‍U.S. construction is expected to see a year of moderate cost increases, shorter lead times, and a robust project pipeline in 2024, according to a new forecast by JLL. This positive outlook comes after a period of stabilization in 2023, which followed significant supply chain disruptions in the prior year.

Key Takeaways for Construction Professionals:

• Modest Cost Growth: Total construction costs are predicted to rise only 2-4% in 2024, a significant slowdown compared to previous fluctuations.
• Improved Supply Chain Efficiency: Lead times for most materials are expected to shorten, and prices should remain stable with the exception of electrical components.
• Strong Project Pipeline: Despite a slowdown in new private construction starts, a healthy backlog of projects will keep the industry busy throughout the year.
• Labor Shortage Concerns:  The construction industry will likely continue to grapple with a lack of skilled workers, pushing labor costs up by 3–5%.
• Potential Interest Rate Impact:  While not yet a major factor, higher interest rates could impact project financing in the latter half of 2024.
• Public Investment Boost: Increased public spending on infrastructure and manufacturing construction is expected to offset any slowdown from private sector projects.
• Supply Chain Volatility Risks:  JLL warns of potential disruptions like natural disasters, trade conflicts, and geopolitical tensions that could impact material availability and prices.

Strategies for Success in 2024:

JLL emphasizes three core strategies for construction companies to navigate the year ahead:

• Invest in Your Workforce: Building strong partnerships with skilled workers and prioritizing retention, upskilling, and trust-building are critical.
• Embrace Technology: Tools like artificial intelligence and BIM (Building Information Modeling) can help anticipate project challenges and optimize solutions.
• Market Awareness: Staying informed about macro- and micro-economic trends, including environmental regulations, material costs, and consumer preferences, allows for better planning and risk mitigation.

This JLL forecast suggests a cautiously optimistic outlook for the U.S. construction industry in 2024. While challenges remain, such as labor shortages and potential interest rate impacts, the overall picture points towards a period of relative stability with opportunities for growth. By implementing the suggested strategies, construction  companies can  position  themselves for  success  in  the  coming  year.