Who's constructing (and who's not)

Steel as the leading indicator, and 7-ish other charts related to CRE

• steel is the leading indicator

• construction AI (speculative)

• ***some additions to the ‘electrification of everything’ watchlist***

7ish Charts on CRE

• building a ton (just not for people)

• what do the starts say?

• a tale of two office types

• on-time rent collection, less on-time

• the secret to RE returns

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Who’s constructing stuff (and who’s not)

Some charts on the state of the cycle.

Steel is the leading indicator

The steel manufacturer, Nucor NUE 0.00%↑, reported yesterday, and painted a nifty little picture of where the ‘world of atoms’ is cooking:

In terms of who is ordering steel, it’s:

• data centers and the electrification of everything;

• plus, there’s some general bridges and highways stuff, too.

In terms of who is not ordering steel, it’s

• office buildings (and resi),

• light vehicles, and

• offshore wind.

No real surprises there, but lest there be any doubt, AI is the Capex Now (and there are no signs of slowing).

If you’re in the business of providing compute, or the electricity necessary to make it happen, you are the sun, the moon, the everything. If, on the other hand, you’re in the real estate business (or other consumer durables), you know that there is no housing shortage, and there is definitely no office shortage, so you’re sitting this one out.

Still, some pro-cyclicality is better than no-pro-cyclicality, so no complaining.

Construction AI

Not only is construction increasingly focused on building for AI, construction is apparently becoming a power-user of AI:

Ramp

The construction industry has seen a 60x increase in AI-spending over the past two-years.

60x increase for construction is followed by a 35x increase for manufacturing, both of which lap the field.

They’re also both off of very small bases, and this is Ramp’s data, so query how broadly representative it is, but still, it’s a fun chart.¹ Eat your own dogfood, I guess.

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📈💰📊 ‘Electrification of Everything’ investment watchlist update

As an aside, I’ve added three names to the watchlist related to this theme: