What Will the Construction Industry Look Like in 2023?

The past few years have completely changed many industries and reshaped how people live their lives. As we head into a new year, it’s time to look forward and plan for continued changes, advancements, and challenges in the year ahead.

Non-Residential Construction Predicted to Slow Down

Based on the potential recession that’s looming on the horizon, non-residential construction is expected to slow down. It will not be a devastating drop in activity, but it will be felt by the industry as a whole. Recessions usually come with a decrease in overall spending which will affect most industries, including construction.

Manufacturing construction, in particular, has grown 22% in the last year, but changes in economic trends are set to slow down that growth rate. The pandemic switch from spending on services to spending on goods is starting to reverse, meaning there is less demand for greater manufacturing capacity and therefore manufacturing construction will slow.

Other specific areas of non-residential construction such as commercial construction, infrastructure, healthcare construction, etc. are harder to predict and will likely experience less of a drop in activity.

Inflation Will Cause a Decrease in Construction Starts

A recent article from Construction Dive predicts that “Total U.S. construction starts will drop 3% when adjusted for inflation to clock in at $1.08 trillion next year, according to the 2023 Dodge Construction Outlook.” Specifically, commercial starts such as retail, office space, warehouses, hotels, etc. are predicted to decrease by 13% in 2023, adjusted for inflation.

Richard Branch, Chief Economist at Dodge, said, “The construction sector has already started to feel the impact of rising interest rates. The Federal Reserve’s ongoing battle with inflation has raised concerns that a recession is imminent in the new year. Regardless of the label, the economy is slated to significantly slow, unemployment will edge higher and for parts of the construction sector it will feel like a recession.”

Public and government funding will support manufacturing and infrastructure construction activity, but an economic downturn will negatively affect the residential and commercial construction sectors.

Greater Focus on Sustainability and Resiliency

While construction starts are predicted to slow in 2023, there will be an even greater shift towards sustainable building practices and resiliency of construction projects. The industry focus on net-zero (zero waste) construction and remodeling projects will continue to grow exponentially in the next year, leaving companies who don’t invest their resources into green building practices at a disadvantage.

Aside from environmentally friendly construction practices, there will also be a greater emphasis on creating or modifying buildings and infrastructure to increase resiliency. With the wildfires, hurricanes, and other natural disasters we’ve seen in the past year, there is a push to create infrastructure that can withstand these catastrophic events.

This focus on sustainability and resiliency will lead the construction industry into new ways of thinking and doing. From rebuilding homes to renovating warehouses, architects, designers, builders, and Mechanical, Electrical, and Plumbing (MEP) engineers are going to need to approach these projects with an eye for opportunities to choose sustainable building materials or more resilient building structures over traditional construction practices.

Innovations in Technology

In the increasingly digital world, there has been a steady growth in spending on technology and digitalization across all industries.

The construction industry in particular has started seeing huge leaps in innovative technology-based practices, such as 3-D modeling, Augmented Reality, Building Information Modeling (BIM), Computer Aided Design (CAD), and off-site construction.

Digital tools not only make the design and construction process easier and more efficient; they also greatly increase the level of precision of measurements and materials, which leads to fewer mistakes during construction and ultimately, money saved.

More Collaboration Opportunities

With the advancement of tools and technology, there has come an increased level of collaboration between companies and sectors in the construction industry. We now have the ability to digitally send plans, drawings, models, and more to anywhere in the world, which opens up huge opportunities for collaboration and connection.

At Pro Engineering, we stay up to date on the latest industry trends, technologies, and regulations. We engineer our MEP designs to maximize energy efficiency and sustainability. If you want to learn more about what we do and how we can collaborate on your next construction project, contact us today.

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