Over the past few years, we’ve seen populations soar in what used to be considered small cities. While Los Angeles and New York City are great places to live and work, more people are finding places like Washington D.C. and Baltimore appealing in different ways. Even surrounding suburban areas are seeing population increases.
As a result, the construction industry in the mid-Atlantic region of the US is booming. Both multi-family and commercial construction projects are on the rise and talent is in-demand.
Why the Population is Growing
The mid-Atlantic region-- specifically Washington DC, Maryland, and Virginia -- is growing rapidly for a number of reasons. Chief among them is affordability.
The rent-to-income ratio in this region is around 20.5%. For context, the same ratio in New York City is 44% and Los Angeles is 35%. This means that people can live a little bit more comfortably here, making it especially attractive for young professionals, empty nesters, retirees, and more.
The economy here is also relatively stable, as it was the first to bounce back after the Great Recession in 2008. The area is also home to top-notch education and transit systems.
Effects on Multi-Family Construction
Because the population is consistently increasing by about one percent each year, housing needs to expand as well. While this region is more affordable than others, construction costs and rents are still steadily increasing as a result of demand. Therefore, multi-family options are more attractive to a lot of residents.
Over the last couple of years, vacancies in the DC, MD, VA region have dropped to 4.4%. With many multi-family structures in the pipeline, vacancies are suspected to increase this year. This will offer more options to the growing population.
Because of all this, investors are extremely active in this region, putting a vast sum of money behind multi-family construction. The DC Metro market alone had the fourth-highest investment volume in the US at the end of 2019. The area is seeing higher growth rates in investment than it has in years past, as well.
As one real estate EVP told Bisnow, “"Everyone wants multifamily, everyone wants workforce housing, and everyone wants DC.”
Effects on Commercial Construction
As more people move into in the DC, Maryland, Virginia region, it stands to reason that more people are working there, too. The numbers and trends we’re seeing in construction certainly back that assumption.
Healthcare construction in the region is expected to grow 1.5% this year and nearly 2% in 2021. Similarly, education construction should increase 1.8% in 2020 and 2.1% next year.
Virginia is experiencing significantly low unemployment right now, and that trend should continue to grow as Amazon’s second headquarters is completed in Arlington. As it’s under construction right now, a vast number of construction professionals are engaged in this project. With Amazon’s entrance, more large companies are expected to join it, meaning that commercial construction professionals will continue to be in demand here.
Commercial construction is also taking off in the DC area, as it ranked 6th in the US for office construction last year. This trend is expected to continue in 2020.
All told, both commercial and residential construction growth is projected to reach $25 million this year. In and industry that is already experiencing a talent shortage, professionals in the DC, MD, VA region may have trouble finding the right candidates to fill open positions.
Michael Page has expert recruitment consultants who specialize in this market and have access to a network of talented professionals. Because we have separate teams for multi-family and commercial construction, we can find candidates with the right skillset and experience for your specific projects.
If you’d like to learn more about our services, please reach out to our team today. You can also see more of our insights in our Michael Page advice section.