Financial markets experienced an initial bounce following the US elections, anticipating more business-friendly conditions.
Construction markets are hot in most regions of the US, in stark contrast to the conditions seen in many other regions worldwide. Of the three cities reported here, Houston has the weakest construction market with the oil market slump denting construction growth.
In Houston, residential and non-residential construction starts are falling following five years of solid growth and some projects are being cancelled as a result. Office vacancy climbed to nearly 20 percent, indicating several years of weakness ahead. In contrast, San Francisco is hot and Seattle is overheating.
Unsurprisingly, labour skills shortage is a problem, with labour costs increasing relatively strongly, and overall construction costs are experiencing some of the highest growth rates among developed economies worldwide.
Housing sectors will run out of steam eventually given the high levels of supply coming on-stream, but should the new administration’s policies prove successful in bringing businesses’ headquarters back to the US, commercial construction should do very well.