From an apartment supply standpoint, Barkham says, the most significant wave of new apartment supply in decades will temper rent growth and improve affordability for renters in 2024.
Barkham also says that the news isn’t great from a hotel industry standpoint. That industry will still struggle in 2024, especially with growing competition from alternative lodging sources and a slower economy. However, that will be tempered a bit by fewer Americans traveling internationally, instead redirecting their spending to the domestic market.
Barksdale also sees demand for new data center development attracting more institutional investment in 2024 as investors re-allocate their capital from the office sector to real estate alternatives.
Resilience and Reliability
With weather conditions across the U.S. becoming more severe every year, HVAC Systems are more exposed than ever.
Commercial customers want more resilient HVAC systems to withstand extreme weather events and ensure continuous operation in critical environments.
Commercial contractors should consider weather conditions as they install and service mechanical equipment. For example, consider the El Nino impact on our country. According to the National Oceanic and Atmospheric Administration (NOAA), an El Nino typically brings above-normal temperatures to the Northern U.S. and wetter conditions in the South.
This year, meteorological groups like Accu-Weather see El Nino creating severe weather nationwide through April 2024.
While above-normal temperatures in some parts of the U.S. could mean less work for HVAC companies, El Nino could cause increased use of heating systems in places like northern Arizona, northern New Mexico, southern Utah, and southern Colorado.
The bottom line is that severe changes in weather impact not only the use of comfort systems in commercial buildings but also contractors and their teams who work on those buildings and systems.
Labor Shortages Continue
The commercial and residential sectors of the HVAC Industry continue to suffer from workforce shortages. According to the Associated Builders and Contractors (ABC), the construction workforce shortage topped half a million in 2023. They say the overall construction industry needs to attract more than 546,000 workers on top of the average pace of hiring to meet labor demands.
In a Malco Product blog post from November 2023, the author writes, “Many [HVAC Contracting] companies are struggling to complete jobs and attract enough skilled workers, which means the next decade is going to have quite the labor gap, even as the job outlook for HVAC technicians is expected to increase by five percent by 2031.
“With consumer demand growing and contractors competing for fewer and fewer trade pros, businesses are looking for any way to get more bang for their buck, do things more efficiently, and attract the best talent. All of that comes down to quality. To attract quality projects, they need quality people and quality tools.”
The Commercial HVAC Marketplace is Still Strong
It’s essential to keep in mind that commercial HVAC services represent the second largest part of the market, with more than 30% of total HVAC sales (residential is the largest). Industrial HVAC services account for 20% of total HVAC sales.
So the opportunities are there. The key is to stay on top of providing quality education to your field service teams.
It’s imperative for commercial High-Performance HVAC contractors to continue training their teams in testing, measuring, and diagnosing total system performance issues while staying on top of industry issues and trends, some of which we’ve outlined here.