Construction Today - December 2009 - (Page 10)

2010 CONSTRUCTION FORECAST Are We There Yet? With 2010 on the horizon, when can we expect an upswing in the industry? BY HEATHER JONES T he outlook for the general economy is improving, but that doesn’t mean good news for construction just yet. Total construction in 2009 and 2010 will be down 14 percent and 5 percent, respectively. We still anticipate that residential construction may find the bottom this year, but that the decline until it does will be steep. Residential construction will decline 25 percent in 2009 and will recover in 2010. Nonresidential construction will decline 13 percent this year with an even further decline of 16 percent in 2010. Nonbuilding construction will continue to be the only positive contributor, increasing 5 percent per year in 2009 and 2010, driven mostly by conservation and development construction. Year-to-date nonresidential put-in-place construction through September was flat, but is expected to decrease sharply during the rest of this year. Contractors are reporting backlogs of 8 months in the third quarter of 2009, according to FMI Corp.’s Third Quarter Nonresidential Construction Index (NRCI). Tight credit continues to cause cancellations and delays. Project delays continue to be four times the normal rate and are currently at 20 percent. Project cancellations are five times the normal rate and are currently at 10 percent of backlog. Credit is expected to remain tight through 2010, and delays and cancellations are likely to increase. A Stimulating Idea One of the most common questions I am asked is, “Is the stimulus bill working?” My answer is, “yes.” It was not intended to stimulate the building market, and it certainly is not doing that. All kidding aside, it was designed to help stimulate infrastructure spending. It is helping to mitigate some of the loss in highway construction due to declining state revenues but, according to the Government Accountability Office, states have spent two-thirds of stimulus funding on paving and widening projects. Moreover, American Recovery and Reinvestment Act (ARRA) funding has slowed to $4.2 billion per week in September compared to $9.7 billion per week over the prior four months. According to FMI’s third quarter NRCI, less than 22 percent of panelists have seen effects from the stimulus bill, and 72 percent of the panelists believe that the bill has not made a difference in general market conditions. In addition, 31 percent of panelists will not pursue stimulus funds due to regulatory/legal requirements to receive the funds. The lodging, office and commercial segments will see the largest declines. Lodging construction has seen several cycles of overbuilding and corrections. Lodging construction saw three years of tremendous growth and overbuilding. It is now time for at least two years of correction. Occupancy rates and revenue per available room have both been declining and will continue to do so until the correction is over. Office construction is dependent upon employment, and experts predict the unemployment rate to continue climbing throughout 2010. It will be several years until vacancy rates are low enough to spur new construction. Commercial construc- CONSTRUCTION-TODAY.COM DECEMBER 2009 http://www.CONSTRUCTION-TODAY.COM

Table of Contents for the Digital Edition of Construction Today - December 2009

Construction Today - December 2009
2010 Construction Forecast
Special Focus
Product Showcase: Hand Tools
F&R Construction Group Inc.
Suffolk Construction: Met 2
Weitz Co.: Solaris at Crossroads
Chance Construction Co.
Allied Building Products Corp.
Bird Construction Co. Inc.: Condado Vanderbilt Hotel
Broccolini Construction Inc.: EDC Headquarters
CJ Pink Ltd.
Cobra Corporate Management Inc.
DDRM: The St. Regis Deer Crest Resort
Q.B. Construction
T.N. Ward Co.
EllisDon: North Park Quad Pad Arena
REIG Capital
Blumenfeld Development Group & Forrest City Ratner – East River Plaza
Clark Construction: Michigan International Speedway
Morton Buildings Inc.
Triangle Associates Inc.: The Gallery on Fulton
Vogel Bros. Building Co.
Walsh Construction: Mercy Corps.
Wasatch Advantage Group: San Tropez
Profitable Contractor
John W. Danforth Co.
Shore Environmental LLC
S.T. Wooten
American Civil Constructors Inc.
Archer Western: I-75/I-475 Reconstruction
Cleland Site Prep Inc.
Delaware DOT: Indian River Inlet Bridge
Goodfellow Bros. Inc.
International Construction Equipment Inc.
Kiewit Pacific Co.: SR 519 – Seattle Intermodal Access Project
Plaza Construction Corp.
B. Gottardo Construction Ltd.
Bergmann Associates: Walkway Over The Hudson
Craig Olden Inc.
G.M. Sipes Construction Inc.
Idaho Sand & Gravel Co.: Ten- Mile Interchange
J.F. White
Malcom Drilling Co. Inc.
Mid Eastern Buildings Inc.: Southampton Wastewater Treatment Plant
Minnesota Department of Transportation: I35W Crosstown/ Urban Partnership
Nicholson Construction Co.
Papich Construction Co. Inc.: Route 46 Expansion Project
Tilcon New York Inc.: Interstate
Tyam Excavation and Shoring Ltd.
W.C. English Inc.: U.S. 321
West Electric Corp.
Industry Trends
Turner Construction Co.: Eastern High School
Gafcon Inc.: Carlsbad High School Modernization Project
DASNY: Gouverneur Healthcare Services
Stuart Olson: University of Lethbridge Markin Hall
University of Houston Student Housing
HDR Architecture Inc.
Marshall-Lee Construction Corp.
RA-LIN & Associates
Suffolk Construction: Boston Renaissance Charter School
Suffolk Construction: FIU School of International and Public Affairs
Swinerton Builders
Tower Construction: Huntington Memorial Hospital expansion
Absher Construction Co.: Chief Sealth High School and Denny International Middle School
Bird Construction
Casey Middle School
Cedar Ridge High School
Clark: Lowell Reception Center
Gilbane/Banks Joint Venture: Coppin State University
Hensel Phelps Construction Co.: FORSCOM/USARC New Headquarters
Shaw Construction: Mesa State College Student Center
Shiel Sexton: Butler University
SpawGlass Contractors Inc.: Austin Community College Rio Grande Campus Parking Garage
Stuart Olson: New Edmonton Remand Centre
The Christman Co.
Turner Construction Co
Weddle Construction Ltd.
Construction Coach
Polimeni International
Greenpark Homes
Kite Realty Group Trust: Eddy Street Commons at NotreDame
Construction Law
Centerpoint Builders
Last Look: DANSY

Construction Today - December 2009