city of Boston in his “Housing a Changing City: Boston 2030” initiative earlier this year. Areas where there will be a steady stream of construction (approved, permitted, or starting preconstruction) include the South End, Seaport, Dorchester, South Boston, East Boston, Allston, Brighton, Cambridge, and Somerville. In addition to those approved, another major multifamily project could include a potential 700-unit project on Albany Street a few blocks from the Boston Medical Center.
Office Construction
As the economy continues to strengthen, so does the office market. Boylston Street, which is already the seventh most expensive street in the United States, will be adding 888 Boylston Street, which has been securing record high leases. Nearby, John Hancock is looking to build a 625,000sf, 26-story tower on Stuart Street. However, not all the office construction resides in the Back Bay. Some notable projects outside the Back Bay include One Congress Street and 115 Winthrop Square. In the Seaport District, permitted space includes 121 Seaport, 140 Northern Avenue, and Parcel D. In addition, there are lots of projects on the table including the proposed $2.2 billion redevelopment of Government Center, and the recently proposed $900,000 mixed-use downtown tower, which would include 700,000sf of office space. With this high level of activity, office construction will remain very strong throughout 2016.
Life Sciences
Through 2015, 2.5 million sf of lab space came online in the Greater Boston area. More importantly, there is another 5.2 million under construction. This trend sees no sign of slowing down in 2016 or beyond. Major developments under consideration in Kendall Square alone include the Volpe Center, MIT, and Northpoint. Not to be outdone, life sciences projects are slated, or currently under construction, at most major colleges and universities in Boston, including Boston University and Northeastern University. Also, not all life sciences projects are being built in Boston and Cambridge. Instead, activity can be seen up and down the Route 3 corridor, in Marlborough, and the new recently proposed project at 115 Hartwell Avenue in Lexington.
Colleges and Universities
There is going to be a considerable amount of building on college campuses in 2016 — in particular, with lab buildings and residence halls. Among non-elite, four-year colleges, there is a war for talent like never before. College enrollment surged during the recession but has begun to slow down during the recovery now that more jobs are available. One battlefront in this war is the need to upgrade campuses to attract this talent. Nationally, close to one-half of construction growth on college campuses will be science, technology, engineering, and math (STEM ) related. In fact, three of the largest five college projects last year were STEM-related.
Another area where schools are competing is residence halls. Spending on amenities is seen as a differentiator for many non-top-tier colleges. In 2015, residence hall starts (nationally) had reached prerecession levels. New England schools are on pace to exceed these trends for 2016 and beyond.
Bud LaRosa is chief business performance officer at Tocci Building Companies.
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Healthcare
Demographics are playing a major role. The number of residents over 65 is expected to grow by 61% in Massachusetts by 2030. Unlike the past generation, this demographic is not relegated to acute healthcare. This generation is more active (physically) and pro-active (in regards to their well-being), and will be looking for more wellness services than prior generations. To accommodate the expected patient growth, many healthcare operators are beginning to renovate existing facilities to improve efficiency. Others are expanding their existing facilities. Most are doing both. In order to keep costs at a minimum, healthcare operators are leading the charge toward alternative delivery systems. By leveraging technologies such as Building Information Modeling (BIM), large healthcare projects are being constructed in a more collaborative fashion by utilizing Integrated Project Delivery (IPD), Highly Collaborative Project Delivery (HCPDTM), and design-build processes that have resulted in better designed facilities. Look for healthcare to improve significantly over last year.
The projects that aren’t (yet)
No matter your position on the failed Boston Olympic bid, the one positive that came from the exercise was the idea for the potential to develop Widett Circle and Columbia Point. I don’t see anything happening in 2016 for these projects, but beyond next year there should be some measure of activity.
Trends to watch for:
Labor shortage
The 800 lb. gorilla in the recovery is the shortage of qualified labor that continues to plague the industry. During the recession and subsequent years of struggle for the building industry, qualified labor across all sectors fled in search of work elsewhere. Now that the industry is recovering, those workers aren’t coming back. The area hit the hardest has been skilled craft labor.
Although the construction industry has seen a strong rebound this year, its growth has been slowed by a lack of qualified labor. Japan has been using technology to help augment its construction labor shortages. Look for the U.S. and the technologically-astute companies in New England to start doing the same in 2016.
BIM
It seems odd that we are still talking about Building Information Modeling (BIM) as a future trend, but it is. Fortunately, adoption is in excess of 70% today as opposed to 17% in 2007 – which is hardly surprising given the benefits of BIM implementation. At the most rudimentary level, BIM provides more consistent, more accurate, and less time consuming project document generation. In addition, utilizing BIM increases collaboration and coordination among the contracting parties. The process of creating digital models to provide information for planning construction has also proven beneficial for safety reasons. When used correctly, BIM will make all project parties smarter. In order to remain competitive, contractors will need to adopt BIM and will continue to do so in 2016.
Laser Scanning
We have several clients who are seeing significant cost savings from laser scanning. During renovations, it is common to encounter incomplete or inaccurate as-built drawings for existing buildings. Laser scanning, where a scan captures a site’s shape and appearance, and converts those conditions into a cloud of data points that can be imported into a Building Information Model, helps aide in the cost of both planning and designing in existing buildings. It provides a higher-level of detail in a reduced time period. The cost savings for owners is compelling. As such, we expect laser scanning to be more common in 2016 and beyond.
Drones
The industry has been talking about drones for a while, but adoption on the jobsite has been slow. However, of those who have been given FAA exemptions, over a third are in the construction industry.
Surveyors are utilizing drones to eliminate human risk by keeping workers out of dangerous terrain and hazardous equipment. They are also using drones in aerial mapping in tight urban settings in order to more easily measure and calculate site dimensions, height restrictions, and access points – all of which save time, money, and resources.
Drones are also being used to inspect work using high-definition cameras in locations that are either hard to reach or inaccessible to places where access would require additional equipment. This type of inspection is much more accurate than traditional aerial photography – at a fraction of the cost.
Contractors are starting to use drones as marketing tools, as well, documenting actual progress and project conditions for clients, lenders, and other stakeholders.
Modular
Modular construction will continue to gain traction in 2016. There are too many compelling reasons for it not to. Modular buildings are flexible and can be customized to suit a particular budget. Offsite building in a factory can also improve both quality and time. A controlled factory building environment also makes it easier to monitor the quality of the materials being used. One extreme example is that a company in China recently built a 57 story building in 19 days utilizing modular construction, a feat that would be impossible through traditional construction methods.
End users are adopting more modular projects for energy efficient reasons. Not only can modular construction reduce energy consumption during the building process by around 67%, but it can also reduce energy costs for its occupants.
Prefabrication off-site improves the efficiency, quality, and cost. Owners are demanding lower costs and condensed schedules. New product development and durable building materials will be key focus areas for innovation in modular and prefabricated construction. These factors are all driving the use of modular construction and prefabrication.
There will be a lot of opportunity for builders to succeed in 2016. Work is abundant, the economy continues to strengthen, and the demographic changes in society are helping fuel what could be a record year. The technology used to deliver construction projects will continue to evolve. BIM is no longer new, but for those who haven’t adopted it, it is no longer a luxury, but rather a necessity. Laser scanning, modular construction, and drones all add to the creative ways that construction firms can deliver projects at better quality, in less time, and for less money.