THE DOLLAR VOLUME in construction starts in the U.S. commercial sector will decline by more than 10 percent this year, according to ConstructConnect, a data-collection organization in Cincinnati, Ohio.

The company foresees a stall in new projects as a whole this year with a revival in 2019. However, hotels and motels will continue to see a decline in volume, dropping steadily each year through 2022.

ConstructConnect, in partnership with Oxford Economics, reports while the U.S. economy and job growth are robust, labor shortages in the construction sector “have become a growing concern.” The hardest-felt need is in skilled labor.

The federal Bureau of Labor Statistics said 92,000 construction jobs were added in the first quarter of this year, and 58,000 jobs were added in the second quarter. “The JOLTS labor market survey shows job vacancy rates just shy of their 2007 peak, and weekly earnings were up 3.9 percent year-on-year in Q2,” reports ConstructConnect. “Although there is little evidence this has harmed construction to date, labor shortages could limit the extent to which construction spending can keep pace with demand.” JOLTS stands for Job Openings and Labor Turnover Survey, conducted by the BLS.

Researchers also cite rising material costs, resulting from the trade tariffs, as an impediment to supply growth in commercial construction, including hotels and motels.

Of the $148 billion in new commercial construction projects in 2017, hotels/motels accounted for $28.5 billion, roughly 20 percent. This year, ConstructionConnect expects the percentage ratio to remain the same.

Commercial construction starts will total about $128.3 billion in 2018, with hotels/motels making up $26.7 billion or 30 percent of total volume. In 2019, commercial construction starts will total $132 billion – an uptick of 2.6 percent – with hotels/motels accounting for $20.2 billion or 15.3 percent of that.

In 2020, commercial construction starts will hold steady at $131.2 billion but hotels/motels will decline to $16 billion or 12.2 percent of the total.

While total dollar volume in commercial construction starts will remain relatively flat from 2020 through 2022, hotels/motels will decrease to $15 billion 2021 and 2022.

When comparing year-over-year volume in just hotels and motels, the percentage declines forecasted are:

  • In 2018 ($26.7 billion), down 6.2 percent
  • In 2019 ($20.2 billion), down 24.3 percent
  • In 2020 ($16 billion), down 22.4 percent
  • In 2021 ($15 billion), down 6.25 percent