An industry in motion: Construction trends to watch

If it seems like the construction industry has been a mixed bag recently, that’s because it has. According to the AIA Consensus Construction Forecast,ⁱ some sectors of the industry are poised for steady growth while others are slowing down.

“It has been a fluid industry as we have emerged from the post-COVID-19 era to what we see now,” says Braden Bond, Executive Director of the Nationwide E&S Brokerage construction vertical.

Since then, pent-up demand is coming to the forefront, and movement in the industry is reflecting changes in the way people live, work and shop in the aftermath of the pandemic and as technology continues to evolve.

“There’s an upward trend in construction, with less emphasis on traditional offices and more on warehouses, manufacturing facilities, and infrastructure (highways, bridges, etc.) projects,” notes Bond. “There’s also an uptick in multi-family housing to address the housing shortage across the country.”

Here are some trends to watch.

Interest rate adjustments

Interest rates remain high today, but the Federal Reserve is expected to cut rates later this year in response to easing inflation. When rates eventually come down, lenders may become more liberal with their lending policies.

“Lower interest rates could jumpstart construction projects that have been on hold,” notes Bond.

An aging workforce

Once there is an uptick in construction projects, builders may face another challenge: an aging workforce.

“The concern is that once the backlog of construction projects is online, there might not be enough qualified workers to meet the demand,” says Bond. “Hiring less experienced workers creates risk.”

At the same time, Bond notes that there is a rise in members of Generation Z looking to get into the skilled trades, and that trend has an upside.

“The next generation of trade workers will be skilled at trades and more adaptive and open to technology,” he adds.

Safety-enhancing wearable technology

Every year, more wearable technology emerges, including smart boots, glasses, vests and helmets designed to do everything from sensing slips, falls and heat-related distress to helping workers lift heavy objects and take pictures or videos on the job.

“Other technology is helping reduce risk on job sites, such as drones that let workers survey tall structures without using ladders and sensors that can detect water intrusion to help diagnose gaps in construction,” says Bond.

Innovations in technology—wearable and otherwise—are helping make construction work safer and more efficient while improving the quality.

Shifts in residential living

With a shortage of affordable housing in areas across the country, many developers are building communities where people can live, work and play. With technology enabling people to work remotely and bypass long commutes, demand is growing for village-style living.

“We’re seeing a trend of multi-family buildings with retail, including grocery stores, on the bottom floor so residents don’t have to drive to get what they need,” explains Bond. “These are smaller communities where you can walk to retail and restaurants and rely on public transit.”

Many of these communities are available for rent only, though, which keeps this supply of residential homes off the market and can drive up housing prices.

“A lot of Americans want to buy homes right now, so this is a challenge,” notes Bond.

Emerging materials and building methods

Newer technologies in construction materials and outside-the-box building methods are poised to shift into the mainstream in the year ahead. This includes many options that are more sustainable than their traditional counterparts.

“For example, some builders are using heavy timber for mid-to high rise buildings, which are cleaner and more sustainable than reinforced concrete and steel” says Bond. “The wood has been engineered to make it less flammable, too, so it is a durable and safe option.”

Modular construction is also on the rise. Building components are constructed in a factory and assembled into the final structure on site. Then, plumbing, electrical wiring, etc. are added later.

“As modular technology improves, this will create an alternative way to build homes faster and more safely” says Bond.

Staying on top of the trends

Nationwide takes a proactive approach to staying ahead of construction trends, so we can provide the coverage insureds need as the industry evolves. Nationwide’s in-house risk management team and Research and Insights Center of Excellence have the expertise needed to capture data about emerging technologies and trends and how they impact the market.

“We strive to be students of our industry,” says Bond, “and we know that we need to keep learning and developing as professionals and as a team to stay ahead of the curve for our partners.” 

This adds up to a winning approach for all parties as the construction industry continues to evolve.

“We leverage our financial strength and expertise to bring those benefits to ourselves, our partners and our insured,” sums up Bond.