- An HVAC Perspective on Upcoming Construction Markets (Part 2)
- An HVAC Perspective on Upcoming Construction Markets (Part 1)
- Bank of Canada Cuts Rate, ‘Loonie’ Suffers Unflattering Rout
- SOTU’s Three Construction Sidebars
- Twenty major upcoming Oil & Gas and Electric Power construction projects - Canada - January 2015
An HVAC Perspective on Upcoming Construction Markets (Part 2)
As part of high-rise living, there has been a proliferation of mixed-use projects, especially in proximity to rapid transit stations.
Continued from "An HVAC Perspective on Upcoming Construction Markets (Part 1)."
Mixed-use projects include residential, office, retail, medical and accommodation (e.g., hotel) space. As for the latter, ‘leisure and hospitality’ has been one of the sub-categories of U.S. employment experiencing the most rapid build-up of hiring over the past couple of years. The year-over-year percentage change in jobs has consistently been close to +4.0%, compared with a total-economy rate of increase that has struggled to reach +2.0%.
Mixed-use projects and rapid transit, side-by-side or on top of each other, define the term synergy. The second brings traffic to the first; the first assures ridership for the second.
Politicians generally love rapid transit projects. They’re a highly visible means to impress voters with the efforts being made on their behalf.
Rapid transit is also an easy pitch based on its cleaner environment connotations. Clusters of development that incorporate the live-work ideal, while reducing the carbon footprint from vehicular traffic, is a winning ‘green’ strategy for municipal planners.
Greater office and residential tower construction is being planned in some of the nation’s biggest cities, including New York (Hudson Yards), Tampa (Channel District) and Miami (the Worldcenter Development).
Forward thinking companies in the high-tech sector are providing their work forces with attractive campus-like locations where they can both live and work (e.g., Amazon in downtown Seattle; Apple in Cupertino California.)
Not to forget our major topic area, all of these projects will need state-of-the-art heating, cooling and ventilating systems.
The retail sector also appears on the verge of a new wave of construction. The dramatic decline in the price of gasoline is freeing up money that consumers can spend on other goods and services.
While the Internet is taking away some ‘bricks and mortar’ construction, there is the impression that online retail sales may top out between 12.0% and 15.0% of the total. The progression from 0.0% to 7.0% happened quickly; from 7.0% to a current 9.0%, has been slower.
All ‘serious’ retailers must have an Internet presence. Shoppers are making purchases on-line, no doubt about it, but just as often, they’re using their browsers to conduct research about what products are available; and which vendors have the sought-after good in stock; and how do their prices stack up against each other? Then they go to the store of their choice and take out their wallets or purses, or flash a credit or debit card.
The physical act of shopping will never disappear. For a vast majority of people, it’s a recreational activity. It’s what gets them out of the house on the weekend.
Before leaving the commercial construction marketplace, HVAC manufacturers should also make note of the large number of stadium and arena projects planned across the nation by teams in the NFL, NBA, NHL and major league baseball. Contract awards from these projects will be major revenue generators.
In the institutional category of construction, aging baby boomers guarantee work in the hospital/medical field will be strong for decades to come; at least, once the virtual moratorium on projects, due to uncertainty surrounding the introduction of Obamacare, comes to an end.
Increases in school enrolments will mainly be driven by the grandchildren of the baby boomers out to the 2020s. There will be more work at the level of elementary and secondary schools.
Community colleges will receive a boost, if President Obama realizes his wish to make attendance free. He’ll need the backing of Congress, however, and partisanship makes that unlikely.
Construction at universities will largely arise due to the generosity of former students. Successful alumni sometimes like to shower their alma maters with financial gifts. The process is helped along when their names are attached to new faculty buildings by ready-to-please administrators.
Manufacturing plant construction will benefit from a repatriation of jobs. In some overseas countries, there have been multifold increases in the cost of labor and/or the introduction of new workplace rules to bring health and safety standards closer in line with richer nations.
Low-cost energy – realized from the hydraulic fracturing of shale-rock – is providing U.S. manufacturers with an advantage. CMD’s industrial starts in 2014 were +16.5% versus 2013. A further significant increase in ‘current dollar’ (i.e., not adjusted for inflation) industrial construction is expected in 2015.
There’s one final chapter, with an expected big impact on HVAC firms, to be discussed − the relationship between the environment and technology. It would be easy to assume the drop in the global price of oil will curb the world’s shift to greater fuel efficiency.
Neither the technology wizards who are devoting their working lives to the cause of energy efficiency nor the environmental activists for whom this is their ‘calling’ are likely to let that happen.
It has long been known that carbon emissions from buildings are as pervasive − if not more so − as those from the tail pipes of motor vehicles traveling the nation’s roads and freeways. HVAC manufacturers will continue to face scrutiny over whether they are doing enough to purify the air we all breathe.
The flip side will be greater opportunities to promote the sales of those products that do extend building life cycles, especially if they also lower maintenance costs.
A number of high-profile ‘net-zero energy’, or ‘carbon neutral’, or so-called ‘passive’ structures have already been built. The construction industry can be assured that HVAC companies will be taking pride in their efforts to innovate further.
Sales/shipments and New Orders
(not seasonally adjusted −12-month moving totals)
(not seasonally adjusted −12-month moving totals)