For 2020, Optimism Prevails for Southeast Builders
As 2020 approached, national forecasts about the vitality of the U.S. construction economy typically predicted some level or type of slowdown in new starts. Among other items, worries about impacts from international trade disputes and tariff measures helped fuel some skepticism of the construction economy’s ability to maintain momentum.
Last November, Dodge Data & Analytics predicted the volume of 2020 U.S. construction starts would decrease 4%, for a total of about $776.4 billion.
“Yes, [construction will] decline in 2020, but nothing like what we saw in the last recession,” said Richard Branch, chief economist for Dodge Data & Analytics, ENR reported. He added, however, “There will still be lots of opportunity for growth” in certain areas.
Indeed, contractors and designers working across the Southeast are still seeing plenty of opportunity for growth across the region.
“Our optimism is still high,” says Dan Kaufman, regional president with JE Dunn Construction in Atlanta. “We can’t help but think that the tables are going to turn, but it feels very similar to 2019.”
For the contractor, last year proved exceedingly strong, Kaufman says, with 2019 finishing out as “the best year ever in our company.” The year ended with the firm’s backlog hitting a record high.
Even so, Kaufman adds, “Revenue and profitability in 2020 look even better for us.” For instance, Dunn’s pipeline of Southeast work should total “a little over a billion dollars” for 2020, and 2021’s backlog is already roughly $700 million. “We’ve got a great runway in the amount of pursuits we have in interviews, and the pipeline still seems to be really strong.”
Elsewhere, similar sentiments prevail for 2020.
“All of our geographic markets in the Southeast continue to show signs of growth, and our design partners are busier than ever,” says Mark Whitson, Southeast region leader for DPR Construction in Raleigh.
Whitson cites the life sciences construction market in the Raleigh-Durham area, which he says “continues to show very strong growth,” as does the health care sector throughout the Southeast. And the Southeast continues to draw capital investments in manufacturing facilities, with that project sector appearing to remain “extremely strong,” he adds.
Major metropolitan areas across the Southeast have been delivering an abundance of construction activity recently, and there is little sign that this trend will slow. Whether it’s Orlando’s booming theme parks and transportation infrastructure improvements or Tampa’s continuing transformation of its downtown district or the continuing activity in Miami’s residential sector, the examples of continuing market strength abound.
“Nashville has had tremendous growth, and there are typically 20-plus tower cranes visible from the skyline,” adds James Ferris, chief operating officer with Orlando-based TLC Engineering Solutions.
More specifically, Ferris says, “Atlanta has had high activity with Piedmont Atlanta finalizing construction on their new expansion, Grady Health System starting a major growth program as well as major projects at all of the health care systems within Atlanta.
“But overall, if you look at the state level, Florida would still collectively have the most growth,” he says. “The market is certainly hot, and as long as population growth continues to be realized, the Southeast will continue to grow.”
Robin Savage, president and COO of Robins & Morton, is also optimistic about 2020.
“We believe that 2020 will likely be another steady year for the Southeast construction market, even considering external unknowns and impacts,” Savage told ENR Southeast.
“Southeast cities, including Atlanta, Orlando, Charlotte and Nashville, continue to rise in popularity with young professionals as they attract new business and industry,” Savage says, citing Nashville’s recent recognition as one of the nation’s top U.S. job markets, according to the Wall Street Journal.
“As these cities continue to grow, they will have immediate construction needs,” Savage says. “I believe we will continue to see the Southeast thrive and the volume of new projects increase. This outlook is supported by the high backlog of projects as well as continued opportunities on new projects.”
For the Southeast as a whole, perhaps no other construction market has been as solid over the past several years as the health care sector. That doesn’t appear to be changing anytime soon.
“The health care and hospitality industries remain strong and growing, and the Southeast holds some of the most prominent locations for both of those sectors,” says Savage, with Robins & Morton, one of the nation’s largest health care contractors. However, he adds, “The emphasis on strict project budget compliance has risen to a new level.”
Ferris, with TLC Engineering Solutions—another health care construction specialist—sees continuing strength in this area.
“Health care is slightly different in the Southeast than other regions,” he points out, with national trends pointing toward “more and more outpatient care and less opportunities for additional inpatient beds.”
By contrast, “With the population growth that the Carolinas, Tennessee, Georgia and Florida have seen, there has been significant need. The outpatient projects are still very much present, but we have still continued to add beds, and hospital systems are immediately filling them.”
About the Ranking
This year’s Top Starts list ranks 55 projects from across the Southeast region that started construction in 2019. Primary sources for this ranking included reports provided by Dodge Data & Analytics as well as firms that provided information about their largest Southeast contracts to start construction during the 2019 calendar year.