Builders Get Ready for Southeast Resurgence

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The residential rebound has grabbed the attention of contractors across the Southeast, with several citing the housing recovery as the main factor fueling increased construction activity.

"The for-rent market has led the commercial construction industry out of the downturn," says Rob Taylor, regional president with Brasfield & Gorrie, Kennesaw, Ga.

While condominiums are surging in South Florida, the rental market is driving multifamily construction in the rest of the Southeast. Instead of being another bubble, though, Millard Choate, president and CEO of Atlanta-based Choate Construction Co., thinks apartment projects could keep regional contractors busy for awhile.

"Based upon demographics and a decline of confidence in single-family investment, I predict there is still a dearth of apartment supply and construction will continue for three to four years, or more," he says.

Mike Bartlett, executive vice president with JE Dunn Construction Group, Atlanta, also sees some longer-term strength for this project type.

"Multifamily appears to be here to stay, at least for the short term," Bartlett says, noting a variety of projects moving forward, including some student housing. "It seems to be the only private market lenders like."

Meanwhile, health care, one of the markets that has been among the steadiest for Southeast builders over the years, is now experiencing a changing dynamic due to the ongoing change in federal law.

"It's interesting to watch that [market] right now as everybody tries to get postured for 2014 and the [implementation of the] Affordable Care Act," says Taylor.

While some health care providers have slowed or halted construction programs, Taylor says, others are opting to expand, and consequently making big plans.

"It depends on where you are and who you're talking to," he says. "It's not like it was (recently) when every hospital would have a major expansion going on."

While market uncertainty persists, contractors interviewed by ENR Southeast agreed that increased material prices and a labor shortage are looming.

Choate, for example, sees an "erratic escalation of costs for commodities such as wood, drywall and concrete," mostly due to the residential rebound.

Scott Judy is Deputy Editor for Regions, and editor of ENR Southeast, one of Engineering News-Record's 10 Regional publications. His roughly 27 years as a construction journalist began with an 11-year stint covering Midwest construction projects. In 2000, Judy helped launch the publication now known as ENR Southeast. He often delves into controversial aspects of the construction industry such as bankruptcies and fatal accidents, and wishes he would never have to cover another accident but suspects that he might.