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Commercial Building Construction in the US - Industry Market Research Report

United States commercial building construction market: $293.5 billion industry by 2018


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2014-02-03 13:20:02 - Commercial Building Construction in the US - Industry Market Research Report - a new market research report on companiesandmarkets.com

Few industries suffered more during the recession than the United States Commercial Building Construction market. The collapse of the housing market and its subsequent strain on the financial sector set the stage for a stifled business sector with little need for new commercial space. A tightened credit market, high unemployment and low consumer spending also contributed to the industry´s decline as businesses downsized or closed shop, which halted demand for new office, retail and warehouse construction. Stagnant growth in per capita disposable income also cut into demand for hotel and recreation market demand. As a result, industry revenue is expected to fall at an annualized rate of 8.5% to reach $194.5 billion during the five years to 2013.

Commercial construction typically

 

 

lags behind the overall economy by one to two years, due in part to the length of construction contracts and the pipeline of projects that general contractors keep on the books. Industry revenue began to contract in 2008, and then plummeted 25.0% and 26.3% in 2009 and 2010, respectively. During those years, most contractors´ backlogs dried up and many operators cut prices to stay competitive, leading profit margins to significantly narrow. In 2011, the average margin dropped to 1.7% of revenue from 3.8% in 2008. Margins are expected to make up some ground in 2013 to reach 2.0%, showing modest improvement as economic recovery stimulates demand for new commercial construction and as operators gradually regain pricing power.

Despite the recession´s doldrums, revenue is expected to jump 6.8% in 2013, though stubbornly high office vacancy rates will likely delay a more dramatic jump until later in the five years to 2018. Overall, though, improvements across the US economy will drive strong industry growth, with demand for new construction returning as businesses expand to meet growing consumer demand. During the five years to 2018, industry revenue is forecast to grow at an annualized rate of 8.6% to reach $293.5 billion.

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