Midwest Contractors Bounce Back With Economy
Or are they? Even in a diverse, vibrant market like Chicago, it’s not all roses quite yet, according to an ‘optimistic’ industry leader
Contractors working in the Midwest, and especially in the Chicago area, have heard much about recovery. But is such chatter just idle?
“Yes and no,” says Jeff Riemer, who heads up Chicago operations for Lendlease as executive vice president. “What we see is some strong recovery in certain market sectors, weak recovery in others, and almost no recovery in a third category.” But because it is happening in Chicago means even a partial recovery has contractors working. “Chicago is one of a number of cities around the U.S. that has pretty good diversity of market sectors,” says Riemer. “That’s good for us, because we like to be in cities where there is sustainability of market over a long period of time.”
In the ENR Midwest Top Contractors rankings on the pages that follow, Lendlease sits 15th in overall 2015 regional revenue and is ranked No. 7 in Illinois. The firm set up shop in Chicago in January 1976. “I think 40 years here proves that sustainability,” says Riemer.
In 2015, the residential sector stood out for Lendlease. The company delivered 1,800 residential units and 600 hotel keys, up from 1,700 and 220, respectively, in 2014. Riemer sees such strength continuing for “the next couple of years,” even with a slight downturn anticipated. In 2016, Lendlease has in progress 2,235 residential units including two mixed-use projects that represent an additional 450 hotel keys.
Within the residential sector, a particular trend is emerging, too. “Coming out of the recession, the building was all for-rent apartments,” he says. “We’re actually seeing some transition now to condominiums.”
The largest Lendlease project to break ground in the Midwest in 2015 is the No. 9 Walton boutique condo development for repeat client JDL Development; following deep basement work, the top-end Gold Coast project is now going vertical. Another condo project underway is the mixed-use One Bennett Park tower in downtown Chicago for client Related Midwest.
Lendlease’s largest Midwest project to be completed in 2015 was the mixed-used residential building housing the new Loews Chicago Hotel at 455 North Park. “There’s some modest shift now to for-sale product,” says Riemer, crediting a movement of residents back to Chicago’s core from the suburbs.
At the same time, he notes, the Chicago office construction market sector has improved somewhat due to space absorption and lack of vacancy as the general economy has recovered. Lendlease is currently working on two projects downtown totaling 88 stories and 2.2 million sq ft of office space, specifically the River Point tower being completed at Canal and Lake streets and the more recently started CNA Center at 151 North Franklin.
Less vibrant market sectors include education, “definitely negatively impacted by the public finance situation and still 20% below 2006,” along with health care and government. “There was a lot of government spending during the recession, but it really trailed off and is only about a third of the activity that took place in 2009.”
On the whole, “I’m optimistic in that there has been underlying strength despite the public financing side of it,” says Riemer. “We started about half a dozen projects this spring, so that’s looking very good for the latter part of the year and for next year.”
For contractors working in the Midwest, taking care of their own has, by extension, enhanced the entire industry. Lendlease was among the companies in on the ground level with Build Safe Chicago, which bands together leading contractors to trade best practices and raise the bar on such issues as safety and training. The dialogue has since expanded to include the city, unions and OSHA.
“When there’s consistency among all the projects around town, and people understand the standards are uniformly high, it makes it easier for our people to manage because they don’t have to explain a new set of processes each time. People already know,” says Riemer. “I’m happy to share that a lot of owners are as supportive of this as we are. This is one of the things that makes Chicago a great town to work in.”