February 15 2024 0Comment

2024 Economic Outlook from Paul D. Little

In 2023 the overall economy and new construction slowed as predicted. As we suggested last year, many developers and Owners took a “Wait and See”, approach. While most “waited” some took advantage of the economic uncertainty and continued to develop in hot geographic markets near our borders with Mexico and areas around major U.S. ports. Alston benefited from a strong backlog entering the year and seeing several of our diversification initiatives produce solid outcomes.

Our outlook for 2024 is one of cautiousness primarily because of geo-political conditions. Higher energy prices due to ongoing conflicts could influence our economy. But overall, we see 2024 as a year of transition towards a stabilizing economy in terms of inflation with a hope that the Fed’s potential downward adjustments to interest rates will lead to more sustainable future growth.

Currently, we anticipate a continuing decline in the overall commercial construction market. Our industry has been impacted significantly by the Federal Reserve’s current monetary policies. We anticipate a continued decline in the warehouse distribution segment balanced by a solid uptick in manufacturing space for the EV sector of the automotive business. This combined with incentives for other onshoring processes, have delivered significant opportunities for growth in this market segment. Construction of Cold Storage facilities is another market segment that has shown strong growth for us. Alston is fortunate to carry a strong resume and experience base in the automotive business and in particular component manufacturing and parts facilities for many of the largest automakers in the world. We have also completed multiple large cold storage facilities over the past several years. This experience has helped Alston develop specialized staff resources with an in-depth understanding of these unique buildings.

Advancements in technology and automation are also driving the growth of the industrial construction sector. Industries are increasingly adopting automated systems and robotics to enhance productivity and efficiency. This has created a demand for specialized construction projects that cater to the installation and integration of advanced technologies within industrial facilities. Alston is currently very active in this growth segment with our a+ Automation Integration Management (AIM) group.

In general, we anticipate experiencing continuing economic headwinds and uncertainty for the next 6-8 months. If inflation remains in check as anticipated, we should see some improvement later this year. It’s also important to note that the fundamental drivers of our core business are sound. Vacancy rates in most major distribution markets are at healthy norms, while rental rates remain stable.

We are genuinely excited with the continuing growth and outlook for all of Alston which is a direct result of the great opportunities provided by our clients and friends. The Alston staff is exceptional. We are committed to bringing a broad array of outstanding preconstruction and construction services to every market we serve.

All the Best,