• Economic uncertainty: Although current U.S. construction volumes remain steady and growing, investors, financiers and contractors alike are beginning to approach decisions with caution, weighing risk and opportunity. Confidence indicators in the construction, development and lending industries are beginning to falter, depicting a changing mind-set as tides begin to turn.
• Labor challenges: Record-breaking commercial construction activity along with a 4.5 percent construction unemployment rate – the lowest in over 14 years – has created a high demand, low supply scenario in terms of labor. As a result, the average hourly wage hit $29.98 per hour in July 2016, which is more than 3.5 percent higher than that of the year prior and outpaced the national average annual growth of 2.4 percent. With high construction volumes across property types and a dwindling labor pool, expect demand to remain elevated for the time being.
• Technology boom: Construction and development has made strides to become an industry for innovation with the implementation of new productivity software, tech products such as drones and virtual reality devices, and the ever expanding sharing economy making its debut in construction. Technology has become a game changer for project managers and contractors looking to streamline processes and offer an all-in-one solution.

Sector highlights

• Office: The office construction pipeline reached its highest point this cycle at 105.4 million square feet in Q3 2016, up 4.8 million square feet from last quarter. But starts declined by 10.6 million square feet this quarter, illustrating a possible hesitancy to begin new projects.
• Industrial: The growth rate of industrial new project deliveries continues to increase year-over-year, as the under construction pipeline remains steady at 204.3 million square feet. Vacancy continues to decline as the sector hits 5.8 percent – the lowest rate in over 16 years.
• Hospitality: Metrics for the U.S. hotel industry continue to suggest that the sector is stabilizing at normal levels. The supply pipeline has increased 1.5 percent year-to-date, but this growth remains below the long-term average of two percent.
• Retail: The retail under construction pipeline continues to climb, reaching 82.4 million square feet in Q3. Starts are at their highest in the Southwest region, boasting 6.7 million square feet in the last quarter.