With a more diverse mix of construction projects either breaking ground or on the drawing boards in a broad range of regional markets, the nonresidential construction market may finally be on solid ground. Projects of $100 million in total construction value that made news over the past six weeks include a 3,500-room Las Vegas resort; a 72-story Los Angeles office tower; a billion-dollar residential development in the California desert; and a $4.3 billion office complex project planned for Kansas City, Mo., by Cerner Corp.
These jobs and several dozen other projects now in the pipeline contribute to the bullish economic forecasts by the construction industry’s leading forecasters. According to the Consensus Construction Forecast published by the American Institute of Architects (AIA), Washington, D.C., the nonresidential construction industry will grow 7.6% in 2014, led by double-digit increases in the commercial, office and retail construction markets. AIA’s consensus forecast combines the economic outlooks published by McGraw-Hill Construction, IHS Global Insight, FMI, Reed Construction Data, Associated Builders and Contractors and Wells Fargo Securities.
Another economic indicator highlighting the current health of the construction market is McGraw-Hill Construction’s Dodge Momentum Index, which rose 1.2% in December from November and is at the highest level since Feb. 2009. A McGraw-Hill press release highlighting the latest index said the December reading for the Momentum Index, a monthly measure of the first (or initial) report for nonresidential building projects in planning that leads construction spending for nonresidential buildings by a full year was up 32% compared to the same month a year ago. That being said, the Momentum Index remains significantly below its Dec. 2007 pre-recession peak. McGraw-Hill said in this release that some of the largest projects to enter the planning pipeline late last year were the $350 million Moffat Place Office Campus in Sunnyvale Calif.; the $300 million Boston Garden Office Tower in Boston; a $95 million expansion of a Microsoft data center in Quincy, Wash.; a $120 million renovation/addition to the University of Michigan’s School of Dentistry in Ann Arbor Mich.; a $100 million Nuclear Power Training Facility in Charleston S.C., and a $90 million renovation to the University of Dearborn’s Engineering Laboratory in Dearborn Mich.
No other project reflects the drastic turnaround in the construction market better than the Resorts World resort that Malaysia’s Genting Group plans to build in Las Vegas. According to a report in the Las Vegas Review Journal, the resort will break ground this year on the former site of the Echelon casino and will undergo between $2 billion and $7 billion in renovations. The article said, “It will take at least two to three years to complete the 3,500-room Resorts World, which would become the Strip’s first new megaresort opening since the 2010 unveiling of The Cosmopolitan of Las Vegas.”
Some of these new projects are apparently record-breakers. According to a report at www.multihousingnews.com, a 69-story residential tower that recently broke ground in Jersey City, N.J., will be the tallest residential project in N.J. The report said, “The $291 million, 763-unit development is the first phase of URL Harborside, which will eventually showcase three towers offering more than 2,300 residences overlooking the skyline of Manhattan. It’s slated for completion in 2016.”
On the West Coast, www.globest.com says the $1.1 billion 72-story Wilshire Grand hotel that will break ground in Los Angeles on Feb. 15 will be the tallest structure on the West Coast at 1,100 feet, and in Philadelphia Comcast Corp., plans build a “$1.2 billion, 1,121-feet tall technology center that, upon completion in late 2017, will be the largest building in the United States outside of New York and Chicago,” according to a www.bostonherald.com post.
While the improvement in the residential market over the past 12 months is well-documented, few of the projects that builders have in mind are probably on the same scale as La Entrada, a massive mixed-used development that last month was approved by the city council of Coachella, Calif. According to www.mydesert.com, the 2,200-acre development will create a “city within a city” and bring 30,000 new residents to Coachella over the next 20 years. Said the post, “The $1 billion-plus idea for the La Entrada by New West Development is ambitious. It would include 7,800 homes; a retail center with stores, office space and businesses; nearly 350 acres of open space for playgrounds, parks and hiking trails; and potentially a new soccer-centric sports venue.”
Two mixed-use projects also in the heavyweight classification include the $850 million Flushing Commons, which Crain’s New York Business says will break ground in March in Queens, N.Y., and include 150 housing units, commercial space, and a 1,000 vehicle parking area, and the ongoing Hudson Yard project in Brooklyn, N.Y., which when complete will include a combined total of 12 million square feet of residential and commercial space.
What’s particularly interesting about this boomlet in construction is the diversity of projects. In addition to the mixed-use, commercial, residential, retail and hotel projects mentioned here are mass transit projects underway or planned in Honolulu, Orlando and Los Angeles; 10 petrochemical cracker plants in the Gulf Coast region; billions of dollars of construction in downtown Pittsburgh and in facilities to support western Pennsylvania’s shale gas industry.