Stay ahead with Veritex Community Bank’s insights on the latest economic trends and banking news. Discover key updates on the construction industry’s growth, challenges, and sustainability trends for 2024.
Per Deloitte1, the construction industry saw a notable increase in both nominal value added and gross output at the onset of 2023. However, much of this growth is attributed to price inflation rather than increased volume. Alongside grappling with inflation, the sector has been contending with fluctuating material prices, rising labor costs, and a persistent shortage of skilled workers. Furthermore, high interest rates and stricter lending standards are adding to the challenges impacting construction activity.
Looking at 2024, the construction sector anticipates an upturn fueled by investments in manufacturing, transportation, and clean energy infrastructure. Implementation of the following legislations: Infrastructure Investment and Jobs Act (IIJA), the Inflation Reduction Act (IRA), and the Creating Helpful Incentives to Produce Semiconductors Act (CHIPS) are expected to inject funds into the industry. This optimism is further supported with notable organizations, like the Associated Builders and Contractors, foreseeing enhanced profit margins and staffing levels, especially in the initial months of 2024.
Below please find further information on key construction trends in 2024 Q1.
Sustainability
- Deloitte1 notes that, sustainability remains a pressing priority within the construction industry, driven by evolving market trends, environmental regulations, and customer demands for greener buildings. A prime example referenced1 is the International Energy Agency’s Net Zero Emission by 2050 Scenario — requiring all new buildings and 20% of existing structures to be zero-carbon-ready by 2030. With buildings contributing significantly to global energy consumption (30% per International Energy Agency2) and emissions (26% per International Energy Agency2), the industry is adopting efficient materials and sustainable practices to align with targets as such.
- Governments are also stepping up efforts to promote sustainable construction, as seen in initiatives like the Federal Buy Clean Initiative in the U.S., which prioritizes lower-carbon construction materials for federal procurement. Deloitte reports more than $2B has been designated to buy greener construction materials such as asphalt, concrete, and steel for government projects. The initiative also led to $100M to be set aside for helping state and local government purchases of building products derived from converted carbon emissions4.
In addition to sustainability, the industry is increasingly focusing on resilience in the face of severe weather events. U.S. Green Building Council3 highlights that this has led to a bigger interest in green building approaches addressing resilience demands. As a result, the use of advanced materials like self-healing concrete and graphene, offering greater durability benefits, are expected to see more adoption by Engineering and Construction (E & C) companies1. Overall, sustainability is highlighted1 as a key focus for the construction industry. E & C companies are expected to prioritize sustainable design tactics early in the conceptual phase – leveraging technologies like generative design and Building Information Modeling (BIM) to model performance, estimate costs, and reduce emissions throughout the construction process.
Thank you for taking the time to read our industry insights. We truly appreciate your interest in staying updated with the latest trends and news within the construction sector.
About Veritex Community Bank: Veritex Community Bank is a mid-sized community bank serving its customers with a full suite of banking products and services. The bank has more than 30 branch locations in Houston, Fort Worth and Dallas, Texas with total assets of more than $10 billion. The bank specializes in providing depository and credit services to retail and small- to mid-size businesses, which have been largely neglected by national banks. The name “Veritex” is derived from the Latin word “veritas,” meaning truth, and “Texas.”
Source: References & Cited Works (1) Deloitte Insights. “Engineering and Construction Industry Outlook.” Deloitte Research Center for Energy & Industrials, 2023, www2.deloitte.com/us/en/insights/industry/engineering-and-construction/engineering-and-construction-industry-outlook.html. (2) International Energy Agency. “Buildings.” IEA, 2023, www.iea.org/energy-system/buildings (3) U.S. Green Building Council. “2023 USGBC Green Building Trends.” USGBC, June 2023, www.usgbc.org/sites/default/files/2023-06/2023-USGBC_Green-Building-Trends.pdf. (4) Office of the Federal Chief Sustainability Officer. “Buy Clean.”, October 6, 2023, www.sustainability.gov/buyclean/ (5) Gordian. “Gordian Quarterly Report 2024 Q1.” Gordian, February 2024, www.gordian.com/uploads/2024/02/Gordian_QuarterlyReport_2024_Q1_FINAL.pdf. (6) FMI Corporation. “Overview Q12024.” FMI Corporation, February 2024, www.fmicorp.com/uploads/media/Overview_Q12024_Final.pdf?
