New construction starts figures for March from McGraw Hill Construction suggest that commercial construction remains in a state of limbo — no longer spiraling down into the depths of recession but still a considerable distance away from truly healthy levels of activity.
At first glance, the news from McGraw Hill, released on April 20, was especially favorable for nonresidential building starts, which jumped 25% in March to an annual rate of $165.5 billion.
However, the year got off to a shaky start for nonresidential production, with the starts for January and February averaging 14% below the monthly average for all of 2010.
On a quarterly basis, according to statistics from McGraw Hill, nonresidential building in the first quarter of 2011 was down 2% from the fourth quarter of 2010, “depicting a market that’s still receding but beginning to stabilize.”
Commercial Builders Waiting for Better News
"We are all desperately waiting for good news and try to dig it up at every opportunity," said Ken Ringe, president of Bayview Construction Corp. in Stuart, Fla.
"There are a lot of approved commercial projects waiting to be taken off the shelf and built," Ringe said.
Unlike busier times when it was a long process obtaining needed project approvals from the government, in today's considerably slower marketplace "most commercial entrepreneurs have their approvals in hand and are awaiting the rebound," he said.
"Of course, financing and the availability of capital remains the largest single factor holding back the recovery, but a lot of banks are opening their range to include products like credit lines again," he said.
Ringe predicted that it may not be long before financial restraints begin to loosen, "and when they do," he said, "builders will have more projects ready to go than anytime I can remember."
Current conditions in Coupevill, Wash., the home of Ted Clifton's company, Clifton View Homes, Inc., are even more sobering.
"We are seeing the worst year ever for all lines of construction in our area," Clifton said. "I have not seen any non-residential work in over a year, not even a remodel or tenant improvement."
Residential builders in the area have been keeping themselves busy with small remodeling projects, he said, but they are not enough to sustain a business.
And the tight lending situation is critical. "The flow of money has completely dried up around here," Clifton said. "Everyone would like to do something, but nobody has any money to do it with."
Gains in Nonresidential Structures
Offering some encouragement, McGraw Hill reported that most of the nonresidential structure types saw gains in March, although in many cases this reflected a boost coming from large projects.
At the top of the list, the starts volume of office construction surged 87% in March, lifted by the start of a $1.1 billion data center in Utah for the National Security Agency.
Manufacturing plants climbed 42% in March, helped by the start of a $900 million semiconductor plant in Oregon.
Store construction in March rose 37%, supported by $245 million for work on the retail portion of the Revel Resort Hotel and Casino in Atlantic City, N.J.
Warehouse and hotel construction were up 67% and 43%, respectively in March, with some assistance from large projects that were more moderate in scale.
On an unadjusted basis, commercial building was up 18% during the first three months of 2011.
“For nonresidential building, there’s still the downward pull coming from the institutional categories, but on the plus side commercial building seems to have already reached bottom, and the gains for commercial building in March would appear to be a positive development going forward,” said Robert A. Murray, vice president of economic affairs for McGraw-Hill Construction.
“The note of caution for commercial building is that market fundamentals such as occupancies have only just begun to improve, and banks remain very cautious with regard to lending for new projects.”
Total new construction starts in March — which include residential and nonbuilding construction — came in at a seasonally adjusted annual rate of $404.9 billion, essentially the same as in February.
Construction Employment Slump Far From Over
Construction employment increased in 138 out of 337 metropolitan areas between March 2010 and March 2011 based on federal employment data, AGC reported on April 26, with decreases in 153 and little change in 46.
However, association officials warned that the industry’s five-year employment slump is far from over, and could worsen as public construction winds down.
“Even with more metro areas adding jobs than in any 12-month period since November 2007, the fact is most areas are far below previous construction employment peaks,” said Ken Simonson, the association’s chief economist.
“With federal stimulus, base realignment and Gulf Coast hurricane-protection projects slated to end soon, many areas are at serious risk of another downturn in construction employment,” he said.
While private nonresidential and multifamily construction appear to be stabilizing or picking up in most markets, those gains are likely to be offset by pending drops in public construction, according to AGC.
Workers need to take precautions against exposure to silica, a basic component of soil, sand and granite that can present a hazard on construction sites.
There are many ways to be exposed. Sand, for instance, can be 100% quartz, which is where most crystalline silica is found.
Silica is contained in many commonly used building products, including mortar, grout, cement, stucco, plaster, bricks/blocks, rocks/stones, ceramic tile, drywall joint compound, fiber-cement board (used for siding) and sandblasting materials.
Over extended periods of time — 10 to 30 years — exposure to high levels of crystalline silica can lead to chronic silicosis.
Exposure to high levels of crystalline silica that can be breathed in can cause acute or accelerated forms of silicosis that ultimately can be fatal.
Silicosis can lead to heart failure, has been linked to several forms of lung cancer and can increase the risk of other diseases such as tuberculosis.
It is important to take corrective measures to reduce employee’s exposure to respirable crystalline silica.
A simple control may work, such as using a water hose to wet down dust at the point of where it is being generated.
Some additional steps that can provide protection:
- Always use the dust control systems that are available for many types of dust-generating equipment, and provide good maintenance for them.
- When sawing concrete or masonry, use saws that provide water to the blade.
- Use local exhaust ventilation to prevent dust from being released into the air.
- Minimize exposures to nearby workers by using good work practices.
- During abrasive blasting, use abrasives containing less than 1% crystalline silica to prevent harmful quartz dust from being released into the air.
- The use of respirators should be considered as a last resort, when engineering or administrative controls are not possible or they are insufficient to achieve acceptable limits of exposure.
Respirators should only be used in the absence of other dust control methods. Employees using respirators must be included in a respiratory protection program. (See 29 CFR 1910.134.)
For more information on this health hazard, see NAHB's Silica Safety Card.
For further information, email Marcus Odorizzi at NAHB, or call him at 800-368-5242 x8590.
The Environmental Protection Agency’s plan to add clearance testing to its Lead: Renovation, Repair and Painting (LRRP) rule has come under attack by 11 Senate Republicans.
The opposition comes on the heels of an NAHB lawsuit against the agency for eliminating another provision of the rule that had allowed the owners of homes in which there were no children under the age of six or pregnant women to opt out of requirements to use lead-safe work practices.
As it wends its way through the federal approval process, the clearance testing proposal — which requires remodelers to conduct lead-paint abatement-style cleanup and testing both in and around the project site after the work is finished — is now being reviewed by the White House Office of Information and Regulatory Affairs, part of the Office of Management and Budget.
In mid-April, senators led by James M. Inofe (R-Okla.) sent a letter to EPA Administrator Lisa Jackson saying that clearance testing would create “significant confusion and complication” and “result in additional costs for home owners” that would make it more likely for them to hire uncertified contractors — the opposite of the rule’s intent to protect home owners from the dangers of lead dust.
In meetings with Senate staff members, particularly those working on the Committee on Environment and Public Works, NAHB has continued to raise awareness of the problems associated with the clearance testing.
In an April 27 letter to Cass Sunstein, administrator of the Office of Information and Regulatory Affairs, Inhofe and the other Republican Senators complained that their previous correspondence with the EPA had gone unanswered.
Calling it a “dramatic change” to the lead rule, the senators told Sunstein that the clearance testing requirement would “amplify the unintended consequences we have heard from our constituents: that the higher costs from current LRRP renovators have pushed home owners to either hire uncertified individuals or to perform renovation work themselves."
In addition, they said, the testing would add even more costs to the renovation work — an expense that the EPA has not accurately portrayed in its analysis of the impact of the new requirement.
“Protecting pregnant women and children from lead exposure is important to all of us and we continue to support the intent of the LRRP rule,” the senators wrote.
“However, we remain concerned that this amendment will have the unintended consequence of driving people away from using LRRP-certified renovators and missing the clear health benefits that come from employing LRRP renovators,” they said.
For more information about the lead paint rule and the actions NAHB has been taking on this issue on behalf of association members, email Matt Watkins, or call him at 800-368-5242 x8327.
May 17-20 is the Spring Board of Directors meeting in Washington, D.C. This year, the meeting will be held at the Marriot Wardam Park Hotel. We look forward to seeing you all there!
Download the schedule and meeting materials at http://www.nahb.org/NCBCspring.
It's that time of year again when we ask you to share your exceptional work! The deadline for submissions is Aug. 1, 2011.
The Awards of Excellence program recognizes achievements in the commercial building industry for design (remodeling and new construction), market appeal, energy efficiency, challenges faced during building and overall project success. The awards program is sponsored by NAHB's National Commercial Builders Council.
The awards competition is open to all builders, architects, designers, engineers, contractors, developers and building owners nationwide. Any non-residential project or facility in the U.S. — completed after Dec. 31, 2009 — is eligible for consideration. Multiple entries are accepted. A panel of building industry professionals will select winning entries. The judges will choose a Project of the Year and Grand, Merit and Chairman’s awards in all categories. Winners will be featured in the Commercial Builder Online Magazine. Follow the instructions in the brochure and fill out the entry form for your chance to be recognized!
The awards competition is open to all builders, architects, designers, engineers, contractors, developers and building owners nationwide. Any non-residential project or facility in the U.S. — completed after Dec. 31, 2009 — is eligible for consideration. Multiple entries are accepted.
A panel of building industry professionals will select winning entries. The judges will choose a Project of the Year and Grand, Merit and Chairman’s awards in all categories. Winners will be featured in the Commercial Builder Online Magazine.
Follow the instructions in the brochure and fill out the entry form for your chance to be recognized!
Freestar Bank Project Makes Bailey Edward Architecture a Star
From the contemporary interior design with bright colors to the signature star logo decorating the frosted glass of the entry tower, the Freestar Bank building in Urbana, Ill., could be mistaken for a downtown city lounge.
To patrons of the bank who know better, the design of the building reflects Freestar’s mission to provide knowledgeable, reliable financial services in a comfortable and casual environment. Inside, a gas fireplace and plush furniture welcome clients to relax, and the brick exterior reflects the durability and strength of the brand.
Bailey Edward Architecture of Champaign, Ill., built this bank with the mission of Freestar clearly in mind. The firm had previously designed another branch in Champaign, so the work history and a demonstrated understanding of the bank’s needs enabled Bailey Edward greater freedom when designing this location in Urbana.
“Freestar Bank insisted that we provide their clients with a comfortable atmosphere that fosters communication and a sense of community. For this reason, the entry and offices open onto a central lobby where clients can relax and enjoy a cup of coffee by the fireplace,” said Jessica Gilbert, project architect for Bailey Edward.
“High quality materials and finishes were used throughout to emphasize the high value that Freestar places on their clients,” Gilbert added.
NAHB’s Commercial Builders Council awarded Bailey Edward Architecture a 2011 Awards of Excellence Merit Award. The Awards of Excellence recognize achievements in design, market appeal, overall aesthetics, challenges faced during building and overall success of commercial projects that are either built or renovated and range in size from less than 5,000 to more than 100,000 square feet.
“The design speaks of strength and durability — certainly a significant message for a consumer banking business,” said Carl Harris, 2010 chair of the Commercial Builders Council. “Congratulations to Bailey Edward Architecture for a job well done.”
The building’s eye-catching design has paid off with increased visibility in this shopping district, resulting in new clients for the bank. The easy flow of traffic around the building was considered in the design to accommodate drive-up and walk-in customers.
Another consideration was that the bank would be viewed from all sides due to its location, so the building design is appealing from any angle. Mechanical equipment and roof penetrations were concealed within a sloping roof with a dropped center portion.
Not only does this building look great but it was built with energy efficiency in mind. All exterior walls were constructed using insulated concrete forms to optimize thermal resistance, and the rooftop HVAC units exceed energy code requirements by more than 10 percent. The building’s other energy-efficient features include occupancy sensors, energy-efficient lamps, and dual-glazed, low-e coated windows set in thermally-broken aluminum frames.
“Excellent communication between the design team, owner and contractor played a key role in the overall success of the project,” said Kevin Schnebly, branch manager of the Bailey Edward office in Champaign. “Everyone’s commitment to quality was clear through all stages of construction.”
For more information on the award and NAHB resources for commercial builders, e-mail Lisa Leone, or call her at 800-368-5242 x8455.
By Kristina Kessler
As society as a whole works toward a greener, more sustainable lifestyle, more and more mixed-use developments are being created in central locations near transit and with biking and walking paths, reducing the need to drive to work or run errands and enabling entire communities to be planned with multiple routes to major destinations. Read about some of the components likely to make mixed-use development more popular during coming years.
Certain trends are becoming apparent as more mixed-use developments emerge in the United States. A focus on walkability, smarter planning for transportation, affordable housing mixed with market-rate units, centers for gathering to create a sense of community, and a mix of commercial and office space, enabling people to know their neighbors and local businesses —much like the feeling of small-town living — are just some of the components likely to make mixed-use development more popular during coming years.
As society as a whole works toward a greener, more sustainable lifestyle, more and more mixed-use developments are being created in central locations near transit and with biking and walking paths, reducing the need to drive to work or run errands and enabling entire communities to be planned with multiple routes to major destinations.
A product type that is constantly changing to serve new residents, businesses or retail tenants, mixed use continues to dominate new commercial and multifamily construction. Successful projects are usually located in dense urban or suburban areas, close to transit, and with a rental rather than for-sale residential component. There also is a trend to give architecturally significant buildings a new mixed-use identity. One niche market —especially at or near the edge of downtowns — is boutique class A office space catering to small business owners.
Given the demographic trends of recent college graduates and empty nesters wanting a more urban lifestyle coupled with low land and construction costs, mixed use will continue to meet certain consumer preferences, say members of ULI's Urban Development and Mixed-Use councils. Lifestyle mixes have the most potential, with entertainment/lifestyle centers still working well. Residential space is definitely the driving force and market favorite. Until employment picks up, however, prospects will be limited. Near-term opportunities will probably be in "redeveloping and reprogramming existing broken mixed-use projects," said one council member.
Opportunity capital is the most available form of financing for new mixed-use projects. A huge amount of equity capital is waiting to be invested, with some equity players more interested in becoming partners. Sales of operating properties are starting to take place at very high prices. The business model also is changing due to formation of public/private partnerships. Governments now are accessing complicated financial structures and new streams of federal dollars, while some are actually borrowing money from private developers in exchange for guarantees.
The recent recovery in demand for housing tax credits is expected to lead to more robust affordable housing construction, with demand for those tax credits now exceeding supply for the first time since the recession started. Projects built in part with tax-exempt bonds are penciling out, as are various workforce housing models in higher-cost markets. The U.S. Treasury Department's New Issue Bond Program is helping keep project financing costs below market rates.
Speakers at the ULI 17th annual McCoy Symposium on Real Estate Finance see recovery remaining slow, with several more years of financial disruption possible. Unfortunately, asset prices rather than job numbers were inflated by the federal program of purchasing securities to provide liquidity to the markets. Loan-to-value ratios have increased from 50 percent to 60 percent. Small- to medium-sized bank failures are slowing. Life insurance companies are becoming very active in Class A assets in cities such as New York and Washington, D.C., but the data have yet to show the overall effects of the lack of job growth.
Symposium participants predicted that the current situation in commercial real estate will last another three to five years — and that it could take 10 years to produce the 10 million jobs needed to bring unemployment down to normal levels.
Advocating for some 400,000 member families, the Texas Farm Bureau is the state’s largest agricultural association. Grant Goss Contracting won the coatings bid for the bureau’s new, state-of-the-art $12 million 73,000 square foot Conference Center.
The job required a wide array of Sherwin-Williams products, starting with one-component ProSelect Stampede Polyurethane Sealant. “With Stampede, we were able to caulk the whole bottom of the exterior building where the flashing meets the concrete with a bead from 1/8 inch to two inches in width,” says William Lane, superintendent on the job. “This product had excellent workability, and it set up quickly so that it resists dirt pick-up.”
ProMar 400 Interior Latex Eg-shel provided excellent touch-up and coverage on interior walls, and Lane also liked the way that the Sher-Cryl HPA performed on the exterior doors and hand railings. “Being waterbased, it was easy to use, and hardens like an oil-based paint,” he says.
Sher-Wood BAC Wiping Stain was used on all the interior woodwork. “We were able to reach a deep color with one coat of the stain,” Lane says. In all, a total of 2,000 gallons of paint, stain and faux finish glazes were used on the job, a team effort led by Lane, lead men Paul Rose and Raymond Saliz, and project manager/company co-owner Cameron Goss.
Reprinted from Professional Painting Contractor magazine, Fall 2010.
This feature is solely for educational and informational purposes. Nothing on this page should be construed as policy, an endorsement, warranty or guaranty by the National Association of Home Builders of the featured product or the product manufacturer. The National Association of Home Builders expressly disclaims any responsibility for any damages arising from the use, application or reliance on any information contained on this page.
Construction Materials Costs Being Driven Up by Surging Freight Costs
A significant part of the recent spike in construction materials costs — up 6.8% in the last twelve months — is due to the 7-8% rise in truck freight rates over the past year through March. Read the full story.
U.S. Construction Spending Goes Up 1.4 Percent in March
Spending on construction projects in the U.S. increased by 1.4 percent during the month of March after hitting a ten year low during February. Read the full story.
Prospects Bright for Originations
For commercial mortgage brokers, the gloom of the financial crisis is starting to lift. Not only are macroeconomic indicators turning positive for the first time since 2007, but bank liquidity — one of the key indicators of future mortgage lending — is starting to improve. Read the full story.
Industry Expects Constrained Cement Consumption Growth for Next Two Years
While the economic recession is over and economic growth is strengthening, the construction recession may not run its course for another 18 months, hindering an improvement in cement consumption for the next two years according to the most recent economic forecast from the Portland Cement Association (PCA). Read the full story.
ASHRAE Seeks Public Comment on Standard for Existing Buildings
With 86 percent of construction dollars going to the renovation of existing buildings, the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) and the Illuminating Engineering Society (IES) are revising ANSI/ASHRAE/IESNA Standard 100-2006, Energy Conservation in Existing Buildings. Read the full story.
VIDEO: Tony Malkin Offers Advice to Owners, Developers and Policy Makers on Green Retrofitting of Commercial Buildings
Anthony E. Malkin, president of Malkin Holdings, LLC, argues for the view of energy conservation as an energy alternative, using results of the green retrofit of the Empire State Building as an example and stating that it costs less to conserve watts than to produce them by alternative means. Watch the video.
Concrete Additives Add Strength and Reduce Carbon Footprint
The National Research Council of Canada - Institute for Research in Construction (NRC-IRC) has developed a new project aimed at reducing the environmental impact of concrete by replacing part of the cement with supplementary cementing materials (SCM). Read the full story.