Southeast Builders Too Busy to Worry About Slowdown
A year ago, Southeast contractors were singing about the regional construction economy’s impressive strength across many different project sectors. That depth caused some to even describe the 2018 market as “unprecedented” in their careers.
Today, amid various national predictions of 2019 declines in new contracts, Southeast cities are looking to buck that trend. As noted elsewhere in this edition of ENR Southeast, the Charlotte and Orlando construction markets, for instance, are both forecast to deliver a higher volume of new contracts than a year ago. Charlotte, for example, will see its strongest year in at least five, with an estimated $8.7 billion in new contracts estimated to move ahead in 2019, according to Dodge Data & Analytics.
Looking at this year’s Top Starts ranking, it’s quickly apparent that new, emerging construction markets are driving a significant amount of today’s work, with project owners such as Facebook, Google, Amazon and FirstSolar making strong contributions. The projects being built by these firms are spurred less by the overall economy and more by the development of new technology and the expansion of the digital world.
Add in projects from the still-strong health care, manufacturing, mixed-use development, manufacturing and residential markets, and there’s reason to believe that Southeast builders will remain busy for awhile longer.
The question raised by an “unprecedented” construction market is whether project owners and contractors have since grown smarter, and more disciplined than in past years, says Bobby Campbell, senior vice president for McCarthy’s Atlanta division.
“This isn’t going to last forever,” he says. “The real question for me is has the market diversified itself, and does the market have the kind of discipline where we won’t see the major dips” as was the case with the Great Recession.
So far, he adds, the warning signs that preceded that downturn—such as overbuilding brought on by “easy money”—are not evident.
“Personally, I have not seen a lot of signs pointing towards a massive slowdown at all,” Campbell says, adding that he does see some market discipline currently.
Also foreseeing more positives than negatives from the Southeast region is Robin Savage, president and COO with health care specialist Robins & Morton. Savage expects to see “moderate to strong” growth in construction through 2019, he says.
“Areas such as hospitality, health care and some segments of the commercial sector continue to offer some sizable projects that should start in 2019,” Savage says. “We are generally seeing about a 5 percent increase from 2018.”
The health care construction market “continues to remain strong in 2019 due primarily to large backlogs of work generated during 2018,” Savage adds, with additions, renovations and expansions generally winning out over new, freestanding hospitals.
About the Ranking
Primary sources for the Top Starts ranking include Dodge Data & Analytics as well as ENR Southeast’s own reporting during the past year and related research. Additionally, ENR Southeast asked contractors and designers to provide information about the largest Southeast contracts their firms started building during 2018.
This year’s Top Starts list ranks 40 projects from across the Southeast region, which includes Alabama, Florida, Georgia, North Carolina, South Carolina, Tennessee and Puerto Rico. Collectively, this year’s ranking reflects nearly $10.2 billion in contracts. These key projects are helping to shape the Southeast construction economy.