Market Trends of United States Commercial Construction Industry
The Emergence of Smart Cities is a Key Market Trend
New York City is currently ranked as the second smartest city in the world and is one of the most prominent Smart Cities. The main innovation of the city can be identified by the form of the transportation and communication linkages. In Smart Cities, the management of operations involves the integration of data and communication, as well as the utilization of the most up-to-date technologies. The development of Smart Cities leads to the creation of functional areas, such as Transportation, Traffic Management, Energy Efficiency and Sustainability, and Governance. The increasing number of Smart City projects across the United States will necessitate the construction of sophisticated road network systems, thus creating growth opportunities for vendors in the market.
For instance, in October 2022, Honeywell's Accelerator Program for Smart City Strategic Planning announced that it is partnering with Acceleration for America to help cities plan for their future and build the capacity to fund transformative initiatives. In-kind support will be provided through Honeywell's Smart Cities Accelerator Program, which is a partnership between Honeywell and Acceleration for America. The Acceleration for America program is designed to accelerate progress in cities' strategic planning efforts. The Honeywell Smart Cities Acceleration Program is a partnership between Acceleration for America (AFA) and Honeywell (Honeywell), which is a subsidiary of Honeywell Inc. (Honeywell). Five U.S cities have joined the Acceleration for America: Cleveland (Cleveland, OH); Louisville, KY; Kansas City, MO; San Diego, CA; Waterloo, and Iowa.
Each city will receive Smart City Strategic Plans (SCPs) through Honeywell's and Accelerator's technical support. Each SCP aligns key stakeholders, sets priorities, and identifies high-impact, inclusive initiatives that improve residents' quality of life (QoE) in areas like climate resilience, public safety and operational efficiency, and enhanced service delivery. Each city will also be supported in applying for Federal grants to help implement identified projects.
Office and Retail Space Driving the Market
In March 2022, 144.7 million square feet of office space were under construction in the United States, accounting for 2.2% of total stock. Notably, half of that pipeline will be provided in urban submarkets outside of key business areas. Furthermore, 93% of the space is Class A or A+, indicating that businesses are continuing to prioritize high-quality projects to retain their workforce.
In March 2022, Austin, Texas, had 10 million square feet of office space under construction. This represented 11.5% of the city's current stock, while planned projects represented 25.3%, the highest percentage among major cities. This comes after Austin outperformed all other markets in 2021 in terms of office-using job growth (14%), as well as new development (5.3 million square feet). In contrast, construction in Denver and Phoenix slowed due to the pandemic and massive pre-pandemic deliveries; between 2015 and 2021, each city added more than 16 million square feet of additional supply. In March, both cities had slightly more than 1 million square feet of office space under construction, accounting for slightly more than 0.8% of total stock.
