... residential category that’s underperforming estimates. McGraw-Hill Construction now predicts that this sector will deliver $7.3 billion in new work during ‘09. That’s $4.5 billion lower than its original forecast of $11.8 billion.
Nonresidential is lower than expected, with the current forecast $11.2 billion, versus the original ’09 tally of $12.6 billion.
Nonbuilding is cranking, though, and McGraw-Hill now anticipates $9.5 billion in new contracts for this sector, up from the original forecast of $7.25 billion.
The story is much the same in Georgia, minus the big nonbuilding uptick. McGraw-Hill Construction now expects $14.7 billion in total ‘09 contracts, down from the original forecast of $18 billion.
Nonresidential is now forecast to deliver $6.7 billion in new contracts, while the residential market may only generate about $4 billion in new projects. That adjustment to the residential forecast is more than 33% lower than the company had expected back in January, when it predicted nearly $6.2 billion for this market.
Nonbuilding construction in Georgia is now expected to be only slightly better, with the current forecast at nearly $4 billion, up from the original $3.7 billion.
North Carolina’s overall number is down considerably, too. In January, the prognosis had been $18 billion in new 2009 contracts. McGraw-Hill Construction now expects $13.6 billion in new contracts.
The state’s nonresidential market is now forecast to total $5.4 billion, down from the early forecast of $6.3 billion. The residential market, originally estimated at $8.5 billion, is down to just $4.8 billion.
The state’s nonbuilding market is now expected to hit nearly $3.5 billion, up from the original estimate of $3.2 billion. That’s still down from 2008, however, when nonbuilding totaled an estimated $4 billion.
In South Carolina, McGraw-Hill Construction now expects only $7.1 billion in new state contracts during 2009. That’s below the $9.8 billion the company had anticipated earlier this year.
The state’s nonresidential market forecast has been cut to $2.6 billion, down from the original estimate of $3.4 billion. The residential outlook has been slashed. Instead of the $4.5 billion originally predicted, the new figure is just $2.8 billion.
Thanks to the stimulus, the state’s nonbuilding market is nearly on target with McGraw-Hill Construction’s original forecast. Instead of the nearly $1.9-billion original estimate, this market is now pegged at about $1.75 billion.
The Opinions Sources contacted for this story were seemingly singing from the same songbook, with a chorus of “low expectations.” Comments included: “2009 has lived up to its low expectations;” “Unfortunately, 2009 is evolving about as we had anticipated;” and “2009 has been as difficult as expected.”
The issues contributing to the downturn are, likewise, as expected—continued problems with financing and tight credit; declines in capital budgets, especially among public-sector owners; and intense competition for contracts.
Though many opinions were negative, there is some contractor-style optimism.
“Our revenue will stay about the same in 2009 as for 2008,” says Rex Kirby, president and manager of Suffolk Construction in West Palm Beach, Fla. “It’s not the growth we projected prior to the financial collapse, but based on what I am seeing and hearing, we will take it. 2010 has me concerned.”
Most would probably “take” that kind of revenue performance, says Mark Wylie, president and CEO of the Central Florida Chapter of Associated Builders and Contractors in Orlando.
“Commercial construction activity is at low tide in Central Florida,” he says. “We see an extraordinary number of generals and subs pursuing a few public projects.
“Commercial lending dried up last summer and the drought has not been broken. Federal stimulus funds are also not coming into commercial construction, for the most part.”
Tom Raney, senior vice president of R.J. Griffin & Co., Atlanta, is also downbeat.
“New commercial projects are slow to start, primarily because the banks have been out of the market for the past 10-plus months,” he says. “There are a few exciting things happening, in select commercial markets, where owners have the financial strength to capitalize on the substantially reduced construction cost. (But) the overall commercial market is slow and has the potential to be extremely rough.”
|Southeastern Region||Actual |
|Commercial & Manufacturing||23,967||15,312||9,355|
|Stores & Shopping Centers||5,635||4,339||2,550|
|Hotels and Motels||2,323||2,224||1,246|
|Other Commercial Bldgs||4,735||3,364||2,240|
|Other Institutional Bldgs||5,200||6,292||7,142|
|Highways & Bridges||8,215||5,580||7,885|
|Other Public Works||4,340||2,542||2,938|
|Commercial & Manufacturing||10,292||7,174||4,361|
|Commercial & Manufacturing||5,083||3,830||2,321|
|North Carolina||Actual |
|Commercial & Manufacturing||3,405||2,648||1,795|
|South Carolina||Actual |
|Commercial & Manufacturing||5,187||1,661||878|