Commercial Construction Boom to Continue

According to Dr. Glenn Mueller, the busy days we’ve been experiencing for the past few years are barely showing any sign of slowing up. While Mueller’s research is most often used for real estate investors, there’s a logical use case for both GC’s and subcontractors. Mueller’s formula has 16 specific stages for the market (both geographic and vertical) to be at a given time. Based on the number of the stage, one can tell whether or not the market is improving or cooling off, and if it’s better than the historical average for the sector.

The direct correlation for contractors is fairly obvious: In stages 7-13, new construction is more economically feasible. Keep in mind that the operative word here is “more.” Even in Stages 1 and 2, construction happens, just at levels that are below historical averages. Similarly, many will choose to rent rather than build in stage 10, even if the economics favor building.


So currently, the nation is at a very healthy score of 8, which is the same score given to Power Centers (defined as mini malls with big box stores, like the The Crossings at Conestoga Creek). The Suburban Office market, which would include projects like we recently completed for Rhoades Electric, is still below average, but heating up.

While Mueller’s research shows the Apartment Market might be past its peak, it’s also still way ahead of average.

Taken together, there are a few obvious implications:

1.) Everybody’s busy. There’s a lot of work out there, so subcontractors will most want to work with GC’s that can properly manage a project. They don’t want to miss out on work, due to poor scheduling. At Benchmark, our PM’s work hard to ensure that our subs can trust our schedules.

2.) Price-wise, everybody wins. From an economic standpoint, when the market is between 7 and 13 on Mueller’s chart, it’s often more economically advantageous for you to build than rent. That said, keep in mind that those subcontractors also have a slew of options, which is why Turner’s overall cost index continues to climb. At Benchmark, our goal is to keep projects moving at a swift pace to stay ahead of increasing costs. For reference, Turner is showing that the same project a year ago theoretically could cost 4.85% more now. As always, speed matters at all facets of the project.