Retiring Boomers Will Leave Construction Sector in the Lurch

Approximately 11,000 baby boomers will retire each day this year and that figure will impact commercial real estate construction labor and increase demand for hospital visits and thus, medical office buildings.

These seniors will leave carrying unique skill sets, particularly when it comes to construction, according to John Chang, Senior Vice President, National Director of Research and Advisory Services for Marcus & Millichap.

Employment of people over the age of 55, the closest proxy for baby boomers available from the Bureau of Labor Statistics, is plentiful in career fields such as agriculture, financial services, manufacturing, education, and health services.

They also play a big role in trade careers like construction, carpentry, plumbing, electrical work, and so on.

So, developers lament the potential loss of several key construction personnel who plan to retire in the next couple of years, according to Chang.

“The leaders of these construction firms have become very reliant on a core group of very experienced tradespeople, and in general, the US doesn’t have a deep bench of workers with these very important skills,” he said.

Even now the construction industry continues to face a severe skilled labor shortage, according to Marcum’s annual analysis of the Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey, or JOLTS.

A surprisingly strong economy supported robust construction industry hiring in 2023, Marcum said. “Contractors have now added jobs in each of the past ten months, and only once in the past two years—in March 2023—has industry employment declined during a month,” said Anirban Basu, Marcum’s Chief Construction Economist and author of the report. “Despite still being about 500,000 jobs short of where employment would have been based on the pre-pandemic trend, the pace of industry job growth has returned to the late 2010s level.”

This hiring would have occurred faster if not for ongoing skilled labor shortages. “An average of 4.6% of construction positions were unfilled over the course of 2023,” said Basu. “That’s the second highest level ever, trailing only the 4.9% average seen throughout 2022.”