A pair of recently published economic tracking studies for the construction industry developed by Quarterly Market Forecast (QMF) highlight the increasingly split nature of construction proposal activity within the United States following the COVID-19 pandemic. 

Commercial projects are struggling, with some exceptions

First, the bad news: Commercial projects are facing dire straights. 

A recent net plus/minus index (NPMI) conducted by QMF measuring the difference between firms that saw a drop in proposal activity and those that saw an increase shows that commercial developers have seen a 45% decline in proposal activity during the second quarter of 2020, slightly up from a minus 51% showing during the first quarter of the year.

Here, warehouse and fulfillment center developers saw an increase in proposal activity, predictably due to the drastic increase in online ordering that has taken hold in recent months. Meanwhile, retail, restaurant, and other facilities saw steep declines.

“It is interesting to note that the Commercial markets were showing signs of weakening even prior to the COVID-19 pandemic,” explains Greg Hart, a PSMJ consultant and manager of the QMF survey. “Both Commercial markets dropped to NPMI levels in the 3rd and 4th Quarters of 2019 that they hadn’t seen since just after the recession, in the 2010 to 2012 time period. This probably explains why the Commercial markets fell faster and harder than the other major markets in the 1st Quarter, even though the crisis didn’t really begin until March.”

Housing is rebounding

Meanwhile, the housing market, according to QMF, is doing relatively better give the long term, pent up demand for housing that has gripped the country in recent years, a trend that has only been exacerbated by the pandemic.

According to the QMF report, housing "was one of only four major markets that recorded a positive Net Plus/Minus Index. With proposal activity slumping across most markets, Housing’s NPMI of 2% placed it behind only Water/Wastewater (20%), Energy/Utilities (15%) and Healthcare (10%) among 12 major markets measured. Housing’s 1st Quarter NPMI was -19%."

There is particular growth in the multi-family housing sector, which not only saw fewer construction shutdowns during the first lockdown period, but also was experiencing strong growth in the quarters just before the onset of the pandemic.

Additionally, single-family housing projects are also seeing a steady rebound in recent weeks. 

The report explains, "Possibly driven by record-low mortgage interest rates, single-family properties (individual) saw its 1st Quarter NPMI of -31% jump to +9%, while Multifamily improved from -2% to +7%. Single-family developments remained well into the negative at -12%, but that was up from -28%. Senior/Assisted Living ticked up from -3% to -1%, while condominiums continued to struggle (-28% in Q1 to -26% in Q2)."