Thanks to a boom in residential housing, the $1 trillion construction industry is among the biggest drivers of the national economy, according to an industry group.
Construction workers in Maryland have enjoyed a national trend of job creation in their field, especially those who work on commercial jobs. Photo by Max Franz
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Construction employment rose by 3.6 percent over the last 12 months, more than twice as fast as in other nonfarm sectors. In March alone, construction generated 26,000 jobs, or 25 percent of the 110,000 nonfarm jobs gained last month, according to statistics from the Associated General Contractors of America.
Maryland is enjoying its share of the growth in construction jobs. But the state has seen most of its growth in institutional construction, said Anirban Basu, chief executive officer of the Sage Policy Group Inc. in Baltimore.
“The federal government is driving a lot of activity in Maryland and nationally, and this is generating a lot of construction activity,” Basu said.
“You’ll notice that 80 percent of all office construction in the Baltimore metropolitan area is in Anne Arundel and Howard Counties,” he said. “That tells you that the federal government is expanding.”
Those counties have more space to build in than closer counties such as Prince George’s and Montgomery.
Nationally, employment generated by residential building went up by 7.1 percent in the last year, a much greater increase than from nonresidential and heavy and civil engineering construction.
But in Maryland — which in the past 12 months has seen a 3 percent increase in construction overall — employment generated by residential construction has declined, according to a local industry group.
“The reason for that is because there is really a shortage of buildable land in the region,” said John Kortecamp, executive vice president and chief executive officer of the Home Builders Association of Maryland.
Smart-growth rules and zoning laws in many Maryland jurisdictions have kept residential development to a relatively slow pace, Kortecamp said.
But the high demand for housing in Maryland — due in part to the desire to be near those government-related jobs — outstrips supply, a fact that has caused home prices in the state to rise rapidly.
The Baltimore region is predicted to be “underhoused” by 70,000 units in 2020, Kortecamp said.
“The units will be built, but they’re going to be built further and further out,” Kortecamp said, pointing to Western Maryland, Maryland’s Eastern Shore and Pennsylvania as locales for Maryland home builders.
The relative lack of residential construction in Maryland might be seen in other states, as the boom in residential construction tapers off as it did in Maryland three or four years ago.
“There’s a widespread belief that home building will fade as rising interest rates will decrease the number of people who can afford to build a house,” said Kenneth D. Simonson, the chief economist for the Associated General Contractors of America
“Residential construction is still leading the parade, but I think it’s about to pass the baton to private, nonresidential construction,” he said.