LOS ANGELES, CA – Rider Levett Bucknall – international property and construction consultants, and industry leader in cost research – reports that the mainland U.S. construction industry overall continued its slow growth forward in the last quarter, with no signs of gaining momentum. Activity in Los Angeles, on the other hand, is strengthening and shows a positive five-year outlook.
The report also states that activity for construction put-in-place nationwide increased just 1.7% above June 2014 figures while the unemployment rate for construction laborers increased during the same period, falling to 7.5% in April 2015.
L.A. outlook shows slow, positive growth; Skilled labor shortage continues to drive up wages.
According to the Los Angeles Economic Development Corporation (LAEDC) February 2015 Forecast Report, construction employment in California saw substantial gains in 2014, growing by 5.6% and adding 35,700 jobs. These gains have only begun to offset the loss of 373,900 jobs or 40% of total construction employment from a 2006 peak of 933,700 to a low of 559,800 in 2010. Construction employment is expected to grow by 5.6% again this year with a 6.3% gain projected for 2016.
Already, however, shortages of workers in some of the more skilled construction trades are being reported including equipment operators, carpenters, project managers and supervisors. “Many skilled construction workers have turned to other occupations,” says Philip Mathur, associate principal at Rider Levett Bucknall in Los Angeles. “They’ve left California or have exited the workforce altogether. This is helping drive up wages for some of the specialty trades.”
As of the second quarter 2015, reported the LAEDC, new office construction continues to lag because of high vacancy rates, but industrial construction has grown especially in the goods movement and distribution, technology, and energy industries. Nonresidential construction permits increased by 8.7% in 2014 and are expected to increase by 4.3% this year.
Increases in residential and hospitality drive growth in downtown Los Angeles
In Los Angeles, over 40 high-rise condos have started construction – after a 22-story project that started last year sold out within weeks – and are among the first ground-up, high-rise condominium projects in downtown Los Angeles since 2005. Rental properties are seeing exceptional growth as empty nesters and younger first-time homeowners flock to urban settings, fueling demand. Buyers are paying a premium to live in higher-cost, higher density areas. New home permits, stated the LAEDC report, which showed a modest gain in 2014 (3.7%), are expected to accelerate this year and increase 28.9%.
The hotel market is also on the rise in downtown Los Angeles as the City pushes for more hotel construction near the Convention Center, and there are over 2,000 rooms under construction in downtown alone. In 2014, the new Marriott Courtyard/Residence Inn in South Park was completed and it was announced that InterContinental Hotels will operate the 900-room Wilshire Grand Project, currently under construction. On the boutique side, construction began on the Commercial Exchange Building at 8th and Olive to house the Sydell Group’s Freehand Hostel.
About Rider Levett Bucknall
Rider Levett Bucknall is an award-winning international firm known for providing project management, construction cost consulting, and related property and construction advisory services – at all stages of the design and construction process.