The past year was a tough one for many people, but in many ways, it was a good news story for construction. Demand for construction work remained sky-high throughout the year, and while some input costs like construction materials rose, others dipped.
Similarly, market trends for 2023 promise a year of mixed blessings. While the overall picture still looks rosy for the industry, the ever-changing dynamics of the construction landscape emphasize the need for dynamic and adaptable owners, contractors, and construction workers to maintain resiliency.
Here are some of the key trends we see for the construction industry in the United States for 2023.
1) A chance to catch up on the backlog
There are some indications that extreme demand for new construction projects will soon wane. Slowed demand could sound like bad news, but the backlog of construction projects should keep the construction market going strong for the next year. Funds from the Infrastructure Investment and Jobs Act (IIJA) are beginning to flow, too, which will help drive continued appetite and keep construction going for some time.
2) The big push is in infrastructure
Despite some concern over housing shortages, new housing starts in residential construction took a deep dive during 2022 as increased interest rates and mortgage rates took a toll on homeowner sentiments. Luckily, increased infrastructure spending was there to pick up the pieces for commercial building.
There is considerable pressure to improve the state of infrastructure across the country to enable better communication, transportation, power delivery, and trade. The IIJA is part of that push and will continue investing money into capital projects throughout 2023, keeping construction spending and construction jobs high.
3) A focus on sustainable construction
The construction industry has been paying more attention to building sustainable structures and reducing its carbon footprint in building materials use and procurement. The UN environment programme’s 2022 Global Status Report for Buildings and Construction found that investments in building energy efficiency increased by 16% last year.
Construction companies focus on erecting net zero structures, investing in green building, and renewable energy and enforcing buy-clean policies, while governments influence outcomes through building code amendments. Still, the construction sector’s overall CO2 emissions continue to increase. Construction accounts for 34% of the world’s energy demand, and the industry is not currently positioned to achieve decarbonization by 2050, which is its stated goal.
The construction industry will continue its efforts to get back on the path to decarbonization during 2023, evidenced by increased investment in green building in the sector, with improved initiatives toward net zero building, the use of sustainable building materials, green roofs, and passive design. Moves toward offsite construction and more efficient project management (often through the use of digital construction technology) will also be a focus.
4) Efficiency and productivity rule the day
Construction costs are on the rise. Rising interest rates and material costs, supply chain issues, labor shortages, and inflationary pressures make building more expensive. Construction firms must keep their ducks in a row to maintain viable business operations.
Focusing on efficiency and productivity will help companies prevent failed projects, project delays and lost revenues. The possibility of a coming recession puts even more pressure on construction businesses to be productive and resilient – both facilitated by new technologies.
Construction technology tools can improve construction operations in several ways. Companies could become more efficient by using construction management software that allows all stakeholders on a construction project to access documents, communicate changes, and predict schedule conflicts before they occur. They could become more efficient by automating repetitive and workforce-intensive tasks so that teams can use their time more productively. Whatever form they take, new technology solutions will provide greater productivity for successful companies.
5) Digitization and automation
Whether the pressure comes from digital transformation in the economy or competitors using new technology tools to outperform, robotics, AI, and new construction technology will be the focus for many construction firms through 2023. One simple swap that can reduce manual tasks while simultaneously improving outcomes is the migration to digital payment systems.
With Truss, you can import invoices straight from your inbox to make approval, payment, and reconciliation a breeze and minimize data entry tasks. With this one simple system, you can reduce payables and accounting efforts, increase payment security, and improve vendor relationships.
Regardless of the size of your construction business or the number of projects you have on the go, payments are something all construction firms have in common. You have to make them, and you have to receive them. By starting your construction technology journey by adopting digital payment processes, you can realize immediate wins with a smaller learning curve than many tech solutions.
Whatever it looks like, research shows that companies that are open to new technology outperform those that are stuck in the tried-and-true.
Market trends for 2023
The past few years held some ups and downs for construction professionals. Demand has held consistent for construction work, but the cost of doing business has made it difficult for many companies to compete. The construction trends for 2023 show efforts to improve operations through innovation, sustainability, and training, all of which will help the construction sector become stronger in the year ahead.
