NOVEMBER 21, 2016 � enr.com

2017 TRUCK PREVIEWBig changes are coming to the pickups and heavy-duty trucks contractors rely on (P. 42)

ELECTION 2016

enr.com

2017 TRUCK

(P. 42)

WHAT PRESIDENT-ELECT TRUMP AND THE NEW CONGRESS WILL MEAN TO CONSTRUCTION P. 10

HOW NEW RULES AND BILLIONSIN ADDED PROJECT FUNDS

WILL AFFECT INDUSTRY P. 11

WILL MARKET FORECASTS CHANGE FOR 2017

AND BEYOND? P. 28

1121_cover_Nat_F1.indd 1 11/14/16 5:38 PM

10 � ENR � November 21, 2016 enr.com

Construction Gears Up for Policy Shift Industry weighs President-elect Donald Trump’s ambitious infrastructure plan and his promises to undo Obama regulations

As President-elect Donald J. Trump starts to assemble a team of advisers to staff his adminis-tration, the construction indus-

try is parsing his post-election comments for inklings about his priorities and plans when he takes offi ce in January.

Industry executives like Trump’s ambi-tious infrastructure ideas but await more details. Says one contractor fi rm execu-tive, “Trump says the right things, but will he follow through?” They also realize that—even in a Congress under Republi-can control, although with slightly dimin-ished majorities—a long path lies ahead before such a proposal can become reality. One engineering fi rm CEO speculates that Trump “could be at odds with Con-gress even more than Obama.”

All sides expect the new administra-tion’s regulatory policy to tilt sharply toward business interests’ point of view, including a pullback on Obama adminis-tration environmental and workforce-related rules. Groups that represent contractors and engineering fi rms support such prospective changes, but environ-mental groups and labor unions do not. Promised reversals of climate-change pacts and greenhouse-gas-emission curbs prompted Michael Brune, executive direc-tor of the Sierra Club, to pledge that

groups will fi ght efforts to roll back rules. “We won’t be in a defensive crouch over the next four years,” he says.

As the industry digests the election results, Trump’s infrastructure program is a hot topic. “We are going to fi x our inner cities and rebuild our highways, bridges, tunnels, airports, schools, hospitals,” he said in a post-election speech. “We’re go-ing to rebuild our infrastructure, which will become, by the way, second to none. And we will put millions of our people to work as we rebuild it.”

Construction groups support that idea. Steve Sandherr, Associated General Con-tractors of America CEO, said, “We are eager to work with the executive and leg-islative branch to advance new infrastruc-ture investments and identify and put in place sustainable, long-term and reliable ways to pay for them.” A spokesman for North America’s Building Trade Unions says, “Infrastructure is of supreme impor-tance, not just to our membership but to the nation and our economy.”

Trump fi rst called for an infrastructure program that would be “at least double” Democratic candidate Hillary Clinton’s $275-billion, fi ve-year initiative. Later, he proposed a $1-trillion, 10-year plan. Spe-cifi cs were lacking, however.

To clarify the plan’s financing, two

Trump senior policy advisers, private-equity investor Wilbur Ross and Univer-sity of California, Irvine, professor Peter Navarro, in an Oct. 27 report said it would involve private investment in proj-ects with revenue streams, such as toll roads. They said a $1-trillion program would require $167 billion in private equity. To attract those dollars, the ad-ministration would provide tax credits of $137 billion. Ross and Navarro said the credits would be repaid by revenue from income taxes from workers on the projects and taxes on contractors’ profi ts.

But a more recent Trump team infra-structure statement clouds the issues of how large the plan will be and what types of projects it will include. A post-election posting on the web page for Trump’s tran-sition discusses a $550-billion plan. Rob-ert Murray, Dodge Data & Analytics vice president for economic affairs, suggests the fi gure may refl ect a shortening of the time period to fi ve years from 10. The new Trump statement also refers to only transportation infrastructure.

Even with the question marks, the prospect of a big boost in infrastructure investment sent some engineering and construction stocks higher in the day after the election, including Caterpillar, Jacobs Engineering, Fluor Corp. and AECOM.

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ELECTION 2016 November 21, 2016ELECTION 2016

NOVEMBER 21, 2016 � enr.com

2017 TRUCK

PREVIEW

Big changes are

coming to the

pickups and

heavy-duty trucks

contractors rely on (P. 42)

ELECTION 2016

enr.com

2017 TRUCK

(P. 42)

WHAT PRESIDENT-ELECT TRUMP

AND THE NEW CONGRESS WILL

MEAN TO CONSTRUCTION P. 10

HOW NEW RULES AND BILLIONS

IN ADDED PROJECT FUNDS

WILL AFFECT INDUSTRY P. 11

WILL MARKET FORECASTS

CHANGE FOR 2017

AND BEYOND? P. 28

1121_Election.indd 10 11/15/16 5:19 PM

A cross the country, voters made their voices heard on ballot questions that will unleash billions of dollars in new

project spending. The results also put in place rule changes that, in many cases, will have an impact on owners, firms and employees. Not all items gained support among tax-and-spend weary voters, but some won big.

Voters approved 69% of some 280 state and local transportation funding measures, which Alison P. Black, American Road and Transportation Builders Association chief economist, said was a record number in the U.S., generating more than $201 billion in new funds and spending authority.

California voters strongly endorsed educa-tion improvements when they approved Propo-sition 51, which allows the state to sell $9 billion in general obligation bonds for new and upgraded school facilities. A coalition of build-ers pushed the school construction bond mea-sure, the first on state ballots since 2006. In fast-growing Colorado, where a record $4- billion of school bond money was up for deci-sion, voters approved about $3 billion. Denver residents overwhelmingly approved, 65% to 35%, a $628-million tax package for new con-struction and upgrades. But Jefferson County voters rejected, with a 54% majority, a $568- million spending initiative.

Californians OK Most MeasuresCalifornia voters fought back against the well-financed Proposition 53, the so-called “No Blank Check” initiative, that would have re-quired a statewide vote for revenue bonds above $2 billion on any state-owned or -managed project. The measure, rejected 51% to 49%, was largely funded by a Central Valley landowner opposed to a proposed $15-billion water tunnel and could have complicated financing for the state’s high-speed-rail project.

The state’s largest transportation improve-ment measure, the $120-billion Measure M in Los Angeles, easily won passage. Through a countywide half-cent sales tax, it will fund a rail tunnel through the Sepulveda Pass and a

BALLOT INITIATIVES

Voters OK Billions in Bonds, Move Most Marijuana, Minimum-Wage Measures

enr.com November 21, 2016 ENR 11

In a Nov. 9 note, Andrew Wittmann, lead construction industry analyst for in-vestment firm Robert W. Baird Inc., said he was “incrementally positive” on E&C-sector stocks post-presidential election, “though not rushing in,” citing risks to industry firms of protectionist policies and reduced support of alternative energy.

Industry officials hope that infrastruc-ture legislation will break through Capitol Hill partisan fights. Steve Hall, American Council of Engineering Companies vice president for government affairs, says, “With tighter margins in Congress, this may be one of the few consensus issues that they can actually make progress on.”

The American Association of State Highway and Transportation Officials wants the infrastructure proposal to in-clude a “fix” for the revenue-challenged Highway Trust Fund, says Jim Tymon, chief operating officer. “But finding a way to come up with a bipartisan offset or a bipartisan way to pay for it is going to be more of the challenge,” he told reporters. Moreover, it is likely that Republican fis-cal hawks will seek to hold down overall federal spending, which could harm some construction programs.

POST-ELECTION MEETING Trump pledged to seek repeal of Affordable Care Act. But after meeting with Obama, he said he’d like to retain some provisions.

subway extension to Santa Monica.Voters on both sides of San Francisco Bay

approved a $3.5-billion bond measure to up-grade aging core components of the region’s BART transit infrastructure, including more than 90 miles of track, water-damaged tun-nels and the system’s nearly half-century-old train control system. All have contributed to increased service disruptions and other oper-ational issues, although critics claim BART’s woes are due, at least in part, to the agency’s prioritizing system expansion over mainte-nance. A 30-year, half-cent sales-tax hike ap-proved in Santa Clara County will help to fund a proposed extension to downtown San Jose.

Approved measures also are set to add $6 billion in new tax revenue for California free-way upgrades. But Sacramento’s $3.6-billion road and transit proposal fell short by just over 1% of the needed vote, while opponents of the San Diego Council of Governments’ failed $18-billion public transit and freeway program faulted its emphasis on transit, with only $2.6 billion earmarked for freeways and car-pool lanes. Also defeated in San Diego were two proposals to boost its hotel room tax, which would have directed up to $1.8 billion to a new convention center and football stadium that team owners claim will prevent its relocation.

Washington state voters favored the $54- billion Sound Transit Proposition 1 to expand light-rail and bus operations, but they strongly rejected, 59% to 41%, what would have been the nation’s first carbon-emission tax on the sale or use of certain fossil fuels and fossil-fuel-generated power, with proceeds to have offset sales taxes. Industry groups were split on the measure, with architects in favor and building trades and contractor groups against. Proponents are planning to push an alternative plan to state legislators next year to invest tax funds in clean-energy projects.

Nearly 60% of Austin, Texas, voters said yes to issuing $720 million in transportation bonds, the largest such measure approved in the city’s history, while those in Wake County, N.C., approved a 10-year, half-cent sales-tax

ELECTION 2016 November 21, 2016

1121_Election.indd 11 11/15/16 5:19 PM

Some see possible tax-reform legisla-tion as a vehicle for a trust-fund solution. The National Electrical Contractors Association would like to see a tax mea-sure that includes repealing the estate tax and tax-rate reductions for smaller fi rms, says Marco Giamberardino, executive di-rector for government affairs.

While Republicans still will be in charge of the House and Senate, the GOP’s sway over federal policies and leg-islation will not be absolute because it lacks the 60 votes in the Senate needed to ensure that legislation and presidential nominees won’t be blocked by fi libusters.

Republicans will hold 51 Senate seats and Democrats hold 48, including two Independents who caucus with them. That compares with a 54-46 Republican-Democratic/Independent pre-election split. The GOP, which won all but two Senate races rated as toss-ups, is expected to get a 52nd seat after votes are counted in a Louisiana runoff in December. One GOP winner in the Senate was incumbent Marco Rubio (R-Fla.), who bested chal-lenger Rep. Patrick Murphy (D), son of the chairman of Coastal Construction.

The House will have 239 Republicans and 193 Democrats, with three races unde-cided. The breakdown now is 246-186, plus two vacant seats. In Florida, Republican Francis Rooney, chairman of construction fi rm Rooney Holdings, Naples, Fla., won his race for a U.S. House seat.

Industry executives predict that Trump will seek to cancel or ease Obama admin-istration regulations. Industry targets include the “blacklisting” rule, which re-quires contractors to verify compliance with workplace-related statutes to qualify

for federal work. Also on industry’s list is a rule revising compensation levels at which employers must pay overtime. Hall says Trump’s election “has to bolster our efforts at revisiting these rules and scaling them back to a fairly signifi cant degree.”

AGC is seeking action on regulations mandating project labor agreements and paid sick leave and setting new limits on workers’ exposure to silica dust. AGC wants “signifi cant changes, if not repeal” of the Affordable Care Act, a spokesman said. Trump pledged to repeal the law, but after meeting with President Obama, he said he wants a new health-care plan to retain some elements, such as a ban on denying coverage to those with preexist-ing health conditions.

Energy companies also seek regulatory changes. “With the oil and natural-gas industry facing 145 regulations or other policy-setting activities that could discour-age production, preventing regulatory over-reach should be a top priority,” said Jack Gerard, American Petroleum Institute president and CEO. One rule Trump prob-ably will aim at is Obama’s Clean Power Plan, which seeks to curb power-plant emis-sions. Scott Segal, a lobbyist with the Brace-well Policy Resolution Group, said court challenges to the rule may succeed in block-ing it, or the Trump administration could push new rulemaking. Trump also may revisit Obama’s decision to halt construction of a 1,900-kilometer segment of the Keystone XL oil pipeline.

The changes are being watched closely by those abroad with U.S. interests. Uwe Kruger, chairman of U.K.-based Atkins, wel-comes tax credits for private project fi nancing but notes the need for “clear policy propos-als.” Others are more concerned. “The president-elect has threatened to impose punitive tariffs on foreign goods, and that could have a huge economic impact world-wide,” says Ann Bentley, global chairman of cost consultant Rider Levett Bucknall, also U.K.-based. “2016 appears to be the year of political decisions that will alter the fabric of the major markets we all work in.” �

By Tom Ichniowski, Pam Hunter McFarland and Debra K. Rubin

12 � ENR � November 21, 2016 enr.com

ELECTION 2016

Trump’s election “has to bolster our efforts at revisiting these rules and scaling them back to a fairly signifi cant degree.” — Steve Hall, Vice President,

Government Affairs American Council of Engineering Companies

increase for $2.3 billion to fund commuter-rail and bus rapid transit systems to relieve congestion across Raleigh’s fast-growing suburbs. But in Virginia, work on a light-rail line between Norfolk and Virginia Beach halted on Nov. 9, after voters overwhelm-ingly rejected $155 million in state funding.

Constitutional amendments for fuel-tax “lockboxes,” which ensure monies are spent exclusively on transportation projects, were approved in Illinois and New Jersey, both of which endured political battles this year over spending. New Jersey proponents cele-brated a win after the Garden State’s three-month standoff shuttered state road and rail projects until early October, when a 23¢-per-gallon fuel-tax deal was reached. Some observers were fearful that the increase might have defeated the measure.

Voters also weighed in on issues with likely impacts on industry employees and employers. Colorado voters resoundingly defeated Amendment 69, which would have created the fi rst state-run, single-payer U.S. health-care system, funded largely through payroll and income taxes. Opponents, in-cluding many in construction, cited its cost, between $25 billion and $36 billion.

Alabama residents approved enshrining the state’s right-to-work law in its constitu-tion, a measure supported by the Associated Builders and Contractors, but Virginia voters said no to a similar measure. South Dakota defeated an initiative to allow unions to charge non-union workers a fee for services such as collective bargaining. Missouri voters approved a constitutional amendment to pro-hibit new sales taxes on professional services, something municipal offi cials envisioned to boost revenue. State realtors pushed for the ban, supported by professional surveyors, in-terior designers, homebuilders and others. Employees gained higher minimum-wage rates in four states—Colorado, Arizona, Maine and Washington—although all are below $15, while employers face potential workplace im-pacts of relaxed marijuana laws in California, Massachusetts, Nevada, Arkansas, Florida , North Dakota and Montana. �

By Debra K. Rubin, with Jim Parsons, JT Long, Mary B. Powers and Erin Richey

ELECTION 2016

increase for $2.3 billion to fund commuter-

NOVEMBER 21, 2016 � enr.com

2017 TRUCK

PREVIEW

Big changes are

coming to the

pickups and

heavy-duty trucks

contractors rely on (P. 42)

ELECTION 2016

enr.com

2017 TRUCK

(P. 42)

WHAT PRESIDENT-ELECT TRUMP

AND THE NEW CONGRESS WILL

MEAN TO CONSTRUCTION P. 10

HOW NEW RULES AND BILLIONS

IN ADDED PROJECT FUNDS

WILL AFFECT INDUSTRY P. 11

WILL MARKET FORECASTS

CHANGE FOR 2017

AND BEYOND? P. 28

1121_Election.indd 12 11/15/16 5:20 PM

A Weak Recovery Will Gain StrengthTrump’s unexpected election is having little impact on next year’s construction market forecasts: The fundamentals are strong and already in place. The year to watch is 2018.

The ink barely had dried on this year’s batch of construc-tion market forecasts when economists had to take a sec-

ond look at their numbers to evalu-ate the impact of Donald Trump’s victory in the presidential election, which brought with it a Republican-controlled Senate and House. Most economists are holding firm to their initial forecasts, saying it is too early to sort out all the variables.

Dodge Data & Analytics is forecasting construction starts to increase 5.4% in 2017, after seeing growth fall to 1.3% this year. FMI Corp. predicts that construc-tion put-in-place will grow another 3.9% next year, following this year’s 4.9% increase. The Portland Cement Associa-tion’s forecast looks for a 3.5% increase in construction put-in-place, a slight boost over the 3.1% growth PCA estimates for this year. The National Association of

Home Builders is calling for single-family housing starts to jump 12.3% in 2017 at the same time the multifamily housing starts cool off. The transportation asso-ciation, ARTBA, expects to see the strong growth in some states canceled out by weakness in others.

On the downside, the election does carry some risks, says Ed Sullivan, chief economist with PCA. “No decision-maker likes uncertainty. Trump could have an adverse effect on overall economic activity next year, which, in turn, could affect construction activity,” Sullivan notes.

Upside From Bond MeasuresOn the upside, voters passed billions of dollars in construction-related bonds, which should brighten next year’s out-look, says Robert Murray, chief economist for Dodge. “Trump offered a wide range of proposals … but the specifics are still to come,” he says.

“Of the various proposals, there are three that are relatively safe to say will have some near-term impact on construc-tion,” Murray says. He thinks Trump’s pledge to “repeal and replace” the Afford-able Care Act will have a negative impact on health-care construction. Dodge was predicting that starts for new health-care facilities would increase 7% in 2017. This potential uptick could be balanced by an increase in infrastructure spending as Trump tries to make good on his promise to create jobs. Finally, Trump’s call to “lift Obama-Clinton roadblocks and allow vi-tal energy infrastructure projects to move forward” could help to revitalize a sector that hit a brick wall in 2016, Murray says.

Dodge is forecasting increases between 5% and 8% for most non-building con-struction markets in 2017. The major ex-ception is a 29% decline projected for the electric utility market, a dip that would follow this year’s estimated 26% drop.

Construction Growth Is Forecast To Increase 5% in 2017

SOURCE: Dodge Data & Analytics. Annual percent change for dollar volume of total construction starts.

5

15

10

-5

-10

-15

0

2015 2016 2017

(% ANNUAL CHANGE)

20141999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

+6% +5%

+3%

-7%

+2% +1% +1%

+5%

+2%

+10%+12%

+13%

-13% -24%

+12%+11%

+10%+11%

+5%

28 ENR November 21, 2016 enr.com

2017 FORECAST

enr.com November 21, 2016 ENR 29

The energy market is coming off a string of large multibillion-dollar, energy-related projects, mostly in the Gulf Coast area, in 2015 and early this year, says Murray. However, the market could not sustain that momentum, and the result was double-digit percentage declines.

If the electric utility and gas terminal projects were excluded from total con-struction starts, the estimate for 2016 and forecast for 2017 would look very differ-ent, says Murray. Excluding this sector, Murray estimates that total construction starts would be up 4% this year instead of 1%. Further, next year’s forecast would be calling for an 8%, instead of 5%, increase in total construction starts.

Market Swell for OfficesThe Dodge forecast for the non-residen-tial building markets is fairly optimistic. Murray estimates that office-building starts will increase 18% this year, after a weak 2015. He predicts that growth will continue, with another 9% increase in 2017. “Hotel construction has probably reached its peak with this year’s estimated 25% increase in starts,” Murray says. He forecast the hotel market to grow just another 1% next year.

On the other hand, “further declines in vacancies indicate that neither ware-houses nor offices are facing an immediate imbalance of supply versus demand,” Murray says. He forecasts that, overall, the commercial markets will grow about 6% in 2017.

ARTBA is calling for a relatively flat highway-and-bridge market next year. “The passage of the FAST [Fixing America’s Surface Transportation] Act and increases in state and local funding will create real growth is some states, while others remain flat or even decline,” says Alison Black, chief economist for ARTBA. “The FAST Act does provide much-needed funding stabil-ity, but it does not provide a ramp up in real funding that would support market growth in each state.”

FMI also sees continued growth in the overall construction market, although at a slower pace than in recent years. Brian Strawberry, senior econo-

mist at FMI, notes that many sectors, including residential construction, have seen double-digit growth in recent years, but that pace is not sustainable in the long-term. “We’ve been playing

catch-up since the recession,” he says. “Things are settling down now.”

FMI reports that the single-family home market saw double-digit growth in 2012-15, but it estimates growth will pull

FMI CONSTRUCTION PUT-IN-PLACE FORECAST: 2017 ($ BIL) MARKET

ACTUAL ESTIMATE FORECAST % CHG. % CHG.2015 2016 2017 15-16 16-17

TOTAL CONSTRUCTION 1,108.718 1,162.903 1,208.553 +4.9 +3.9

TOTAL RESIDENTIAL 440.255 463.908 480.700 +5.4 +3.6

SINGLE-FAMILY 233.049 246.945 258.425 +6.0 +4.6

MULTIFAMILY 57.533 61.776 64.476 +7.4 +4.4

HOME IMPROVEMENT 149.673 155.187 157.800 +3.7 +1.7

TOTAL NON-RESIDENTIAL 444.616 467.993 488.508 +5.3 +4.4

LODGING 21.728 25.601 26.971 +17.8 +5.4

OFFICE 55.188 63.883 67.002 +15.8 +4.9

AMUSEMENTS AND RECREATION 19.878 21.498 22.658 +8.1 +5.4

RELIGIOUS 3.667 3.857 3.919 +5.2 +1.6

EDUCATION 83.517 86.400 90.462 +3.5 +4.7

HEALTH CARE 40.734 41.043 43.090 +0.8 +5.0

COMMERCIAL 66.924 70.838 73.645 +5.8 +4.0

MANUFACTURING 78.178 80.057 83.234 +2.4 +4.0

PUBLIC SAFETY, ADMINISTRATIVE 8.729 8.313 8.387 –4.8 +0.9

TRANSPORTATION 45.566 45.936 47.726 +0.8 +3.9

NON-BUILDING STRUCTURES 223.847 231.001 239.345 +3.2 +3.6

CONSERVATION AND DEVELOPMENT 7.985 8.374 8.808 +4.9 +5.2

HIGHWAYS AND STREETS 90.068 91.272 93.181 +1.3 +2.1

SEWER SYSTEMS 25.064 24.403 24.967 – 2.6 +2.3

POWER 87.167 93.941 99.202 +7.8 +5.6

WATER SUPPLY 13.563 13.011 13.187 – 4.1 +1.4

SOURCE: FMI CORP., RALEIGH, N.C. HISTORICAL DATA ARE COMPILED FROM BUILDING PERMITS, CONSTRUCTION PUT-IN-PLACE AND TRADE SOURCES. ESTIMATES FOR 2016 AND FORECAST FOR 2017 BY FMI.

DODGE CONSTRUCTION STARTS FORECAST: 2017 ($ BIL)

MARKETACTUAL ESTIMATE FORECAST % CHG. % CHG.

2015 2016 2017 15-16 16-17

TOTAL CONSTRUCTION 667.660 676.400 712.925 +1.3 +5.4

RESIDENTIAL 270.155 290.275 313.700 +7.4 +8.1

SINGLE-FAMILY HOUSING 186.202 203.500 227.125 +9.3 +11.6

MULTIFAMILY HOUSING 83.953 86.775 86.575 +3.4 – 0.2

NON-RESIDENTIAL 217.280 224.025 241.725 +3.1 +7.9

OFFICE BUILDINGS 29.507 34.700 37.800 +17.6 +8.9

HOTELS AND MOTELS 13.533 16.925 17.100 +25.1 +1.0

STORES AND SHOPPING CENTERS 19.477 18.425 19.550 – 5.4 +6.1

OTHER COMMERCIAL 25.503 28.850 30.700 +13.1 +6.4

MANUFACTURING 24.050 17.050 18.075 –29.1 +6.0

EDUCATIONAL BUILDINGS 46.657 48.300 53.100 +3.5 +9.9

HEALTH-CARE FACILITIES 22.131 23.325 25.000 +5.4 +7.2

OTHER INSTITUTIONAL BUILDINGS 36.422 36.450 40.400 +0.1 +10.8

NON-BUILDINGS CONSTRUCTION 180.225 162.100 157.500 –10.1 –2.8

HIGHWAYS AND BRIDGES 65.318 58.800 62.000 – 10.0 +5.4

ENVIRONMENTAL PUBLIC WORKS 32.854 31.600 34.200 –3.8 +8.2

OTHER PUBLIC WORKS 25.479 29.700 31.300 +16.6 +5.4

ELECTRIC UTILITIES 56.574 42.000 30.000 – 25.8 –28.6

SOURCE: DODGE DATA & ANALYTICS

back to 6% in 2016, with a total value of $246.9 billion. During that time, the multifamily residential market also was hot but now has cooled. FMI forecasts a 7% rate of growth in 2016. Strawberry says he sees similar growth rates in resi-dential in 2017.

In non-residential, FMI also sees a

general cooling of activity, particularly on the private side. “A lot of private projects were in planning and are now underway or completed,” he says. One notable exception is the data-center market. Strawberry expects data-center activity, which has been strong in recent years, to continue at a high

level. “There are some very large data-center projects underway, with more in planning,” he says. “That will have an impact on the overall commercial mar-ket going forward.”

As private work winds down, Strawberry believes more work in the public markets, such as institutional and infrastructure proj-

FOUR OUT OF FIVE REGIONS ARE FORECAST TO GROW IN 2017Strongest growth will be in the western and South Atlantic regions, which are projected to increase 9% next year

West

175

155

135

115

95

75

($ BIL.)

+8%

+9%-10%

-23%

-24%

-3%+7%

+10%

+10%

+12%

’15 ’16’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14

NORTH-EAST

SOUTHCENTRAL

MIDWEST

WEST

SOUTH ATLANTIC

SOURCE: Dodge Data & Analytics

West

175

155

135

115

95

75

($ BIL.)

+8%

+9%

-23%

-24%

-3%+7%

+7%

+10%

+10%

+12%

’15 ’16 ’17’08 ’09 ’10 ’11 ’12 ’13 ’14

South Central

165

150

135

120

105

90

+7%

+22%

-13%

-23%

+8%

-1%0%

+3%

+19%

($ BIL.)

+17%

-24

’15 ’16 ’17’08 ’09 ’10 ’11 ’12 ’13 ’14

South Atlantic

170

148

126

104

82

60

+11%

-26%

-24%

-7%+9%

+8%

+9%

+14%

($ BIL.)

+24% -1%

’15 ’16 ’17’08 ’09 ’10 ’11 ’12 ’13 ’14

Midwest

130

114

98

82

66

50

-2%+9%

+13%+5%

+3%

-3%

-9%

-25% -5%

+4%

($ BIL.)

’15 ’16 ’17’08 ’09 ’10 ’11 ’12 ’13 ’14

Northeast

125

100

95

80

65

50

+1%+1%+23%

+8% +6%

+13%0%

-7%-23%

($ BIL.)

+4%

’15 ’16 ’17’08 ’09 ’10 ’11 ’12 ’13 ’14

A fter seeing total annual growth for hous-ing starts cut from 10.7% in 2015 to 5.0% this year, the National Association

of Home Builders expects starts to rebound 7.9% in 2017. Single-family starts are expected to climb 12.3% next year, followed by another 14.9% gain in 2018. Single-family starts will be blunted by a slowdown in multifamily starts. After posting double-digit increases during the previ-ous three years, multifamily starts will show no gain this year and then decline in the next two years, according to NAHB’s latest forecast. n

Housing Starts Predicted To Increase 7.9% in 2017NAHB FORECAST

Single-Family Housing

SOURCE: NAHB/Housing Economics.Thousands of units, percent change year-to-year.

1,000

800

600

400

200

0

+16%+4%

+8%

-3%

+11%

+12% +15%

’15 ’16’14’13 ’17 ’18

Multifamily Housing

SOURCE: NAHB/Housing Economics.Thousands of units, percent change year-to-year.

400

300

200

100

0

-3%

’15 ’16’14’13 ’17 ’18

+25%

+15%

+12% +0% -1% -4%

30 n ENR n November 21, 2016 enr.com

2016 FORECAST

PCA CONSTRUCTION PUT-IN-PLACE FORECAST: 2017 ($ BIL)

MARKETACTUAL ESTIMATE FORECAST % CHG. % CHG.

2015 2016 2017 15-16 16-17

TOTAL CONSTRUCTION 979.5 1,010.1 1,045.1 +3.1 +3.5

TOTAL RESIDENTIAL BUILDING 373.6 384.5 404.3 +2.9 +5.1

TOTAL NON-RESIDENTIAL BUILDING 231.7 242.9 251.1 +4.8 +3.4

INDUSTRIAL 70.4 65.1 65.4 – 7.5 +0.4

OFFICE 50.5 57.5 60.8 +14.0 +5.6

HOTELS, MOTELS 18.9 22.7 24.1 +20.3 +6.1

HOSPITALS, INSTITUTIONS 23.3 23.9 24.7 +2.8 +3.3

RELIGIOUS AND MISCELLANEOUS 3.3 3.3 3.4 +1.5 +1.2

EDUCATIONAL 14.9 15.5 16.1 +4.3 +3.4

COMMERCIAL 50.5 54.7 56.7 +8.4 +3.6

PUBLIC UTILITY 99.5 102.9 105.3 +3.5 +2.3

PUBLIC CONSTRUCTION 217.8 223.8 228.9 +2.8 +2.3

BUILDINGS 91.9 95.2 97.0 +3.6 +1.9

HIGHWAYS AND STREETS 78.8 82.4 85.1 +4.6 +3.3

CONSERVATION 6.9 7.1 7.1 +2.2 +0.8

SEWER SYSTEMS 21.1 21.3 21.8 +1.2 +2.2

WATER SUPPLY 11.4 10.5 10.7 – 7.3 +1.2

MILITARY, PUBLIC SECURITY 7.7 7.2 7.2 –5.7 – 0.4

SOURCE: PORTLAND CEMENT ASSOCIATION, SKOKIE, ILL.

T he American Road & Transportation Build-ers Association estimates total spending on highway and bridge work will be down

slightly this year and bounce back only about 1% in 2017. “The good news is that the bridge market is leveling off at record levels of investment,” says ARTBA’s chief economist, Alison Black. “The chal-lenge is that the recovery we saw in the highway market in 2014, 2015 and even earlier this year is starting to stall,” she adds. ARTBA predicts $57 billion in new highway work next year, while bridge work tops $33 billion in 2017. n

Highway and Bridge Markets Expected To Remain Flat in 2017ARTBA FORECAST

ects, will start to come on line. “If you look at 2017, 2018 and 2019, you’ll see attractive growth rates in education and health care, with health care going a touch faster than education,” he adds.

Strawberry notes that many of the large higher-education projects are sports facilities and related projects. “That ties into economic growth opportunities around those develop-ments,” he says.

PCA’s Ed Sullivan sees solid economic

fundamentals in the general economy but a mixed outlook for construction heading into 2017. PCA predicts that GDP will end up at 1.5% this year and 2.4% next year. Unemployment also is likely to re-main at or slightly below 5%. In addition, inflation is “not an issue.” The Federal Reserve is “taking its time ramping up interest rates,” he says.

Still, PCA sees the residential market softening in the latter half of 2016. In its summer 2016 forecast update, PCA

predicted 6.7% growth in the housing mar-ket in 2017 and 2018. However, Sullivan says the market has reached a plateau. “As a result, we haven’t seen some of the growth we expected, even though modest, in starts activity—primarily in single-family homes,” he adds. “That’s a powerful statement be-cause residential is so important in overall construction that it does create a more tem-perate outlook for this year and next year.” Sullivan adds the caveat, however, that PCA is still its exact forecast numbers.

Meanwhile, non-residential activity remains roughly at the pace that PCA pre-dicted in the spring, Sullivan says. After double-digit growth in non-residential spending in 2014 and 2015, PCA expects growth of less than 5% in 2016. Annual growth could range between 3.0% and 3.5% for the foreseeable future.

Sullivan credits continued job creation as the key driver in non-residential activ-ity. PCA predicts that annual job creation in the U.S. could slow slightly but remain above two million per year through 2020. “If one in five jobs are in an office, that puts pressure on occupancy rates and drives demand,” he adds.

PCA also forecasts increased and sus-tained government spending, particularly at the state and local levels, as tax revenue generally improves. “It may grow at a modest clip, but it will still grow,” accord-ing to Sullivan. n

By Tim Grogan and Bruce Buckley

ARTBA forecasts 2017 construction market will be slightly above 2016 levels

170

148

126

104

82

60

($ BIL.)

2013

$50.8 $53.6$57.5 $56.2 $56.6

$30.5 $30.0 $32.2 $33.1 $33.3

2014

Highway and related work Bridges

2015 2016(e) 2017(f) 2013 2014 2015 2016(e) 2017(f)

SOURCE: ARTBA 2017 Forecast. Historical spending data from U.S. Census Bureau Value of Construction Put in Place for pavement and bridges and tunnels, adjusted with ARTBA Price Index.

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