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Rounding out the hottest five markets are new additions K-12 schools, and telecommunications, which replace last years water supply and wastewater, and highways and bridges. The 2008 AEC Industry Outlook projects that residential construction will continue to decline through the first half of 2008, but the growth of institutional construction, like higher education and health care, should balance out that decline in the residential market.
The demand for new and improved health care facilities is driving a flurry of design and construction activity, and 2008 looks to be another strong year for this market, says Elaine Kornbau, executive editor of best practices publications and market intelligence reports at ZweigWhite. That translates into good news for firms serving the health care market as more hospitals and facilities invest in modernizations and expansions.
Similar trends are also appearing in the higher education and the power and energy markets. Based on a market-by-market analysis, the 2008 AEC Industry Outlook identifies five hot markets to watch in 2008. The top five markets include:
1. Health Care. The increases in health insurance costs that are bad news for AEC firm leaders trying to control costs are good news for firms working in the health care market. The increases in health care expenditures will result in additional capital available for health care projects. In addition, an aging population and advancements in technology are increasing the demand for new health care facilities.
2. Higher Education. Higher education construction is at record levels, and colleges and universities are still upgrading and expanding residence halls and educational facilities to deal with increasing enrollments. The competition for new students is further driving the growth of the market.
3. Power and Energy. The sharp increase in energy prices in 2007 have provided energy companies with soaring revenue and profits to invest in capital in major infrastructure projects, making up for a few years of underinvestment. In addition, it has pushed public support and improved the financial viability of the development of alternative energy sources. The federal Energy Policy Act of 2005 will continue to drive new projects in 2008 and beyond.
4. K-12 Schools. Although the K-12 market has flattened somewhat, it continues to be a vast and solid market for design and construction firms. Enrollment in K-12 schools in the U.S. is beginning to grow again, and the South and West are primed to lead the increase due to a rise in student population.
5. Telecommunications. The telecommunications market has shown significant growth since the beginning of 2004, and it is poised to grow again in 2008. Telecommunications companies are making record investments in their infrastructures as they compete for customers with wireless, broadband, and VoIP services.
Although projections for the success of the U.S. economy are down from ZweigWhites 2007 outlook, AEC (architecture, engineering, and construction) firm leaders surveyed in conjunction with the ZweigWhite report remain confident about the forecast of their industrys performance in 2008. The survey found that 50% of the respondents expect the AEC business to outperform the U.S. economy in 2008, while only 16% expect the design and construction industry to lag behind the U.S. economy. In addition, 51% of the respondents expect their 2008 business performance to be either outstanding or excellent, while only 5% anticipate poor performance.
The 2008 AEC Industry Outlook examines all of the major markets served by design and construction firms. The report also identifies the key trends that will affect the AEC business in 2008 and provides information on the strategies AEC firms will use to grow in the coming year. This report is available from the publisher for $295, plus $8 shipping and handling. Copies can be ordered online at www.zweigwhite.com/bookstore/.
ZweigWhite is the nation's leading source of management consulting, information, and education for the design and construction industry. ZweigWhite brings together experts in strategic business planning, organization, operations, business valuation, ownership transition, human resources, recruitment, finance and administration, information technology, mergers and acquisitions, market research, marketing, project management and project delivery methods. The firm is headquartered in Chicago, IL, with additional offices in Natick, MA, San Francisco, CA, and Washington, DC.