Regional Report: East Texas
Construction remains off from the boom times of a few years ago, but there are glimmers of hope in Houston, as well as worries related to BP’s oil spill.
“In some respects, we are a bright spot in the country because we have enough public-sector work to keep people busy,” says Cliff Haehl, director of business development for Manhattan Construction Co. in Houston. “But it’s slower than at any time in the past 30 years.”
However, Haehl says he expects that Houston, America’s fourth largest city, is well positioned to come out of the recession before some other parts of the country because of its positive business climate and population growth.
The Brookings Institute recently reported that Houston and five other Texas cities were among the 21 strongest-performing metro areas in the country.
Manhattan Construction is working on two projects at George Bush Intercontinental Airport in Houston: the $36-million, phase three automated people-mover extension and a $42-million renovation of the Terminal C garages.
For Linbeck of Houston, “The first sixmonths of 2010 have been busy, and there have been a lot of opportunities in the education sector,” says Bill Scott, division president.
Linbeck recently received a design-build contract to build a classroom building and business school at the University of Houston and a $17-million construction management contract at the school’s Energy Park campus.
Ronnie Howe, senior vice president and account manager for Skanska USA Building in Houston, also reports having “a fairly successful year, a lot more so than our counterparts.”
Randhir Sahni, president of Llewelyn-Davies Sahni, a Houston architecture and urban design firm, says, “The Texas economy is still chugging along nicely. Houston is a bright spot in the United States.”
Llewelyn-Davies Sahni continues design work for Houston Community College. Construction has started on the $1-million Central Campus Business Center and the $1.2-million South Campus Sports Complex. Gamma Construction of Houston is building the business center and Miner-Dederick Construction of Houston the sports complex.
One concern, however, is aftereffects of the BP oil spill, Sahni says. If the government succeeds in implementing a moratorium on drilling, he fears oil companies will move drilling operations to Brazil. In addition, as BP spends more money on clean-up and containment, that’s less it can spend on its Houston operation.
“It all ties into the economic flow,” adds Russell Hamley, president of the Associated Builders and Contractors Greater Houston Chapter. “Unemployment in that sector will exacerbate what’s a bad problem.”
Christopher Peck, vice president of McCarthy Building Cos. in Dallas, says oil companies, like other private entities, are likely exhibiting signs of caution about spending money. McCarthy is still working on a $100-million extension of the existing Bayport Terminal Complex at the Port of Houston. It is nearing completion on an eight-floor addition atop M.D. Anderson’s 12-story Alkek Hospital in Houston, a $220-million, 500,000-sq-ft vertical expansion designed by Dallas-based architect HKS Inc. “The good news is there are opportunities,” Peck says. “Although activity is not as good as we would like it to be, there is work to pursue, from higher education to health care to public general construction to civil construction. The projects are not as big, and there’s a more competitive market.”
Jerry Nevlud, president and CEO of the Houston Chapter of the Associated General Contractors, anticipates 2010 will end up about the same as 2009, which produced half of the work of 2008.
“Houston is better than other places, but it’s still a tough market,” Nevlud says.
Hamley concurs that Texas is fairing better than other regions, but he reports a lot less work than in years past.
“Backlogs are being reduced tremendously, and a lot of contractors are looking for nontraditional work outside their specialty,” says Hamley, who estimates public work is off 75% from two years ago and private development is nonexistent. “There’s quite a bit of competition and companies coming from out of state.”
Competition Private work remains scarce, because of tight credit markets, Haehl says. Banks fear economic uncertainty, and economic turmoil in other parts of the world is affecting lending here.
“As a result, construction companies that have focused on the private sector are now focused on the public sector,” Haehl says. “There’s less work and more competition.”