May 1, 2008

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Forging a Path Along Utah's Corporate Trail

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Build Out

New Construction Brings Expanded Possibilities

Janine S. Creager

May 1, 2008

When searching for a title for an article about Utah’s construction industry, it all depends on the point of reference. Considering all those new skyscrapers included as part of Downtown Rising, how about titling it “Reaching New Heights”? But then there’s the FrontRunner commuter train, Legacy Parkway, TRAX expansions and upgrades to existing highways. If we look at the industry from this angle, we could just call it “Going the Distance.” In the end, no matter what perspective may be employed, the bottom line is: things are looking pretty good here in the Beehive State. Utah has always had a tradition of bucking national economic trends, explains Rich Thorn, president and CEO of the Utah Chapter of Associated General Contractors (AGC). But the fact that the lows and highs in the state never quite reach the national extremes bodes well for Utah’s economy. This holds especially true in the commercial construction industry. “We continue to have a lot of work that needs to be done. We don’t see it slowing down,” says Thorn. “It looks like it’s going to be strong for a while.” James Wood, director of the Bureau of Economic and Business Research at the University of Utah explains that in 1997, when construction peaked in the state, there was $2.1 billion in permit-authorized non-residential construction. “We were just under that last year [with $2.05 billion],” he says. “We’ll probably break [the record] this year.” Contributing toward that record is about $400 million in retail construction of various mall expansions and renovations throughout the Salt Lake Valley. This figure excludes the City Creek project, which is being built by an LDS Church-affiliated entity and which will add two anchor stores and 100 shops and restaurants. (As a matter of policy, the LDS Church does not disclose financial information.) Although it is not known for certain, says Wood, it is possible that the non-residential permits that the Church applies for this year could set the new record in commercial construction all on its own. “Non-residential commercial [hasn’t] had a boom like this in years. They’re extremely busy,” he says, while adding a caution: “[But] will they be able to fill the buildings with tenants? If you overbuild, the next job might not be around the corner for a while.” This warning against overbuilding, even in a booming market, is good advice. Empty buildings, no matter how well constructed, do not lend themselves to future projects. If the commercial side in general is experiencing record success not seen in years, the excitement is somewhat balanced by the slowing on the residential side of the industry. According to Wood, residential building permits are down over the past three to four years, with permits filed during the first two months of this year down 70 percent over last year in the state’s fastest growing cities. “Builders are nervous,” Wood says. “They want to make sure they’ve sold their inventory on the residential side…Now we’re seeing the impact in employment.” Although unemployment rates have risen somewhat to 3 percent as of February 2008, the challenges in the residential market do affect the commercial side as well. When the residential market slows, for instance, many construction workers make their way into light commercial projects. While this may sound like an ideal solution, says Thorn, the transition is not so simple. “It’s bittersweet with residential housing,” he says. “This helps to staff [the commercial projects], but the educational process is significantly different: different timelines, increased regulations, rules, deadlines. We need to do some significant training to ensure they’re working safely.” Yet, as James Wood explains, the current slowing in the residential markets is not necessarily a cause for alarm. In the economic cycles which naturally take place over time between the two sides of the construction market, it all tends to balance out. “The residential peaks first, then the commercial follows two to three years later,” he says. “After that, residential is on the way down, when commercial peaks.” By 2010, he further states, permits will be contracting compared to present circumstances. The building, say at the City Creek project, will still be in full swing, but there will not be as many applications for future projects. By then, a full five years after it peaked in 2005, the residential market should again be on the way up. When looking at the industry on the whole, says Thorn, “The message is that Utah is not a bad place to live. The construction industry stands ready to build the state, and we’re ready to roll.” Canvassing sites across the state, Utah Business offers some examples of the largest commercial and residential projects currently in the works. City Creek Center In November 2006, The Church of Jesus Christ of Latter-day Saints embarked on City Creek Center — a mixed-use, walkable urban community in the heart of downtown Salt Lake City. Overall completion is scheduled for 2012 with some residential elements of the project coming online in 2010 and 2011. Two national department stores, Nordstrom and Macy’s, will anchor a retail offering of more than 100 shops and restaurants. Approximately 700 condominiums and apartments will be constructed. Remodeled lobbies and entries will improve existing office towers. City Creek Reserve, Inc. (the downtown property development arm of the LDS Church) and its partner, Michigan-based Taubman Centers, Inc., are working with Utah companies Cowboy Partners and Harmons Grocery Stores as well as with local architects and contractors on the 20-acre project. I-15 North (Ogden area) The I-15 NOW (New Ogden-Weber) expansion is slated to cost $265 million and is under the project management of Weber County Constructors (Granite Construction and Ralph L. Wadsworth Construction). The project covers a 9.5 mile stretch of highway, four lanes in each direction, from I-84 to 12th Street. From 12th Street to 2700 North, it includes three lanes in each direction. Six interchanges will be reconstructed as part of the project, including reconfigured designs at 31st Street and 12th Street; work will continue through fall 2008. Legacy Parkway Gov. Michael Leavitt announced in 1996 the eventual construction of Legacy Highway, which would run as an alternative freeway west of I-15 from Nephi to Brigham City. The intended 120-mile facility will be built in segments over time as funding allows. The first segment is Legacy Parkway, a 14-mile stretch of new roadway west of I-15 between North Salt Lake and Farmington. The four-lane divided roadway will provide an alternate route in southern Davis County and reduce congestion on I-15 by an estimated 30 percent during rush hour. Interchanges will be located at I-215 in North Salt Lake, 500 South in Bountiful, and the I-15/U.S. 89 junction in Farmington. Contractors on the project are W.W. Clyde, Ames Construction and Wadsworth Brothers. Legacy Parkway and the multi-use trail system are on schedule to open fall 2008 as a designated scenic byway. REAL Salt Lake Stadium The RSL Stadium in Sandy will be funded by $72.5 million in private investment; $35 million from the Salt Lake County Transient Room Tax and $10 million from Sandy Redevelopment Agency Funds. Layton Construction is embarking on a joint venture with Turner Construction on this 20,000-seat, open-air, state-of-the-art venue. Site preparation began last year and is scheduled to be completed in fall 2008. FrontRunner North It’s a very exciting time in Utah public transportation. April 26, 2008 marked the grand opening of FrontRunner Commuter Rail. This $611 million project runs 44 miles from downtown Salt Lake City to Pleasant View. There are eight stations that will offer access to passengers throughout Weber, Davis and Salt Lake counties. Trains run up to speeds of 79 miles an hour, and are equipped for high speed Internet access while onboard. Utah Transit Authority expects to carry 5,900 people on opening day and 12,600 riders each weekday by 2025. FrontRunner cost is $2.50 for a one-way base fare, and $0.50 for each additional station up to $5.50. FrontLines 2015 Utah Transit Authority has announced a $2.5 billion dollar project, which will build 70 miles of new rail in seven years. There are five lines throughout this project spanning Salt Lake County and Utah County. The first line is FrontRunner South. This is a 45-mile line from the Salt Lake Intermodal Hub, where FrontRunner North now ends, to Provo. The Airport TRAX line, another part of this project, will run from the Salt Lake International Airport to the Salt Lake Intermodal Hub. A third line will break off from the main North-South TRAX line through West Valley City and end at West Valley’s city hall. The fourth line will extend the current TRAX North-South line 8.5 miles south in Sandy and Draper. And finally, the Mid-Jordan line will break off the main TRAX line in Midvale, and travel through South and West Jordan, ending in the Daybreak community on the west side of the Salt Lake Valley. University Health Care Layton Construction is the project manager for a new building, the West Pavilion, in the medical complex at the University of Utah Medical Center. Ground was broken for that project on July 18, 2006. The new addition will total more than 220,000 square feet and include 120 private patient rooms. The project is scheduled for completion in mid-year 2009 at an estimated cost of $130 million. Intermountain Healthcare Hospitals Intermountain Healthcare’s new Riverton and Summit Hospitals will be located in Riverton and Park City, respectively. The facility in Riverton sits on 63 acres and will include a four-story hospital operated by Intermountain Healthcare, Primary Children’s outpatient services and a physician office building operated by the Intermountain Medical Group. Construction on the hospital began in April 2007 and is on schedule to be completed in July of 2009. The Summit County facility is located on approximately 160 acres on the northwest corner of US-40 and SR-248 at Quinn’s Junction. The location will provide easier access for all Summit County residents and Park City-area visitors, with close proximity to local ski resorts for trauma transport. The hospital is expected to be approximately 100,000 square feet and have 25 inpatient beds and six operating suites. Groundbreaking was held April 2007. Procter and Gamble Procter & Gamble announced it has decided to invest some $300 million to begin the first phase of a new plant in northern Utah’s Box Elder County. State officials confirm that the company plans to begin construction on the facility early next year. 222 South Main 222 South Main Street is the location of downtown Salt Lake City’s newest office tower. Designed by architects Skidmore, Owings and Merrill, 222 South Main will feature more than 420,000 square feet of office space on 22 stories. The tower’s double-height entry lobby and adjoining 9,000 square feet of retail space will add to the historic and revitalized Main Street corridor. Oakland Construction is heading up the project. which will be completed by October 2009. Residential Projects With suburban neighborhoods expanding in a soft market, a few neighborhoods have a much larger footprint than others. Daybreak DayBreak, a West Bench community by Kennecott Land located in the Salt Lake Valley, has nearly 1,800 homes built to date with a total of 20,000 planned during the life of the community. Current amenities include: the Daybreak Community Center, Founder’s Park Community Garden plots, a Splash Pad water feature, 60 acres of Oquirrh Lake (with canoe, kayak, paddleboat, and sailboat rentals), Daybreak Elementary, 12 parks and more than 24 miles of trails. In 2008, a second school, Eastlake Elementary will be built, as well as tennis courts, a community pool and 100 additional community garden plots. Sun River Sun River, which was started in spring 1998, currently has 1,450 homes completed on its way to a total of 2,150. The “55+ better” community has $17 million in amenities, with a restaurant, pro shop and 18-hole public golf course now completed. There is also a gated community of approximately 100 homes within the larger community where homes sell from the $200s to well over a million. A new Sun River interchange off of I-15, Exit 2 will be completed in May 2009. Plans for a 16-acre retail shopping center are projected to be completed by 2012. Jordanelle Ridge Jordanelle Ridge, being developed by the Sorenson Group, is one of several residential and commercial projects currently under construction in the state. Jordenelle Ridge is located between the Jordanelle Reservoir and the city of Heber, off of Hwy. 40. Construction has already begun on the first plat of 145 homes, called River View, which will be half single family dwellings and half townhomes. The townhomes will range in price from $500,000 to $650,000, with the single family homes starting at $500,000 and going to $1 million. Amenities will include a pool, club house, trails and spectacular views. Over the life of the project, which will extend out the next 30-35 years and eventually total upwards of 5,000 units, there will also be other amenities including a resort hotel and golf course.
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