Construction for Healthcare, Education, Lab, and More to Grow in 2023

  • Home
  • Construction for Healthcare, Education, Lab, and More to Grow in 2023
Construction for Healthcare, Education, Lab, and More to Grow in 2023

Surety Bond Professionals is a family owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your construction bond needs.

Growing Institutional Building Sectors

The two institutional sectors of the construction industry experiencing the greatest growth in 2023 (with expectations for continued growth in 2024) are education and healthcare.

Healthcare Construction in 2023

Healthcare construction projects typically involve building inpatient hospitals, structures housing medical offices to provide outpatient services, nursing homes, or standalone clinics. Project starts are estimated to total more than $40 billion in 2023. The greatest growth is expected in the construction of medical buildings where outpatient services are provided.

The uptick in the construction of medical office buildings is driven by a growing demand for conveniently located outpatient services that don’t require admission to a hospital. Most hospitals offer outpatient services, but patients prefer to avoid the usual registration process or navigating a large hospital facility. Revenues from outpatient services grew by 30% between 2020 and 2022, while inpatient revenues increased by only 8.5% during that period.

The volume of outpatient office visits is expected to grow by more than 20% in the next 10 years. While this is due in large part to patients’ preference for convenience, there are two other key factors:

  • Advances in medical technology have made it feasible to deliver more services in an outpatient setting.
  • The lower cost of outpatient care makes it more attractive to health insurance companies.

With an aging population, it’s reasonable to expect the need for healthcare to continue to support new construction of medical facilities for the foreseeable future.

Education Construction in 2023

Education projects account for more than half of all institutional construction in the United States. The education sector includes K-12 schools, colleges, and laboratory facilities associated with educational institutions at all levels.

Activity in the education construction sector is driven by two primary factors: population growth or contraction and the age and condition of existing educational facilities. Some regions are experiencing a decline in population due to falling birth rates and/or internal migration to another part of the country. And some regions are seeing an influx of new residents, even though the birth rates in those regions are not increasing significantly.

In general, the Northeast, Midwest, and West Coast are losing population. However, the schools in those regions tend to be older, with many needing renovation or replacement, which generates some construction activity. In areas experiencing population growth, there is more need for new school construction. But the biggest contributor to construction activity in the education sector in 2023 is the construction of labs associated with K-12 schools, colleges, and universities. The need for new labs is a natural outgrowth of the emphasis on STEM (science, technology, engineering, and mathematics) education to meet the demands of today’s job market. According to the National Science Foundation, STEM education is essential to teaching learners of all ages to be creative, think critically, solve problems, and unleash a culture of innovation.

Other Institutional Construction in 2023

Recreational buildings are also included under the institutional construction umbrella. Some major recreation projects are in the works, such as the $2.1 billion MSG Sphere in Las Vegas. Originally planned for a 2021 opening, it was pushed back to begin construction in September 2023 due to the pandemic. And a $600 million renovation of the Las Vegas Convention Center is scheduled for 2023. But overall, recreation projects (e.g., convention centers, entertainment venues, casinos, etc.) are not expected to increase substantially in 2023.

Importance of Bonding Capacity

Since the passage of the Infrastructure Improvement and Jobs Act in November 2021, construction projects related to infrastructure and transportation have received the lion’s share of attention. But that doesn’t mean that no opportunities exist in other sectors.

Contractors hoping to take advantage of those opportunities need to have sufficient bonding capacity to do so. That means finding a surety willing to guarantee large enough bonds and a large enough aggregate amount for multiple bonds to support long-term business growth. Having sufficient bonding capacity to purchase the bid bonds, performance bonds, and payment bonds required for government-funded projects and, increasingly for projects financed by private investors is essential for growing a construction business in 2023.

Call Us Today

Our surety bond professionals will help you grow your revenue by maximizing your surety capacity. Call us today!