Commercial construction has been growing in the past years as businesses have progressed to expand and improve their offices. Now, the question is, what will happen in 2022 when several of these office leases are ready for renewal? As per reports from JLL, a leading name in commercial real estate, around 8% of the office leases in the USA are likely to expire in the year 2022, and this percentage is one of the highest that has been recorded so far if you compare it to the years in the future. This is one of the critical reasons for a slowdown in the commercial real estate, as most companies will be busy renewing their existing leases instead of shifting to a new office premise.
Kanat Sultanbekov- an insight into the construction industry this year
Kanat Sultanbekov is a respected name in the construction sector. Regarding the market, he thinks there could be a slowdown in the commercial construction as several offices are ready to renew their leases instead of shifting to a new place. The above move will result in a ripple effect on the industry, causing a slowdown in the creation of jobs and growth in the construction industry.
Understand the meaning of commercial construction
Commercial construction refers to any construction taken up to create or update the commercial buildings like retail spaces, office buildings, or warehouses. This construction mode differs from residential building construction undertaken for building or updating homes.
The industry for commercial industry has been growing as the number of jobs in the sector has increased by about 9% between the years 2020 and 2022, as per reports issued by the US Bureau of Labor Statistics.
The ripple effect due to a slowdown in the commercial construction industry
A slowdown in commercial construction could have a ripple effect on the whole sector; for instance, a slowdown in the growth of jobs can lead to lesser opportunities for experienced construction workers, and a decrease in its demand would mean reduced costs for construction materials. This again will lead to a decline in the revenue for companies in the construction field, resulting in layoffs and more slowdowns in the construction sector.
The rebound of the construction industry
On the other hand, one should note that the market for commercial construction market is very cyclical, so when a slowdown occurs this year, this does not mean that the industry will not recover. The construction sector has already started to rebound from the past downturns, and there are expectations that it will also resume its growth in the long run.
According to Kanat Sultanbekov, the commercial construction sector is facing an excellent potential for a slowdown this year as several leases are coming up for renewal, and the global economy is still recovering from the coronavirus pandemic. However, the above does not mean that the industry will not recover, as the long-term outlook for the industry is very positive, and there is a huge expectation that it will persist in growing in the future as well.