The past year has carried the construction sector, and the world, through some very choppy waters. The year ahead will likely bring many of the same challenges, but with the vaccine already on its way, it could also deliver a much-hoped-for revitalization of our economy. With the pandemic as the backdrop, 2021 looks like a decidedly mixed bag for the commercial construction industry. Here are 4 trends we are watching for the months ahead.

 

1. Online shopping will continue to fuel growth

With experiences like travel and live performance being so dramatically curtailed, people will continue to invest in physical goods. While in the last few months we have seen a gradual return to brick and mortar stores, a majority of shopping is still taking place online. This spike in online shopping means continued demand for efficient and robust distribution facilities. It also means growth in many aspects of the manufacturing sector, with decor, toys, and other home-based products leading the way. Which brings us to…

 

2. Supply chain disruptions will accelerate diversification

Social distancing, overwhelming demand on shippers, trucker shortages, and international border closings have all strained supply chains. After years of globalizing, the pandemic has given us a compelling reason to build a network that is a bit closer to home. The disruptions we have seen over the past year will push people in every industry to build up their contingency plans [link: https://www.gartner.com/smarterwithgartner/diversifying-global-supply-chains-for-resilience/] and build in more flexibility. Having a second (or third) choice vendor on hand when trouble strikes can prevent days-long delays. If we are to handle all the pent-up demand economists predict, we’ll need a supply chain that won’t break under the pressure.

 

3. Smart firms will plan for inconsistent work

Much like the start and stop we’ve seen in our supply chains, the work itself will come in hard-to-predict waves. As the construction industry—especially parts that have taken a harder hit, like non-residential—continues to fight back from pandemic lows, we’ll find that the recovery is not linear. According to the Dodge Data & Analytics report from late last year, each industry will find its footing in its own time.

 

The dollar value of commercial building starts will increase 5% in 2021. Warehouse construction will be the clear winner as e-commerce giants continue to build out their logistics infrastructure. Office starts will also increase due to rising demand for data centers (included in the office category) as well as renovations to existing space. Retail and hotel activity will languish.

Our best advice? Prepare for droughts while trusting that there is a brighter future ahead.

 

4. A New Challenge for Subcontractors

As commercial contractors work through their backlogs without seeing an uptick in new starts, they may begin to take more jobs in-house. For contractors, this can limit some of their liability, but for subs, it’s another challenge in an increasingly competitive market. Those who can show they are trustworthy and reliable will have a much easier time finding their place in this more cautious world.

 

On the whole, we’re entering 2021 with our eyes wide open. We’re familiar with the safety protocols, the effects of rolling shutdowns, and the sectors that thrive in a pandemic landscape. We expect that this year will bring some rebound, but that we won’t be enjoying the robust opportunities of pre-Covid times. Commercial builders and customers who can lean into the growing sectors and build resilience for the leaner times will be well-prepared for what 2021 has in store.