THE THREE TENORS

Pardon our headline; it was three economists at Friday’s American Institute of Architects/TEXO economic outlook; but, like a tenor, they spoke of deep treble—sorry, make that trouble. Specifically, retail was hit hard and office was overbuilt in 2009. Though, education, public works, and healthcare, show promise.
 

We snapped AIA chief economist Kermit Baker, who reminds us construction is typically the last major sector of the economy to recover. With the current recession ending in March, he says history shows it takes about two years for a recovery. Recent job reports offer no good news, he says, but everyone is starting to watch the clock for signs.

Overbuilding is causing a decline in office occupancy, and firms are hesitant to add new staffers, according to McGraw-Hill Construction Dodge editorial honcho Cliff Brewis. It’ll take most of next year, he adds, to get a return on the glut of recent projects. Even when employment grows after the recession, it’s unlikely to return to previous levels. He says stimulus packages have made a positive contribution to public works projects in the state, and Texas healthcare projects lead the nation in square footage of new starts.

AGC chief economist Ken Simonson warns small construction employers to pay attention to the new healthcare legislation. He said, as a general rule, there was relief for employers with fewer than 15 employees. But, one proposal has reduced the threshold for construction employers to those with fewer than five. Now, he says, those with 5-50 employees will be singled out for penalties for not providing coverage the government considers adequate.

CD Henderson Construction Group VP Jim Hemsworth and Rogers-O’Brien VP Paul Johnson. With funding, or lack thereof, putting many projects on hold, their companies are taking on smaller projects that can usually get capital. Schools, hospitals and churches seem to be all the rage these days. Less so for the people in them, we imagine, at least for the first two.

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