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Saturday, Feb 4, 2023

Report Says SoCal Construction Still Faces Problems

Construction is booming in Los Angeles and throughout Southern California. Downtown towers are sprouting up left and right, a new $1.5 billion bridge spanning the mouth of the Los Angeles River at the Port of Long Beach is taking shape, and a $2.6 billion football stadium for the Los Angeles Rams broke ground last month in Inglewood.

But a new report by the Los Angeles Economic Development Corp., “Building the Future: Construction in Southern California,” says the region still hasn’t fully recovered from the recession and that the construction industry faces a challenging regulatory environment and high costs.

Yet, there is reason to be optimistic, according to the report, as builders utilize new technologies and look forward to further growth ahead.

Construction activity in 2014, the most recent year for which data are available, made up 2.9 percent, or $28.1 billion, of Southern California’s $962.2 billion regional gross product. That’s down from a high over the past decade of 5.1 percent in 2004 and 2005, the report says.

The types of new construction have changed dramatically, especially in Los Angeles County. In the past ten years the percentage of permits for multi-unit residential construction in the county has risen to 81 percent from 53 percent.

Last year, the construction industry employed 313,700 workers in Southern California, about 98,000 fewer than in 2006.

In L.A. County, the report found there were 125,700 construction jobs last year, up 21 percent from the low of 104,000 in 2011, but still down 15 percent from the pre-crash level of 148,500 in 2005.

Regionwide, construction industry wages were on average $58,986 per year, slightly higher than the average wages for all other industries at $55,783. Wages were highest in the heavy and civil engineering sector at $84,872, followed by construction of buildings ($64,180) and specialty trade contractors ($53,171).

Looking ahead, new trends will develop, the study says, including:

• The multifamily sector will slow as single-family housing gains momentum, especially in more affordable inland areas.

• Homebuyers will continue to seek out walkable communities near employment centers and transportation hubs.

• Demand for ecology-minded building features for both commercial and residential structures will continue to rise.

• Remodeling and renovations will continue at a robust pace.

• Construction companies will struggle with shortages in some skilled trades.

• Prefabricated and off-site construction methods will become more popular.

• The use of building information modeling technology will become a necessity.

• Laser scanning technology used to create digital models will gain wider usage.

• Construction companies will be more cautious about project selection because of lingering caution from the recession.

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