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Construction Market Comeback?

April 19, 2021
With numerous large projects hitting the market and some bullish leading indicators, the construction market may be snapping out of its slump earlier than expected.

The U.S. construction market got off to a slow start in the first few months of 2021, and construction economists believe market conditions on a national basis will remain sluggish in most regions and construction segments in 2021.

However, some market segments, such as health care and residential construction, are expected to outperform the construction market as a whole. In addition, two leading indicators for the business recently turned positive the Dodge Momentum Index, published each month by Dodge Data & Analytics, and the monthly Architecture Billings Index (ABI), published by the American Institute of Architects (AIA), Washington, DC.

In March, the Dodge Momentum Index hit its highest level since the summer of 2018, in large part because of back-to-back increases in health care and lab projects entering the planning stage. Billings at architecture firms turned positive in AIA’s ABI Index for the first time in a year.

Another good indicator of the construction market’s health is the number of large projects worth $100 million or more in total value that either broke ground or were announced in Q1 2021. EC&M’s editors found more than 50 projects of this size. The projects listed in the Chart below should generate plenty of revenue for the electrical construction industry, considering electrical work typically accounts for an estimated 10% of a construction project’s total construction value.

Three trends quickly become apparent when you study these 50 construction projects:

  1. The number of large hospital projects;
  2. How many are located in the Industrial Midwest (particularly the Chicago metropolitan area, Ohio, and Michigan);
  3. The continuing strength of data center construction.

The size of the 13 hospital projects is impressive, with 10 being in the $800-million to $2-billion range. At $5.6 billion, the largest of them all is the multi-facility project announced by the Mayo Clinic, which will include the construction and renovation of its nationwide network of medical facilities.

Chicago-based contractors and other electrical professionals will keep busy with some large multi-family projects, a 400,000-sq-ft life-science facility, and data center construction. Additionally, Microsoft plans to construct two data centers in Hoffman Estates and Elk Grove Village, Ill. Another interesting project scheduled to get underway later this year in Chicago is the $500-million Barack Obama Presidential Center. Columbus, Ohio, is another Midwest city that will enjoy some large construction projects, including a $300-million data center and the $1.2-billion Wexner Inpatient Hospital Tower being built on the Ohio State campus.

The data centers to make our list of the Top 50 construction projects for Q1 2021 include two projects of more than $1 billion in total contract value and several in some typical data center hot spots – northern Virginia; the Omaha-Council Bluffs, Neb./Iowa metro; Des Moines, Iowa; and Prineville, Ore. The largest projects are the $2-billion expansion of Facebook’s existing campus in Prineville and the $1-billion Ginger data centers in West Des Moines, Iowa.

California and Texas electrical professionals who focus on renewables will want to snag a piece of several utility-scale solar and wind farms now underway or scheduled to break ground soon. The largest renewables project currently underway is the 825MW Desert Quartzite Solar Facility in Blythe, Calif. Other projects of note are Orsted’s 518MW Helena Energy Center valued at $495 million, a solar and wind facility scheduled to break ground later this spring; the $427-million, 345MW Mesquite Sky Wind Farm in Putnam, Texas; and the $375 million, 300MW Recurrent Energy Slate solar farm in Stratford, Calif.

Although construction economists don’t expect the overall U.S. construction market to show any significant growth this year, electrical folks with these large projects in their market may have a shot at a big-time revenue boost if they get in on the action.

About the Author

Jim Lucy | Editor-in-Chief, Electrical Wholesaling & Electrical Marketing

Over the past 40-plus years, hundreds of Jim’s articles have been published in Electrical Wholesaling, Electrical Marketing newsletter and Electrical Construction & Maintenance magazine on topics such as electric vehicles, solar and wind development, energy-efficient lighting and local market economics. In addition to his published work, Jim regularly gives presentations on these topics to C-suite executives, industry groups and investment analysts.

He launched a new subscription-based data product for Electrical Marketing that offers electrical sales potential estimates and related market data for more than 300 metropolitan areas. In 1999, he published his first book, “The Electrical Marketer’s Survival Guide” for electrical industry executives looking for an overview of key market trends.

While managing Electrical Wholesaling’s editorial operations, Jim and the publication’s staff won several Jesse H. Neal awards for editorial excellence, the highest honor in the business press, and numerous national and regional awards from the American Society of Business Press Editors. He has a master’s degree in communications and a bachelor’s degree in journalism from Glassboro State College, Glassboro, N.J. (now Rowan University) and studied electrical design at New York University and graphic design at the School for Visual Arts.

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