Though construction activity hasn't yet taken off, Atlanta builders are seeing such a surge of preconstruction activity that they are starting to at least think about uttering the "B" word again: Boom. How this expected/hoped-for boom will play out was the focus of an SMPS Atlanta panel discussion I participated in on April 16.
Entitled the "Boom is Back; Is It Built to Last?," the panel discussion centered on the impact that the expected construction upturn—symbolized by the city's two major-league stadium projects heading toward reality—will have on area contractors and designers. In addition to myself, other panelists included Scott Shelar of the Construction Education Foundation of Georgia; Chris Soffe of construction consulting firm Gleeds Americas; Russ Brockelbank with DPR Hardin Construction; and moderator Mike Dunham, CEO of the AGC of Georgia.
The new Atlanta Falcons stadium project, estimated at roughly $1 billion, is one of the megaprojects that will boost the city's construction activity. (Image courtesy 360 Architecture)
While the group concluded that Atlanta is not yet booming, panelists appeared to agree on two points: a significant increase in work is coming; and a shortage of workers will pose a considerable challenge to builders.
Regarding the hoped-for construction resurgence, here are a few of McGraw Hill Construction's latest 2014 forecast estimates for Atlanta metro contracting activity that I was able to share with SMPS members, starting with the good news.
- In 2014, Atlanta will see its highest total of new contracts in six years, with just over $10 billion worth work of new work expected to move forward. That’s an increase of roughly $1 billion compared to 2013, which totaled just over $9 billion.
- By comparison, that two-year total for 2013-14, of about $19 billion, is roughly $2 billion shy of the value of all new Atlanta contracts recorded over the four-year period of 2009-2012.
- Despite that increase, McGraw Hill Construction's current forecast for Atlanta is still well short of the roughly $18.1-billion totals recorded in 2005 and 2006.
- Single-family construction is back, with McGraw Hill predicting the value of new contracts in this sector to increase by about 30% in 2014, for a total of about $4.4 billion, up from 2013's approximately $3.4-billion total. Since single-family construction is regarded as a leading indicator for other construction sectors, that should be a positive. For instance, the publisher also predicts retail contracts to jump considerably in 2014, increasing by about $150 million to total an estimated $482 million.
- On the negative side, Atlanta-area health-care construction will drop to its lowest level in five years, with the 2014 forecast of $254.3-million indicating a steep decline compared to ’13, when this sector generated more than $520.4 million in new work.
How contractors will deal with the hoped-for resurgence remains to be seen, especially with project staffing. Both Scott Shelar of CEFGA and Russ Brockelbank with DPR Construction noted, for instance, that contractors have already shifted from complaining about too many bidders per project, to not having enough specialty contractors bidding each job. The reason for this, they say, is that too many subcontractors are struggling mightily with worker shortages, and their own finances, to be able to bid some of the major projects that are moving forward.
If contractors are already facing these kinds of hurdles, when so much work is still in the offing, what will the situation be like when this wave of construction activity actually turns into reality?
I noted that the coming upturn will provide the answers to questions that, for good or bad, presently remain unanswered: Just how badly did the Great Recession impact the construction industry's capacity? How many workers have left the construction industry for good?
Those answers may not be positive ones. Either way, it will be interesting to watch this situation unfold, in Atlanta and across the Southeast.