P3s: Trending in America

December 16th, 2015

Cottage industries are springing up around one of the hottest topics in the infrastructure business – public-private partnerships. Also known as P3s and PPPs, this project delivery method is quickly gaining steam in the United States after rapidly consuming much of the market overseas and in Canada.

During my three years with the legendary engineering company Fay, Spofford & Thorndike, we invested a lot of time, money and effort into ensuring that we didn’t let this trend pass us by. In fact, FST’s acquisition by Stantec in October was driven partly – maybe largely – by the need to have sufficient resources to capitalize on P3 opportunities.

One of FST’s recent signature projects – the study of a third crossing over the Cape Cod Canal – has been discussed as a possible P3. Other projects in FST’s wheelhouse, such as the reconstruction of sections of Route 3 South going to the Cape, are also on the Massachusetts Department of Transportation’s short list of potential P3s.

Our research and insight came from a variety of sources. We were long-time subscribers to the UK-based P3 Bulletin, which delivers daily news item electronically and a monthly hard copy magazine. I personally attended the P3 Hub South Conference in Richmond, Virginia, in 2014 and the National Council for Public-Private Partnerships (NCPPP) Federal P3 Summit in Washington, D.C, in February 2015.  In July, FST’s Director of Transportation Bill Reed and I attended the P3 Connect Conference at the Westin Copley Hotel in Boston, which was also sponsored by the NCPPP. (For those who think P3s are a new phenomenon, consider that the NCPPP is celebrating its 30th year in existence.)

This investment gained us a far greater understanding of the potential, and more importantly, the reality of P3s in America. Like many trending issues, people can become intrigued with P3s before they fully understand all that they entail.

If there is anything we have learned from keeping abreast of P3 news and attending these events it’s that P3s can be an outstanding way to ensure that a needed project is financed, designed and built cost-effectively, in a reasonable time and with a high level of quality. However, as with every so-called alternative delivery method, only certain projects lend themselves to the P3 approach.

Here are some other thoughts about the state of P3s in the United States as we move toward 2016.

P3s introduce parties that engineers are not used to dealing with, even on design-build and other alternative delivery methods. The attendee list at a P3 conference is very different from most of the ones we attend in the AEC industry. It’s a far more mixed bag of companies and professions. You’ll find a much higher representation of the financial and legal professions than you would at an ACEC or APWA conference. Understanding the motivation and role of these non-traditional members of the project team is crucial for engineering firms interested in getting into the P3 game.

P3s are not only for transportation infrastructure projects. The perception that all P3s are massive highway and bridge projects ignores the fact that most P3s occurring in the United States in 2015 are vertical projects such as military barracks, dormitories, government buildings and water or wastewater facilities. One of the most innovative P3 projects currently underway is a stormwater management project for Prince George’s County in Maryland.

P3s in transportation are not all about toll roads and bridges. Another misperception is that all transportation P3s are funded by user fees (i.e., tolls).  Now, government agencies rely more on “availability payments” from traditional funding sources such as grants, loans and tax revenue to compensate the private-sector financial partner.

For example, the Port of Miami Tunnel Project, one of the country’s highest-profile P3s, uses availability payments. According to the official project site, under the concession agreement, Florida DOT will make milestone payments to the concessionaire during the construction period, upon the achievement of contractual milestones. Once the construction is complete, the department will then make availability payments to the concessionaire.  The state is paying half of the $668.5-million cost, with Dade County and the City of Miami splitting the other half. These payments will be contingent upon actual lane availability and service quality. The tunnel will be returned to FDOT at the end of the contract in October 2044.

While we still have a long way to go before P3s are as common here as they are in many other countries, state legislatures continue to pass laws that remove barriers to P3s. Interest among international companies in the U.S. P3 market is growing, to the point where Moody’s Investor Services has said that the U.S. is poised to become the largest market for P3 projects in in the world.

Why wouldn’t we? The new federal highway funding legislation passed this month is a step toward stability in that it allows state DOTs to do more and better long-term planning. However, the $305 billion in the five-year bill – about $225 billion reportedly for highways – still comes up short of all the needs. Also, the highway trust fund grows more obsolete by the day as a way to pay for transportation infrastructure improvements. Agencies at all levels will increasingly include the P3 option as they seek solutions to transportation infrastructure challenges.

Social P3s are also primed for growth. Vanessa M. Leiby, executive director of the Water and Wastewater Equipment Manufacturers Association, wrote in the March 2015 issue of Water & Wastes Digest, “The extent to which the federal government has begun encouraging and facilitating such ventures is notable. It appears P3s will play a large role in the future of water and wastewater infrastructure funding.”

As it is with many recent developments in our industry – be it technology-driven advancement such as Building Information Modeling or the latest in project financing or project delivery – P3s are outside the comfort zone of most traditional engineering companies. At FST, we chose to accept and embrace these changes with the goal of succeeding where others may have failed to even try. – Jerry Guerra, December 16, 2015

Midyear Update in SMPS Marketer

June 18th, 2013

The June 2013 issue of marketer, the journal of the Society of Marketing Professional Services (SMPS), features a midyear assessment of the AEC industry based on The JAGG Group’s latest publication, The 2013 Guide to the U.S. AEC Markets. If you’re interested in receiving a free copy of the midyear report on which the article was based, send an email to research@jagg-group.com.

Ranking 40 Markets for US AEC Firms in 2013

January 9th, 2013

The JAGG Group’s 2013 Guide to the US AEC Markets ranks this year’s outlook for 40 markets served by architecture, engineering, environmental and construction companies, supported by more than 150 pages of analysis and insight from experts, practitioners and economists. Point totals are tallied based on a weighted scale that assesses the size of the market, potential short- and long-term growth and a variety of miscellaneous factors.

1     Apartments 72
2     Natural Gas 71
3     Senior Housing 61
4     Transmission/Distribution 60
5     Health Care 58
6     Hospitality 49
7     Solid Waste 41
8     Manufacturing 40
9     Industrial/
10     Retail 38
11     Hazardous Waste 37
12     Single-Family Housing 35
13     Heavy Rail 34
14     Water Supply 33
15     Ports and Shipping 32
16     Wastewater
17     Transit 29
18     Aviation 28
19     Solar 27
20     Higher Education 26
21     Roads and Bridges 26
22     Office 24
23     Research &
24     Biopharma 22
25     Condos and Townhomes 21
26     K-12
27     Data Centers 19
28     Life Sciences 18
29     Wind* 17
30     Geothermal and Other
31     Testing &
32     Air Pollution
33     Stormwater
34     Religion 13
35     Coal 12.5
36     Amusement &
37     Government Buildings 11
38     High-Speed
39     Nuclear 7
40     Brownfield Development 5
*This table was tallied prior to the fiscal cliff deal that extended the Production Tax Credit for wind. For this reason, the wind market may have a better year in 2013 than predicted, though the threat of the PTC expiration will limit growth, especially in the long term.

For more detail about why these markets are ranked where they are, purchase The 2013 Guide to the U.S. AEC Markets by clicking on the link at the top right and paying with a credit card through our secure PayPal site. Within one business day, you will receive a pdf copy of our 270-page report to your requested email address. The Guide comes with a full money-back guarantee.

Apartments, Natural Gas, Senior Housing, Transmission/Distribution top 2013 AEC Markets

December 11th, 2012

New Report Predicts Strongest, Weakest 2013 AEC Markets

MEDIA RELEASE: December 11, 2012

Two of the top three markets identified in The JAGG Group’s 2013 Guide to the U.S. AEC Markets as the most promising of 2013 are no surprise – apartments and projects related to natural gas development have carried the industry along for months, if not years. However, the third in that group may turn a few heads.

In naming Senior Housing the third most-promising market for AEC firm work in 2013, The JAGG Group reports, “The inescapability of demographics, combined with low levels of building for a prolonged period, have brought the senior housing market back in vogue. High occupancy rates, rising home prices and lagging supply also contribute to the resurgence.”

Despite a tapering off of the market’s construction activity in the latter half of 2012, The JAGG Group’s 270-page market outlook predicts a renewed focus on investment in senior housing development in 2013. This view, while likely unexpected to some, is supported by comments from industry insiders at the annual conference of the National Investment Center (NIC) for the Seniors Housing & Care Industry in September.

Bill Kauffman, senior research analyst for NIC, told Senior Housing News, “There’s chatter about new construction and lenders being extremely busy. Talking to lenders, they say they’re very busy with underwriting new construction loans.”

Another factor that could potentially drive the industry is acquisition. More than two-thirds of senior housing and care industry executives say that mergers and acquisitions are their primary growth strategy for 2013. This could eventually lead to design and construction work on rehabs and renovations.

Fourth on The JAGG Group’s list is the transmission and distribution market, for which the comprehensive research book notes, “The high ranking is for short-term prospects in 2013, as well as longer-term possibilities through at least 2015. The needs are great and it’s not a market that can be ignored.”

In all, the newly released annual market guide ranks 40 U.S. markets served by architecture, engineering, environmental consulting and construction firms. The book also includes sections on what the results of the 2012 election mean to the industry, an update on 10 top trends in 2013, a look at international markets, and much more. 

For more information on The 2013 Guide to the U.S. AEC Markets or to purchase this strategic planning tool from the publisher, visit their blog at http://www.aecinsight.com or email to research@jagg-group.com. You can also find links to more information on Twitter @aecinsight.

Winners & Losers from Election 2012

November 14th, 2012

It’s about a week after the 2012 presidential election and we now know that voters granted President Obama a second term. In Congress, the Democrats gained a couple of seats in the Senate, while the House remained essentially status quo. The body is still split – donkeys holding the Senate and elephants hanging on to the House.

We’ve updated The Revised 2013 Guide to the U.S. AEC Markets to reflect the results, including in our section titled “Election 2012: What It Means to You” and our ranking for 40 markets and subsectors. 

The post-election question everyone is asking: What do the results mean for our industry? In a November 9 webinar sponsored by Reed Construction Data (RDC) (Norcross, GA), the consensus answer among three economists is…not much.

“People tend to over ascribe economic impacts to the president alone,” says Ken Simonson, chief economist for the Associated General Contractors of America (AGC) (Washington, DC). “The reality over the last several decades is that we’ve had Democratic presidents and Republican presidents who have presided over strong periods of growth and really bad recessions. So much depends not only on Congress, but the Federal Reserve and other outside influences. We would have seen, if not gridlock, a very difficult situation, for either a President Romney or a President Obama.”

RDC’s Bernie Markstein says the primary difference between Democrats and Republicans is that the former tend to spend more on social programs, while the latter tend to spend more on defense. “But it’s a leaning,” he said. “We do need to spend on things like infrastructure. We’re all a little concerned that the money won’t be forthcoming. I’m a bit of an optimist that they can get together and agree that there does need to be more spending there, but this gridlock is really frustrating.”

Markstein added that immediately after the election, all the talk was of bipartisan cooperation. That lasted “about an hour,” he joked, saying that the rhetoric quickly returned to the same old place. “So I’m hopeful, but they don’t give me a lot to hope for.”

Kermit Baker of the American Institute of Architects (AIA) (Washington, DC) said that any different approaches by the candidates would not have affected the construction industry in any significant way for several years – probably not until the term was over. “In the short run, it’s hard to make an argument that there would have been significant differences in construction activity under a Romney Administration than there will be under an Obama Administration,” said Baker.

At The JAGG Group, we wholeheartedly agree that the results of this one vote are unlikely to have a major effect on the overall industry for the next few years. However, the Obama win, combined with the looming “fiscal cliff” that threatens to smack down the recovery with a drastic jump in taxes and draconian spending cuts, may stifle economic growth in the last several weeks of 2012 as the sides attempt to settle the issue.

Most economists and political insiders believe the sides will address the issue satisfactorily. At minimum, Congress and the President will agree to extend the deadline for a period that allows for a resolution, they say. At best, they sides will compromise and avoid the fiscal cliff plummet that could bring another recession.

Despite these serious threats, and the consensus opinion that one presidential race doesn’t much influence the short-term performance of the construction industry, it would be naïve to think that there were not winners and losers among the markets served by the AEC industry when the ballots were cast and counted on November 6, 2012.

Here is our take on the winners and losers from Election 2012. We offer more detail on these and dozens of other markets in the nearly 300-page book’s Section 5 (“Election 2012: What it Means to You”), Section 6 (“Outlook for the US AEC Markets”), and Section 7 (“2013s Best & Worst Markets”).

Election Winners

High-Speed Rail. Throughout The Revised 2013 Guide to the U.S. AEC Markets, we predicted that a Romney win would have doomed the vision for a national network of high-speed rail because so many conservatives oppose HSR. Even with Obama back in office, HSR faces numerous challenges; but it at least has a pulse.

Wind and Other Alternative Energy. Obama wants to extend the production tax credit (PTC) for wind energy development; Romney said he would let it expire. The Obama win, then, is good for wind. Same goes for other alternative energy PTCs set to expire at the end of 2013.

Health Care. A qualified win. While Obamacare’s full effects remain unknown, the uncertainty over its potential repeal has waned, if not disappeared. This could spur development in the sector. States may still seek to undermine its primary principles, however.

Bicycle and Pedestrian Trails. The GOP-controlled House may still have a bullseye on the back of the bike and pedestrian trail movement, but the strong showing by Democrats in the election could ease efforts to pull back on government-funded investment in these “non-traditional” transportation projects.

Markets Driven by EPA Regulations. It is no secret that the Republicans are gunning for the EPA, but Obama’s win keeps the agency safe from all-out attack for a few more years at least.

Election Losers

Defense. As the AIA’s Baker says, a Republican would be less likely to cut military spending. The truth is, most of Obama’s intended military cuts would not affect construction – and some might actually benefit it in the long term – but the military markets may have been better off if Romney had won.

Commercial Markets. Presumably, Romney’s policies would have attempted to stimulate business growth and opportunities. This would have arguably helped drive job growth, resulting in the need for more and better office space, hotels, retail outlets, and so on. Brownfield development may also have prospered better under Romney.

Coal. With Romney in the White House, the current aggressive attempts to clean up emissions from coal-burning plants may not have been so aggressive.

If you’d like to purchase The Revised 2013 Guide to the U.S. AEC Markets, please click on the button at the top right corner of the blog home page and use your credit card on our secure PayPal site. There is a 100% money-back guarantee, so there is no risk to you.

A Book is Done; A New Challenge Begins

October 31st, 2012

On October 25, 2002, I walked into the Town Hall in Lynnfield, Massachusetts, and registered a dba business called The JAGG Group. I was not crazy about the name, but others seemed to like it so I went with it.

Ten days before the 10th anniversary of The JAGG Group, I walked into the Burlington office of 98-year-old engineering firm Fay, Spofford & Thorndike (FST) as their new Manager of Marketing and Strategic Business Development. The JAGG Group lives on, at least temporarily, to provide service to the buyers of my latest book – The 2013 Guide to the U.S. AEC Markets – and for a few remaining projects that we’re wrapping up. Otherwise, my focus is on adding what I can to the marketing and business development programs, systems and processes that have made FST such a successful and respected firm for such a long, long time.

It was not a decision I made lightly. The JAGG Group was doing well and business opportunities were picking up. We had also begun the process of writing and self-publishing another book, continuing us down the path of having a full-fledged publishing arm to go along with our consulting work.

Of course, anyone who has owned any kind of business — from a global megacorporation to a paper route — will tell you that business ownership is a blessing and a curse. The blessing is that you call your own shots, the accountability stops at you, and your time is often your own to choose when, where, how and for whom you work. These three blessings can also be curses, as can the responsibility of always being the one “carrying the water.” This is especially true in small firms like The JAGG Group.

Despite these challenges and stresses, I enjoyed what I was doing and would be still be doing it except for the opportunity that I stumbled across one day in September. I saw an ad on the Linked In business-based social media site that said it was looking for…well, me. I had applied to exactly two jobs in my 10 years in business — one because a headhunter called me and the potential to be a ground-floor investor seemed great; a second because it seemed to be similarly designed especially for me. In both cases, they wanted someone with more experience in high-tech PR (the first was an air-quality monitoring product company, the second an AEC industry software giant). I never even went for an interview.

During my initial meeting with Peter Howe, FST’s President and CEO, I quickly saw the possibilities that this position presented to me. Not only from a career standpoint, but as an opportunity to use the skills and experiences I’d gained in my 30-year professional career to contribute to the continuing and expanding success of an established firm. This time, though, it would be from the inside, as a true part of the team. It was a great fit, I thought, for me and for FST.

The thing that most intrigues me about my new position is Peter’s (and as I eventually found out, the board of directors’) outlook on what the firm does very well in marketing and business development, and where it could benefit from some changes and possibly a new perspective. In my 2-plus weeks at FST, I’ve confirmed that we have a very strong business development culture — our exceptionally talented and hard-working marketing staff produces attractive, professional and technically sound proposals at an incredible clip. Yet, there are systems and programs that we can improve to make the proposal production process even better and more efficient. Many of the firm’s engineers, planners, scientists and other technical professionals are also well in tune with the need to not only do good work and support their clients, but to look for new opportunities and projects.

FST’s marketing culture is not as advanced as its business development culture. I’m talking about what many engineers consider the “softer” side of marketing and BD — press releases and published articles, brochures and other marketing collateral, social media outreach, and so on. Our goal is to put a comprehensive, intelligent and achievable plan in place to bring the marketing culture here to the same level as the BD culture. It’s a big challenge — not only here, but in most of the engineering firms I’ve worked with in nearly 20 years in the AEC industry –and I very much look forward to tackling it with my new colleagues at FST. As I’ve said internally (and in the press release about my new position), FST has so many great stories to tell about the incredible work we’re doing; I can’t wait to start telling them.

As for the book, it took a bit longer than we’d hoped (for a variety of reasons, including the obvious one), but the good news is that it’s done. The better news is that it’s good — at least I believe it is. Readers will be the judge. My hope is that The 2013 Guide to the US AEC Markets provides sufficient insight to the people and firms who buy it to help them make smart decisions in their own planning processes — formal or otherwise — in the coming year and beyond. We offer a money-back guarantee for this reason. I’m proud to say that we’ve not yet been asked to send anyone a refund on either book we’ve published.

If you want to check it out, you can order it with a credit card by clicking on the button on the top right of the AECInsight home page. If you have any questions, email me at my JAGG Group address — jguerra@jagg-group.com — and I’ll get back to you within a day.

As for AECInsight, I plan to continue posting articles relevant to the industry, albeit with the focus of the Manager of Marketing and Strategic Business Development at FST rather than of an independent consultant. I will link it with FST’s growing social media presence, along with my own Twitter and LinkedIn accounts. We may even expand it and post more often. We’ll see.

In the interim, if you want to talk with me about FST-related matters, contact me at jguerra@fstinc.com or 781-221-1299.






Grading Our 2012 Projections

October 2nd, 2012
Market researchers like to make predictions, assigning projected growth percentages to everything from market subsectors to the global economy. Yet, how often do they look back to see how they did when the next year rolls around…especially if their prediction was off?

It’s like taking a test, but never getting a grade.

In late 2011, we ranked 26 U.S. sectors and subsectors based on their anticipated growth and activity in 2012. We did not assign projected growth rates, just a ranking, top to bottom, from the market that our data indicated would be healthiest in 2012 to the one we expected to be least healthy.

We don’t do estimated growth rates because, simply put, we think they’re all but useless and not worth the trouble. How valid is the numerical estimate from even the most competent economist when we’re talking about volatile design and construction markets in a turbulent national economy?

Even if these numbers could lay claim to some accuracy, how important is it really to the average AEC firm? Does it matter to a 50-person West Coast architecture firm if the $17 billion healthcare construction market ticks up 2.1% or 2.2%? Sure, that 0.1% is a lot of money in the big picture, but if this firm is only capable of capturing $5 to $10 million of it, there are far more important factors to consider.

All you need to do is look at the massive differences among the various prognostications to question their relevance. For example, for 2012, IHS Global Insight (Englewood, CO) called for 9.6% growth in the retail and other commercial sector for 2012 off $32 billion in 2011 spending put-in-place. Wells Fargo Financial (San Francisco, CA) predicted only a 3.6% gain on $43.4 billion in 2011 spending put-in-place. Almost a third less growth on a 35% differential in 2011 spending put-in-place. (This is according to the AIA Consensus Construction Forecast.)

Let’s face it; these things are hard to quantify. We don’t even try. (If you like these numbers, though, we do report on how others see the markets growing, though the results are often contradictory.)

Instead, we prefer to consider factors such as whether the right metrics are in place for growth in the sector, the overall economic health of a geographic area, and trends and developments in the industry. Most importantly, we want to find out and assess what owners and investors are saying, seeing and feeling about specific markets.

So let’s look back at a few of our rankings for 2012:

1. Apartments. We ranked apartments at the top of the list simply because the market was strong when others weren’t and it showed no signs of slowing. Our comment at the time was “The good times aren’t over yet for the surprisingly strong multifamily-for-rent sector.” This was especially true amid the struggles of single-family housing.

How’d we do?  The National Association of Home Builders (NAHB) (Washington, DC) Multifamily Production Index rose for the eighth straight time in the second quarter of 2012. While the highest rate of activity has been concentrated in the strongest metropolitan areas, and production is far better in market-rate units than affordable, we’d be hard pressed to find a market that has done better.

2. Wastewater. “Despite a likely reduction in federal funding, the wastewater market is back near the top due to increasing demand, aging infrastructure and government mandates,” we wrote.
How’d we do? Experts say it has been flat through the first half of 2012, and we didn’t get the regulatory push we thought we might. Yet, given the intense need, growing municipal and industrial demand, and potential for catastrophe if we don’t act, we’re not conceding this one yet. At minimum, it is certainly a solid long-term market.
3. Health Care. “Not without its issues, and reform has the industry in limbo, but still good in the short term and great long term. A caveat: if the GOP wins the presidency and tries to repeal reform, the limbo could linger.”
How’d we do?  We were a little optimistic on this one, though it is still in the top tier. We’ve talked with health care design firms who experienced their first down period in years in 2011-2012. Health care construction grew only slightly through the first half of 2012, and projects continued to be delayed and canceled. It remains a good market overall, but the stagnation brought on by reform and other pressing issues held it down more than expected. On the plus side, Modern Healthcare reported that capital investment is climbing among health systems.

Energy Production an Election Battleground

September 10th, 2012

The Democrat and Republican parties tend to differ greatly on the best approach to energy production and use. However, just four years since the GOP was chanting “Drill, baby, drill,” and the Dems were howling against the Bush Administration’s approach to global warming and pushing aggressive renewable energy goals, the sides have managed to find more common ground in Election 2012.

A September 5 article in the Houston Chronicle, headlined “Democratic Party platform touts natural gas, tones down climate change talk,” reports:

In the party platform they unveiled [September 4], Democrats draw a distinction between “Big Oil” and “cheap, abundant natural gas” they tout as “helping to bring jobs and industry back to the United States.”

At the same time, the Democratic platform tones down its assessment of the severity of global warming and what the United States should be doing to arrest it — a big turnaround from four years ago, when the party warned that “the epochal, man-made threat to the planet” of climate change had to be halted.

The changes reflect two economic realities:

The recent surge in domestic production of natural gas from dense rock formations across the country  is bringing jobs to Ohio, Pennsylvania and other battleground states.

At the same time, the ailing economy nationwide has made broad initiatives to combat global warming — including cap-and-trade programs that would put a price on carbon dioxide emissions–a tough sell in the nation’s capital.

Both Republicans and Democrats have linked economic gains to domestic gas production.

The GOP hasn’t moved as much in its energy platform as the Democrats have, but the party’s views on the issue have “evolved.”

An excellent analysis of the competing platform in the Casper Star-Tribune – headlined “Where do the Dems and GOP stand on energy and the environment?” – notes:

Both the Republican and the Democrat party faithful highlighted energy policy and environmental issues in their platforms. That’s not unusual. But take note what they say, and how it compares to their platforms written four years ago.

Some things sound the same and some are very, very different. And while both parties seek some identical things — energy independence, energy efficiency, a balance of energy development and environmental protection — the devil, as always, is in the details.

The gap between their views may be smaller, but the “details” illustrate that the sides still differ greatly in their overall approach.

What does this mean for energy development in general and the AEC industry in particular? A lot depends on who wins in November.

The emergence of plentiful natural gas reserves appears to have softened the Democrats’ push for renewable energy sources such as wind and solar, but these remain a critical element of the party’s energy approach.

Republicans, likewise, seek to end reliance on foreign oil and strive for a “sustainable energy future.” However, as in 2008, their timetable is not as ambitious.

Energy is a major issue, not only in the 2012 election, but in the fate of the AEC industry’s rebound in 2012. Our 2013 Guide to the U.S. AEC Markets delves deeper into the issue and offers our views on which elements of the market will thrive and which will struggle. To pre-order the publication at a discount, click on the icon at the top right and pay with your major credit card.

Has Housing Plummet Struck Bottom or Is A Shadow Looming?

September 7th, 2012

One of the first rules of market research is to consider the source. So, when trying to decide which side is right in the housing bottom debate – the optimists who say that the freefall in prices and sales has ended or the naysayers who focus on the shadow inventory of foreclosed and underwater homes – it is important to remember this rule. 

In an article headlined “Homes Selling More Quickly, Time on Market Down with Tighter Supplies,” economist Lawrence Yun shows that he is in the former camp. “A notable shortening of time on market began this spring, and this has created a general balance between home buyers and sellers in much of the country.”

Yun’s employer is the National Association of Realtors®, who would like nothing more than to see the housing crisis nightmare end. Not only does Yun argue that the price dive has reversed itself, he cautions that a housing shortage may be in the offing.

“Ironically, if housing construction doesn’t pick up to normal levels within two years, supply shortages could be sustained for an extended period and lead to above average appreciation,” Yun said. “Therefore, any unnecessary hindrance to housing starts, such as excessive local zoning regulations or stringent bank capital rules for construction loans, should be carefully re-examined.”

Not everyone shares this outlook. A June 26 article on the Forbes magazine web site reports “10 Million Underwater Mortgages And Shadow Inventory Worth $246B Mean Housing Trouble.”

The lead paragraph under this ominous headline begins, “Don’t be so sure the housing market is on its way back to health.  Despite the first monthly increase in home prices in 7 months, as the Case-Shiller indexes showed on [6/26/12], there are still more than 10 million properties with underwater mortgages, and a shadow inventory of 1.5 million, or four months supply.  Negative equity will continue to take its toll on consumption, while the shadow inventory, worth about $246 billion according to CoreLogic, will constrict lending and probably affect banks’ earnings.”

What could Forbes’ motive be for the negative spin? It’s hard to say, but Charles Tatum, a cynical reporter played by Kirk

Douglas in a 1951 film called “Ace in the Hole,” said, “Bad news sells best.” Trust me, it’s a credo that many newspapers and magazines live by.

This is not to suggest that either of these organizations are being dishonest or falsifying data to achieve the results they want. Both viewpoints are well supported by facts. It’s just how they choose to interpret these facts and data that the researcher must question.

An objective look at this issue suggests that the truth – as is often the case – likely lies somewhere in the middle.

The residential market’s importance to the overall health of the AEC industry and U.S. economy is a major theme in our upcoming release – The 2013 Guide to the U.S. AEC Markets. Even firms that don’t work in the single-family or multifamily residential space are significantly affected by its performance. Retail isn’t the only development sector that follows rooftops.

For each market and subsector, we include a graphical breakdown of the current state of the market, the outlook and other important information (see the Multifamily example below). This is in addition to pages of narrative, tables and charts, insightful quotes and other important information that fills this 200-plus page book.

Multifamily Capsule 

About Our Book

The 2013 Guide to the U.S. AEC Markets will examine these issues – and many more – in far greater depth. The soon-to-be-published comprehensive report will include a review of the sector-by-sector projections from the 2012 forecast, as well as:

  • Dozens of interviews with leaders and experts in the markets served by architects, engineers, environmental consultants and contractors.
  • Ten industry trends (and what they mean to you)
  • A recap of 2012 and the U.S. Economic Overview for 2013
  • A U.S. geographic outlook, regionally and state by state
  • Discussion of passed, pending and potential legislation that could affect the AEC industry in 2013
  • A look at the post-election AEC industry from both sides of the aisle
  • Most promising international markets and regions
  • The 2013 outlook for over 25 major markets and subsectors
  • Ranking of the hottest and coldest markets for 2013
  • More than 20 pages of links, articles and other resources for firms to consult and use in their own research

Buyers will also receive quarterly Updates of fresh market data and industry developments. These 20-plus-page reports will ensure that the 2013 Guide will prove its worth all year long. 

The list price for the pdf-only version of The 2013 Guide to the U.S. AEC Markets is $299, but right now, you can get the prepublication price of $225. (Hard copy price is $279 prepublication, $349 list.) As always, we offer a full refund guarantee; so there’s no risk to you.

To pre-order your copy of The 2013 Guide to the U.S. AEC Markets  – due out by October 5 – click on the button on the top right and pay with your major credit card.

Table of Contents for The 2013 Guide
to the U.S. AEC Markets (Working)

Part 1: Introduction: A Time Like We’ve Never Seen Before

Part 2: Ten Trends in the Industry

Part 3: The U.S. Economy: Is the Recovery Finally Here?

Part 4: Election 2012: What it Means to You

Part 5: The Geographic Markets in the U.S.

Part 6: The International Markets: Beyond BRIC

Part 7: U.S. Market Outlook for 2013

  • Introduction
    • Demographics
    • Methodology
  • Residential Outlook
    • Single Family
    • Multifamily/Senior Housing
  • Commercial Outlook
    • Office
    • Retail
    • Hospitality
    • Industrial/Warehouse
  • Manufacturing
  • Institutional
    • Health Care
    • Higher Ed
    • K-12
    • Science/Technology
    • Government Buildings
  • Transportation
    • Roads/Bridges
    • Aviation
    • Rail
    • Ports/Shipping
  • Water/Wastewater
    • Water Supply
    • Wastewater Treatment
    • Storm Water Management
  • Energy
    • Renewable
    • Non-Renewable
  • Environmental
    • Solid Waste
    • Hazardous Waste
    • Air Pollution
    • Testing & Analytical Services

Part 8: Best & Worst U.S. Markets for 2013

Appendix: Resources & Links

The 2013 Guide to the U.S. AEC Markets comes with a full money-back guarantee. Click on the button below to order.

If you have any questions, e-mail to research@jagg-group.com.

Good News Friday from NGKF – Metro Job Recovery

August 31st, 2012

There’s a cool feature on the website of the research firm Newmark Grubb Knight Frank (New York, NY) called “Good News Friday.” Every Friday (or so), the group highlights some piece of good economic news in a brief analytical article.

The August 24 entry assesses the state of job recovery in various regions and metropolitan areas. You can read it here.

We’ll discuss this more in our next entry.