2. Agenda
3. U.S. Macroeconomic Picture
4. U.S. Macroeconomic Picture
5. U.S. Macroeconomic Picture
6. U.S. Macroeconomic Picture
The U.S. economy has been in recession since Dec. 07. 7. U.S. Macroeconomic Picture Inflation had retreated, but energy prices moving upward again. 8. U.S. Macroeconomic Picture Short-term rates are down; long-term rates lower, but now edging up.
Also a plusStimulus bill now in place. 9. U.S. Macroeconomic Picture Tighter lending standards are a major constraint for 2008/ 2009.
10. U.S. Macroeconomic Picture
11. U.S. Macroeconomic Picture Federal budget $455 billion deficit for fiscal 2008, more in 2009 . Not much negative impact on near term appropriations.
12. U.S. Macroeconomic Picture Numerous bond measures passed, but state fiscal health has weakened.
13. U.S. Macroeconomic Picture Material Prices moved higher in early 2008; now easing through 2009.
14. U.S. Macroeconomic Picture Other Building Material Prices 15. U.S. Macroeconomic Picture Material Prices Expected to Remain Lower in 2009. 16. U.S. Construction Market Indicators The decline for Total Construction became steeper in 2008. 17. Major U.S. Construction Sectors (Starts) Single Family Housing still falling; Commercial Building heading down; Institutional Bldg. healthy but turning;Public Workswasslipping. 18. U.S. Single Family Housing Construction has fallen sharply.Prices at national level still dropping. Single Family Housing Starts 2006 1.331 million units-18% 2007 .937 million units-30% 2008 .549 million units-41% 19. U.S. Single Family Housing Pluses low mortgage rates, inventories easing. Bottom in sight. Single Family Housing Starts 2009 .375 million units-32%
20. U.S. Multifamily Housing Construction relatively stable in 2006, weakened in 2007 and 2008.
Multifamily Housing 2006 516,000 units-3% 2007 452,000 units-12% 2008 308,000 units-32% 2009205,000 units-33% 21. U.S. Multifamily Housing Multifamily Housing Top 10 Metros -- ranked by new dwelling units Year 2007,%ch 07/06 1. New York-15%2. Chicago-31% 3. Houston+53%4. Washington DC-0-5. Los Angeles-25%6. Seattle+18%7. Atlanta-3%8. Miami-51%9. Orlando-8% 10.Dallas-Ft.Worth -26% 12.Las Vegas+4% Year 2008,%ch 08/07 1. New York-2% 2. Dallas-Ft.Worth -1% 3. Washington DC-23% 4. Houston-37% 5. Atlanta-31% 6. Los Angeles-40% 7. Seattle-45% 8. Chicago-58% 9. Phoenix-42% 10. Austin TX-31% 11. Miami-58%17. Las Vegas-58% 22. U.S. Commercial Bldgs. -- Stores Construction in 2007 at all-time high; now in sharp retreat. . Store Construction 2006 308 msf-1% 2007 314 msf+2% 2008206 msf-34% 2009130 msf-37%
23. U.S. Commercial Bldgs.-- Warehouses Construction peaked in 2007; now heading down.
Warehouses 2006221 msf-1% 2007 254 msf+15% 2008188 msf-26% 2009123 msf-35% 24. U.S. Commercial Bldgs.-- Hotels Construction soared 2006-2007, mild retreat in 2008, plunge in 2009. Hotels 2006 81 msf+67% 2007 86 msf+6% 200881 msf-6% 200942 msf-48%
25. Large Projects U.S. Commercial Bldgs.-- Hotels 26. U.S. Commercial Bldgs. -- Hotels Hotel Construction Top 10 Metros -- ranked by new square feet Year 2007,%ch 07/06 1. Las Vegas-64% 2. New York+45% 3. Washington DC +193% 4. Orlando FL+308% 5. Chicago+30% 6. Los Angeles+22% 7. Dallas-Ft.Worth-11% 8. Miami+15% 9. San Antonio+187% 10. Atlanta+50%Year 2008,%ch 08/07 1. New York+16%2. Las Vegas-40% 3. Orlando+6%4. Dallas-Ft.Worth+28%5. Washington DC-15%6. Phoenix+47%7. Houston+68%8. Miami+10%9. San Antonio+9% 10.Atlantic City NJ +493% 27. U.S. Commercial Bldgs. -- Offices Construction upturn was measured this time Office construction 2006 208 msf+25% 2007 219 msf+5% 2008164 msf-25% 2009120 msf-27%
28. U.S. Commercial Bldgs. -- Offices Large Projects 29. U.S. Commercial Bldgs. -- Offices Office Construction Top 10 Metros -- ranked by new square feet Year 2007,%ch 07/06 1. Phoenix+17% 2. Washington DC-19% 3. Miami+32% 4. Atlanta+40% 5. Chicago+29% 6. Dallas-Ft. Worth-21% 7. Houston+14% 8. New York-36% 9. Seattle-4% 10. Orlando FL+43%Year 2008,%ch 08/07 1. New York+83%2. Washington DC-2% 3. Houston+40%4. Dallas-Ft.Worth-23%5. Atlanta-39%6. Seattle-7%7. Phoenix-53%8. Boston+52%9. Baltimore+56% 10.Chicago-61% 30. U.S. Commercial Bldgs. -- Offices Office Building Factors
Forecast 31. U.S. Manufacturing Buildings Plant construction in sq. ft. sliding;surge in dollars reversing. Surge of ethanol plants in 2006-2007 Huge refinery additions in 2008 Manufacturing Buildings 200683msf+4% 200790msf+8% 2008 74msf-17% 200960msf-19% Manufacturing Buildings 2006$13.5 bil.+33% 2007$19.9 bil .+47% 2008 $30.2 bil.+51% 2009$18.2 bil.-39% 32. U.S. Manufacturing Buildings Large Projects 33. U.S. Institutional Buildings Public Buildings had strong 2007-2008; should stay close in 2009. 2008 Detention Facilities-48% Armories/Military+36% Courthouses-6% Police/Fire Stations+14%Post Offices-1% Total Public2006 +2% 2007 +49% 2008 -4% 2009-2%
34. U.S. Institutional -- Educational Bldgs. School construction still strong, but losing some momentum .
Educational Buildings 2006 230 msf+5% 2007 220 msf-4% 2008 223 msf+1% 2009191 msf-14% 2007 2008Primary, Jr. Highs-7%-5% High Schools-7%+10% Colleges/Univ.+11%+2% Libraries-5%-14% Laboratories+11%-19% Museums-26%+15% Comm. Colleges-0-+8% Vocational Schools-44%+40% 35. U.S. Institutional Educational Bldgs. Large Projects 36. Educational Buildings Top 10 States -- ranked by sq. ft. of new starts U.S. Institutional -- Educational Bldgs. Year 2007,%ch 07/06 1. Texas+8% 2. Florida-15% 3. Georgia+46% 4. California-27% 5.Pennsylvania-24% 6. Ohio-32% 7. North Carolina-7% 8. New York+26% 9. Illinois-16% 10. Arizona-7%Year 2008,%ch 08/07 1. Texas+24% 2. California+22%3. Georgia-6%4. Florida-29% 5. Pennsylvania+17%6. Ohio+3% 7. North Carolina+10% 8. South Carolina +72%9. Alabama+49% 10. Illinois-15% 37. U.S. Institutional -- Educational Bldgs. School renovation work already strong But, no specific line item in final stimulus package; funding could come from State Fiscal Stabilization Fund. 38. U.S. Institutional -- Healthcare Buildings Healthcare facilities reached new high in 2008.
Healthcare Facilities 2006 110msf+1% 2007 103msf-6% 2008111msf+8% 200991msf-18% 2007 2008Clinics/Nursing Homes+1%-6% Hospitals-16%+29% 39. U.S. Institutional Healthcare Buildings Large Projects 40. U.S. Institutional Healthcare Bldgs. Healthcare Buildings Top 10 States -- ranked by sq. ft. of new starts Year 2007,%ch 07/06 1. California+36% 2. Texas-39% 3. Florida-13% 4. Ohio+8% 5. Illinois-0- 6. Michigan+2% 7. Indiana-14% 8. Pennsylvania-27% 9. Arizona+11% 10. Minnesota+55% Year 2008,%ch 08/07 1. Texas+62% 2. Illinois+110%3. Ohio+31%4. California-34% 5. Florida-24%6. Virginia+133% 7. Maryland+125% 8. Tennessee+78%9. New York+81% 10. Wisconsin+40% 41. U.S. Institutional Buildings Amusement/Recreational and Churches still declining. Amusement & Rec . 2008Convention Centers+11%Sports Arenas+50% Theaters-32%Other (inc. theme parks )-14% Total Amuse. & Rec.2006 +8% 2007 -9% 2008 -10% 2009-17% Religious Buildings 200634msf-6% 200731msf-10% 200827msf-12% 200926 msf-3% 42. Airport terminal work in sq. ft. expected to decline further, Renovation work should help dollars move upward. U.S. Institutional Buildings Airport Terminals 2006 $2.0 bil.+23% 2007 $1.8 bil .-9% 2008 $1.4 bil.-22% 2009$1.6 bil.+12% Airport Terminals 2006 3.1 msf-28% 2007 2.2 msf-28% 2008 2.0 msf-8% 20091.9msf-5% 43. Highways and bridges slipped back in 2008; Gets substantial funding in 2009 from stimulus bill. U.S. Public Works -- Highways & Bridges
Highways, Bridges 2006 $51.0 billion+15% 2007 $53.6 billion+5% 2008 $52.7 billion-2% 2009$60.8 billion+15% 44. . U.S. Public Works Mass Transit Mass transit work has also been on upward track, set to grow further.
Mass Transit Starts 2006 $2.3 billion-26% 2007 $3.7 billion+64% 2008 $3.8 billion+3% 2009$4.8 billion+25% 45. U.S. Public Works -- Environmental Environmental public works slowed in 2008. In 2009 large boost coming from stimulus bill. Environmental Public Works 2006 $33.3 billion+6% 2007 $37.2 billion+12% 2008 $38.0 billion+2% 2009$41.3 billion+9%
46. U.S. Electric Utilities New electric utility starts soared in 2008. Electric Utilities 2006 $17.7 billion +125% 2007 $16.8 billion -5% 2008 $27.7 billion+65% 2009$18.0 billion -35%
47. U.S. Total Construction Starts for 2009 Billions of Dollars 2005 2006 2007 20082009 Total Construction 670.3 689.6 639.1 552.0 457.7 +13% +3% -7% -14% -17% Single Family Housing 315.5 272.4 201.2 122.4 84.7 +12% -14% -26% -39% -31% Multifamily Housing68.6 69.8 61.839.4 26.7 +36% +2% -12% -36% -32% Commercial Bldgs. 72.2 93.0 100.784.6 60.3 +7% +29%+8% -16% -29% Institutional Bldgs.100.1 110.8 117.4 128.8 118.7+12% +11% +6% +10% -8% Manufacturing Bldgs. 10.1 13.5 19.9 30.2 18.3 +26% +33% +47%+51% -39% Public Works 96.0 112.4 121.4 118.9 131.0 +9% +17% +8% -2% +10% Electric Utilities7.9 17.7 16.827.7 18.0 +6% +125% -5% +65% -35% 48. Single Family Housing, by Region 49. Single Family Housing, by Region 50. Nonresidential Building, by Region 51. Nonresidential Building, by Region 52. Points of Perspective U.S. Construction 53. Points of Perspective U.S. Construction 54. Agenda
55. Using Trends to Capitalize on Opportunities
56.
FutureTrendsDriving Industry Change
MAJOR TRENDS TRACKED BY MCGRAW-HILL 57. Global Construction:$5.6 trillion * Source: IHS Global Insight, April 2009 *Numbers in 2005 USD$Trend 58. Largest Construction Markets by Value * in $US Billions Source: IHS Global Insight, October 2008 *Numbers in 2002 USD$, based on 2007 market 59. Dubai Today: The Bubble has Burst
60. India Market: Poised for Growth
*Conversion Rate: $1 = INR 40 61. China: Construction Opportunities Persist
62. Silver Lining in the Down Economy = 2008 = 2013 Europe South America Asia Sub- Saharan Africa 36% 73% Percentage of Firms Largely Dedicated to Green(on over 60% of projects) from 2008-2013 Doubling 29% 56% Trend Sustainability/Green Building: 63. Market Size $ (billions) 2005 2008 2013 In the U.S.: Increasing MarketOpportunity Total Non-Res Residential Total Residential Total Non-Res Residential Non-Res Triple Double Triple Five Fold 64. How is Green Building Affected by the Down Market? Less Affected No Difference More Affected According toU.S. Green Building Council Members 65. Green: Part of the CorporateMission & Growth Strategy Not Involved Only Regulatory Involvement Some GreenActions Green Is an Opportunity Value-Based Commitment to Sustainability Is Green a Part of Your Companys Growth Strategy? 2009 50% Shift in Dedication to Green 2009Preliminary expanding decreasing 66. Corporate Sustainability Practices
Source:The Greening of Corporate America SmartMarket Report , McGraw-Hill Construction, 2007; Bernstein, Harvey. Presentation. Construction Industry Trends. McGraw-Hill Companies Offices, New York, NY, May 2009. (based on 2009 market research data conducted by McGraw-Hill Construction in 2009) 67. Market is Growing Despite Declining New Building Construction $244 Billion = Commercial &InstitutionalMarket = Green Market Source:Commercial & InstitutionalMarket Size: McGraw-Hill Construction, as of June 3, 2009. MHC Housing Starts data is similar to the Census Bureau, except that MHC defines single family housing as detached housing only.MHC includes townhomes in its multifamily data. GreenMarket Size: Commercial & Institutional Green Building: Green Trends Driving Market Change, McGraw-Hill Construction, 2008 $182 Billion $3 Billion $29 Billion $196 Billion 68. Rapid Growth ofLEED in Specs 69.
Perceived Business Benefits Increasing 13.6% 10.9% 9.9% 6.4% 6.1% 2005 2008 70. Before 2006 2006 to 2008 Increasing StateGovernment Influence Before 2006 Enacted 2006-2008 2005 57 2008 156 Number of Local Governments 71. State & LocalLegislative Trends
72. Green Wins in Stimulus:Renovation Gets a Boost in Green
Trend Renovation 73. Big Focus on Renewable Energy
Trend Renewable Energy 74. Increases from Stimulus,Especially Green Jobs
Trend Workforce: 75. Transforming Construction
Trend Climate Change: 76. Water Efficiency
Trend 77. Water Efficiency Involvement Growing Dramatically
2008 Use: - A/E Firms = 35%- Owners = 30% 2013 Use: - A/E Firms = 51% - Owners = 50% 78. Water Efficiency RapidlyGrowing in Importance
79. Perceived Business Benefits from Water Efficiency in Buildings
Currently 80. Public-Private Partnerships
From a demandstandpoint, there isnt a bigger marketplace on the planet, regardlessof growth in Asia or elsewhere. Manju Chandrasekhar Vice President Halcrow ConsultingBusiness Group Trend 81. Experience Leads to Positive Opinion of PPPs! None gave PPPs an unfavorable rating 82. As Experience Increases, so Does Interest in Future PPPs Large percentage of ambivalent officials suggests opportunity Interest in PPPs Officials withPPP Experience Officials without PPP Experience 83. Financial Crisis:Changing the Types of PPPs Pursued
84. Traditional Information Exchange Interoperable Exchange Source: International Alliance for Interoperability, 2007 Trend Interoperability/BIM Structural Engineer HVAC Engineer City Constr. Manager Facilities Manager Building Owner Civil Engineer Architect Structural Engineer HVAC Engineer City Constr. Manager Facilities Manager Building Owner Civil Engineer Architect Structural Engineer HVAC Engineer City Constr. Manager Facilities Manager Building Owner Civil Engineer Architect Building Information Model (BIM) 85. Making the Case: Shift to Digital Design Effort Time Traditional Design Digital Design Digital Design shifts the bulk of project work to theDesign phase to help coordinate building systems and the project and manage project costs Source: International Alliance for Interoperability, 2007 Litigation Phase of Design Changes Cost Ability to cost control Design Design Devel Const Docs Construction 86. BIM Enables Exchange/Access forAll Relevant Information BIM Environmental Data Design Data Financial Data Specification Data Owner / Occupier Data Legal Data Sustainers Data Geospatial Data Source:buildingSMART alliance 87. Adoption of BIM Increasing Over 2009 Architects Engineers Contractors Owners 88. Measuring BIM ROI: Factors Considered
89. New Materials: Smarter, Greener
Trend 90. Prefabrication & Modularization
Prefabrication and modularization - off-site preconstruction or manufacturing of a component or complete system that is transported to the job site. Trend 91. Prefab & Modularization: Building Texas Refineries in Maine!!
92. Prefabrication Examples
93. Stephen Jones Senior Director McGraw-Hill Construction US Construction Activity Outlook and Key Trends