FMI, a provider of management consulting and investment banking to the construction industry, released its 2009 U.S. Markets Construction Overview, offering insight into some of the construction industry’s business challenges. FMI predicts 2009 as the benchmark low-water year for residential construction as it struggles through a contraction unprecedented in its depth.
According to President and Managing Director Hank Harris, "This has been a year of opportunity for some and disappointment for many. Sustained by poor lending practices well beyond the demand curve, the single-family residential wave finally broke—big time. As goes residential, so (eventually) goes much of construction."
In 2005, the value of residential construction swelled to nearly $618 billion, accounting for 56 percent of all U.S. construction. In 2008, that value has dwindled to $397 billion, now accounting for just 37 percent of U.S. construction.
FMI outlines 10 significant drivers that it says will affect the future of the construction industry. For each driver, there are five implications and five actions to aid thinking around these issues. The top 10 futures drivers include the following:
- energy burns,
- capital supply suffers,
- talent losses likely,
- climate changes count,
- cost of construction climbs,
- the old guard changes,
- change comes faster,
- green keeps growing,
- customers increase construction knowledge, and
- global acts impact local markets
FMI’s U.S. Markets Construction Overview includes a report on construction trends and forecasts the growth or decline in 19 market segments and nine geographic regions, noting both short-term and long-term considerations. The report is available here for $135.