Central Texas Report
Central Texas remains one of the brighter regions for construction in the nation, with many public projects moving forward as well as a few private jobs.
“We have a positive outlook on Central Texas, whereas a lot of areas of the country still have a dark cloud from the economic meltdown,” says Chuck Lipscomb, business development manager for JE Dunn Construction in Austin. “We think this will be one of the first areas to rebound from the recession.”
Forbes magazine, in an article published last summer, placed Austin-Round Rock at the top of a list of cities where the recession is easing and growth is projected to continue. It ranked San Antonio seventh.
Lipscomb credits the area’s entrepreneurial approach to business, with biotech companies and university collaboration, with boosting the region’s economic outlook.
Local businesses, including contractor JE Dunn, have contributed to Opportunity Austin, an economic development initiative of the Austin Chamber of Commerce designed to create investment in Central Texas.
“Businesses that are here see the advantage of growth and bringing in new companies,” says Joe Cisper, vice president of JE Dunn.
One such is Samsung, which announced in early June it would expand its existing semiconductor plant in Austin with an addition to its 2.3-million-sq-ft campus, investing $3.6 billion in its plant’s second phase. The project is expected to create about 3,000 temporary construction and vendor jobs.
Samsung Texas Construction Inc. is the general contractor for the project, which is expected to be complete by end of next year.
Another investor in the area from the private sector is Nordstrom Rack Stores. JE Dunn is building the department stores in Texas. The construction of each outlet location is funded from operations rather than borrowing.
Military projects in San Antonio and state university work in Austin also are providing opportunities for JE Dunn and other contractors.
“At least there are opportunities to pursue,” Cisper says, adding that is not true in many places around the country.
Doug McMurry, executive vice president of the San Antonio Chapter of Associated General Contractors, credits the Texas economy with its relatively low unemployment rate and its ability to attract new business with keeping the area moving.
“We have a great business climate here with companies looking to Texas and Austin for relocations,” adds Phil Thoden, president and CEO of the Texas AGC Building Branch, based in Austin. “The cost of living is relatively cheap compared to other parts of the country.”
Darren G. Woody, CEO of Jordan Construction in El Paso, says that commercial projects are difficult to close due to borrowing difficulties, but public entities with funds find it a good time to build. “Construction costs are down considerably,” Woody says.
Jordan Construction is building the $29.5-million, 558,690-sq-ft Preserve at Fredericksburg, a 360-unit apartment complex with 34 two-story buildings in San Antonio, and Avalon Place, a 360-unit student housing project, also in San Antonio.
“Things in San Antonio are better than most places in the country and in Texas, but it’s nowhere near what it was like a couple of years ago,” says Steven J. Schultz, president of the Associated Builders and Contractors South Texas Chapter in San Antonio. He cites Base Realignment and Closure projects at Fort Sam Houston and Lackland Air Force Base and several school districts with money to build from past bond issues.
“We benefit a great deal from the public sector,” McMurry adds. “That’s not to say we wouldn’t enjoy more private work. We would, but it’s not 2007. In general, we are so much better off than much of the country. We need to be thankful.”
However, because the area continues to offer construction opportunities, McMurry and Thoden say there is greatly increased competition for the work that is moving forward.
“We have a number of folks looking to Austin to tap into the market, and that’s putting added pressure on pricing,” Thoden says.
San Antonio area projects Work began in spring on a parking garage for San Antonio’s University Health System’s $778-million, 1-million-sq-ft trauma tower addition at University Hospital. UHS anticipates construction to begin on the tower in January. A joint venture among Zachry Construction Corp. of San Antonio, Vaughn Construction of Houston and Layton of Phoenix is providing construction management services. The project is set to wrap up in 2014.