The Top Starts ranking of the Southeast’s largest projects under way is a yearly glimpse into the heart of a regional market. From owners and contractors, to sectors and geographic hot spots, Top Starts inevitably showcases the forces and players driving work for the Southeast’s construction and design firms.

Image Of The Wolfson Children’s Hospital Courtesy Of Batson-cook Co.

Public Sector This Veterans Administration Medical Center project in Orlando, Fla., illustrates the influences of the public sector and health care on this year’s ranking.

For a few years now, major private-sector projects have been few and far between in the Southeast. Recent figures from McGraw-Hill Construction, the parent of ENR, bear this out. For example, the value of new nonresidential contracts in the Southeast fell as little as 12% in Georgia and as much as 27% in Florida, compared with 2009 totals.

The prospects for 2011 are more upbeat. McGraw-Hill Construction projects a 9% overall improvement in new contracts in Florida, while Georgia and South Carolina are expected to bounce back by 40% and 43%, respectively. North Carolina, meanwhile, could decline by about 5% overall, McGraw-Hill reports.

For the time being, contractors continue to endure market realities, but Top Starts holds out hope.

Power Surge?

Power is one market showing signs of increased activity. Last year’s ranking included just under $700 million of energy-related contracts. This year, the cumulative value of projects is more than $15 billion—although $14 billion of that total is attributed to this year’s top-ranked contract, Southern Co.’s new Plant Vogtle nuclear power project.

The Plant Vogtle project could be the start of a long-term nuclear renaissance that could bring about numerous Southeast projects. As Joseph “Buzz” Miller, executive vice president for nuclear development for Southern Nuclear, says, “We want to build several more reactors. Nuclear is a great source of power, and we’re looking at possible sites across the Southern [Company] system.”

Charlotte, N.C.-based Duke Energy’s recently announced $26-billion merger plan with Raleigh, N.C.-based Progress Energy brings together two firms already inclined toward increased nuclear generation.

Overall, however, the power market is still being held back by the economy, says Keith Manning, executive vice president at Zachry, the contractor for the $400-million FPL project on this year’s ranking.

“It’s certainly far from robust, given the decline in both industrial and residential power demand,” he says, adding that regulatory uncertainty is also hampering activity.

Manning says the most active portions of the power market revolve around gas-fired power generation—due to the declining price of natural gas—and biomass. “We continue to see biomass opportunities,” Manning says. However, because that market is dominated by developers seeking power-purchase agreements from utilities, “the opportunities are going to be situational,” he says, and dependent upon a quality feedstock, as well as financing. This year’s ranking includes a biomass project in Georgia, which has been especially focused on this emerging fuel source.

Health Care

Another prominent sector on this year’s ranking is health care. Numerous contractors have attempted to maneuver their way into this market in recent years, and for good reason. The health-care market remains one of the more consistent ones in the Southeast and has again landed numerous contracts on this year’s ranking. But even here, optimism is restrained.

“We’re guardedly optimistic about increased activity,” says Ed Smith, executive vice president for health care at Charlotte, N.C.-based BE&K Building Group.

“We’re seeing financing being loosened up, allowing projects that were [previously] stalled to move forward,” he adds. In fact, the $94.7-million Piedmont Newnan Hospital in Newnan, Ga., listed on this year’s Top Starts ranking, is an example of improved prospects for financing. “Because of uncertainty with the financial market, it sat mothballed for about a year,” Smith says. “We’re seeing projects like that come off the shelf and get released.”

Though Smith describes health-care owners as “fairly bullish,” uncertainty due to national politics is continuing to affect construction, he says. “The change in Congress has created additional discussion. We still see the market as up in the air, and that’s what we’re hearing from our clients,” he says.

Another contractor active in the health-care sector sees some cause for optimism. Dan McGonaghy, executive vice president for Gilbane Building Co., says providers are expecting to change the way they deliver health care. “Out of that change is going to come some opportunity. I’m fairly confident of that,” he says.

The Southeast, in particular, is generating numerous “hybrid” projects that feature components of health care, higher education and life sciences. That’s mostly due to availability of funding, says Smith.

“The Southeast seems to be fairly robust compared with other regions of the country,” Smith says.

“Research and development seems to be picking up,” adds Gary Stradowski, vice president in Turner Construction Co.’s Charlotte office, which just landed a $60-million energy infrastructure research project at the University of North Carolina-Charlotte.

The List

This year’s Top Starts ranking includes the top 25 projects in Florida, Georgia and the Carolinas that started construction last year. ENR used multiple sources to create the list, including McGraw-Hill Construction’s Dodge database, submissions from contractors and designer firms and previous news reports. Clearly these projects and players will be fueling the Southeast’s construction market in the year to come.