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Commercial construction spending dips as shortages continue

Amanda Peacher Nov 1, 2021
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Nonresidential construction has been held back by weakness in office and retail space, though warehouses are booming. Eduardo Munoz Alvarez via Getty Images

Commercial construction spending dips as shortages continue

Amanda Peacher Nov 1, 2021
Heard on:
Nonresidential construction has been held back by weakness in office and retail space, though warehouses are booming. Eduardo Munoz Alvarez via Getty Images
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Numbers out Monday from the Census Bureau confirm that the construction industry is still pinched for workers and supplies. Spending on nonresidential construction in September — covering everything from office buildings to hotels to transportation projects — saw the biggest downturn.

The pandemic has shown there are some buildings we don’t need more of right now, according to Anirban Basu, chief economist for Associated Builders and Contractors.

“The office segment has been pummeled by remote work, the hotel segment by the lack of recovery in business travel and the retail-space segment by the fact that we’re doing more online shopping,” Basu said.

But one kind of commercial construction is booming: warehouses.

“Warehouses are just bulging with goods,” said Ken Simonson, chief economist with Associated General Contractors of America.

Like goods from online orders or products en route to big-box stores. Retailers are trying to get ahead of supply chain slowdowns and they’re stuffing warehouses before the holidays, “so there’s a huge need to build more warehouse capacity,” Simonson said.

But even there, the challenge is still finding workers. The construction industry has some of the highest rates of vaccine hesitancy nationwide. That’s a problem for new construction at hospitals or on government sites that have COVID-19 vaccine mandates.

Steve Levy of McCownGordon Construction said his company has a lot of openings for jobs in the field right now.

“It’s becoming harder and harder to find individuals that are vaccinated,” he said.

Then there are wages, which are on the rise in other sectors, like hospitality. Construction pay typically has been the thing that attracts workers, Levy said. “Well, now everybody else is starting to catch up.”

It’s hard to convince people to work in the sun or out in the cold on construction sites, when these days, Levy said, they could earn just as much indoors in a restaurant or hotel.

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