SPOTLIGHT ON. Atlanta

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1 INTERNATIONAL INSIGHT ATLANTA

2 INTERNATIONAL INSIGHT ATLANTA CONSTRUCTION MARKET OUTLOOK/STATISTICS NORTH AMERICA CONSTRUCTION STATISTICS INFLATION SECTORS OF ACTIVITY PROCUREMENT AND CONTRACTS RESOURCES OTHER GLEEDS CONTACTS 01

3 CONSTRUCTION MARKET OUTLOOK/STATISTICS THE BUILDING CONGRESS FORECASTS THAT CONSTRUCTION SPENDING WILL REACH CIRCA: USD 33billion in 2014 (17% rise from 2013) USD 35.3billion in 2015 USD 35.6billion in 2016 The City construction market has just about rebounded from post-recession depths - nearing boom territory again Improving economic conditions, increased foreign investment and continued progress on a handful of major public and private sector projects fuel growth Gleeds describes the construction market as optimistic and rightly so, strengthening with the growing economy Developer focus is moving to outer boroughs - Brooklyn and Queens - for development opportunities Traditionally industrial parts of are prime for redevelopment such as Red Hook - old industrial waterfront neighbourhood in Brooklyn, and Halletts Point/Cove in Queens Development of parks and water front regeneration are receiving renewed interest 02

4 ATLANTA CONSTRUCTION STATISTICS Archicim aximusdae sit, ut quiam, aliquae. Itae rempos eaquibus nimolorem aut occum aut litia viti volest, utendandicim aut esed mostiunte doluptatem fugitatem fugit quaspel Commercial increase by 15% Public sector (institutional) increase 9% (through release of a major schools programme of works) Healthcare to increase a small amount from a base point of zero Residential sector: Single family housing increase by 15% Multi-family housing increase by 9% Infrastructure increase by 5% Utilities decrease by 9% 03

5 INFLATION SECTORS OF ACTIVITY The Dodge Momentum Index* rose in October 2014 by 7.6% from September 2014 This is 18% above September 2013 indicating healthy overall growth throughout the construction sector The index declined from July-September The increase in October, mainly a result of increasing workload in the institutional (public) and commercial sectors, returns the index to the rising trend seen in the first half of the year. Gleeds prediction for tender price inflation over the next 12 months currently stands at 3%. *Dodge Momentum Index represents a monthly index measure of all non-residential construction activity. NON-RESIDENTIAL* The Building Congress predicts the value of non-residential construction projects to reach $7.8bn in 2014 (down from $8bn in 2013) This is likely to rise back up again in to circa $10bn There is very much a positive outlook in the hotel, retail and institutional sectors. Gleeds is in particular seeing a strong level of enquiries in hotel development. *includes institutional (public) development, sports, entertainment and hotels COMMERCIAL There is a significant amount of investment in ; 13 new office buildings are to be constructed from , including the World Trade Centre and Hudson Yard district. Gleeds is seeing large acquisitions and the strategic repositioning of commercial property in midtown and lower Manhattan in particular. Building Congress forecasts a total of $10.9bn will have been spent on housing in City in 2014, increasing $4.1bn from 2013 Further development work is predicted increasing the output to circa $12.5bn by 2016 Much of the residential development of the last few years has been through construction of ultra-luxury apartments in Manhattan. The key to the City s future success is through the development of a range of residential developments at multiple pricing points. INFRASTRUCTURE A $32BN CAPITAL PLAN FOR HAS BEEN ALLOCATED TO THREE PRIORITY AREAS: There is also a large amount of work and enquiries coming through in the aviation sector. $23.5billion core System renewal (Subway, Long Island Rail Road and Metro North Railroad) $3.1 billion maintain and improve the MTA s nine bridge and tunnel facilities $5.5 billion to continue major expansion projects 04

6 PROCUREMENT AND CONTRACTS Procurement is most commonly via competitive tender, negotiated guaranteed maximum price (GMP) or open book. In, construction managers are preferred over general contractors and this means that bills of quantities or detailed pricing documents are not generally produced. The suite of contracts most commonly used are those published by the American Institute of Architects ( These contract forms tend to be used across a range of project types and sectors. Other bespoke agreements are also commonplace. RESOURCES THE ATLANTA BUILDING CONGRESS FORECASTS: Gleeds describes current labour availability as adequate, although labour costs are more expensive than in the UK. Due to the fact that has a strong union environment, labour pricing remains consistent. However, less established developers may use nonunion labour. Although not deemed likely, the materials anticipated to be most likely to increase in price over the next 12 months are steel, copper and aggregates. OTHER The US Tax policy is seen as a major hurdle to international investors, both in the residential and commercial sectors. Proposed changes would mean significant investment is likely to come forward. AN INCREASE OF MORE THAN 2,000 CONSTRUCTION JOBS IN ATLANTA (FROM 120,900 IN 2013 TO 123,000 IN 2014) FURTHER INCREASES TO 125,000 JOBS IN 2015 AND 127,300 IN

7 GLEEDS ATLANTA CONTACT Chris Soffe President T: E: