As we close out another year, we wanted to take a look back at the commercial construction trends that defined 2014 and highlight some of the highs and lows. Overall, this was a great year for the commercial construction industry as commercial construction activity and revenue were up considerably.
According to a recent article from Crain’s Chicago Business, signed contracts for construction projects in the Chicago area were at $4.3 billion during the first six months of the year, up 16 percent from deals during the same period a year ago.
Englewood recently began work on the Stratford Square Mall in Bloomingdale, Ill.
Mall renovation work was a highlight of 2014.
High – Ground-Up Construction Makes a Comeback
Nothing gets a national commercial contractor more excited than moving dirt. The past few years have been dominated by commercial construction renovation work, but this year saw a strong return of ground-up construction. Led by the restaurant sector, new projects broke ground across the country as restaurateurs felt the gains of the improving economy.
One byproduct of this commercial construction trend is it has allowed Englewood to be more selective in our projects. In 2010, commercial construction firms were in survival mode and had to bid on anything available. Now, we can avoid bidding on projects that already have too many bidders, or, are too small for Englewood to be competitive. This has allowed us to concentrate on national corporate programs with firms like Darden and profitable new construction projects with restaurants such as Cooper’s Hawk Winery and the award-winning Harry Caray’s 7th Inning Stretch and Chicago Sports Museum.
Low – Retail takes a step back
While it has been a robust year and revenue is up, the majority of our commercial activity has been in new restaurant construction. Retail construction has taken a step back and worthwhile projects are becoming few and far between. Many national retailers are still expanding, but it is with smaller square-footage concepts, making margins much tighter and bidding much more competitive. National retailers still haven’t fully recovered from the downturn, with expansion velocity at a sluggish pace.
That’s not to say there are no opportunities in new retail construction. Englewood continues to be very active with many national retailers such as American Girl and Destination Maternity brands, but work in the retail construction sector is definitely down for everyone.
High – Shopping Mall Renovation
Yes, you read that correctly—one portion of the retail construction market that is experiencing robust activity is the mall reconstruction sector. While new retailers may not be expanding at a rapid clip, shopping mall owners are taking the opportunity to renovate and reposition traditional malls to entice shoppers back to brick and mortar locations. Englewood has been busy at the Lake Brazos Mall in Jackson, Texas and Stratford Square Mall in Bloomingdale, Ill. We expect this work to continue well into 2015.
Low – Labor Shortage
An unfortunate byproduct of the recent economic downturn and now quick construction rebound is that the industry is facing a major commercial construction labor shortage. Many skilled laborers were forced to leave the industry to find new work, while others left the country entirely to find work in growing overseas markets. Commercial contractors are very concerned about the lack of skilled labor available for new projects. As the commercial construction industry continues to heat up, this should be a commercial construction trend to watch closely as it may put a damper on the amount of new commercial construction the market can handle.
On behalf of everyone at Englewood, I would like to wish all of our readers happy holidays and a safe and healthy New Year. With the way the commercial construction industry is going, we feel 2015 will be a prosperous year indeed.
Check back in with us in January as Englewood CEO Bill Di Santo will take a look back at 2014.
Director of Operations
Tel: 847-233-9200 x712
You can reach me at email@example.com