Southeast Commercial Construction Update Strikes Upbeat Note
The Atlanta Fed’s fourth quarter 2013 commercial construction poll results were fairly optimistic. The majority of commercial construction contacts indicated that pace of nonresidential construction activity (measured by square feet) and the pace of multifamily construction (measured by number of units) had increased from year-earlier levels (see the charts).
Most contacts reported backlogs greater than year-earlier levels, suggesting a healthy pipeline of construction activity (see the chart).
More contacts reported upward pressure on labor costs than in previous polls (see the chart). Perhaps not surprisingly, this trend of upward pressure on labor costs for commercial contractors is consistent with our recent reports (here and here, for example) of upward pressure on labor costs for residential builders.
Most contacts also noted upward pressure on material costs and have consistently reported this pressure several quarters in a row (see the chart).
Relative to recent polls, the number of respondents reporting that the amount of available credit exceeded demand increased; the number of respondents reporting that the amount of available credit fell short of demand also increased (see the chart). Another way of viewing the results is that more than half of the respondents indicated that amount of available credit met or exceeded demand, which has been the case for three consecutive quarters.
When asked what type of projects will dominate the landscape during 2014, business contacts indicated that they plan construction activity across a wide variety of property types. The property types mentioned include multifamily housing/senior housing, education, office, health care/medical, infrastructure/energy, retail/restaurant, municipal buildings, hotels, and industrial/warehouse.
Note: Fourth quarter 2013 poll results were collected January 6–15, 2014, and are based on responses from 19 business contacts. Participants of this poll included general contractors, subcontractors, lenders, developers, and material fabricators with footprints of varying sizes across the Southeast.
If you are a commercial contractor and would like to participate in this poll, please let us know by sending a note to RealEstateCenter@atl.frb.org.
By Jessica Dill, senior economic research analyst in the Atlanta Fed's research department
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