Page 30 - BusinessWest August 19, 2024

Designs on the Future
Construction to Gain Momentum This Year, but Stall in 2025
“While traditional office spending has been declining, spending on data centers has been rapidly increasing. Commerce Department figures peg data- center spending as accounting
for over 3%
of the overall non-residential building market, and its share has doubled since 2019.”
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According to the Fed’s recent report, “a significant net share of
Outlook
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Roundup
well, and testing that needs to happen. It’s all good; it’s just expensive.”
It’s also one way Kuhn Riddle provides pro- fessional-development opportunities to its team, Tierney said.
“I think they appreciate having the opportu- nity to learn a new skill, and it’s obviously a ben- efit to us to have that expertise, to be able to say to developers, ‘yes, we have five people who are passive-house-certified consultants, and we can do your projects.’”
More broadly, she went on, “in becoming
an architect, you have to go through education, training, and then take exams. We’ve been paying for the study software and materials, and then we also pay for people to take their exams. Any- body coming out of college is in debt from going to school, so that additional expense of having to pay for study materials and exams, we just want to take that pressure away. And as people get licensed, that’s a benefit to the firm.”
Opportunity Knocks
The firms we spoke with have all had suc- cess bringing in young talent, even though they acknowledged it’s not the easiest field.
“It’s hard work. There are more lucrative industries to get into, given the amount of work
“Someone going into architecture doesn’t necessarily have to choose a certain role. You can be in all kinds of different places within the field.”
field. Whether you want to go into the sustainability side, or if you want to go into spec drawing or doing renderings or other things, it’s all about how you want to approach the field, and I think that’s unique to architecture. A lot of industries don’t have that much of a bandwidth.”
Rothschild-Shea said his firm has had success with entry-level interns and entry-level architects, adding that his team members appreciate the rela- tionship aspects of the business. “I think we continue to be people-centric
Spending on non-residential buildings is projected to increase over 7% this year, but then slow to only 2% growth next year. Commercial-facilities activity effective-
ly will be flat this year and next, manufacturing construction will increase almost 14% this year before stabilizing in 2025, and institutional construction will see a more than 10% gain this year before slowing to 4% in 2025.
These are the key conclusions from the midyear update by the American Institute of Architects (AIA) Consensus Construction Forecast panelists, a group comprised of lead- ing construction forecasters from across the country. This survey evaluates how this year is likely to shape up from the midyear vantage point and projects how these trends are expected to play out in the coming year.
Sector Conditions Diverging
While the overall non-residential building market is see- ing reasonably healthy growth this year, its performance has varied greatly by sector. The commercial sector has seen declines year-to-date as compared to the same period a year ago, while spending on manufacturing facilities has seen strong growth, and most institutional sectors have seen rea- sonably healthy gains.
On the commercial/industrial side, a few key sectors have been generating strong growth, while others are stagnating. For example, manufacturing construction currently accounts for well over one-quarter of all spending in the non-residen- tial building sector, a share that has doubled since 2019.
Embedded in the generally weak retail and other commer- cial sector is warehouses, which account for more than 9% of spending in the broader non-residential building category. Its share has increased from just over 6% in 2019.
Finally, data centers are categorized within the broader
office sector. While traditional office spending has been declining, spending on data centers has been rapidly increas- ing. Commerce Department figures peg data-center spend- ing as accounting for over 3% of the overall non-residential building market, and its share has doubled since 2019.
In total, these three niche commercial/industrial construc- tion sectors currently account for more than 40% of the non-residential building market, up modestly from their 39% share last year. In 2019, these three sectors accounted for less than 23% of overall non-residential building activity. As a result, these construction sectors, which typically have a different design focus, materials composition, and contrac- tor specialization, now account for much of the gain that the industry has seen recently. That would suggest that some segments of the industry have benefited from the strong growth in these sectors, while others have been passed over.
Market Challenges Continue
Construction spending, while continuing to increase,
has seen the pace of growth slow so far this year, and this slowdown is expected to continue through this year and into 2025. Indications of a continued slowdown include a chal- lenging lending market for construction projects, continued weakness in commercial property values, and ongoing soft- ness in billings at architecture firms.
The lending market remains challenging, and current lending rates are significantly changing the calculations of project feasibility. The Federal Reserve Board’s survey of senior loan officers documents the tighter lending standards for commercial real-estate (CRE) lending.
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versus the salary,” Edgin said. “So what do we do to attract them? We give you a lot of oppor- tunity, I’ll say that. You’re not pigeonholed into doing just one little task. Continuing education is important to help folks grow and reach their goals. We support that and encourage that.”
Angela Johnson, who went to school for archi- tecture and is now the firm’s marketing assistant, agrees.
“I’ve been here almost three years now, and I’ve definitely learned a lot. Seeing different sides of how it all connects is really eye-opening,” she said. “Someone going into architecture doesn’t necessarily have to choose a certain role. You can be in all kinds of different places within the
at our core; what we’re doing is designing build- ings for people, and we certainly continue to focus on service and taking care of people.”
After all, Tierney said, this is a career in which professionals can bring a job from the drawing board to often very impressive fruition, and that’s a draw for many young people.
“That’s probably my favorite part of the job,” she told BusinessWest — “to draw something
on a piece of paper, show it to a client who gets excited about it, and then see it literally come out of the ground and walk through the building with them and have them say, ‘this is exactly what I wanted.’” BW