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Strong Immune System
Statistics show commercial construction so far this year has slowed from a year ago. But compared to elsewhere, this market remains robust.
By Sean Roth
Special Sections Editor
If you graphed the trend line over the past half-century of Manatee and Sarasota counties' construction industry, except for a few cyclical downturns, the arrow would almost always be moving up and to the right.
Construction, as has tourism, has always fueled the economy here. Now is no different - even in the midst of the nation's economic slump. Make no mistake about it, the construction industry has two trump cards that keeps it going in good times and bad - a) the region's attractive physical environment, which draws new residents who beget new construction; and b) the unending stream of northerners immigrating to Florida.
"We have been pretty immune the last couple of years," says Jack Cox, president of Halfacre Construction Co. Inc. "We have been hiring lately, and we got a ton of applications from people outside the area" - a clear indicator of how weak the regional economies are elsewhere and how strong our regional economy is perceived to be by outsiders.
Statistically, the first four months of the year are mixed. Total construction starts and values have increased 7.7% and 3%, respectively, in the first four months of this year versus the same period last year, according to data compiled by Sarasota-based Construction Guides Inc.
Predictably, single-family homes continue to lead the construction market in both starts and values. For the first four months there were 2,594 starts with a value of $446,105,845. As a percentage of the total, single-family starts were 55% of all starts in the period, and single-family values were 63.9% of the total ($698.6 million). Single-family starts were up versus the same period in 2003 from 2,335 to 2,594 starts (11.1%), while values jumped by 20.6% to $446 million.
Overall, commercial construction, during the period, had a similar number of starts compared to the first four months of 2002. But reflecting the slowdown in office construction, the value of new commercial construction declined by 15.8% to $142 million.
Commercial starts comprised 6.3% of the total number of construction starts during the first four months of this year, but the value of commercial construction during the period was 20.3% of the total. There were 296 new commercial starts for the first four months for a total value of about $142 million.
Multifamily construction starts declined by 30.8% from 104 starts in 2002 to 72 this year. The value of multifamily construction in the first four months fell by a similar amount from $84 million to $52 million, or 38.2%.
Geographically, commercial construction starts are concentrated primarily in the unincorporated areas of the two counties and in the two largest municipalities.
In the first four months of the year, unincorporated Manatee registered 108 commercial construction projects, while unincorporated Sarasota County registered 101 commercial projects.
The city of Sarasota followed with 43; Bradenton recorded 26; and Venice recorded the commencement of 11 commercial projects. Longboat Key was the only municipality to record no new commercial construction starts among the 10 municipal and county entities tracked by the Construction Guide.
In terms of dollar value, the projects begun so far this year in Manatee County were valued at $63.6 million, while those in unincorporated Sarasota County were valued at $40.8 million. Clearly the value of construction in Manatee has benefited from the construction of the new hospital at Lakewood Ranch.
Altogether, construction executives say this region's commercial sector remains healthy vis-a-vis most other areas of the country. To be sure, speculative office building has come to a halt, just as it has everywhere else. Nonetheless, there's one sector of the commercial office market that continues to expand - perhaps to the point of becoming overbuilt. Several construction executives are becoming concerned about the high-growth in the flex- and office condominium market.
With interest rates at their lowest point in a decade, developers have used the condo option to attract primarily small businesses. It seems as if everyone is participating: Sarasota architect George Palermo's Garden Office Park; Bonita Springs-based Corporate Realty and Development's Ironwood Business Center; Jerry Wyatt's Whitfield Loop building and Miramar-based National Constructors' Contractors Business Park at the Sarasota County Interstate Business Center.
"I personally think it's full or getting full," Cox says. "We're not seeing a slowdown in people buying them, which is kind of a contradiction. I'm surprised the market is still so strong. I think it's a great investment for a small company. I'm just surprised by the number of small business owners in Sarasota County."
John McIntyre, president of McIntyre, Elwell and Strammer General Contractor, agrees. He thinks the office condo market is overbuilt. "They have been very trendy, very hot. A lot of that boils down to the price of money. The biggest issues with them, from a practicality standpoint, is there is no ability to expand." McIntyre wonders what all those companies will do over a five-year period if they outgrow their space.
One area of the construction market that has been growing considerably is municipal government construction.
"I would say that it is a tick above average," says Craig Campbell, director of business development for Sarasota-based Dooley and Mack Constructors Inc. "The schools certainly got a boost, not just locally but around the state." In this area, there's also the Florida Department of Transportation's $68 million, 3,000-foot John Ringling Causeway Bridge. While most of Dooley and Mack's municipal work is outside the two-county area, Manatee County is scheduled to see its share of new school construction from a half-cent sales tax and impact fees.
"They have $377 million more to spend on schools," Michelle Holt, vice president of marketing for the Sarasota office of Pittsburgh, Pa.-based R.E. Crawford Construction Inc.
Lakewood Ranch also continues to be an area in high demand in all sectors - residential, retail and office/warehouse. Here's another measure of its popularity: By 2004 there are expected to be four construction companies with offices in Lakewood Ranch: Miami-based Myers Construction and Remodeling Co., Halfacre Construction Co., R.E. Crawford Construction and Dooley and Mack. W.G. Mills currently has a branch office there, and at least three major home builders will soon have their headquarters in Lakewood Ranch - Lee Wetherington Cos. Inc., M. Pete McNabb/Arthur Rutenberg and Neal Communities.
McIntyre attributes a lot of the new business interest in Lakewood Ranch to its residential success. "Certainly, new construction follows housing starts," McIntyre says.
Downtown Sarasota also has experienced a resurgence in development interest in the last year, with projects in development for a Publix Super Markets, Whole Foods Courthouse Centre, Five Points Tower and a new Sarasota Herald-Tribune headquarters.
"The downtown is being revitalized," Lisa Murphy, vice president of D.E. Murphy Constructors Inc. She says the new activity is why her company relocated last year from Seeds Avenue to Ringling Boulevard.
Downtown Bradenton is experiencing a resurgence, too. Progress continues on the residential condominiums at the formerly vacant Sandpile property, just south of U.S. 41. Work started a year ago on the MainStreet at Bradenton, an $18 million 252-unit apartment complex, and already a number of the units have been leased and occupied.
The entire complex is scheduled for completion in about a month. The next phase of the Sandpile development is expected to start in October, when construction is set to start on the first of three high-rise condominiums. Plans call for the developer, Bradenton Riverfront Partners, also to build a five-story hotel and several office/retail buildings.
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