Cautious Optimism for the Construction Industry in Maryland, North Carolina, South Carolina, D.C. and Virginia for 2008

Christina Fisher -- Associated Construction Publications, 12/20/2007

The industry is faring well in Construction’s region, and this trend is expected to continue through 2008. In fact, there appears to be no shortage of work in the region, and a cautious optimism prevails as we look ahead to next year.

The thousands of new people and jobs that are expected due to BRAC and the migration of many commercial businesses to the mid-Atlantic region means that commercial, institutional and heavy construction must keep pace. According to a report by the National Association of Industrial and Office Properties for commercial construction in 2005, the latest data available, the metropolitan D.C. area spent $8.467 billion on new commercial development and $110.7 billion on operational costs for existing buildings. All three phases of commercial construction – soft costs, hard costs and operating costs – continue to be on the upswing in this area of the country.

The Carolinas are also experiencing a construction boom, and the Carolinas Associated General Contractors’ Construction Barometer reached one of its highest “optimism” marks in its nine-year history, and a growth rate of 6 percent to 7 percent is predicted. While the availability and cost of labor, materials and supplies are concerns, recent data indicate qualified laborers and managers are moving to the South to find work, and most firms indicate that they expect the cost of materials and supplies to stabilize in 2008.

Schools and hospitals – both types of buildings are under construction throughout Construction’s region. For example, in Loudon County, Virginia, it is projected that over the next six years 20 more schools will be needed at an estimated cost of $1.3 billion. In Maryland, the state legislature passed a record $400 million in state school construction funds. In North Carolina, Charlotte-Mecklenburg County residents voted in favor of a $516-million bond package, and seven major projects will get under way by the spring of 2008. In Wake County, North Carolina, where 41,000 new students are expected in the next five years, the Wake County Public School system is investigating private partnerships in order to decrease costs and speed up construction. Greenville County, S.C., successfully implemented a similar program in 2005 that has saved several hundred million dollars and eight years on a massive school building program.

Hospital and health care construction is also playing a major role in the region’s construction industry through 2008. All four states and D.C. have major projects under way such as Johns Hopkins Hospital’s $1.2-billion construction of two clinical towers and the Medical University of South Carolina’s $400-million Ashley River Tower facility in Charleston. The North Carolina Cancer Hospital and neighboring physician’s office building in Chapel Hill is still under construction, and Duke University Hospital has two projects totaling over $76 million under way.

Without a doubt, transportation projects are a priority throughout the region. With the congestion brought on by an exploding population and the location of several major ports and “commerce corridors,” moving people and goods efficiently and safely has become paramount. In Maryland, the second major construction contract is now under way for the Intercounty Connector (ICC), a new 18-mile state-of-the-art intermodal toll highway connecting I-270 with I-95 and US 1. These first two ICC contracts total $992.6 million; three more contracts are pending.

In Virginia, three of the five mega-projects begin construction in 2008 – I-95 widening for six miles from Newington to the Occoquan River; the I-95/Telegraph Road Interchange; and construction of two beltway HOT lanes in Northern Virginia. Utility Relocation has started near Tysons Corner in preparation for the proposed Dulles Rail project, another mega-project.

In the Carolinas, transportation construction projects have not reached the levels of Maryland and Virginia, but major projects are under way and moving freight through the Carolinas is also a big concern. Two major projects in North Carolina are the U.S. 70 Clayton Bypass, a 10.7-mile four-lane divided highway ($123 million), and the U.S. 17 Washington Bypass, a 6.8-mile project with a cost of $192 million. U.S. 17 is also under construction in South Carolina, where Segment 1 of the $80-million Ace Basin Parkway is under way. Phase II of the Palmetto Parkway in Aiken County, S.C., is also under way and on the fast track to be completed in 31 months.

As this region of the country continues to set records for population growth and more businesses relocate to take advantage of its strategic transportation corridors and beneficial tax climate, area contractors will have no shortage of opportunities in every industry sector.