Ever since the great downturn stalled the Southwest construction industry more than four years ago, each new year has brought with it an optimistic attitude that things would get better. Although the downturn lasted longer than most would have hoped, if activity is as robust as projected in the year ahead, 2014 might finally be the year when the Southwest construction market is able to focus more on growth than recovery.

photo courtesy of JB Henderson Construction
Construction employment is expected to continue its upward trend as contractors land more work.

ENR Southwest's inaugural Watch List feature— based on input from those within the industry, editorial research and data compiled by McGraw Hill Construction—highlights several trends related to this renewed growth.

Awaiting a Residential Revival

Nonresidential will grow, but housing awaits another surge

The Southwest had been a growth area for residential construction for more than two decades, but that segment was the hardest hit in the downturn. After years of foreclosures and surplus housing, residential construction in the West is projected by McGraw Hill Construction to see a boom in 2014. According to a report released in November, residential activity in the region is forecast to jump 29% to $6.3 billion in 2014.

But while some parts of the West will see a boom in residential construction—specifically Utah and to a smaller extent New Mexico—increases will be hampered in Arizona and Nevada by high vacancy rates and high unemployment. Increases are expected, but more significant gains likely won't occur until late 2014 or 2015.

"New home sales increased their market share to 14% of sales units in October from 12% a year ago," writes Mike Orr of Arizona State University's W.P. Carey School of Business in his December Greater Phoenix Housing Market report. "They still have a long way to go to recover their normal percentage of the overall market (25 to 30%)."

Las Vegas Stirs From Its Slumber

Tourism and gaming are trending upward, leading to new development

It's been more than three years since Las Vegas has hosted the opening of a hotel or resort and casino, but several projects are under way that will soon change that.

The reason: Revenues are up. According to The Center for Business and Economic Research at the University of Las Vegas, gaming revenue rose more than 1% in Nevada and more than 2.5% for locations along the Strip.

As a result, formerly abandoned sites like the Echelon on the north end of the Strip are scheduled for development and a $350-million sports and entertainment arena will be built between New York-New York and the Monte Carlo.