As we began another strong year, I was honored to participate on the “Industry Assessment: Opportunities in Today's Commercial Construction Marketplace" panel at the Minnesota Real Estate Journal's 10th Annual Construction Summit. Here's an overview of my key points from the panel:
- Recapping 2018 – 2018 was another busy year for us both in Minneapolis and nationally. We had a lot of work in progress; the most active sectors were multifamily and industrial. Additionally, there was a good mix of projects with an Opus development component but also a lot of Client Direct Services work. We even completed a spec office building; we haven't been able to say that for a while!
- Strategic Investments – We know that our associates are our number one resource. Our in-house expertise is crucial to our ability to deliver valuable buildings for our clients. In support of that we continue to invest in training and development.
- New Product Types – We've always explored new product types or sectors, leveraging our expertise from other sectors. We're excited to currently be building and pursuing various senior living projects throughout the country. We see a lot of value in these projects as demographic shifts continue to occur.
- Workforce – Along with the Opus Foundation®, we've launched Future Builders, a strategic initiative to introduce and prepare youth for careers in the construction industry. We've placed an emphasis on working with middle school students in the Twin Cities along with Construction Careers Foundation. This is a new and exciting opportunity for us!
- Getting Deals Done – Projects are taking a long time to get to the finish line (meaning start!), which is impacting everyone. It's especially hard for GCs, A/E and subs to plan work. All this means that relationships are more important than ever. Our strong relationships with subcontractors, vendors and partners allows us to hold deals together and accommodate schedule requirements.
- Tech – Of course, technology has an ever-growing presence in our work. We try to be innovative with our use as much as possible, always being mindful of the cost and benefits. When we're assembling project teams, we try to mix associates who are tech proficient with those who aren't.
- Working Differently – We are aligning early with key members of our project team – the subcontractors. We think of them as partners and know how important they are to project success.
- Pipeline – We are seeing nice Client Direct Services opportunities in our institutional and liturgical markets and continued strong metrics in our core development markets. As far as sectors, industrial infill and multifamily will be key.
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Future Outlook – Pricing pressure will continue to make deals harder to pencil. This includes rising construction costs and eventual interest rate increases pushing investor return expectations even higher. Investments in efficiency and productivity increases will be important. We'll come to understand the value of our data and its use with more of our work life becoming “workflow" due to rise in AI and “near AI".