Mc Graw Hill Construction 07 24 09 Cgc

Stephen Jones Senior Director McGraw-Hill Construction US Construction Activity Outlook and Key Trends

Agenda ,[object Object],[object Object],[object Object],[object Object]

U.S. Macroeconomic Picture ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

U.S. Macroeconomic Picture ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

U.S. Macroeconomic Picture ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

U.S. Macroeconomic Picture ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],The U.S. economy has been in recession since Dec. ’07.

U.S. Macroeconomic Picture Inflation had retreated, but energy prices moving upward again.

U.S. Macroeconomic Picture Short-term rates are down; long-term rates lower, but now edging up. ,[object Object],[object Object],Also a plus – Stimulus bill now in place.

U.S. Macroeconomic Picture Tighter lending standards are a major constraint for 2008/ 2009. ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

U.S. Macroeconomic Picture Federal budget – $455 billion deficit for fiscal 2008, more in 2009 . Not much negative impact on near term appropriations. ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

U.S. Macroeconomic Picture Numerous bond measures passed, but state fiscal health has weakened. ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

U.S. Macroeconomic Picture Material Prices moved higher in early 2008; now easing through 2009. ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

U.S. Macroeconomic Picture Other Building Material Prices

U.S. Macroeconomic Picture Material Prices Expected to Remain Lower in 2009.

U.S. Construction Market Indicators The decline for Total Construction became steeper in 2008.

Major U.S. Construction Sectors (Starts) Single Family Housing still falling; Commercial Building heading down; Institutional Bldg. healthy but turning; Public Works was slipping.

U.S. Single Family Housing Construction has fallen sharply. Prices at national level still dropping. Single Family Housing Starts 2006 1.331 million units -18% 2007 .937 million units -30% 2008 .549 million units -41%

U.S. Single Family Housing Pluses – low mortgage rates, inventories easing. Bottom in sight. Single Family Housing Starts 2009 .375 million units -32% ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

U.S. Multifamily Housing Construction relatively stable in 2006, weakened in 2007 and 2008. ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Multifamily Housing 2006 516,000 units -3% 2007 452,000 units -12% 2008 308,000 units -32% 2009 205,000 units -33%

U.S. Multifamily Housing Multifamily Housing Top 10 Metros -- ranked by new dwelling units Year 2007, %ch 07/06 1. New York -15% 2. Chicago -31% 3. Houston +53% 4. Washington DC -0- 5. Los Angeles -25% 6. Seattle +18% 7. Atlanta -3% 8. Miami -51% 9. Orlando -8% 10. Dallas-Ft.Worth -26% 12. Las Vegas +4% Year 2008, %ch 08/07 1. New York -2% 2. Dallas-Ft.Worth -1% 3. Washington DC -23% 4. Houston -37% 5. Atlanta -31% 6. Los Angeles -40% 7. Seattle -45% 8. Chicago -58% 9. Phoenix -42% 10. Austin TX -31% 11. Miami -58% 17. Las Vegas -58%

U.S. Commercial Bldgs. -- Stores Construction in 2007 at all-time high; now in sharp retreat. . Store Construction 2006 308 msf -1% 2007 314 msf +2% 2008 206 msf -34% 2009 130 msf -37% ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

U.S. Commercial Bldgs.-- Warehouses Construction peaked in 2007; now heading down. ,[object Object],[object Object],[object Object],[object Object],[object Object],Warehouses 2006 221 msf -1% 2007 254 msf +15% 2008 188 msf -26% 2009 123 msf -35%

U.S. Commercial Bldgs.-- Hotels Construction soared 2006-2007, mild retreat in 2008, plunge in 2009. Hotels 2006 81 msf +67% 2007 86 msf +6% 2008 81 msf -6% 2009 42 msf -48% ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Large Projects U.S. Commercial Bldgs.-- Hotels

U.S. Commercial Bldgs. -- Hotels Hotel Construction Top 10 Metros -- ranked by new square feet Year 2007, %ch 07/06 1. Las Vegas -64% 2. New York +45% 3. Washington DC +193% 4. Orlando FL +308% 5. Chicago +30% 6. Los Angeles +22% 7. Dallas-Ft.Worth -11% 8. Miami +15% 9. San Antonio +187% 10. Atlanta +50% Year 2008, %ch 08/07 1. New York +16% 2. Las Vegas -40% 3. Orlando +6% 4. Dallas-Ft.Worth +28% 5. Washington DC -15% 6. Phoenix +47% 7. Houston +68% 8. Miami +10% 9. San Antonio +9% 10. Atlantic City NJ +493%

U.S. Commercial Bldgs. -- Offices Construction upturn was measured this time … Office construction 2006 208 msf +25% 2007 219 msf +5% 2008 164 msf -25% 2009 120 msf -27% ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

U.S. Commercial Bldgs. -- Offices Large Projects

U.S. Commercial Bldgs. -- Offices Office Construction Top 10 Metros -- ranked by new square feet Year 2007, %ch 07/06 1. Phoenix +17% 2. Washington DC -19% 3. Miami +32% 4. Atlanta +40% 5. Chicago +29% 6. Dallas-Ft. Worth -21% 7. Houston +14% 8. New York -36% 9. Seattle -4% 10. Orlando FL +43% Year 2008, %ch 08/07 1. New York +83% 2. Washington DC -2% 3. Houston +40% 4. Dallas-Ft.Worth -23% 5. Atlanta -39% 6. Seattle -7% 7. Phoenix -53% 8. Boston +52% 9. Baltimore +56% 10. Chicago -61%

U.S. Commercial Bldgs. -- Offices Office Building Factors ,[object Object],[object Object],Forecast

U.S. Manufacturing Buildings Plant construction in sq. ft. sliding; surge in dollars reversing. Surge of ethanol plants in 2006-2007 Huge refinery additions in 2008 Manufacturing Buildings 2006 83 msf +4% 2007 90 msf +8% 2008 74 msf -17% 2009 60 msf -19% Manufacturing Buildings 2006 $13.5 bil. +33% 2007 $19.9 bil . +47% 2008 $30.2 bil. +51% 2009 $18.2 bil. -39%

U.S. Manufacturing Buildings Large Projects

U.S. Institutional Buildings Public Buildings had strong 2007-2008; should stay close in 2009. 2008 Detention Facilities -48% Armories/Military +36% Courthouses -6% Police/Fire Stations +14% Post Offices -1% Total Public 2006 +2% 2007 +49% 2008 -4% 2009 -2% ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

U.S. Institutional -- Educational Bldgs. School construction still strong, but losing some momentum . ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Educational Buildings 2006 230 msf +5% 2007 220 msf -4% 2008 223 msf +1% 2009 191 msf -14% 2007 2008 Primary, Jr. Highs -7% -5% High Schools -7% +10% Colleges/Univ. +11% +2% Libraries -5% -14% Laboratories +11% -19% Museums -26% +15% Comm. Colleges -0- +8% Vocational Schools -44% +40%

U.S. Institutional – Educational Bldgs. Large Projects

Educational Buildings Top 10 States -- ranked by sq. ft. of new starts U.S. Institutional -- Educational Bldgs. Year 2007, %ch 07/06 1. Texas +8% 2. Florida -15% 3. Georgia +46% 4. California -27% 5. Pennsylvania -24% 6. Ohio -32% 7. North Carolina -7% 8. New York +26% 9. Illinois -16% 10. Arizona -7% Year 2008, %ch 08/07 1. Texas +24% 2. California +22% 3. Georgia -6% 4. Florida -29% 5. Pennsylvania +17% 6. Ohio +3% 7. North Carolina +10% 8. South Carolina +72% 9. Alabama +49% 10. Illinois -15%

U.S. Institutional -- Educational Bldgs. School renovation work already strong – But, no specific line item in final stimulus package; funding could come from State Fiscal Stabilization Fund.

U.S. Institutional -- Healthcare Buildings Healthcare facilities reached new high in 2008. ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Healthcare Facilities 2006 110 msf +1% 2007 103 msf -6% 2008 111 msf +8% 2009 91 msf -18% 2007 2008 Clinics/ Nursing Homes +1% -6% Hospitals -16% +29%

U.S. Institutional – Healthcare Buildings Large Projects

U.S. Institutional – Healthcare Bldgs. Healthcare Buildings Top 10 States -- ranked by sq. ft. of new starts Year 2007, %ch 07/06 1. California +36% 2. Texas -39% 3. Florida -13% 4. Ohio +8% 5. Illinois -0- 6. Michigan +2% 7. Indiana -14% 8. Pennsylvania -27% 9. Arizona +11% 10. Minnesota +55% Year 2008, %ch 08/07 1. Texas +62% 2. Illinois +110% 3. Ohio +31% 4. California -34% 5. Florida -24% 6. Virginia +133% 7. Maryland +125% 8. Tennessee +78% 9. New York +81% 10. Wisconsin +40%

U.S. Institutional Buildings Amusement/Recreational and Churches still declining. Amusement & Rec . 2008 Convention Centers +11% Sports Arenas +50% Theaters -32% Other (inc. theme parks ) -14% Total Amuse. & Rec. 2006 +8% 2007 -9% 2008 -10% 2009 -17% Religious Buildings 2006 34 msf -6% 2007 31 msf -10% 2008 27 msf -12% 2009 26 msf -3%

Airport terminal work in sq. ft. expected to decline further, Renovation work should help dollars move upward. U.S. Institutional Buildings Airport Terminals 2006 $2.0 bil. +23% 2007 $1.8 bil . -9% 2008 $1.4 bil. -22% 2009 $1.6 bil. +12% Airport Terminals 2006 3.1 msf -28% 2007 2.2 msf -28% 2008 2.0 msf -8% 2009 1.9 msf -5%

Highways and bridges slipped back in 2008; Gets substantial funding in 2009 from stimulus bill. U.S. Public Works -- Highways & Bridges ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Highways, Bridges 2006 $51.0 billion +15% 2007 $53.6 billion +5% 2008 $52.7 billion -2% 2009 $60.8 billion +15%

. U.S. Public Works – Mass Transit Mass transit work has also been on upward track, set to grow further. ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Mass Transit Starts 2006 $2.3 billion -26% 2007 $3.7 billion +64% 2008 $3.8 billion +3% 2009 $4.8 billion +25%

U.S. Public Works -- Environmental Environmental public works slowed in 2008. In 2009 large boost coming from stimulus bill. Environmental Public Works 2006 $33.3 billion +6% 2007 $37.2 billion +12% 2008 $38.0 billion +2% 2009 $41.3 billion +9% ,[object Object],[object Object],[object Object],[object Object]

U.S. Electric Utilities New electric utility starts soared in 2008. Electric Utilities 2006 $17.7 billion +125% 2007 $16.8 billion -5% 2008 $27.7 billion +65% 2009 $18.0 billion -35% ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

U.S. Total Construction Starts for 2009 Billions of Dollars 2005 2006 2007 2008 2009 Total Construction 670.3 689.6 639.1 552.0 457.7 +13% +3% -7% -14% -17% Single Family Housing 315.5 272.4 201.2 122.4 84.7 +12% -14% -26% -39% -31% Multifamily Housing 68.6 69.8 61.8 39.4 26.7 +36% +2% -12% -36% -32% Commercial Bldgs. 72.2 93.0 100.7 84.6 60.3 +7% +29% +8% -16% -29% Institutional Bldgs. 100.1 110.8 117.4 128.8 118.7 +12% +11% +6% +10% -8% Manufacturing Bldgs. 10.1 13.5 19.9 30.2 18.3 +26% +33% +47% +51% -39% Public Works 96.0 112.4 121.4 118.9 131.0 +9% +17% +8% -2% +10% Electric Utilities 7.9 17.7 16.8 27.7 18.0 +6% +125% -5% +65% -35%

Single Family Housing, by Region

Nonresidential Building, by Region

Points of Perspective – U.S. Construction

Agenda ,[object Object],[object Object],[object Object],[object Object],[object Object]

Using Trends to Capitalize on Opportunities ,[object Object],[object Object],[object Object]

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Future Trends Driving Industry Change ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],MAJOR TRENDS TRACKED BY MCGRAW-HILL

Global Construction: $5.6 trillion * Source: IHS Global Insight, April 2009 *Numbers in 2005 USD$ Trend

Largest Construction Markets by Value * in $US Billions Source: IHS Global Insight, October 2008 *Numbers in 2002 USD$, based on 2007 market

Dubai Today: The Bubble has Burst ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

India Market: Poised for Growth ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],*Conversion Rate: $1 = INR 40

China: Construction Opportunities Persist ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Silver Lining in the Down Economy = 2008 = 2013 Europe South America Asia Sub- Saharan Africa 36% 73% Percentage of Firms Largely Dedicated to Green (on over 60% of projects) from 2008-2013 Doubling 29% 56% Trend Sustainability/Green Building:

Market Size $ (billions) 2005 2008 2013 In the U.S.: Increasing Market Opportunity Total Non-Res Residential Total Residential Total Non-Res Residential Non-Res Triple Double Triple Five Fold

How is Green Building Affected by the Down Market? Less Affected No Difference More Affected According to U.S. Green Building Council Members

Green: Part of the Corporate Mission & Growth Strategy Not Involved Only Regulatory Involvement Some Green Actions Green Is an Opportunity Value-Based Commitment to Sustainability Is Green a Part of Your Company’s Growth Strategy? 2009 – 50% Shift in Dedication to Green 2009 Preliminary expanding decreasing

Corporate Sustainability Practices ,[object Object],[object Object],[object Object],Source: The Greening of Corporate America SmartMarket Report , McGraw-Hill Construction, 2007; Bernstein, Harvey. Presentation. Construction Industry Trends. McGraw-Hill Companies Offices, New York, NY, May 2009. (based on 2009 market research data conducted by McGraw-Hill Construction in 2009)

Market is Growing Despite Declining New Building Construction $244 Billion = Commercial & Institutional Market = Green Market Source: Commercial & Institutional Market Size: McGraw-Hill Construction, as of June 3, 2009. MHC Housing Starts data is similar to the Census Bureau, except that MHC defines single family housing as detached housing only. MHC includes townhomes in its multifamily data. Green Market Size: Commercial & Institutional Green Building: Green Trends Driving Market Change, McGraw-Hill Construction, 2008 $182 Billion $3 Billion $29 Billion $196 Billion

Rapid Growth of LEED in Specs

[object Object],[object Object],[object Object],[object Object],[object Object],Perceived Business Benefits Increasing 13.6% 10.9% 9.9% 6.4% 6.1% 2005 2008

Before 2006 2006 to 2008 Increasing State Government Influence Before 2006 Enacted 2006-2008 2005 57 2008 156 Number of Local Governments

State & Local Legislative Trends ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Green Wins in Stimulus: Renovation Gets a Boost in Green ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Trend Renovation

Big Focus on Renewable Energy ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Trend Renewable Energy

Increases from Stimulus, Especially Green Jobs ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Trend Workforce:

Transforming Construction ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Trend Climate Change:

Water Efficiency ,[object Object],[object Object],[object Object],[object Object],Trend

Water Efficiency Involvement Growing Dramatically ,[object Object],2008 Use: - A/E Firms = 35% - Owners = 30% 2013 Use: - A/E Firms = 51% - Owners = 50%

Water Efficiency Rapidly Growing in Importance ,[object Object],[object Object]

Perceived Business Benefits from Water Efficiency in Buildings ,[object Object],[object Object],[object Object],[object Object],Currently

Public-Private Partnerships ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],From a demand standpoint, there isn’t a bigger marketplace on the planet, regardless of growth in Asia or elsewhere. — Manju Chandrasekhar Vice President Halcrow Consulting Business Group ” “ Trend

Experience Leads to Positive Opinion of PPPs! None gave PPPs an unfavorable rating

As Experience Increases, so Does Interest in Future PPPs Large percentage of ambivalent officials suggests opportunity Interest in PPPs Officials with PPP Experience Officials without PPP Experience

Financial Crisis: Changing the Types of PPPs Pursued ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Traditional Information Exchange Interoperable Exchange Source: International Alliance for Interoperability, 2007 Trend Interoperability/BIM Structural Engineer HVAC Engineer City Constr. Manager Facilities Manager Building Owner Civil Engineer Architect Structural Engineer HVAC Engineer City Constr. Manager Facilities Manager Building Owner Civil Engineer Architect Structural Engineer HVAC Engineer City Constr. Manager Facilities Manager Building Owner Civil Engineer Architect Building Information Model (BIM)

Making the Case: Shift to Digital Design Effort Time Traditional Design Digital Design Digital Design shifts the bulk of project work to the Design phase to help coordinate building systems and the project and manage project costs Source: International Alliance for Interoperability, 2007 Litigation Phase of Design Changes Cost Ability to cost control Design Design Devel Const Docs Construction

BIM Enables Exchange/Access for All Relevant Information BIM Environmental Data Design Data Financial Data Specification Data Owner / Occupier Data Legal Data Sustainers Data Geospatial Data Source: buildingSMART alliance

Adoption of BIM Increasing Over 2009 Architects Engineers Contractors Owners

Measuring BIM ROI: Factors Considered ,[object Object],[object Object],[object Object],[object Object],[object Object]

New Materials: Smarter, Greener ,[object Object],[object Object],[object Object],[object Object],Trend

Prefabrication & Modularization ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Prefabrication and modularization - off-site preconstruction or manufacturing of a component or complete system that is transported to the job site. Trend

Prefab & Modularization: Building Texas Refineries in Maine!! ,[object Object],[object Object],[object Object],[object Object],[object Object]

Prefabrication Examples ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Mc Graw Hill Construction 07 24 09 Cgc

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Editor's Notes