Markets Stay Static for Southeast's Major Projects
The Southeast's largest projects last year continued to fall within the same few construction categories as they did in 2010, according to the latest Top Starts ranking by ENR Southeast. Energy, health-care and public-sector market categories again were dominant.
Only five of the 25 projects ranked on the list came from other categories. One of those, a retirement facility, could be considered health care-related.
The power market generated the top three spots on this year's Top Starts ranking, with projects from utilities FPL and Progress Energy and from a four-year-old firm called American Renewables representing more than $2 billion in project value.
The strong health-care construction market, however, was most noteworthy for traditional building contractors. The Top Starts list includes seven projects in that market sector—not including the retirement facility—in all four states covered by ENR Southeast. Health care remains one of the most promising areas for future work.
Scott Skidelsky, vice president of Turner Construction Co., Orlando, calls health care "[one of] the most currently active and promising markets in the Southeast." He adds that the sector "continues to be strong as the needs continue for new facilities and renovating existing ones."
Rex Kirby, president with Suffolk Construction Co. in West Palm Beach, agrees. "The health-care sector is one of the areas we see signs of slow but continued growth," he says. "As the economy picks up, we are seeing more opportunities."
Pat Rodgers, chief executive officer with Rodgers Builders in Charlotte, N.C., believes that an improving economy should push more health-care projects forward. "We think there is some pent-up demand for the health-care market," she says. "During this economic downturn, we saw a number of projects put on hold or scaled back, and in some cases cancelled—but the demand has continued."
Public construction remained a mainstay in 2011, with state transportation departments in North Carolina and Florida collectively moving forward on five major infrastructure projects on this year's ranking, including Turner Construction's $83-million Miami Central Station project near Miami International Airport. Municipal entities were active as well, adding a performing arts center and two airport projects that together totaled more than $600 million.
Trends: Some New, Some Old
The repeat performances of the energy, health-care and public markets on this ranking may be winding down as privately funded projects start gaining some measure of momentum, at least in certain locations.
In South Florida, according to Kirby, "We are seeing the most activity in the multifamily residential rental market." He cited recently awarded contracts for projects in Fort Lauderdale and Miami.
Skidelsky thinks recent hospitality projects, such as Turner's $170-million Four Seasons project at Walt Disney World and a contract for a Tampa casino, could bode well for the future. "With the right development team and project planning, [hospitality] projects are moving forward," he says.
And Rodgers, whose firm is building a $100-million office development in Charlotte, says she is "cautiously optimistic" that this long-dead market may rejuvenate.
Still, the market continues to be defined by extreme competition for projects.
Describing it as "still intense," Kirby says, "We are still seeing larger numbers of bidders on projects throughout all markets and lower bid amounts. Some competitors are still willing to take on projects under an unsustainable fee model."
Adds Skidelsky: "Competition has been fierce, and we have seen our competitors dive for projects with extremely low fees."
This trend may be winding down, however, Kirby points out. "We do see some stabilization, with companies now adjusted to the new economy and no longer willing to take a project just to keep people working."
But a return to a more normal level of competition may take awhile, says Rodgers. "We'll see a slow recovery, and some markets will be slower than others," she notes.
The List
The Top Starts ranking includes the 25 largest projects—by total project cost—that started construction during 2011 within the states of Florida, Georgia and the Carolinas. ENR Southeast used multiple sources to create the list, including McGraw-Hill Construction's Dodge database, submissions from contractors and design firms as well as news reports.
