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JLL Revises Its 2024 Construction Outlook

4 months ago

Confidence in the market over the next year has allowed for total costs to stay on a "gentle upward trend." The post JLL Revises Its 2024 Construction Outlook appeared first on Commercial Property Executive.

JLL’s 2024 U.S. Midyear Construction Update and Reforecast reports price stabilization but also some areas of concern. Adobe Stock image courtesy of JLL

Materials and labor costs have outpaced bid-price growth so far in 2024, according to an update to JLL’s 2024 Construction Outlook, which was issued last year.

“This has eroded some hard-fought gains from the past few years,” Julie Hyson, Americas Portfolio Clients, Services & Industries lead, Project and Development Services, for JLL, told CPE.

“Given the stress on contractors, it’s encouraging how unwavering confidence in the market has been and how strong employment remains. Both are excellent forward-looking signals and position the industry well to hit the ground running as inflation cools, and potential interest rate reductions drive a burst of activity.”

Andrew Volz, research manager, Project and Development Services, for JLL, said it was surprising to see the aggregate growth in material price projections stay toward the low end of the initial forecast.

“While stabilization was expected due to the combined forces of constrained private starts and incoming public infrastructure projects, there is a substantial reassessment of market behavior and underlying supply risks still being addressed,” Volz noted.

“For example, demand remains exceptionally high for specific materials across overlapping industries, electrical goods especially remain a point of stress, and a shift towards more sustainable, design led, construction practices is accelerating. As a result, inflation may not feel as controlled at a project level compared to the headline numbers.”

Rubber meets the road

The 2024 U.S. Midyear Construction Update and Reforecast reported how the year has unfolded compared to JLL’s original predictions and forecasts.

Cost indices haven remained stable since the beginning of the year, but underlying risks and changing patterns of demand make for a few noticeable points of opportunity. Confidence in the market over the next year, recovered margins, and stable materials costs have allowed for total costs to stay on a “gentle upward trend,” according to the report.

Further, with some loosening of capital despite high interest rates, starts are moving upward again in the private sector, JLL said. And construction hiring remains challenged. There are, however, signs of normalization, pointing to contractors working with conflicting strategic pressures as starts ramp up.

Louis Molinini, Americas Market lead, Project and Development Services, for JLL, told CPE that emerging geographic advantages and evolving economic dynamics are major influences on project locations and outcomes. Having predictability at the local market will be a major draw and may accelerate specialization and/or fragmentation.”

The post JLL Revises Its 2024 Construction Outlook appeared first on Commercial Property Executive.