If you read my previous blog about the revised Midyear Outlook for Florida from McGraw-Hill Construction, publisher of Southeast Construction, you already know some of the disappointing numbers that are mounting up as we progress through 2009. (And even if you haven't seen the numbers, if you've followed Florida's construction market at all, you get the general idea.)
McGraw-Hill Construction's recent press release announcing the publication of the Florida midyear report listed these "highlights" for the Sunshine State:
- Single family construction will fall 42% to $5.3 billion in 2009, a mere 14% of the 2005 peak. A significant decline for multifamily construction is also expected this year, as starts fall 35%; but overall, hope is emerging that the residential bottom is close, since housing has become more affordable and condo sales are beginning to gain traction.
- Commercial construction is likely to experience a very deep correction in 2009, with an expected decline of 38% to $4.4 billion.
- Institutional construction will manage a small gain of 4% in 2009, due mainly to a large upswing in healthcare and public building construction.
- The outlook for nonbuilding construction is the most encouraging. Benefits from state and federal economic stimulus funding are expected to raise this sector’s construction starts by 50% in 2009, finishing out the year at $9.4 billion.
In Southeast Construction's upcoming August issue, we'll publish a midyear report of our own, detailing the prospects for the rest of the year throughout the four-state region, based largely upon the latest data from McGraw-Hill Construction's Analytics division.
As we detail in that upcoming August feature, here are the updated overall 2009 forecasts for each of the four states:
- Florida contract activity (new starts) is now expected to total nearly $28 billion in 2009, down from 2008's $32 billion.
- In Georgia, the total of new 2009 contracts is now forecast to hit $14.7 billion, down from 2008's total of more than $17 billion.
- North Carolina contracts should tally about $13.6 billion during 2009, down considerably from 2008's $19.3-billion total.
- South Carolina should experience roughly $7.1 billion in new contracts, a decline from last year's $10.3 billion.
Remarks from our sources for this story reflected the dire numbers. Mark Wylie, president and CEO of the Central Florida Chapter of Associated Builders and Contractors in Orlando, says: “Commercial construction activity is at low tide in Central Florida. We see an extraordinary number of generals and subs pursuing a few public projects. Commercial lending dried up last summer and the drought has not been broken by TARP investments by the federal government.”
“New commercial projects are slow to start, primarily because the banks have been out of the market for the past 10-plus months,” adds Tom Raney, senior vice president of R.J. Griffin & Co., Atlanta. “There are a few exciting things happening in select commercial markets, where owners have the financial strength to capitalize on the substantially reduced construction cost. (But) the overall commercial construction market is slow and has the potential to be extremely rough.”
Look for the full story at www.southeast.construction.com around August 1. Good or bad, we'll keep delivering the news about the Southeast's construction activity. So stay tuned.