by Matt Boud January 07, 2022 4 min read
2022 Business Forecast for the Window and Construction Industry
Generally speaking, forecasts for 2022 show a building and construction industry that should see some stabilization and recovery after experiencing many challenges directly attributable to the COVID-19 pandemic in the last couple of years. Specifically, the window contracting sub-sector is showing growth in 2022, as well, after experiencing declines in 2020 and 2021. As such, the industry should continue to see new construction activity from institutional projects that have been delayed during the pandemic years.
A Strong U.S. Economy
The 2022 period is showing strong signs of economic recovery. Many forecasts estimate GPD growth of over four percent. This will be primarily a function of strong consumer spending and low interest rates.
A Healthy Balance in the Construction Sector
Since 2021, the Momentum Index, which is issued by the Dodge Construction Network, and typically leads construction spending for nonresidential projects, has shown a notable increase. Based on this data, construction starts can be expected by up to 6% in 2022, with much of that in the residential sector. In addition to the total number of projects in bidding, the Momentum Index also signals a healthy balance of building projects in both the public and private sectors, indicating resiliency in the market.
Strong Institutional, Retail, and Warehouse Starts
In 2022, nonresidential construction starts are anticipated to be strong in retail, institutional, and warehouse spaces. Warehouse starts have been nothing short of sensational since the beginning of 2021, at least partly due to issues related to supply chain and trucking labor and are anticipated to reach approximately $52 million in 2022. For institutional building, education will likely be led by the construction of lab space, and healthcare should be the strongest sector besides warehouses.
Office and Hotel Starts Remain Delayed
With uncertainty still surrounding office space demand due to COVID-19, there will be some delay in starts for this sector in 2022. Hotel starts will continue to lose ground in 2022, as pre-pandemic business travel (which is the primary revenue driver) continues to lag.
Residential Sector Remains Consistent
In the residential market, demand will be consistent, but not likely to match the incredible heights of the past couple of years. Although the recent pace will slow somewhat in 2022, every state is still positive for single-family construction. Multi-family should be strong with a shift from high-rise building construction from 2018-19, to smaller buildings of four to six stories, with a smaller number of total units as well.
Labor Issues Continue
Labor continues to be an issue across every industry and construction is no exception. The industry will likely see a persistent labor shortage for 2022, as many workers have not returned after the industry lost over one million jobs in the initial months of the pandemic. In reality, the pandemic has only exacerbated what was already an ongoing challenge in the construction industry, and the sector is still down 2.6% from February 2020.
Vaccination Requirements Play an Increased Role
Vaccination requirements will further complicate the labor shortage in 2022. Vaccination mandates are becoming more common, including an OSHA emergency requiring vaccinations of any employer with over 100 employees. Vaccination rates for the construction and manufacturing industries are lower than other sectors, posing a significant issue for many employers, especially as some companies face mandates on certain sites, such as medical facilities.
Inflation and Supply Chain Issues Decrease
Inflation, which has largely been driven by supply chain issues due to the pandemic, and then the subsequent recovery, should begin to ease in 2022. Material inflation will likely continue until the end of the year, as it will take time for the industry to recover fully from production and transportation setbacks. Also, if history repeats itself, material prices should begin to recede in 2023. However, there is still some risk of disruptions due to legislative changes related to tariffs and increased transportation costs associated with increased demand for trucking services.
Overall, productivity has experienced growth as a result of the pandemic. Businesses have been adopted technologies such as Ai and machine learning at a faster pace than they might have otherwise, largely due to work-from-home policies. However, some advantages of this increased productivity are limited in construction, simply due to the nature of the industry.
Additional Risk Factors
Construction starts of course can be impacted by other factors. Some of these include the potential for another wave of pandemic-related pullbacks, or even a recession. Other potential factors could contribute to a shift in expectations, such as challenges with the political landscape, which could involve a government shutdown or even tensions with countries, such as China or Russia.
Although there are several challenges that the construction industry will face in 2022, such as labor concerns and material costs, it is important to remember that we are still coming out of one of the worst economic downturns in history. This is good news for this industry, as it should still experience growth, with projected increases in total construction starts, albeit not at the same pace as prior years.
If you have a window project slated for 2022, considerOptimal Windows for your windows and installation needs. We are the premium window installation experts in the Dallas/Plano area. We provide comprehensive window consultations and are dedicated to complete customer satisfaction. To learn more about our replacement windows and patio doors that are available for Dallas homes, call us at (972) 768-1999.
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