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Article

Construction

Utah Business Staff

January 1, 2012

Construction leaders have been waiting nearly three years for the economy to pick up again—but many believe they will be waiting for two or three more years before there is any light at the end of the tunnel. The tough times are impacting everyone, from laborers to property developers to construction companies and subcontractors. But in this big squeeze, it’s the entire economy that is hurt the most.

We’d like to thank Richard Thorn, president and CEO of the Associated General Contractors of Utah, for moderating the discussion.

Participants: Tom Morgan, Morgan Asphalt; David Zimmerman, Holland & Hart; Wilford Clyde, Clyde Companies, Inc.; Darin Zwick, Zwick Construction Company; Jeff Beecher, Layton Construction; Richard Hunt, Hunt Electric, Inc.; Matt Klein, Kleins Countertops; Phil Walter, Moreton & Co.; Wil van der Stappen, Advanced Paving & Construction; Lonnie Bullard, Jacobsen Construction Rich Thorn, AGC of Utah; Jason Kilgore, Kilgore Companies; Doug Noland, Noland & Son; Paul Campbell, Wheeler Machinery; Terry Buckner, The Buckner Company; Doug Savage, KK Mechanical, Inc.; Bill Garff, Garff Construction; Nate Runyan, Holland & Hart; Rob Moore, Big-D Construction Dale Campbell, R&O Construction; Abby Albrecht, Granite Construction; James Williams, AE URBIA & J. M. Williams & Associates; Keith Buswell, Wadman Corporation; Alan Johnson, IMS Masonry, Inc. Scott Parson, Staker Parson Companies

 

What is the status of Utah’s commercial building construction industry today and, more importantly, what do you see down the road?

MOORE: Some of us have been fortunate enough to pick up some work and increase our employment, while others are currently on a down cycle. Compared to other states we’re working in, Utah is in a pretty good spot. It seems like we have work to go after, although we sure keep ourselves competitive. The work we get seems to be at margins that owners sure appreciate.

It feels like the marketplace has got some traction a bit. We’re seeing things like office buildings that have not been out there for many, many years being a popular product. Manufacturing seems to be coming back in Utah a bit more. Distribution, warehouses—there are some projects out there getting some traction.

I wish we all had crystal balls, but I think there is some work out there to go after. Is it what it used to be in 2008 and 2009? I don’t think so. Is it going to get better anytime soon? I’m not sure.

D. CAMPBELL: We’ve managed to stay busy. Of course, we’ve said for the last three years that profit margins are down. It seems like every time it looks like it’s going to slow down, there is work out there. Some of the developers and clients are releasing work they’ve had on the shelves for maybe two or three years. They are finally seeing a little light and releasing some work. So we have a steady flow, but it’s not hot.

Are there any hot sectors?

BUSWELL: For some of us involved with the International Council of Shopping Centers, in the last six to nine months there has been more traction as far as having national and regional retailers talk about expansion plans. They are not necessarily all brand new buildings. They are doing a lot of remodeling and going to second-use buildings. But after a couple of years where retailers would not talk about building stores, in some of the more recent meetings, there have been discussions regarding building 25 stores a year or five stores a year and being able to expand. We think that is a good sign as far as retailers looking for locations.

And like Rob said, Utah really is much stronger than our sister states that have extreme vacancies—they have been harder hit than Utah.

ZWICK: We are starting to see more of the private deals with some of the developers, where before it was a lot of estimating for them for free. Now they are getting more comfortable and maybe spending some money.

The other sector that I see coming on strong in Utah is the multifamily division. At least in our firm, we are pricing a lot of multifamily apartments. Nobody wants to own; they want to rent. So we are going to continue to see that.

But, again, like everybody says, the fees and margins are ridiculously low, way too low. We cannot keep operating at these low fees. It’s frustrating. And also general conditions—we are not staffing a project the way it should be staffed. As a result, you have challenges through the course of construction because it’s not managed properly because we have to be so low on our fees.

So construction is on sale still. It’s a good time to be building.

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