Back in June, I posted a blog about the possible resurrection of the South Florida construction market in 2012. It was based on an interview with Thomas P. Murphy Jr., chairman and CEO of Coastal Construction Group, Miami.
"Hospitality projects appear to be on every corner," and "rental apartment (projects) are everywhere" were two of Murphy's quotes.
Well, he's not the only South Florida contractor forecasting an upturn. I recently spoke to Brad Meltzer, president of KM/Plaza Construction, Miami, and it looks like he's seeing similar prospects for the coming year--though sounding a little more reserved than Murphy, who called the forecast upswing "unprecedented."
"We’re cautiously optimistic," Meltzer says. "All signs are pointing toward the economy bouncing back faster than we thought, but nobody wants to start counting their chickens before they hatch. Everyone’s being cautious."
Considering the downturn that local contractors have been enduring, that sentiment's certainly understandable. But reasons for enthusiasm are prevalent, Meltzer adds.
"The rental market is big," he says, adding that affordable-housing projects are also proliferating. The upturn in rental property projects is likely due to the ongoing uncertainty related to the overall housing market, so that could be viewed as a silver lining to this economic sector's ongoing malaise. However, the upturns in two other markets seem to bode more positively.
One market that historically has gone along with positive economic trends is the retail sector. And that's starting to gain momentum in the South Florida area, according to Meltzer.
"We’re seeing a significant amount of retail of late," he says, citing a contract with Simon Properties for an expansion of the Dadeland Mall, and a new shopping center project in Delray Beach.
Meltzer sees retail's "long-term players," including REITs, as the main drivers of the recent resurgence. "They might be financing on their own, and taking advantage of the low construction costs we’re seeing right now [to] take some projects to market that just three or four years ago they couldn’t."
The hospitality sector, long a staple for KM/Plaza, is on fire, Meltzer says.
"Hospitality is definitely a strong sector," he says, adding that Miami Beach is a true hospitality hotbed. For instance, in Miami Beach alone, KM/Plaza is "looking at" six hotel projects.
Again, Meltzer sees the recent hospitality rebound as being fueled by the "long-term players" taking advantage of good prices. But those prices might not stay low for long, he says. A commodity-based price escalation is definitely starting to happen.
"It’s still very low, [but] we’re starting to see a slight creep in a couple of areas," he says. "Most of it has to do with the commodities – things like copper, aluminum, glass, some petroleum. We’re starting to see a few raw materials start to increase in price and therefore some of the key trades like electrical, HVAC, plumbing and concrete. It’s something to keep our eye on right now."
Even so, the good appears to be outweighing the bad, and KM/Plaza and other firms are getting back into the hiring mode. Meltzer says the companies looking to land a fair share of these emerging opportunities--including KM/Plaza--are "trying to time these new projects and bring back some key staff."
"We had some layoffs, but ... our core team is still intact," he adds. "I think we’re well-positioned to take on new work without having to go outside and [hire] too many [new] people."
So what do you think? Is your firm active in South Florida? Are you getting similarly positive vibes about the coming year? Let us hear your thoughts!