Volume 50, Issue 1 - January 2015

A Busy Season Awaits
USGlass Magazine’s Fourth Annual Glass Usage Forecast Calls for Significant Growth

If predictions hold true, 2015 could be a big year for the glass industry. According to the Dodge Data & Analytics 2015 Market Outlook, non-residential construction makes ups 36 percent of all construction, totaling $201 billion. Both non-residential and residential construction segments are expected to see growth in 2015, and that’s good news for the glass industry. The Outlook forecasts total construction spending in 2015 to be $612 billion—compare that to $435.3 billion in 2010 and you see that in just five years, the market has grown. And the USGlass magazine fourth annual glass usage forecast shows increases on the horizon for commercial construction in 2015.

Commercial office building construction and retail construction are two segments poised to see significant growth in the year ahead. Looking at commercial offices specifically, this segment is expected to see 22.9 million square feet of glass usage—a nearly 19 percent increase compared to 19.3 million square feet in 2014. On the retail side, store construction is forecast to see a 10.6 percent increase in glass usage, from 28.25 million square feet in 2014 to 31.25 million square feet in 2015.

Glass usage in hotel construction is predicted to see a 14.3-percent increase compared to 2014, from 8.4 million to 9.6 million square feet. Also expected to increase, glass used in warehouse construction is up to 5.4 million square feet, a 12.5-percent increase compared to 2014.

Both manufacturing and institutional – amusement and recreation segments will also likely see gains. Data forecasts amusement and recreation to see 5.3 million square feet of glass usage, up 12.8 percent compared to 2014. Warehouse glass usage is expected to be around 1.8 percent, a 12.5 percent increase compared to last year.
Glass used in educational facilities will be up somewhere around 8.2 percent to 11.9 million square feet compared to 11 million in 2014.

Looking at residential, this segment, too, will likely grow in terms of glass usage. The market is expected to see about 70 million square feet of glass usage, compared to 63 million in 2014, an 11 percent increase.


Multifamily Construction Continues
to Cast Shadow Over Single-Family

As the construction industry continues its recovery, the single-family and multifamily housing sectors have been in a battle. Because of certain economic and sociological conditions, multifamily has gotten the best of the fight so far.

In its 2015 Dodge Construction Outlook, Dodge Data & Analytics reported that, with the exception of manufacturing buildings, multifamily housing has made the largest and most consistent improvements year-after-year in all of the building industry since 2010, growing at least 22 percent to 37 percent in each year.

In fact, the 22 percent growth in 2014 in terms of multifamily housing starts was its lowest since 2009, and Dodge projects that number down to a 9 percent growth next year.

According to Dodge chief economist and vice president Robert A. Murray, apartments led the early upturn of multifamily housing, but now condominium development has made its way back. He notes that the continued trend in multifamily growth has been helped by the push for downtown redevelopment and millennials’ tendency “to move into an apartment in the city.”

Also, the recession and the slow economic recovery—paired with student loan debt—have directed millennials away from home-buying. That trend has hurt the single-family housing market but has helped multifamily.





The Dodge report notes that “a historically large share of millennials could remain renters for longer than average.” Because of both economic factors and a stronger desire for urban lifestyle, Murray writes that “a larger share of this generation could remain renters by choice, particularly since they grew up fully aware of the uncertainties of investing in housing.”

Hotel Construction Travels Upward

According to Dodge Data & Analytics, total hotel construction saw its third straight year of growth in 2013, with starts advancing 25 percent to 42 million square feet. Hotel construction saw a sharp increase from 2011-2014, and Dodge projects there’s more growth underway.

According to Dodge, occupancies are up to 65.9 percent in 2014, an increase from the 62.3 percent in 2013. Another driver is revenue per available room, which is up from 5.4 percent in 2013 to 8.2 percent in 2014.

Additionally, with the continued increase in hotel construction has come more green building. Green building’s share in the hotel sector is 43 percent ($5 billion), up from 38 percent ($3 billion) in 2012.

Dodge anticipates hotel construction will gain 14 percent to 64 million square feet in 2015 and will see a 17-percent increase to $12.9 billion in that same span.



Institutional Construction Begins to See Growth

The 2015 Dodge Construction Outlook shows the institutional construction sector has seen its first growth in at least six years, increasing 4 percent in 2014 after either decreasing or remaining stagnant in each year since 2009—largely due to dependency on public funding.

Dodge projects the moderate growth this year, however, will continue in 2015, as starts are predicted to increase 9 percent. Within that sector, educational buildings are also expected to increase at an even 9 percent, as well.

“The educational building category is now seeing an increasing amount of K-12 construction, reflecting the financing made available by the passage of recent school construction bond measures,” reported Robert A. Murray, chief economist and vice president of Dodge.

According to Murray, “K-12 school construction is larger and more volatile than colleges and universities,” as square footage for K-12 school construction was 3.5 times the size of higher education construction in 2014, and K-12 projects produced 2.3 times the dollar amount in that same span.

Investment in healthcare facilities, meanwhile, has been put on hold over the past several years due in part to uncertainty regarding healthcare reform. Still, Murray said the sector is supported by the need to replace aging facilities, as well as the growth of the elderly population.

Dodge projects construction of healthcare facilities will increase by 6 percent in 2015 and other institutional buildings—including amusement and recreational facilities—10 percent.

The sports arenas construction category, for example, has seen a whopping 296 percent increase in square footage, headlined by the 1.8-million square-foot Atlanta Falcons stadium.





USG
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