"The housing market has grown far more rapidly since the pandemic—remote work has decreased need for office space," said Ed Hudson, director of the Market Research Division of Home Innovation Research Labs. "Construction of homes continues to push further away from urban and high-density suburbs and into outlying, less-populated areas—this was already occurring before COVID, but the pandemic accelerated the movement."
When comparing the Census construction spending figures for June 2022 and June 2021, Kenneth Simonson, chief economist for the Associated General Contractors of America, said that single-family construction was up 8 percent, but that was a big slowdown from the 20 percent or larger year-over-year gains of a few months ago.
Simonson noted that commercial construction is defined in a variety of ways. The monthly Census report on construction spending on projects underway includes retail, warehouse and farm construction, while others count office, hotel, and some include rental housing. The broadest definition treats commercial as synonymous with all nonresidential building or even public works.
"Private nonresidential construction was up 2 percent and multifamily and public construction were flat," he added.
Among the commercial categories, Simonson said growth ranged from 14 percent for warehouse to 6 percent for retail, with office down 1 percent and lodging off 7 percent.
"Going forward, I expect single-family will decline. Infrastructure, manufacturing and power/energy construction will grow strongly," he said, "and various 'commercial' or income-producing categories will hold more or less steady."
The commercial market, in particular, is affected by purchasing habits.
"In commercial construction, we are seeing more conversions from certain types of uses (including office space) to other uses that have grown since the pandemic," Hudson said. "For example, the shift from retail to online buying is causing conversions that add to warehouse/transportation hub space."