Construction in 2019 – A Transformative Year
The industry has been slow to adopt disruptive technologies and construction productivity has become stagnant but a change is beginning to take place.
2019 will be a pivotal year for construction. The industry has been slow to adopt disruptive technologies and construction productivity has become stagnant. This is during a time when innovation across other sectors is taking place at tremendously fast paces due to the implementation of technology. Construction costs remain high, the processes are inefficient and the environmental impact is mounting.
However, we have seen a change beginning to take place.
I expect that 2019 will truly be a transformative year for the industry and have four key predictions:
- The Federal Reserve recently hiked interest rates and it is predicted that it will do so twice in 2019. These increases will continue to impact the housing sector and modular construction will gain greater market share, as it takes half the amount of time to complete a building as compared to traditional construction, which means it will be half the amount of interest.
- Due to its high cost, environmental impact and long completion time, traditional construction will become less appealing in 2019. The Associated Builders and Contractors, Inc. predicts that construction materials will see moderate price increases early next year. Developers, builders and homeowners will begin to look for alternatives to traditional construction.
- 2019 is projected to be the hottest year ever, which means that more intense weather is expected. Hurricane- and storm-resistant housing is needed in the face of increasingly turbulent weather. Container-based construction is extremely durable relative to traditional construction as containers are built to withstand intense maritime conditions – so they are able to withstand hurricanes, tornadoes, earthquakes, fires and other natural disasters.
- Affordable housing is needed in the U.S. According to the National Alliance to End Homelessness, more than 500,000 people experience homelessness daily. The Monroe Group states that 46 million people in the country live in poverty and there is not a single county that can completely fulfill the needs of its residents for safe and affordable housing. We feel that modular construction will become an increasingly important solution in addressing this crisis. It costs half the amount as traditional construction and, as mentioned previously, can be built in half the amount of time. This means that the money that government and businesses put to help end homelessness can create homes for more people at a much quicker pace. Additionally, containers can be stacked eight units high, meaning structures that are several stories tall can also easily be built.
The stagnancy of the construction industry needs to change and we expect to see progress on this front in 2019. We have seen too many structures destroyed, lives devastated and money and time wasted in recent years. As the world evolves, modular will become an increasingly utilized method of construction and we will see this change begin to take place this year.
Paul Galvin is Chairman and CEO of SG Blocks. The views expressed here are the author’s own and not that of ALM’s real estate media group.