Despite pent-up demand from 2020, new construction starts have slowed in recent years because of both pandemic-inspired labor shortages and supply chain issues. But as interest rates rise and new construction demand slows even further, the architecture, engineering, and construction (AEC) industry should start to see an easing of material costs and improvements in supply chain issues in the coming months and years. 

That decrease is going to spur growth in commercial real estate construction, meaning now is the time for building firms to partner with construction finance lenders and plan for future expansion. Here are some ways you can use construction business loans to prepare for growth: 

Invest in new technologies now

The average construction worker spends four hours a week dealing with rework-related activities, which added up to $31 billion in costs in 2018.¹

That’s why so many AEC firms are investing in virtual design and construction (VDC) tools, so they can visualize and engineer structures before they’re even built. Building information modeling (BIM) is among the most sought-after VDC tools because it gives architects, engineers, and builders the capacity to generate a virtual model of a building and assess potential problems before construction actually starts. BIM is becoming such a critical aspect of the AEC industry that experts estimate the global BIM market will grow by 14% over the next decade.²

More and more firms are also investing in 3D printing technology as another way to lower costs by reducing construction timelines dramatically. And while 3D printing has been mainly used in the residential sector so far, the technology is quickly making its way into commercial real estate (CRE) construction. The Dubai Future Foundation holds the distinction of erecting the first 3D-printed commercial structure and claims a 50% savings in labor costs and 60% less construction waste when compared to a conventionally built structure of similar size. 

It’s Investments in automation and robotics can also help AEC companies reduce waste, enhance job-site safety, increase productivity, and manage labor shortages. Many firms are using loans for construction companies to purchase everything from autonomous operating equipment to robots. Not only can autonomous vehicles and robots perform dangerous and repetitive tasks like running excavators and bulldozers, laying brick, and even tying rebar, but using them can also save on labor costs and dramatically reduce the time it takes to complete projects.

Increase knowledge and expertise in sustainable design and construction

The building industry is responsible for 40% of all the world’s carbon dioxide (CO₂) emissions and 25% of its greenhouse gas emissions. This means the industry spews more pollutants into the atmosphere than even electricity generation, aviation, and shipping. Sustainable construction is not only critical to addressing climate change, but it’s also becoming a critical part of AEC firms’ operations. As sustainable construction goes mainstream, the green retrofitting market alone will be worth as much as $1.1 trillion by 2036.³

Investing in energy-efficient design and construction methods is key. Thus, it’s critical for banks to provide construction financing for contractors to promote green construction and remodeling. 

Now is the time for AEC firms to finance the training of employees in energy-efficient design, building systems, and materials; as well as establishing new partnerships with sustainable product manufacturers. Construction companies should also reevaluate traditional materials, like cement, in particular, for long-term sustainability and look at new materials, like self-replicating concrete and biocement, to provide greener building alternatives.

Recruit and train the next generation of skilled workers

Labor shortages aren’t new to the AEC industry, and they only multiplied with the pandemic. To address the resulting critical labor needs, many firms are getting creative with the help of some construction business loans. For example, some companies are targeting recruiting efforts at secondary schools and reaching out to students as young as grade-school level to increase knowledge about career opportunities in the AEC field. 

A lot of firms are also looking to access labor in often-overlooked markets, focusing recruitment efforts on minorities and women and offering free educational incentives and bonus programs to attract workers.

Offering competitive pay is critical, too. In 2022, the average hourly earnings for production and nonsupervisory employees rose by 6.3% to $32.19, the highest year-over-year wage gain in four decades.⁴ Construction business loans can help AEC firms build wages and incentives to fill employment gaps.

Take advantage of government funding and incentive opportunities

Recent government-backed incentives potentially still benefit the AEC industry, including the Infrastructure Investment and Jobs Act of 2021 and the Build Back Better and Inflation Reduction Acts of 2022. 

Together, these bills provided billions of dollars in federal funding for improving the nation’s infrastructure — roads, bridges, railroads, and the like — as well as an array of tax incentives and rebates for green retrofits and installations in the construction sector.  

As rising interest rates level out, supply chain issues ease, materials become more easily accessible, and costs begin to subside in the coming months and years, there’s no better time to start preparing for the next phase of growth in CRE construction. Whether your firm is looking to invest in new technology, automation, a more highly skilled workforce, or more sustainable materials procurement, Wintrust can help you secure construction business loans, as well as equipment financing, to help you grow your business’s efficiency, workforce, or project load.

Get the financing you need to grow or optimize your firm in the coming years by contacting the Wintrust Construction, Engineering, and Architecture group.