Arizona Contractors Expect More Health Care And Warehouses, Less Retail

Published: Monday, January 11, 2021 - 5:05am

Health care projects dominate this year’s forecast for the construction industry. Ken Simonson, chief economist for Associated General Contractors of America said its annual survey found firms are most optimistic about nonhospital construction.

“As people try to stay away from hospitals or they’re not even allowed into hospitals but they need medical care or they’re going to need long-term care because of side effects from COVID and also as people look for alternatives to nursing homes that’s going to spur demand for a variety of kinds of other healthcare facilities,” he said.

The group’s 2021 Construction Hiring and Business Outlook report included surveys from 23 Arizona firms. It found 57% expect nonhospital projects-things like clinics, medical labs, testing sites-to increase in 2021 while 14% expected healthcare business to remain the same. When it came to hospitals 29% of Arizona contractors surveyed reported higher expectations, 36% reported the same and 36% reported lower.

The warehouse sector topped projections for Arizona firms with 58% expecting more business this year and 17% expecting the same as last year. The sector includes distribution centers for retailers and companies to fulfill online orders.

“Some of those will be new but some will be repurposing abandoned big box stores or portions of malls that have shut down,” Simonson said.

The Valley’s construction industry is faring better than most metro areas, according to an analysis by Associated General Contractors. Between November 2019 and November 2020, the association says metro Phoenix added the most jobs at 4,700.

Nationally, residential construction remains strong while the outlook for retail, office and new public transportation projects is weak. The survey of Arizona firms found 100% expect to do less retail business in 2021.