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Among many challenges, the rising cost of materials and labor hampered construction activity in 2023. Economists — worried about rampant inflation — even labeled some building sectors as “recessionary.”

In response, the Federal Reserve raised its benchmark interest rate four times. While those hikes effectively brought inflation down from its peak, heightened lending standards and subsequent issues with financing on construction projects worsened as the year progressed.

That affected many projects across the country over the past 12 months, especially on privately led developments. For example, Shopoff Realty Investments paused construction on its approximately $550 million Las Vegas Dream Resort in March due to construction financing issues. In November, the Clark County, Nevada, Zoning Commission axed a separate $5 billion entertainment complex in Vegas due to financing issues.

Nevertheless, as the new year begins, it’s evident that certain types of construction will enjoy a surge in activity throughout 2024. On the flip side, some sectors continue to grapple with challenges that are likely to persist over the next 12 months. Below are 2024’s winning and losing construction sectors:

Winner: Factories

A powerhouse ever since the pandemic accelerated America’s onshoring effort, manufacturing construction will continue its hockey-stick trajectory in 2024.

Anirban Basu, chief economist at Associated Builders and Contractors, said larger contractors should continue to benefit from a “bevy of megaprojects around the nation.” Meanwhile, Didi Caldwell, president and CEO of Global Location Strategies, a Greenville, South Carolina-based business consulting and services firm for manufacturers, labeled the onshoring trend a “once-in-a-lifetime” event.

Starts in the sector, which include multibillion-dollar electric vehicle battery plants and 1,000-acre semiconductor factories projects, hit $97 billion in 2023, according to Dodge Construction Network. That ranks as the second largest amount of investment in one year over the past 15 years. Only 2022, which set the all-time record at $102 billion, posted higher activity.

But this year is on track to be even bigger. Dodge forecasts $112 billion in investment in the sector for 2024, a potential record amount of activity, said Richard Branch, chief economist for Dodge Construction Network.

“The good side of the market here is we are starting to see chip demand pick up, semiconductor sales are starting to rise,” said Branch. “That’s a good sign after a year or so of softness in the market.”

Manufacturing construction skyrockets to new heights

Public funds, such as IIJA and CHIPS Act, continue to boost starts in the sector.

Winner: Bridges and roads

Beyond manufacturing, roadway construction could really get rolling in 2024.

About 63%, or nearly $400 billion for over 400,000 projects, of infrastructure funding has thus far been announced since President Joe Biden signed into law the Infrastructure Investment and Jobs Act two years ago, said Branch.

But that doesn’t mean there’s just 37% of funds remaining to spur construction activity. Announced funding, which is captured from agency press releases, is preliminary and non-binding, whereas awarded funding represents actual obligations, according to the White House.

“We have not seen that announcement move all the way through the allocation, or [be] spent yet,” said Branch. “One of the big assumptions we made way back in 2021 was that 2023 and 2024 would be the best years for growth and infrastructure. I think there’s reason to believe, though, that that can maybe be more like 2024 and 2025.”

One reason why is because material prices remain high. With the focus on inflation in 2022 and 2023, local and state planners may have opted to slow activity until later in 2024, where they could benefit from more favorable pricing conditions.

“Data is still out on that one, obviously, but I wouldn’t be surprised if stronger growth gets pushed out,” said Branch. “That means by the midpoint of [2024], we should start to see acceleration in the forecast. Essentially, what the models are doing here is just pushing the growth out.”

That leaves a lot of runway for bridge, highway and street construction. Dodge pegs project starts for streets and highways to grow 23% in 2024, and another 25% growth in bridge construction, totaling about $147 billion worth of activity in these sectors.

Street, highway and bridge projects race forward

Forecasts peg starts in the sector to reach new heights in 2024.

Loser: Warehouses

Not all sectors will increase activity in 2024, however.



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