Happy New Year!
Welcome to 2017. As the curtain came down on 2016, we reviewed a few of the year’s big stories and discussed the ways they shaped the industry sectors WillScot serves (read more in this blog post and this one).
We’re kicking off the new year with our thoughts on some of the major forces we believe will make the most impact. It is important to note that the policies of the new administration will drive much of the change we’ll see in 2017. Although there is still some uncertainty as the President-Elect takes office, he has signaled his intentions in a number of areas.
6 Key Sector Forecasts to Keep Your Eye On
1. Infrastructure: Some doubt that the new administration will be able to make good on its promise to invest $1 trillion in the nation’s infrastructure over the next decade. However, experts do predict Congress will at least approve hundreds of billions of dollars in expenditures on new projects and improvements to aging bridges, roads, tunnels and other physical systems that keep the country moving.
2. Housing: Coming off what Freddie Mac says may be the best year for housing in a decade, consumers’ ability to afford a home reached its lowest level in eight years during the fourth quarter of 2016. The forces at play include rapid price appreciation, moderate wage growth and the post-election interest rate hike. That all adds up to an initial slowing of housing starts in the new year, with growth in both income and population supporting greater demand later.
3. Commercial and retail: Commercial building is projected to increase 6 percent in the new year on the heels of the estimated 12 percent gain for 2016, according to Dodge Data & Analytics’ 2017 Dodge Construction Outlook. Office construction will show some improvement, boosted by high-profile office towers and downtown development efforts in some markets. After a slow 2016, brick-and-mortar retail construction is trending up, and shops are making changes focused on creating memorable in-store customer experiences. Warehouse construction should grow, especially as more distribution centers are needed to fulfill consumers’ online purchases. Hotel construction is slated to slow after a robust year.
4. Energy: There is some cause for optimism among fossil fuel companies, which appear to have the support of the Trump administration. Though increased drilling could yield lower crude prices due to greater global supply, executives at many oilfield companies are seeing some light at the end of the tunnel, according to Natural Gas Intelligence. Belt-tightening in 2016 also led to operational efficiencies that could put companies in good stead as oil demand steadily grows and US shale activity increases in 2017.
5. Healthcare: After 2015’s Supreme Court decision confirming the legitimacy of the Affordable Care Act (ACA), healthcare sector construction began to rise. Questions about the future of ACA with the incoming administration cast some uncertainty over such construction in 2017. But a predicted easing of government regulations and the aging of the baby boomer generation should lead to the construction of more healthcare facilities, residential centers and long-term care communities to serve seniors.
6. Education: Due to a number of factors, student enrollments are flat or waning among populations from elementary school through college. However, research initiatives funded by private industry and alumni may spur construction of new higher-education facilities. Robust stock market performance has also swelled the coffers of university endowment funds, which could lead to an uptick in campus construction to house innovative academic endeavors.
What are the major forces and trends you’ll be watching as we ring in the New Year? Whatever 2017 may bring, WillScot stands ready to help you meet any and all challenges.