Quote:
Originally Posted by SacUrbnPlnr
You can take a hard hat tour of the building on Fridays at 3:30 p.m.
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I think the tour is only for people who show intrest and are serious about buying a unit.
Building boom won't quit
Commercial construction up 37% despite housing slump
By Michael ShawStaff of The Sacramento Business Journal
July 6, 2007
The new CalSTRS headquarters is being built in West Sacramento.
View Larger Residential construction has fizzled but Sacramento is otherwise booming, with about $180 million more in non-residential building under construction so far this year compared to early 2006 -- a 37 percent increase.
The area's top general contractors report they haven't seen a decline in work that typically accompanies a new-housing slump. They're tied up with projects for years to come. Still, those in the industry have cautioned that the wider effects of a prolonged housing lapse might yet materialize.
The Construction Industry Research Board in Burbank released figures last week that show non-residential construction, based on value, is significantly higher in the four-county region for the first five months of the year compared with the same period in 2006. The organization tracks construction through building permits and uses estimates provided by cities and counties to determine the value.
Yolo County had the largest year-over-year increase, about 160 percent, perhaps due to major construction projects at University of California Davis. Construction in Sacramento County increased 28 percent.
"We're booked for two years," said David Higgins, president of Harbison-Mahony-Higgins Builders Inc., the area's No. 3 contractor based on revenue of $330 million in 2006. Like other large contractors, the company does a substantial amount of work in the medical field, which hasn't been hindered by the housing market. One reason for that, Higgins said, is state seismic safety requirements. Some of the work on hospitals has already started.
"Our volume is going to be up this year and next year," said Frank DaiZovi, vice president of Turner Construction Co., the area's top builder, with $475 million in revenue last year through the Sacramento office. The company is building medical centers and schools among many other projects.
Terry Street, president of Roebbelen Contracting Inc., the area's No. 2 contractor based on revenue, said it expects earnings to equal last year's $370 million, the company's best year. It's expecting a small dip in work in mid-2008.
"There's a lot of money floating around Sacramento," Street said.
This year's boom looks to continue a trend. The value of non-residential construction has increased each of the past three years, according to the Construction Industry Research Board.
Home construction hammered
On the flip side, homebuilders are struggling. Second-quarter figures are expected to be issued next week, but the early indication is that housing analysts will report dismal sales in the Sacramento market. That's despite modest gains earlier this year and late last year; and this drop-off is hitting during the peak homebuying season.
The number of local single-family housing permits has fallen this year by 14.3 percent, according to the construction board.
Commercial contractors might have expected a similar slide, based on past experience. Higgins said the industry shadowed the housing market through previous downturns, with a lag of about a year.
The current new-home slump is already two years old with no sign of a turnaround.
One sector that might not escape housing's effects is retail establishments. Construction of stores and other retail-related buildings is 8.3 percent lower than it was at the same time last year, a decline that has been masked by the overall surge in other types of buildings.
"I'm hearing from the Bay Area companies and some in Southern California about slowing on the commercial side," said industry consultant Robert Earl, a former executive with Sundt Inc. "From a hiring perspective, the local contractors' market has softened. It's easier to find people. But it's hard to know where it's heading. It's been a different pattern on the commercial side."
Earl said that generally the market is still strong.
More competition
Other contractors reported competition for small construction jobs has increased, suggesting there is less demand at the lower end of the business. That might also be a sign of a slowdown.
But Davis said the demand for large construction projects such as schools has not caught up with the rapid growth of new homes between 2000 and 2005. There has been a push, meanwhile, to decentralize medical care and open new facilities closer to residents' homes. Demand for office space is up in most markets, with the exception being the Roseville-Rocklin area, where developers raced to erect new buildings and created a glut.
Construction jobs have held steady throughout the housing slump. As of May, the area had about 70,000 employees in construction, only about 600 fewer than a year ago, less than a 1 percent drop, according to the state Employment Development Department.
Said Higgins of the situation, "Sacramento might be to the point where there is a critical mass."
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