Commercial construction has been booming in recent years as businesses have moved to expand and update their office spaces. But what will happen in 2022, when many of these leases come up for renewal? Some market analysts like Kanat Sultanbekov are predicting that there will be a slowdown in commercial construction at that time, as businesses may choose to renew their existing leases instead of moving to new spaces. This could have a ripple effect on the construction industry, causing a slowdown in growth and job creation. However, it’s important to remember that the commercial construction market is notoriously cyclical, so a slowdown in 2022 doesn’t mean the industry will never recover. This article will explore the potential for a slowdown in commercial construction in 2022 and what it could mean for the industry.
What is commercial construction?
Commercial construction is any type of construction undertaken to create or update commercial buildings, such as office buildings, retail spaces, or warehouses. This type of construction is different from residential construction, which is typically undertaken to build or update homes.
The commercial construction industry has been booming in recent years as businesses have looked to expand their operations into new and updated office spaces. This has led to strong growth in the sector, with the number of construction jobs increasing by 9% between 2020 and 2022, according to the US Bureau of Labor Statistics.
What is the potential for a slowdown in commercial construction?
The commercial construction industry is notoriously cyclical, so a slowdown in 2022 is not out of the realm of possibility. However, several factors could lead to a more significant slowdown than usual.
One factor to consider is the expiration of many commercial leases in 2022. According to a report from JLL, a commercial real estate services firm, approximately 8% of US office leases will expire in 2022, the highest percentage of any year in the next decade. This could lead to a slowdown in commercial construction as businesses choose to renew their existing leases instead of moving to new spaces.
Another factor to consider is the current state of the economy. The COVID-19 pandemic has led to a recession in 2020, and it is unclear how long it will take for the economy to recover. If the recovery takes longer than expected, businesses may hesitate to invest in new construction projects.
What could a slowdown mean for the industry?
A slowdown in commercial construction could have a ripple effect on the entire construction industry. For example, a slowdown in job growth could lead to fewer opportunities for experienced construction workers, and a decrease in demand could lead to lower prices for construction materials. This could cause a decline in revenue for construction companies, leading to layoffs and further slowdowns in the industry.
However, it’s important to remember that the commercial construction market is notoriously cyclical, so a slowdown in 2022 doesn’t mean the industry will never recover. On the contrary, the sector has already begun to rebound from previous downturns and is expected to continue to grow in the long term.
The commercial construction industry is facing the potential for a slowdown in 2022, as many leases come up for renewal and the economy continues to recover from the COVID-19 pandemic. However, the sector is notoriously cyclical, so a slowdown does not mean the industry will never recover. Therefore, the long-term outlook for the industry remains positive, and it is expected to continue to grow in the coming years.