Projections for 2008 may differ little from what the AGC expected at the beginning of 2007.
Back in early 2007, there was a feeling that we would continue to enjoy some of the velocity that arose from construction activity in 2006. That, of course, was exactly the case — 2007 became one of our strongest years of the decade.
2008 appears to be showing signs that we could see something close to a repeat, and according to McGraw-Hill reporting service, perhaps an increase.
On the basis of hours worked, 2007 was an extraordinary year. The mega-projects of We Energies-Power the Future, Columbia/St Mary's Hospital, the Marquette Interchange, and Milwaukee City Hall drove construction in ways that we have not seen in recent times.
All of these projects will continue in 2008, which will serve as an enviable base of construction for our area. Other major projects will support this base, particularly the Aurora Hospital in Oconomowoc and the expansion of the Potawatomi Casino.
Where we see difficulty is in the housing markets, both single-family and multifamily.
Unless you've been sitting under a rock, you are undoubtedly aware of the mortgage default problem and the effect that is having on the financial markets. While the depth of this problem is still being ascertained, it certainly is causing anxiety on Wall Street and for the unfortunate people who hold these mortgages.
As for multifamily, we recently heard from one of the area's most prolific developers that there is a four-year supply of condos in the downtown area — hardly surprising considering the level of activity that has occurred over the past several years.
What other areas of concern are out there — gas prices, presidential elections, the downturn in the stock market? All of them will affect our lives. It is just a matter of how.
Relative to high gas prices, we seem to be taking those in stride. Sure, initially we were shocked with $3-a-gallon gas, but now some of us have come to accept it and adjust our lives accordingly.
As for the stock market, well, we have certainly seen a significant correction these past few weeks, and notwithstanding any additional weakness, we may have just dodged a recession. The markets have been very volatile lately, and that certainly causes a considerable amount of apprehension.
Presidential elections are another important issue. They always represent uncertainty and this year will be even more so considering that we will be electing a new president. While that individual will be elected in 2008 and not begin their term until 2009, the $64,000 question will be who and, more importantly, how will their election impact the economy?
While 2008 looks a little hazy, I think the Milwaukee-area construction economy as a whole will sustain itself into another respectable year for 2008.
As I mentioned, we have the mega-projects, we have various mid-level projects; we have opportunities at Pabst Brewery, Pabst Farms, the Menomonee Valley, and yes, we even have expected work in the Park East.
Manufacturing is still doing pretty well for those contractors affected, and with the aging population healthcare construction should continue to prosper.
I am not alone in my assessment; McGraw Hill Economic reporting indicates that while they expect most of the Midwest to experience a slight construction slowdown, they see Wisconsin gaining 11 percent in 2008.
Now that's what I call a projection!