Southwest

The Southwest is very much a tale of two markets: California, and everywhere else.

Cities outside of California are vying to become hubs for the technology industry. Phoenix and Las Vegas are expected to become home to new semiconductor manufacturing facilities and life sciences projects. Region-wide, cities are looking to reap the economic benefits of their comparatively lower costs of living and educated workforces.

California – which makes up almost 75% of the region’s construction spending – is in many ways a victim of its own success. The cost of living has grown to eye-watering levels, which has caused businesses to set up shop elsewhere and deterred prospective residents. Municipalities statewide have been reticent to approve new housing and transit options, with homeowners preferring to keep costs high. The state government has had to step in to encourage new developments, but this has been a slow and cumbersome process. We do not expect things to change in the near future.

Cities across the region have begun to run into climate-related problems. Los Angeles has effectively built on all available land that’s safe from wildfires, leading to new projects directly in their path. Cities further out in the desert like Phoenix, Albuquerque, and Salt Lake City can only grow so big before they no longer have enough natural resources to support their populations. Phoenix is already approaching this point and has placed a moratorium on new construction to preserve its aquifers. As fights over water rights in the Colorado River show, the rest of the region is approaching this point as well.

* Other structures include religious buildings, amusement, government communications, and public recreation projects.