By Eric Jay Toll for The Arizona Builder’s Exchange
The last time construction spending was this high was December 2009. It was the last gift the industry opened. Widespread gains in private construction offset a continuing public spending downturn and pushed totals to the highest point since that long-ago Christmas present. Data analyzed by the Associated General Contractors of America shows encouraging private spending trends.
The AGC expects the distance between private and public construction spending to grow, although MAP-21, the new Federal Transportation bill, will cushion the blow slightly. Private nonresidential spending climbed for the third month in a row and surged 19 percent higher than May 2011. Residential was up 3 percent from April and 8 percent from 2011. Multifamily surged 6 percent over April and 50 percent over a year ago.
AGS economist Ken Simonson said that within the private, nonresidential categories, four posted 12-month spending hikes of more than 25 percent. Energy was up 35 percent over 2011; hotels at 29 percent; education and manufacturing both totaled 27 percent. Transportation, commercial, and office construction spending were up 17, 11 and 7 percent respectively.
In addition to multifamily, four high rise office towers are on the boards to come out of the ground as soon as leasing numbers are hit. Ryan Cos. is pushing to lease space in 10-story Hayden Ferry Lakeside III in downtown Tempe. Metro Commercial plans a 14-story Class A office tower along I-10 south of University Blvd., near Sky Harbor. In downtown Phoenix, the Collier Center is planning a second tower adjoining its existing building, and a new Class A tower is proposed on W. Monroe St. at Second Ave.
The last four months, AZBEX has been reporting newly planned apartment complexes – primarily along the Loop 101 corridor from North Phoenix to South Chandler – in almost every issue. Over 1,000 new units have been announced this week with nearly 400 in Desert Ridge, over 400 in Gilbert, and 300 in Chandler.
Phoenix Business Journal quotes Sean Cunningham, vice chair and multihousing broker for CBRE Inc. as saying that there were 9,800 apartment available throughout the Valley in 1999 and 617 last year. He expects 1,300 new units coming on the market this year and 4,000 in 2013.
Public construction dropped 4 percent when compared to May 2011.
“Based on the number and variety of projects that have been announced in recent months, I expect the private nonresidential sector to keep posting hefty gains for the rest of 2012 and beyond,” Simonson predicted. “Apartment construction seems sure to remain strong as well. Single-family homebuilding is not as solid but has apparently passed its low point. Together, these categories should mean that total construction spending in 2012 will be positive for the year for the first time since 2007 despite ongoing weakness in public construction.”
Association officials said the enactment of a federal highway and transportation bill that slightly increases spending over the next 27 months will keep public construction from falling further. But they urged Congress to include more funding for essential water and wastewater projects.
Read the original report at AGC