Healthy Construction Employment Projections Intensify Phoenix Workforce Shortage

The U.S. recently set a longevity record for economic expansion, exceeding ten years for the first time in recorded history. According to the September 2019 ULI Real Estate Economic Forecast, real estate should remain steady through 2021. The retail sector, however, will likely continue to restructure for several more years, due to the e-commerce boom.

A recent data analysis by Associated Builders and Contractors shows that the construction industry added 7,000 new jobs in September. In fact, construction employment has expanded by 156,000 jobs since last year, with the majority of those job gains representing specialty trades.

Urban Construction in Phoenix

Construction activity in the Phoenix area has echoed national trends, showing a steady increase since 2010. The continued job growth, with high backlog volume and healthy infrastructure investment, is good news for the Valley construction industry. 

Revitalization projects continue to bolster downtown Phoenix’s evolution into a destination for visitors and affluent urbanites. High-end residential towers, as well as commercial and retail projects, are on the rise. The trend of adaptive reuse of Phoenix real estate is also making a big impact on the industry, giving neglected properties both a fresh new look and purpose.

Some notable downtown Phoenix projects include the new 30-story Link PHX luxury apartment tower, and the nearby Block 23, a mixed-use expansion of Cityscape slated to open later this year. The neighboring Arizona Center is undergoing a phased redevelopment that will not only house new retail tenants, but a future boutique hotel and residential tower.

Traveling a few blocks north to midtown Phoenix, The Central Park is a six-tower mixed-use development planned for a vacant parcel adjacent to Steele Indian School Park. The $1 billion project is scheduled to break ground in 2021, and will feature retail, office space, luxury apartments, condos, and a possible retirement community.

Also planning a 2021 groundbreaking, Southbridge Scottsdale II is a future 1 million-square-foot development located in the heart of downtown Scottsdale. It will bring additional multi-family housing, along with hotel, office and retail components, to complement the vibrant energy of Scottsdale Waterfront and Scottsdale Fashion Square. 

Industrial Land Grab in Suburbs

As e-commerce continues to boom, the logistics industry must adjust to new demand by constructing enough regional datacenters, warehouses and fulfillment centers. Even if the overall U.S. economy slows, these industrial spaces will still be necessary to accommodate the needs of online retailers.

This push is heating up the industrial real estate market in the Metro Phoenix area, especially in outlying suburbs. The result is an influx of Fortune 500 businesses seeking large plots of suburban land for new datacenters, warehouses, manufacturing facilities and distribution hubs.

In the West Valley, Microsoft has announced multiple LEED-certified datacenter buildings for Goodyear and nearby El Mirage. E-commerce juggernaut Amazon now has four massive fulfillment centers in the West Valley, including one in Goodyear. Nike recently announced a new Goodyear manufacturing facility, with operations scheduled to launch in 2020, ramping up through 2023.

On the opposite side of town, a future Google datacenter is scheduled to join the Apple facility that opened in East Mesa last year. The two tech giants will be neighbors among several other planned or existing datacenters, in what is now called the Elliot Road Technology Corridor. 

Construction on Intel’s new FAB 42 semiconductor fabrication plant is underway at Intel’s Ocotillo campus in Chandler. The project will also require substantial new infrastructure upgrades to alleviate future traffic in the surrounding area. 

Vacancies are down, and net absorption is up in a robust industrial pipeline. A wave of speculative development in Phoenix is a strong indicator of confidence in the future competition for industrial space. One example of a project being developed on a fully speculative basis is The HUB, a nearly 800,000-square-foot industrial complex under construction in Goodyear. 

Skilled Trades in High Demand

These global businesses entering the Phoenix market are not only creating thousands of jobs in logistics, manufacturing and technology – they’re also increasing the need for skilled trades to build these vast facilities. This demand coincides rather inconveniently with a nationwide workforce shortage. 

The current construction rebound is placing a serious strain on Arizona’s skilled trade resources, and companies are struggling to find enough workers to meet this demand. In fact, a recent workforce survey showed that 95 percent of Arizona contractors are having a hard time filling hourly craft positions.

Competition is fierce for trades ranging from electricians and plumbers, to crane operators and machinists. While this may be good news for skilled workers seeking competitive pay, there’s a risk of a market cooldown if the workforce supply can’t keep up. This imbalance has already driven up construction costs for developers and has increased the risk construction delays.

The good news is that engaging with a skilled trade staffing firm like SitePro Solutions can help companies avoid expensive construction pauses. SitePro is constantly seeking out new talent in the skilled trades, providing clients with instant access to pre-screened construction candidates to keep projects moving on schedule.  

To find out how to put SitePro to work for your construction business, visit www.SiteProSolutions.com