Building Design and Construction in 2015 

| December 23, 2014 | 0 Comments

High-Profile asked Bud LaRosa, chief business performance officer at Tocci Building Companies, for his forecasts on building design and construction  in 2015.

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Bud LaRosa

HP: What does 2015 hold for the building design and construction sectors?

BL: In 2015, construction starts will continue to rise. There has been significant pent-up demand across the country, and as we continue to come out of the recession, construction activity will meet this demand. A leading indicator of this rise, the AIA Architecture Billing Index (ABI) score, has been in excess of 50 for some time now. Any score over 50 indicates growth – signifying a strong start for 2015.

HP: How will building informational modeling (BIM) and virtual design and construction (VDC) continue to play an important role in 2015 and beyond?

BL: BIM and VDC are key components to highly efficient projects and will continue to play an important role in 2015. Modular and prefab projects both benefit from the predictability that is created through the use of BIM and VDC. Many projects are becoming more complex, which in turn adds risk, particularly in projects with substantial mechanical requirements; BIM and VDC can help mitigate this risk.

HP: How will integrated project delivery (IPD) continue to shape projects in 2015 and beyond?

BL: IPD will continue to gain market share in the healthcare sector for the foreseeable future, and it is beginning to gain traction in life sciences as well. As projects become more and more complex, collaborative delivery continues to have a great appeal to owners in these segments. IPD will also be making inroads into less sophisticated projects, albeit at a slower rate. With continued project success, the coming years could see 25% of all private projects delivered via IPD.

HP: Which sectors show the most promise for 2015 and beyond?

BL: Multi-unit residential will continue to perform well, although condos will be slower to revive than rentals. Vacancy rates are still very low, particularly in cities where preference for urban living keeps adding to demand. This trend is expected to last well beyond 2015. Hospitality starts will also continue to rise. Last year’s growth was approximately 25%, and 2015 should see at least 10% to 15% growth or higher. Healthcare is seeing a slow uptick on a national level, but here in Boston competition continues to drive growth. Commercial construction is picking up, and we anticipate a 5% increase at a minimum, led by the growth of warehouse distribution centers in urban settings. High-end manufacturing will also continue to perform well, where we will look for increases in excess of 10%.

HP: What does 2015 hold for your core markets/regions?

BL: We expect to see continued growth for life sciences, healthcare, multi-unit residential, hospitality, warehouses, and select retail segments throughout 2015, and into 2016, in our core regions of New England, New York, and New Jersey. We also are planning for increased activity in these segments in the Mid-Atlantic states. Additionally, we have been working on a large project in the San Francisco area, and see promise there for the foreseeable future.

HP: Other trends in the sector?

BL: The industry is constantly evolving – alternative delivery methods, increased reliance on collaboration, and alternative financing arrangements are just a few of the current trends. We are also seeing a federal/public construction slowdown created by cash-strapped agencies whose capital budgets show little sign of improving in the future. The government is struggling to address the aging infrastructure, which will impact the economic recovery. Additionally, labor shortages in construction exist due to an unhealthy balance between supply and demand. Larger scale projects in excess of a billion dollars are becoming more prevalent thanks to surety capacity and alternative/collaborative delivery methods.

Top economic trends nationally include the modernization of many of the Eastern seaports driven by the Panama Canal expansion and the increased construction in the energy sector, particularly in the Barnett and Bakken Shale regions. Technology trends include more contractors moving to the cloud, big data, artificial intelligence, jobsite connectivity, mobile devices, Google’s entry into the construction market (Google Glass, Project Wing, ATAP/Project Tango), and Oculus Rift, to name a few. Lastly, look for drones to become more common once the FAA issues regulations on their use (expected by September 2015).

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