Construction Outlook Still Strong for 2018

Construction Outlook Still Strong for 2018

Leaders still see promise for commercial projects in the Twin CitiesIt has been said often enough that construction activity reflects the health of other commercial ventures. If that's so, then the prospect for continued construction industry growth in the Twin Cities over the coming year is excellent. Business is good, and in many fields, it's expected to get even better. Even though there were some concerns voiced in February of this year when a group of industry leaders from different field gathered to discuss the trends, most indicators in this last quarter are still positive.

Here's an overview of the discussion, centered around technology, construction, insurance and human resources. Now that the tendency is to look ahead to 2018, what's in store? How have the early predictions played out? Are there hopeful signs ahead for continued growth and development?

Stable Growth Foreseen

Even early in 2017, some experts predicted that new development would "flatten" somewhat in the coming months. It's too early to say for certain what the final numbers will show, but all signs are encouraging. Although growth rates have been slower, and Minnesota expects lower than projected revenues for fiscal 2017-2019, the state also reports effective efforts to adjust spending.

At the beginning of 2017, several trends were noted for the coming year: Continuing industrial development, the extremely low vacancy rate both for industrial and commercial space and for multi-family residential projects, a need for new distribution facilities, and low unemployment numbers.

Panelists predicted that Minneapolis-St. Paul seems poised to become the nation's next tech hub, citing local culture and business environment, the relatively low cost of living and existing infrastructure among the positives. There are, however, some challenges, among them labor.

"Care and Feeding" of the Work Force

Even though there is a highly-trained and well-educated talent pool in the Twin Cities, it may not be sufficient for future needs. Minneapolis was ranked tops in the nation by "jobs to job-seeker ratio" for 2017.

But workers of the future may have different needs and desires from today's employees. Panelists voiced some concerns that companies will need to address in order to maintain a vibrant work force sufficient to fuel future growth:

  • The generational gap
  • Staffing and training needs
  • Hiring and retention practices
  • Women, especially in tech fields
  • Discrimination
  • Insurance, including cyber-security and hacking concerns
  • Scheduling and work environments

"Contingent labor" is viewed as a partial solution to many of these concerns, including independent contractors, temporary and part-time workers and freelancers. The experts noted that up to 35 percent of companies' labor, especially in IT, digital marketing and finance, would fall into this category in 2017. That percentage is likely to increase and extend to other fields in the future.

Market Strengths

In general, these local executives and other business leaders talk of continuing market strength in multi-family residential and retail sectors in the Minneapolis-St. Paul area.

Several high-profile projects, including office renovations, new hotels, redevelopment plans in the cities' cores, and suburban development, confirm that the Twin Cities are moving into next year with optimism. Strong hotel performance in both cities' central business districts and the Bloomington/Airport area have spurred new hotel development plans.

Development near the new Minneapolis sports centers continues; apartment-condo building is ongoing, and the Nicollet Mall renovation is due to be finished in 2018. In St. Paul, much new cultural development, sports-related construction and office renovation is slated for completion next year, and new construction and redevelopment promises to keep downtown building strong. All in all, the future looks bright for these cities, and for the state as a whole.

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