January 14 2021 0Comment

2021 Construction Outlook

While reviewing last year’s 2020 Construction Outlook, there was paragraph that stood out and quite honestly still applies. In January of 2020 we wrote:

“In any business, it’s important to recognize that if there is one thing that is consistent, it’s change. Change comes in many forms and manifests itself in many ways. Whether it’s driven by economic shifts due to tariffs or workforce demographics, or due to geopolitical issues, clearly, 2020 will bring change.”

Well, at least we got that part right! In our 2020 outlook, we also mentioned the Coronavirus, but only as it related to China’s economy and the potential impact to the U.S. economy. We clearly did not envision a global pandemic.

The Outlook for 2021 is Positive, Here are Six Things to Look Forward to in 2021:

1. A Readily Available Vaccine Creates an Economic Uptick Halfway Through the Year

• The Q2/2020 disruption contributed to a 33% decline in the GDP.
• We anticipate GDP to be relatively flat for the first half of the year, but as the vaccine becomes readily available and widely distributed, we look for an economic uptick in Q2 and Q3 of 2021.
• In 2020, we strengthened our backlog moving into the New Year, and new sales prospects for 2021 are robust as well. We anticipate that the pandemic driven recession will be shorter than originally projected.

2. Working From Home & Local Restrictions Affect Office, Retail, and Hospitality Sectors

• With so many organization employees still working remotely, or even with staggered schedules, it has created numerous changes in demand for space in the office and retail sectors.
• Business travel has been greatly reduced and we anticipate that the recovery in this and other ancillary segments, like hospitality, will continue to be negatively impacted.
• This will likely lead to a decline in these segments for the next several years, and the question remains,
i. “Will the workers come back to the office once the pandemic is gone?”
ii. “When will business travel return to some form of normalcy?”

3. Consumers Will Continue to Look to E-commerce

• Consumer activity, primarily due to retail sales, has increased by 4% year over year. We could see further improvement when the second economic stimulus package gets approved and rolled out.
• We expect the explosive growth of e-commerce and Online retail sales to continue for the next 12-18 months, and it should continue to drive CRE businesses on supply chain/distribution.
• For 35 years Alston has been the leader in the construction of industrial facilities for some of the top Fortune 100 companies throughout the United States.
• In the past five years, Alston has completed more than $6.5 billion in industrial and manufacturing projects encompassing more than 30 states.

4. Cold Storage is Not Only Here to Stay, It’s Growing Exponentially

• We anticipate increased need for freezer / cooler space for traditional users and even the potential for growth in speculative cold storage buildings near major ports throughout the U.S.
• Given our extensive experience in the freezer/cooler segment, Alston is positioned to service this segment’s growing demands. Take a look at an interesting read about cold storage here.

5. What Really is the “New Normal”?

• Perhaps the most important thing to watch for in the coming months is how businesses and industries change as we transition out of the pandemic to the so-called “new normal.”
• Just as there were big winners like Zoom and DoorDash, as a result of the pandemic, there will be new winners (and losers) as we transition out of this.
• We must continue to study certain economic shifts that are closely coupled to changed human behavior from the pandemic.
• Alston’s adaptability/design-build experience can help you with the changing markets.

6. COVID-19 Brings 3 Major Positive Changes to the CRE Industry

• Innovation: Everyone has had to innovate to adapt and thrive. Market segments will also have to innovate as well: Office space re-designs, remote working, how we consume goods and socialize, how we conduct business meetings, etc.
• Behavioral: With remote and virtual business practices, in a sense we have greater reliance on each other to perform our work and conduct our business.
• Safety: Similar to our behavioral changes, more than ever we have to rely on each other, whether in business or socially, to “do the right thing” – this has created greater interdependence. While this is not as ideal as in-person business communications, the level of trust and reliance on each other has increased. This includes things like awarding new projects from a Zoom interview, for example. We don’t see too much of these adaptations changing in the 2021.

So, to wrap this up, we are looking forward to continued growth in 2021. We are genuinely thankful for each of our clients and the opportunities that they provide. We are also thankful for all of our CRE friends, design consultants and contracting partners. We are sincerely blessed to have the strong, disciplined and hard-working women and men that make up the Alston staff who provide a quality of service that is second to none. This is the “Alston Way.”

All the Best,

Paul D. Little, CEO