2023 is just around the corner, and builders are contending with an uncertain economic forecast in the year ahead. But for all the unanswered questions, 2023 construction industry trend lines are rapidly becoming more clearly defined.
At Pivot International, we are a global, one-source leader in product design, engineering, manufacturing, and supply chain management. Our extensive suite of digital technologies and world-class DFM talent delivers smart construction solutions to help companies capture value from the latest industry development and trends using the latest IoT applications. In this piece, we’ll explore insights drawn from the CBRE’s 2023 US Construction Costs Trends Report to help industry players prepare for the opportunities and challenges that lie ahead.
- Due to inflation, the war in Ukraine, and a host of other adverse factors, we can expect to see a 14.1 percent year-over-year increase in US construction costs through the end of 2022 with a 2%-4% stabilization expected in early 2023, returning us to historical averages.
- As of this writing, headlines have declared a significant easing of select supply chain stress points. But headlines also reflect choke points and other looming risks, including labor strikes, a shrinking talent pool, an aging workforce, component shortages, and extended lead times.
- Construction demands are expected to hold steady and strong for the near term, though economic uncertainty remains about a possible recession. However, pent-up demand for new construction, historically low housing stocks, and government infrastructure initiatives should help to offset a downturn and boost total construction costs.
- Demand for multi-family housing remains especially strong. The National Multifamily Housing Council estimates a need for 4.3 million new units between now and 2035 to ease the pressure — the shortage of housing is driving up rent, with asking prices rising 12.6% year-over-year through July.
- Smart technologies are shaping the industry landscape, and contractors, engineering firms, and other stakeholders across the value chain are deploying IoT construction solutions to capture value.
Opportunities and Trends
Green initiatives are garnering increasing government support. Between policy changes and government incentives, the construction industry is investing more heavily in green design and energy-saving technology. Integrating modularization and prefabrication (especially using additive manufacturing techniques) into design and build processes drives sustainability and helps firms more easily scale.
The Architecture, Engineering, and Construction (AEC) industry is coming together to devise new methods of reducing construction’s environmental impacts. One of their initiatives includes a concerted effort to recruit greater industry support for committing to using more sustainable building materials. Another initiative involves the widespread use of passive climate control like the HVAC sensor control network our teams at Pivot created that measures indoor temperature and maintains it to preset parameters.
For commercial buildings, offsite construction is becoming more and more common thanks to prefabrication and modular construction. This trend is driving greater demand for tracking technologies that continuously monitor assets and equipment performance. Smart construction solutions are changing the way that construction managers mind their sites. By attaching IoT sensors to cranes, backhoes, dozers, boom lifts, and articulated trucks, managers receive live data and enjoy high levels of site visibility — even from many miles away. One example of Pivot’s smart construction solutions is this custom control panel created by our subsidiary, MCC Electronics. It features LED indicators and switches with a vinyl overlay and joystick controllers for easy operation in a platform or extended bucket. It was created with the benefit of DFM (Design For Manufacture), a Pivot specialty that seamlessly integrates and optimizes design, engineering, and manufacturing phases of NPD to drive cost savings through scalable production.
There is enormous opportunity in the multi-family housing market, which shows signs of being the most significant growth opportunity segment. Companies that launch building products must develop their product lines with an eye to investor-focused construction. This means rejecting viable use case solutions in favor of optimal use cases, which requires a complex understanding of the end-to-end NPD process and broader ecosystem in which the product will be deployed. When you work with a one-source partner like Pivot International, you’re working with a company whose reputation and strength lie in integrating and optimizing every aspect of the product development process.
With supply chain challenges expected to persist in some fashion for the foreseeable future, industry leaders will remain dependent on supply chain experts who offer out-of-the-box solutions. At Pivot, we bring more than fifty years of experience in seeing clients successfully through economic, climatic, geopolitical, and pandemic-driven disruption. During the last two years, our 320,000 square feet of tri-continental manufacturing capability (including options in the American Midwest) has helped to buffer our clients from some of the worst supply chain shocks. In addition to providing alternative supply chain solutions through our global network, we have successfully hacked a significant percentage of supply chain challenges using engineering workarounds. (Proof that procurement isn’t always the answer to breaking through roadblocks.)
Looking to Scale With a Smart Construction Solution?
Pivot delivers a proven track record of IoT construction solutions to help companies capture value from developing trends and opportunities. If you’d like to learn more about our collaborative approach to doing business and how we can help you scale with the launch of a winning product, contact us today for a no-cost consultation.