Wondering about the outlook for the construction industry in 2019 and beyond?
Chris Daum, president and CEO of Raleigh-based FMI Corp., has a forecast. Daum told attendees at Ward and Smith's 2019 Construction Conference, Framing Your Business for the Future, was about the good news and the bad news.
The bad news, Daum said, is that there probably will be a recession in the next year or two. The good news? It probably will be fairly mild and relatively short.
Our consensus is that 2019 is going to be OK, he said. We don't see anybody right now calling  to be a downturn/recession, barring something aggressive the black swan event; second half of the year is when that would materialize.
But, he suggested, a recession is at least a possibility for 2020.
FMI is a Raleigh-based consulting and advisory company focused on engineering, construction, infrastructure, and the built environment. Daum brought a wealth of data, industry insights, and perspective to the corporate attorneys, construction industry executives and others in the room.
He did note one construction sector that's been hot the last several years multifamily projects will slow.
The boom time and fun in multifamily new construction are coming to an end, he said. It doesn't mean you can't win there. But that's been one of the wide-open markets; it's slowing down.
Construction industry growth prospects
Daum doesn't see a lot of measurable growth for the construction industry in North Carolina over the next three years.
A majority of the North Carolina building segments are forecast for the next three years, on average, to have a compound annual growth rate of something less than three percent, he said. And in a bunch of cases, they're actually going to be in a decline.
And less than three percent, he noted, is, at best, just keeping up with an inflation rate that hovers around two-and-half percent.
If your sector is not growing at least three percent in nominal rates, you're not really growing, he said. If you're between zero and two-and-half percent, you're just kind of keeping up with inflation.
Geographically, Daum expects the state's construction growth patterns to flip from where they've been. In the last couple of years, he noted, smaller markets and those down east were underperforming while the big urban markets, such as the Triangle and Charlotte areas, were growing faster.
That won't continue.
Our forecast, in this kind of market, is that our...