May 25, 2023 | Matt Wasielewski, South Florida
The construction industry will need to hire more than half a million more people than average this year to meet nationwide demand, according to a model developed by Associated Builders and Contractors. But young people don’t seem interested in signing up.
The number of young people applying for technical jobs like plumbing, building and electrical work dropped by 49% in 2022 compared to 2020, NPR reported citing data from the online recruiting platform Handshake.
Rather than hope that they can market their way out of the labor shortage, developers and construction industry executives are increasingly incorporating artificial intelligence, machine learning and robots to fill in their human gaps.
“Who wants to come out of college today and lay tile? Who wants to be a mason?” Two Roads Development partner and President Brad Meltzer said at Bisnow's South Florida Construction and Development Summit Wednesday. “Kids are on their phones. They're looking at technology. It's not as sexy as an industry anymore. So how do we engage the tradespeople, or the young people who want to be tradespeople?”
Investments in technology have become a crucial tool for controlling costs and combating a worker shortage, executives said at the event, which was held at the Hyatt Regency in Downtown Miami. With high demand for everything from materials to workers, the construction industry is leaning into innovation in an effort to not only save money but also attract a new generation of employees.
“Construction is probably the most inefficient industry in the world,” said Russ Beck, the South Florida executive director for Juneau Construction. “We have a long way to go. I think everyone realizes that, so we're certainly trying to incorporate tech into everything that we think about.”
Robots that can paint a room, pour concrete or lay tile are being developed and implemented, panelists said. Machine learning is being used to predict when an accident is more likely to happen on a job site. ChatGPT is being used to identify sales data in reports.
“We're going to see a revolution in AI this year,” said Jay Fayette, president for the East Coast of Florida at Suffolk Construction. “Construction has got to get caught up and get into that mix, and that's what we're really trying to do.”
Suffolk has deployed layout-drawing robots from Rugged Robotics at some of its projects, Fayette said. Houston-based Rugged Robotics, which raised $9.4M in Series A funding in March 2022, provides autonomous robots that draw architectural and engineering designs directly onto concrete floors to help contractors know where to build.
Fayette said that technology companies in the construction space are quickly iterating on their products to improve them. The layout-drawing robot, for example, was updated so that it could account for depressions in the concrete slab when drawing plans. The next version, Fayette said, will be able to do ceilings.
“It's brand-new stuff,” he said. “But you've got to be out there knocking it out to understand it, to improve it and to continue to invest in it. Otherwise, it just becomes a flash in the pan.”
Suffolk also worked with Oracle to deploy a safety tracking app at all of its active projects nationwide, Fayette said. Every worker on a site uses the app to log both positive and negative observations related to safety, and the company uses predictive analytics to determine which sites are the most likely to have a workplace accident.
The deployment of the app has saved his company around 40% on some expenses related to inspections, Fayette said.
Asi Cymbal, chairman of the Miami-based vertically integrated development firm Cymbal DLT, pointed to procurement, pre-construction and accounting as “low-hanging fruit” for the integration of artificial intelligence.
“I think AI is certainly the future of construction,” Cymbal said. “There's so much opportunity to create greater efficiencies with technology and AI.”
As the construction industry leans into innovation, developers and executives at the Bisnow event said that government regulations and red tape were holding back the adoption of new technology.
“Building codes don't change as rapidly as technology changes. And so when there's a new technology, you might want to use it in some way, shape or form, but it might not be approved by the municipality that you're working in,” Meltzer said. “We're constantly fighting about that.”
Meltzer and other panelists said that zoning regulations were outdated and that local governments weren’t moving fast enough to make the broad changes to building codes to allow them to fully implement emerging technology.
“It seems like every two years we have a new section of the code where a ‘T’ was crossed or an ‘I’ was dotted, but there's nothing meaningful,” Meltzer said. “And they could instead focus their attention on these kinds of things that really solve problems.”
Some commercial real estate brokers have also embraced the AI revolution for help with marketing and acquisitions. Apex Capital Realty President Miguel Pinto said his brokerage was using ChatGPT to look at disclosure forms from real estate investment trusts and other publicly traded companies to quickly identify which properties were selling.
“From a deal discovery standpoint, where we're utilizing ChatGPT by prompting it to read documents that normally would take an analyst a couple of days, and it’ll read in a couple of minutes for us,” Pinto said.
Apex has also used chatbots trained with artificial intelligence to do marketing outreach. If a chatbot “reaches out to 1,000 people at the same time, there’s going to be some fruit there,” Pinto said.
“The juice is worth the squeeze on ChatGPT,” he added.
Panelists at the Bisnow event also discussed the dynamics that have made South Florida such a strong market for development in recent years.
More than 444,000 people moved to Florida in the 12 months ending July 2022, according to U.S. census data, and Miami has been one of the most popular destinations for new arrivals. The influx of new residents has helped insulate the market somewhat from the broader issues in commercial real estate finance, and developers say banks are willing to lend to multifamily projects in the region because of its popularity and because it is still underpriced compared to some other markets.
“Over the last 30 years of my career, every time we talk about condo financing in Miami, the banks were really shy about it,” said Edgardo Defortuna, CEO of Miami-based developer Fortune International Group. “Now we’ve become the pretty lady in the room in the sense that pre-construction sales and loan-to-value [ratios] are not that high.”
Miami’s aging office inventory also presents unique opportunities for the market. Citadel supercharged the wave of corporate migrations when it announced it was relocating its headquarters to Miami from Chicago last June, and Downtown Miami’s relatively limited office inventory has created room for rent growth and redevelopment.
“In the downtown and vertical markets, there's only 11M SF of office versus a bigger market, let’s say Chicago's 150M SF,” said Vicky Lee, the Senior Vice President for Development at Chicago-based developer Focus. “So there's still room for growth there as well for a lot of companies and headquarters that have moved down there.”
Bradley Colmer, CEO of Deco Capital in Miami Beach, noted that “of that 11M SF [of office] that’s here, a lot of it’s kind of garbage.” Colmer said the types of businesses moving to Miami were seeking out high-quality space and that Miami’s aging inventory isn’t suited to meet their needs.
“So as we see the amount of wealth coming here, and businesses that are attached to those individuals, family offices and hedge funds, and that are attracted to the political environment here and the lifestyle, I think that we can take advantage of that by building the kind of product that attracts them,” Colmer said.
This article originally appeared in Bisnow, read the article here.