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r.o.i. Design was invited to a COAA Spring Owner Connect Workshop by their customer Carol Cool, now a project manager at Michigan State University but who we met when she managed the GVSU Marketplace project where we designed the GVSU Laker Store.

mqswxnMWe were very impressed with the quality of the content, the professionalism of the presenters and attendees and look forward to being more involved.

While all the information presented had value, r.o.i. Design would like to share the highlights from the Ken Simonson’s presentation, “Michigan’s Economic Outlook”, Ken is the Chief Economist for ACG (Associated General Contractors) of America.

Here are the headlines:


Growth moderately up, more so in metropolitan areas; currently nationally we are at 2008 employment rates. The state of Michigan is up 8.5% from 2014 and our growth is 10th best out of the 51 states. Michigan construction employment is 30% of its peak in 2002. (more)

Concern for qualified construction workers: 83% of construction companies are having trouble finding craft workers, 61% of construction companies are having trouble finding project managers and supervisors.

The hope for construction employment is the local focus on vocational programs and the renewed commitment to training. The increased use of labor saving technology will relieve some of the pain.

Material Costs

  • Steel same as 2011 price and declining
  • Gypsum up 50% since 2011, 2014 shows some leveling
  • Copper/brass down 25% since 2011
  • Lumber/plywood up 25% up since 2011, 2014 shows some leveling.
  • Concrete and plastics up 10-18% since2011-cement pricing up 9% in 1 year due to tight capacity. More plastic suppliers coming on line so there may be a cost reduction..
  • 2015-2017 construction spending estimated to be up 6-10%

mUHKRUYGrowth areas expected in 2015

  • 33% of growth will be based on retail remodeling, warehouse/industrial projects, and lodging.
  • 25% of growth in office and office remodeling
  • 20% of growth will be manufacturing based.

National trends holding back construction:

There is less government spending which make public school projects “flat”.

Consumers continue to switch to “on line” retailing. There are increasing amount of services that allow consumers to stay home.

  • But this does reflect in the amount of warehouse and distribution centers being built to satisfy the real time delivery of on line purchased goods.
  • But this has created an active market of re-purposing retail building inventory: converting them to mixed use, office or residential projects.

Employers are shrinking their office spaces. The realization of remote technology has reduced the need to store paper. The realization that not all employees need a full time space in the office has increased the amount of “hoteling” of personnel.

  • But is stimulating office remodeling and this will continue through the unforeseen future at least through 2016.

Seniors appear to be aging in place, slowing down the new construction of senior care facilities.

National trends encouraging construction:

Shale-Gale, term that encompassing the mining of natural resources, is driving new construction. Companies are building complexes around exploration and drilling. Michigan’s own “Rover” program is stimulating the development of natural gas fields which will feed industries in Michigan and Canada.

Panama Canal, the remodeling of the canal is shifting container traffic to US coastal ports. The landside connection of this increase of business is stimulating construction in a variety of types of projects.

Multi-family construction has grown 30-60% annually since 2011 and is projected to continue through 2015. Growth in Michigan this year is projected at 1%

  • Less college grads find employment, less cash to invest in home buying
  • People are waiting longer to get married and have children, paying off college debt.
  • Location preferences are moving towards cities, especially to cities with private charter schools for families and lifestyle options for seniors.
  • Detroit is seeing an increase in urban living for the first time in a generation.
  • Population growth is impacted by immigration; coastal cities are seeing increase in need for apartments.

In 2014

Residential construction is only 48% of its previous peak

Non residential construction grew 4-8% last year-top producers listed in order of dollars spent:

  1. Power (Pipeline)
  2. Roads and Highway
  3. Upper Education(Dropping) (PreK-12 may start to show some investments 2015 forward)
  4. Commercial Remodeling (Growing) (Retail construction is 50% from 2008 levels, all other commercial is showing the growth)
  5. Manufacturing (Growing a double digit rates, especially relating to oil and gas)
  6. Office(Flat)
  7. Transportation(Flat)
  8. Health Care (Waning) (New construction is on the decline. Private hospitals are seeing competition in stand alone medical services suppliers as stimulated by the affordable care act. Off-site medical office building is on the rise.)
  9. Sewage(Waning)
  10. Amusement & Recreation(Waning)
  11. Lodging (Waning), (Lodging was up 19% in 2014 but hotel growth is estimated to continue to 2015 and then wane. Rev/Par rising each of the last 5 years but investors are skid dish. Student housing has influenced the lodging numbers on the upside.)

COAA: Construction Owners Association of America supports project owners’ success in the design and construction of buildings and facilities through education, information and developing relationships within the industry.