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A survey of the Portland-area economy in the final days of 2019 reveals strong conditions much like those of the year prior.

鈥淚t’s been mostly 鈥楪roundhog Day,’鈥� said Mike Wilkerson, a senior economist with ECONorthwest, said during a Builder Breakfast panel event on Tuesday.

The area remains in uncharted territory in terms of expansion. Employment is strong, construction is growing 4 percent per year, and the manufacturing sector is doing very well. A year from now, however, that picture is likely to look very different, according to panelists, as the current boom cycle winds down. Despite industry-wide confidence as high as it’s ever been nationally, in Portland and within the state of Oregon, Wilkerson is less bullish.

鈥淲e see strength through the remainder of (next year) into 2021, but after that the questions are going to be what’s going to continue to fill the pipeline,鈥� he said.

Apartment construction is trending downward, with about 8,000 units under construction right now, as opposed to 12,000 last year. That number could dip to 6,000 by this point next year. The demand drivers don’t exist for hotels, which Wilkerson says have been overbuilt in the current cycle and will see much lower occupancy rates as more projects are delivered.

Similarly, he said, multiple factors will result in a dearth of office space. The region absorbed about 600,000 square feet of office space this year, and about 1.7 million square feet are in the pipeline. Employment is slowing down, and the sectors that continue to grow 鈥� logistics, manufacturing, construction 鈥� are not major office users.

By Wilkerson’s estimation, the largest tenant in town right now is the city of Portland, which has leased space throughout downtown while the Portland Building undergoes renovation. City workers are due to return to the building next spring, leaving a vast amount of vacant office space.

鈥淲ho’s going to take that hundreds of thousands of office feet, on top of what’s already in the pipeline?鈥� he asked.

The panel discussion, a 2020 outlook for the construction industry, was the Daily Journal of Commerce‘s fourth Builder Breakfast of the year, and also included panelists Kristina Thomsen, a partner with ZGF Architects, and Aaron Bouchane, a workforce and professional development manager with Associated General Contractors‘ Oregon-Columbia chapter. Stephanie Holmberg, leader of the real estate and construction industry group at Schwabe, Williamson & Wyatt, served as moderator.

The skilled labor shortage persists here and throughout the U.S. An annual workforce survey conducted by the local AGC chapter showed members are overwhelmingly, and unsurprisingly, still having a hard time finding skilled workers. Only 2 percent of respondents think it will become easier to do so in 2020.

鈥淪o, not a lot of optimism where we sit currently or into the future, in terms of the skills gap or the workforce shortage,鈥� Bouchane said.

Some contractors say the skills gap is having little effect on them, and that they’re adapting as best as possible to make it through each day and quarter. On the other hand, many others are reporting that it is impacting budgets, lengthening timelines, and changing how they bid on projects. Contractors in areas like Medford, Klamath Falls and along the coast are having an especially hard time finding help. Despite the looming end of the current building boom, a worsening workforce shortage has the potential to impact builders even more severely than it already is.

One-third of construction workers within the Portland-metro area are older than 45, Bouchane said, and contractors are worried that once work slows down, those older skilled workers who have been hanging in and making good money during the boom years will decide the time is right to retire. Their exodus from the industry will not only drain the workforce from a numbers perspective, but also result in a widespread loss of institutional knowledge.

鈥淓ven if there is a bit of a slowdown and companies aren’t as busy as they were the last couple of years, the idea of retirement and baby boomers getting to the point of leaving the industry is something that we’re hearing more and more as an immediate and future concern,鈥� he said.

Efforts to stem the effects of the skills gap are helping, Bouchane said, citing the AGC’s increasingly popular educator externship program as well as Measure 98 funding for career and technical education programs.

Looking forward from a design perspective, Thomsen continues to worry about the effects of tariffs and trade wars on projects. One project, she said, suffered a six-figure price increase due to escalating rebar prices. Owners are responding by removing major components from projects, decreasing footprints, or not finishing shell space in order to keep costs down.

鈥淭hat keeps me up at night 鈥� just figuring out how to deal with this,鈥� she said.

Thomsen cited sustainability as a major concern, pointing toward the building industry’s heavy carbon footprint and emphasizing the responsibility of designers and builders in helping change that. Fortunately, she said, developers are more frequently trending toward energy efficiency as costs come down for sustainable building features. Owners are realizing better returns on investment via reduced operating costs and higher rent rates from tenants, who want to be in sustainable buildings that are demonstrated to benefit occupants.

As a health care design specialist, Thomsen is seeing that market segment begin to adapt as popular transportation modes change. Clients are planning for ride sharing and micro-mobility options like electric scooters to become more widely used, and the possibility of automated cars following suit. Health care clients in other parts of the country are building less parking, she said, and exploring options for converting parking garages into occupiable space further down the road.

鈥淐lients are really looking at it big-picture-wise, in terms of what they’re actually building,鈥� she said. 鈥淪o they know they need to build parking garages now, but what does it look like in the future, and how can they adapt their buildings to provide less parking in the future because someone’s arriving by autonomous vehicle or a scooter?鈥�