Marcum's 2023 Northeast Ohio Construction Survey

4 THE 2023 MARCUM NORTHEAST OHIO CONSTRUCTION SURVEY

Body Content Article Headline Our annual surveys come at a time when everyone in the construction industry has considerable concerns about the effects of ongoing inflation and the rising interest rates deployed by the Fed to counter those rising prices. And while those macroeconomic worries certainly played on the minds of our Northeast Ohio-based poll respondents, just as they did nationally, a good dose of optimism came through in our responses. We suspect that is thanks to some underlying strength driven by marquee projects such as the new Sherwin-Williams headquarters, new build and renovation projects for residential and hotel structures throughout the urban core, an array of healthcare buildings and even a broad slate of non-profit and museum jobs. Add in federal and other infrastructure projects, and the region should keep many construction companies busy for the next few years. Backlogs are still healthy, though we saw a slight uptick in respondents expecting lower backlogs in the coming year. So we are seeing a yin and yang, with credible reasons for feeling good in the form of solid pipelines of approved and funded projects juxtaposed with some credible reasons to worry – or at least be cautious. These include the tough rate environment and its strong potential to affect the viability of jobs and a couple of Executive Summary

all-too-familiar woes. Once again, respondents cited finding skilled labor as the biggest priority (and the inability to find it as the biggest threat) and said material issues – both cost and availability – were hampering their ability to complete jobs. Higher costs across the board are still hitting companies, with two-thirds of respondents saying their G&A costs went up in the last year, roughly matching last year’s total, when that number really leapt. “Growth opportunities are hampered by the speed and the breadth of the cost increases to every input over the past year,” said one respondent. “Working strategically to ensure that we can position ourselves for continued growth is made harder by the rapid changes in the market.” You will see in this report that respondents in Northeast Ohio mostly tracked quite closely to national respondents, but there were a few exceptions. For example, the total number of bidders on jobs was notably lower in Northeast Ohio and the 44% of respondents expecting to do more work outside the region in the next three years was 11% higher than the national survey. That 44% total was down considerably from the 58% in 2022, perhaps reflecting some effect from the many projects planned and already happening in Northeast Ohio. That said, companies in certain sectors are feeling the slower growth rate in the region, with several comments specifically calling out the rapid growth down I-71 in Columbus as an area of opportunity.