News
De-construction
November 18, 2010
| McGraw-Hill Construction economist Robert Murray says construction nationwide declined 50% from its peak in 2005 to 2010, so there's nowhere to go but up. Later, our interior decorator stopped by to ask if he could borrow some of that silver lining. | |
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| Bob says the drop in construction's “been really, really steep. Earlier cycles declined only 20% to 30%,†he says. “The expectation is a slow upturn. We're still facing a tight fiscal environment with state and local levels.†If he had to pick a bright spot in the overall economy, he'd go with corporate profits showing decent growth: “At some point, they can't continue to hoard that cash. They'll have to invest it. The expectation is that employment should pick up in 2011. That would set the stage for a more sustainable improvement,†If you're a bettin' man, most mainstream economists say the odds of a double dip are about one in three. Better odds favor “slogging†(we'll assume that's a technical finance term) for late 2010 to 2011. Bob spoke last week McGraw-Hill Construction Outlook 2011 Regional Conferenceat the Dallas Marriott Las Colinas. | |
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| Bob says the underlying dynamics across Texas have been stronger than the US. Employment growth levels will increase in 2011 largely because pluses the state offers: central location,quality infrastructure and economic diversity, etc. The minuses: volatility in the energy and defense sectors and high-tech manufacturers facing foreign competition, he says. “The more recent take on the Texas economy is its expedited recovery can thank gains in manufacturing electronic equipment in Dallas and Austin, in particular,†he says. Compared to the nation, 2010 YTD total construction in Texas versus 2009 figures is down 2%. What's gone up? Single family, up 5%; multifamily, up 18%;manufacturing buildings, up 120%; and public works up 19%. What's down? Commercial, 39%; institutional buildings, 18%, and electrical utilities are down 40%. | |
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| Bob's data shows DFW with four of the state's top construction projects dollar-wise. (Maybe the construction crane really is the state bird of Texas.) Dallas has the largest project in the state this year with the $75M, 375k SF Museum Tower (rendered above), which started in September. Bob says the condo project shows development is picking up. Other September starts include the $32M, 760k SF Parkland Hospital Parking Garage and the $25M, 350k SF Village on Little Texas Apartments in Carrollton. The other DFW top 10 state construction project is the $31.9M, 174k SF The Overlook Residential Retirement Housing, which started in Feb. |
