Residential and Commercial Construction Outlook: What to Expect in 2018

CPAs & Advisors

Alex Wilson
Alex Wilson CPA Principal CPAs & Advisors

Print Friendly, PDF & Email

Wrapping up the end of 2017, the Bureau of Labor Statistics reported that the construction industry added 30,000 jobs in December. Throughout all of 2017, the construction industry added 210,000 jobs, a 35 percent increase over 2016.. While residential and commercial builders are optimistic, the new year will not be without its challenges.

For residential builders, it appears that 2018 could be a strong year, but there is one caveat to this – the millennial. Will they start the migration from the apartments and condos in the metro areas and move into the suburbs? If so, that will certainly drive the residential building market throughout 2018. Even if this migration occurs, there will still be plenty of opportunity for multi-family builds. With the slight downturn in residential new builds over the past five years, many residential builders have constructed multi-unit buildings to fill the gaps in business, and they can continue this trend in 2018.

For commercial building, one area that shows growth is the construction of warehouses and distribution centers. With the rise in e-commerce, fewer people are going to big-box stores; rather, they are ordering online. Commercial contractors have been busy over the past two to three years building massive warehouses and distribution centers, and with e-commerce showing no signs of leveling, it appears the opportunities for these builds will continue in 2018.

Some of the obstacles in the way are consistent with prior years: skilled trades labor shortages, material pricing, and thin margins to work with. While there has been an intense focus from within the industry to correct the skilled labor shortfall, 2018 will still be a tough year to find qualified workers. Many local colleges and trades centers are picking up steam and funding, so it should not be long before the industry sees more qualified workers in the talent pool. With rising prices of materials, especially lumber, the margins that builders are working with are much thinner than they are used to. Will they be forced to raise prices to remain profitable, or will the new tax reform allow enough cushion for them to continue operating on the course they are on?

For help with planning for the changes in 2018 and to learn what new tax laws will have the most effect on your business, please reach out to me or another member of Yeo & Yeo’s Construction Services Group.

Want To Learn More?

Connect with one of our professionals today.