Southeast Industry Outlook
Contractors are normally an optimistic breed. But with 2009 firmly cemented as the fourth straight year of declining prospects, they seem to finally be feeling a little down.
Industry representatives interviewed for this story have apparently exchanged their normal cockeyed optimism for a more realistic perspective.
Luther Cochrane, chairman and chief executive officer for BE&K Building Group in Charlotte, N.C., was pretty dour in his assessment of the 2010 market, especially as it relates to commercial contracts.
“My crystal ball says six to nine months into 2010, things might start to get better,” he says. “But I don’t think it’s going to happen much before that.
“If you don’t do federal stimulus-supported work, (and) if you’re a traditional commercial builder, this market has shrunk dramatically,” Cochrane says. “There are no condo (projects). There are no office buildings. There’s relatively little build-to-suit. There’s no retail. Health care’s slowed down. Hospitality’s slowed down. Sports and entertainment has slowed down. Even education has slowed down. Everything commercial has slowed down fairly significantly.”
Bill Pinto, president of Atlanta-based regional contractor Hardin Construction Co., sees the coming year as more of the same.
“2010 in our markets will, at best, be similar to 2009,” he says. “Lenders are still struggling with their balance sheets and many commercial loans will start to come due in 2010, requiring financing. With the depressed market, the value of commercial buildings will not be in synch with the loan balances, forcing more buildings into foreclosure.”
Warren Simonds, vice president and chief marketing officer with Willis A. Smith Construction in Sarasota, Fla., is another one of those who’s concerned about this issue.
“The next wave to hit—even if the homeowner market manages to struggle back to some semblance of normalcy—will be the commercial mortgage market collapse,” Simonds says. “This could potentially make the home mortgage crisis look like the proverbial ‘day at the beach’ by comparison.”
BE&K’s Cochrane concurs with his peers.
“I don’t think you’ll see the availability of financing in 2010 even like you saw in 2009,” he says. “We’ve got to work through all of this commercial real estate crisis before they’ll start lending to commercial projects again.”
Poll Results: Mostly Down In late 2009, Southeast Construction posted and distributed a one-click online poll that asked readers, “How do you see construction opportunities in your local Southeast market in 2010?” Approximately 200 people responded.
Here, too, the results were on the pessimistic side, but with a dash of optimism thrown in for good measure.
Approximately 30% of all respondents voted that construction opportunities in their local markets would be “declining slightly” during 2010. An additional 19% projected a market that would “decline significantly” in the coming year. Together, that means 49% forecast a business downturn.
Roughly 24% of those responding chose “steady with last year” as their vote. That left just 27% of voters...