U.S. construction is expected to see a year of moderate cost increases, shorter lead times, and a robust project pipeline in 2024, according to a new forecast by JLL. This positive outlook comes after a period of stabilization in 2023, which followed significant supply chain disruptions in the prior year.
Key Takeaways for Construction Professionals:
- Modest Cost Growth: Total construction costs are predicted to rise only 2-4% in 2024, a significant slowdown compared to previous fluctuations.
- Improved Supply Chain Efficiency: Lead times for most materials are expected to shorten, and prices should remain stable with the exception of electrical components.
- Strong Project Pipeline: Despite a slowdown in new private construction starts, a healthy backlog of projects will keep the industry busy throughout the year.
- Labor Shortage Concerns: The construction industry will likely continue to grapple with a lack of skilled workers, pushing labor costs up by 3–5%.
- Potential Interest Rate Impact: While not yet a major factor, higher interest rates could impact project financing in the latter half of 2024.
- Public Investment Boost: Increased public spending on infrastructure and manufacturing construction is expected to offset any slowdown from private sector projects.
- Supply Chain Volatility Risks: JLL warns of potential disruptions like natural disasters, trade conflicts, and geopolitical tensions that could impact material availability and prices.
Strategies for Success in 2024:
JLL emphasizes three core strategies for construction companies to navigate the year ahead:
- Invest in Your Workforce: Building strong partnerships with skilled workers and prioritizing retention, upskilling, and trust-building are critical.
- Embrace Technology: Tools like artificial intelligence and BIM (Building Information Modeling) can help anticipate project challenges and optimize solutions.
- Market Awareness: Staying informed about macro- and micro-economic trends, including environmental regulations, material costs, and consumer preferences, allows for better planning and risk mitigation.
This JLL forecast suggests a cautiously optimistic outlook for the U.S. construction industry in 2024. While challenges remain, such as labor shortages and potential interest rate impacts, the overall picture points towards a period of relative stability with opportunities for growth. By implementing the suggested strategies, construction companies can position themselves for success in the coming year.
.webp)
