Construction — No Signs Of Slowing

Sept. 28, 2010

The industry is faring well in Construction's region, and this trend is expected to continue through 2008. In fact, there appears to be no shortage of work in the region, and a cautious optimism prevails as we look ahead to next year.

The industry is faring well in Construction's region, and this trend is expected to continue through 2008. In fact, there appears to be no shortage of work in the region, and a cautious optimism prevails as we look ahead to next year.


Even the residential market is not doing as badly as averages around the country would indicate. Jobs are flooding into Maryland, and 76,000 jobs are expected in the Baltimore region alone. This is in addition to the 45,000 jobs to 60,000 jobs that are anticipated due to BRAC. All of this means that the state will need 25,000 to 40,000 new homes in central Maryland alone, where the number of affordable homes is a concern. The Metropolitan Washington and Virginia areas face similar issues. An additional 250,000 jobs are expected in the area between 2007 and 2011, which translates to approximately 170,000 new homes. North Carolina and South Carolina, which are also experiencing steady increases in population, have seen their residential construction market remain relatively stable as well.


Of course, this huge influx of new people means that commercial, institutional and heavy construction must keep pace. According to a report by the National Association of Industrial and Office Properties for commercial construction in 2005, the latest data available, the Washington, D.C., economy realized $767 million from new commercial development and $15.3 billion in operational costs of existing buildings; Maryland real estate developers spent $2.8 billion on new development and $34.2 billion on existing buildings; and Virginia totaled $4.9 billion on new development and $61.2 billion on existing buildings. All three phases of commercial construction — soft costs, hard costs and operating costs — continue to be on the upswing in this area of the country.

The Carolinas are also experiencing a construction boom, and the Carolinas Associated General Contractors' Construction Barometer reached one of its highest "optimism" marks in its nine-year history, and a growth rate of 6 percent to 7 percent is predicted. While the availability of labor and materials and supplies costs are concerns, recent data indicates qualified laborers and managers are moving to the South to find work, and most firms indicate that they expect the cost of materials and supplies to stabilize in 2008.


Schools and hospitals — both types of buildings are under construction throughout Construction's region and typify the makeup of its growing population — young professionals with families and retirees. For example, in Loudon County, Virginia, the fastest growing area of the state, it is projected that over the next six years 20 more schools will be needed at an estimated cost of $1.3 billion. In Maryland, the state legislature passed a record $400 million in state school construction funds; this amount represents half of the state's $827-million capital budget. This is, of course, in addition to what each school jurisdiction will spend on construction. In North Carolina, Charlotte-Mecklenburg County residents voted in favor of a $516-million bond package, and seven major projects will get underway by the spring of 2008. In Wake County, North Carolina, where 41,000 new students are expected in the next five years and school construction costs averaged $186.73 per square foot on a recent high school project and $190.02 per square foot on a recent elementary school, the Wake County Public School system is investigating private partnerships in order to decrease costs and speed up construction. Private companies would finance, design and build the schools, and serve as landlord, and the county would lease the facility and be responsible for maintenance. At the end of the 25-year lease, the county would own the facility. Greenville County, S.C., successfully implemented a similar program in 2005 that has saved several hundred million dollars and eight years on a massive school building program.

Hospital and health care construction are also playing major roles in the region's construction industry through 2008. All four states and D.C. have major projects underway such as Johns Hopkins Hospital's $1.2-billion construction of two clinical towers and the Medical University of South Carolina's $400-million Ashley River Tower facility in Charleston. The North Carolina Cancer Hospital and neighboring physician's office building in Chapel Hill is still under construction, and Duke University Hospital has two projects totaling over $76 million underway.


Without a doubt, transportation projects are a priority throughout the region. With the congestion brought on by an exploding population and the location of several major ports and "commerce corridors," moving people and goods efficiently and safely has become paramount. In Maryland, the second major construction contract is now underway for the Intercounty Connector (ICC), a new 18-mile state-of-the-art intermodal toll highway connecting I-270 with I-95 and US 1. These first two ICC contracts total $992.6 million; three more contracts are pending.

In Virginia, three of the five mega-projects begin construction in 2008 — I-95 widening for six miles from Newington to the Occoquan River; the I-95/Telegraph Road Interchange, which is part of the Woodrow Wilson Bridge project; and construction of two beltway HOT lanes from Springfield to just north of the Dulles Toll Road. Utility Relocation has started near Tysons Corner in preparation for the proposed Dulles Rail project, another mega-project. The fifth mega-project, the Fairfax County Parkway, is in the final design stages.

All of this work in the metropolitan D.C. region will also help facilitate the movement of freight through the corridor, which is expected to increase between 70 percent and 80 percent by 2025. Billions of dollars are expected to be spent to facilitate this increase in freight movement through the area that is the geographical epicenter of Interstate 95.

In the Carolinas, transportation construction projects have not reached the levels of Maryland and Virginia, but major projects are underway. Two major projects in North Carolina are the U.S. 70 Clayton Bypass, a 10.7-mile four-lane divided highway ($123 million), and the U.S. 17 Washington Bypass, a 6.8-mile project with a cost of $192 million. U.S. 17 is also under construction in South Carolina, where Segment 1 of the $80-million Ace Basin Parkway is underway. Phase II of the Palmetto Parkway, which will complete the beltway loop around Augusta, Georgia, is also underway and on the fast track to be completed in 31 months.

Landmark Projects

Construction's region has its share of landmark projects that will be in various stages of construction in 2008. Baltimore's Hilton Baltimore Convention Center hotel is scheduled for completion in 2008. The Nationals baseball stadium and the National Capitol Visitors Center in Washington, D.C., will open their doors next year. Ground has been broken and construction is underway on a new Ritz-Carlton and the NASCAR Hall of Fame and adjoining NASCAR Plaza in Charlotte.

As this region of the country continues to set records for population growth and more businesses relocate to take advantage of its strategic transportation corridors and beneficial tax climate, area contractors will have no shortage of opportunities in every industry sector.