The lack of new megaprojects starting across the Southwest region last year was indicative of a more subdued pace of work for most contractors as they continue to deal with the upheaval brought on by the coronavirus pandemic.

The region still has its share of ongoing megaprojects to keep firms busy, but other than the $1-billion Gemini Solar Project in Las Vegas, the next largest start during 2020 came in at $385 million, for the UNM Hospital Tower and Patient Parking Structure in Albuquerque. Next on the list was the $257-million second phase of the Northwest Light Rail Extension in Phoenix.

Related Link
ENR Southwest 2020 Top Starts

The trend toward smaller projects and tighter funding almost certainly will accelerate this year, with construction jobs down by 3,000 nationwide in January compared with December and employment numbers 3.3% lower than in February 2020, according to the Bureau of Labor Statistics.

In addition, many owners are taking a wait-and-see attitude toward spending for new work. “The stagnation in construction employment in January may foreshadow further deterioration in the industry as projects that had started before the pandemic finish up and owners hold off on awarding new work,” said Ken Simonson, chief economist for AGC of America.

But there are some early indications of positive change ahead. “Though nonresidential construction spending has continued to recede for the better part of a year, the growing consensus is that the next six months will be a period of improvement,” said Anirban Basu, ABC chief economist.

Some private-sector work, especially mixed-use, casinos, multifamily and hospital upgrades, surged in Las Vegas and Phoenix.

But municipalities and state agencies are being careful to prioritize their spending, with some public entities cutting capital projects altogether. However, state DOTs in the Southwest are moving ahead with some key work, and several highway projects made the list of 2020 top starts, including the $181-million Spaghetti Bowl Xpress in Reno, Nev., and $134 million in improvements to Arizona’s SR 189 near Nogales.

The ongoing highway construction is due to the growth of metro areas and the need to improve their infrastructure. Those challenges are among the reasons why the Owner of the Year for the region, chosen by a vote of ENR editors, is the city of Las Vegas (see related story, p. 14), which is undertaking a massive street upgrade in its downtown area, touted as the largest public-works project in the city’s history.