News
December 23, 2024

Survey Shows Growing Optimism Among MN Construction Firms

Caroline Raffetto

Construction businesses in Minnesota are feeling more optimistic than last year, according to a recent survey by the Associated General Contractors of Minnesota, despite ongoing concerns over workforce availability and rising costs.

The 2024-2025 Minnesota Construction Industry Assessment, released on December 12, found that 34% of businesses expect market conditions to improve in the coming year, up from 23% in 2023. Meanwhile, half of the respondents anticipate conditions will remain the same, and 18% expect them to decline.

More than 165 Minnesota construction companies, including general contractors, design firms, and specialty contractors, participated in the survey. These companies span various sectors, including building, highways, utilities, and heavy industry, and range in size from less than $20 million to over $125 million in annual sales.

Survey respondents cited project funding and technological advancements as key drivers of optimism. However, challenges such as inflation, rising labor costs, and the scarcity of skilled workers remain a significant concern.

Comments from respondents highlighted a range of issues, including the high costs of construction equipment, government mandates, difficult workforce goals, and the lack of young people entering the construction field. Mental health also emerged as a major concern. One anonymous respondent stated, “Mental health has become front and center in our industry. Employers, project owners and unions have to address the causes of addiction and suicide in the industry.”

Despite these challenges, Tim Worke, CEO of AGC-Minnesota, described the overall outlook as “pretty positive.” He added, “It is a perception survey, so it’s not using data that comes from sources and then is interpreted... It is perception of people in the industry, a look forward into 2025 and then asking things like, ‘What do they see as positives? What are some drags?’”

Ben Anderson, Director of Operations at Shaw-Lundquist Construction, also expressed optimism, saying, “We saw a number of projects tap the brakes in 2024 due to inflationary pressures in certain products and commodities... Many of those projects seem to be re-energized looking at 2025, so we anticipate a stronger year for construction in Minnesota.”

Project funding was viewed positively by nearly 60% of respondents, while 79% cited technological advancements as a positive factor. The most promising market segment was alternative energy, with 58% of respondents seeing it as an expanding market. Other strong sectors include healthcare (49%), heavy/civil infrastructure (46%), and transportation (45%).

However, commercial office construction was the least attractive segment, with 70% of respondents expecting it to decline. The outlook for commercial & retail, multifamily housing, and senior housing was more mixed, with a range of respondents predicting declining, constant, or expanding conditions.

Surprisingly, concerns about the transportation and infrastructure sector grew, despite increased funding from state and federal levels. “That, I think, is due to some challenges in rolling out some of these big investments,” Worke noted. “Our members are concerned that it’s a flat market for the next two years or so, but then we hope to see that turn around.”

This sentiment aligns with a recent survey by the Federal Reserve Bank of Minneapolis, which found lingering concerns about labor availability, material costs, and interest rates, but a generally more optimistic outlook compared to the previous year. Ron Wirtz, regional outreach director at the Minneapolis Fed, said the mood is “more optimistic than I was probably expecting, and certainly the most optimistic we’ve seen in a couple of years.”

News
December 23, 2024

Survey Shows Growing Optimism Among MN Construction Firms

Caroline Raffetto
Construction Industry
Minnesota

Construction businesses in Minnesota are feeling more optimistic than last year, according to a recent survey by the Associated General Contractors of Minnesota, despite ongoing concerns over workforce availability and rising costs.

The 2024-2025 Minnesota Construction Industry Assessment, released on December 12, found that 34% of businesses expect market conditions to improve in the coming year, up from 23% in 2023. Meanwhile, half of the respondents anticipate conditions will remain the same, and 18% expect them to decline.

More than 165 Minnesota construction companies, including general contractors, design firms, and specialty contractors, participated in the survey. These companies span various sectors, including building, highways, utilities, and heavy industry, and range in size from less than $20 million to over $125 million in annual sales.

Survey respondents cited project funding and technological advancements as key drivers of optimism. However, challenges such as inflation, rising labor costs, and the scarcity of skilled workers remain a significant concern.

Comments from respondents highlighted a range of issues, including the high costs of construction equipment, government mandates, difficult workforce goals, and the lack of young people entering the construction field. Mental health also emerged as a major concern. One anonymous respondent stated, “Mental health has become front and center in our industry. Employers, project owners and unions have to address the causes of addiction and suicide in the industry.”

Despite these challenges, Tim Worke, CEO of AGC-Minnesota, described the overall outlook as “pretty positive.” He added, “It is a perception survey, so it’s not using data that comes from sources and then is interpreted... It is perception of people in the industry, a look forward into 2025 and then asking things like, ‘What do they see as positives? What are some drags?’”

Ben Anderson, Director of Operations at Shaw-Lundquist Construction, also expressed optimism, saying, “We saw a number of projects tap the brakes in 2024 due to inflationary pressures in certain products and commodities... Many of those projects seem to be re-energized looking at 2025, so we anticipate a stronger year for construction in Minnesota.”

Project funding was viewed positively by nearly 60% of respondents, while 79% cited technological advancements as a positive factor. The most promising market segment was alternative energy, with 58% of respondents seeing it as an expanding market. Other strong sectors include healthcare (49%), heavy/civil infrastructure (46%), and transportation (45%).

However, commercial office construction was the least attractive segment, with 70% of respondents expecting it to decline. The outlook for commercial & retail, multifamily housing, and senior housing was more mixed, with a range of respondents predicting declining, constant, or expanding conditions.

Surprisingly, concerns about the transportation and infrastructure sector grew, despite increased funding from state and federal levels. “That, I think, is due to some challenges in rolling out some of these big investments,” Worke noted. “Our members are concerned that it’s a flat market for the next two years or so, but then we hope to see that turn around.”

This sentiment aligns with a recent survey by the Federal Reserve Bank of Minneapolis, which found lingering concerns about labor availability, material costs, and interest rates, but a generally more optimistic outlook compared to the previous year. Ron Wirtz, regional outreach director at the Minneapolis Fed, said the mood is “more optimistic than I was probably expecting, and certainly the most optimistic we’ve seen in a couple of years.”