McGraw Hill Construction
2013 Outlook
U.S. Construction
Mid Year Update
MHC Atlanta SMPS
May 22, 2013
Dan Palmer
Senior Director, Editorial Global Operations
McGraw Hill Construction
1
Agenda
U.S. Construction Market Indicators and Sectors
The Environment -- Macroeconomic Picture
Single Family Housing and Multifamily Housing
Commercial Building
Institutional Building, plus Manufacturing Bldgs.
Public Works and Electric Utilities
Total Construction
Regional – The Southeast
Cycle Charts
2
McGraw Hill Construction Confidential. All information presented @ McGraw Hill Construction, 2013. All rights reserved.
U.S. Construction Market Indicators
Total Construction – starts leveled off in 2010 and 2011; put in place bottomed out
in 2011. During 2012 – moderate upward movement for both series.
M-H Construction Starts
Billions of Dollars
Construction Put in Place
2011 2012
+2% +7%
Billions of Dollars
750
1,300
600
1,100
2011
2012
-3%
+10%
900
450
700
300
500
150
90
92
94
96
98
00
02
04
06
08
10
12
14
Source: McGraw -Hill Construction
3
300
90
92
94
96
98
00
02
04
06
08
10
12
14
Source: U.S. Census Bureau
McGraw Hill Construction Confidential. All information presented @ McGraw Hill Construction, 2013. All rights reserved.
U.S. Construction Sectors (Starts)
Residential Building strengthening; Commercial bldg. beginning to edge up.
Institutional bldg. still in retreat; Public Works dealing with budget cuts.
Residential Building
2011
+4% +30%
Billions of Dollars
400
Commercial Building
2012
350
2012
+15% +10%
Billions of Dollars
120
2011
100
300
250
80
200
60
150
40
100
20
50
90
92
94
96
98
00
02
04
06
Public Works
10
2011
Billions of Dollars
12
90
14
-12% -2%
135
120
115
100
95
80
75
60
55
40
35
92
94
96
98
00
02
04
06
08
10
12
92
94
96
98
00
02
04
06
Institutional Building
Billions of DollarsStarts
Construction
2012
140
90
4
08
14
90
92
94
96
98
00
02
McGraw Hill Construction Confidential. All information presented @ McGraw Hill Construction, 2013. All rights reserved.
08
2011
10
12
14
2012
-11% -11%
04
06
08
10
12
14
U.S. Macroeconomic Picture
Economic growth picked up in 2013 Q1, after flattening out in 2012 Q4.
On balance, the pace of economic expansion remains lackluster.
GDP Pattern:
Real GDP Growth - Quarterly
'13 Q1
+2.5%
Annualized Percent Change
6%
History
2010
Forecast
4%
2009
2011
2012
2%
-3.1% +2.4% +1.8% +2.2%
2013
+2.2%
0%
-2%
Shape of Recovery:
-4%
•
-6%
-8%
-10%
05
06
07
08
09
10
11
12
13
Subdued –
Periods of moderate expansion have
been followed by deceleration.
• Much of 2012 was adversely
affected by
Continued uncertainty, due to
European debt crisis
November 2012 elections
Fiscal Cliff
• One plus – corporate profits healthy
• For 2013 – how much of a drag will
come from sequester, higher
payroll taxes.
5
McGraw Hill Construction Confidential. All information presented @ McGraw Hill Construction, 2013. All rights reserved.
U.S. Macroeconomic Picture
After weakening in 2012 Q2, employment growth strengthened in second half of 2012.
Pattern so far in 2013 has shown uneven improvement.
Change in Total Employment
Unemployment Rate
Thousands of Workers
Apr. '13
+165,000
600
450
Apr.'13
7.5%
Percent
11
10
300
150
9
0
-150
-300
7
8
6
-450
-600
5
-750
-900
3
4
05
06
07
08
09
10
11
12
05
13
06
07
08
09
10
11
12
13
Jan. 2012- Apr. 2013, By Month
332
350
• Jobs lost from Feb.’08 to Feb. ’10: 8.7 Million.
311
300
271
219
205
200
153
150
112
100
• Job creation so far in 2010-2013:
6.2 Million. Unemployment rate at 7.5%
247
250
125
165
138
160
148
165
138
87
• Job growth in Jan.-Mar. ’12 : 262,000 /mo
in Apr.-June ’12:
108,000 /mo
in July‘12-Dec.’12: 180,000 /mo
50
in Jan.’13-Apr.’13: 196,000 /mo
0
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr
6
McGraw Hill Construction Confidential. All information presented @ McGraw Hill Construction, 2013. All rights reserved.
U.S. Macroeconomic Picture
Fiscal Cliff Averted, but Sequestration Began March 1.
•
Fiscal Cliff Deferred by January 1 Agreement
- For high income earners, income tax rate raised from 35% to 39.6%.
For those below the thresholds, tax rates remain unchanged.
- Automatic spending cuts called for by the Budget Control Act of 2011, which would have
reduced spending on discretionary federal spending by about 8%, deferred until March 1.
- Payroll tax cut, which lowered rate from 6.2% to 4.2%, allowed to expire
•
Sequestration Now in Effect
- $85 billion in cuts over next 7 months; $1.2 trillion in cuts over next ten years.
- Impact not immediate; will kick in over several months as gov’t agencies implement cuts.
- CBO: without sequestration, GDP growth would be 0.6% higher, 750.000 more full-time jobs
- Cuts to major construction programs estimated at $4 billion
Biggest hits – Dept. of Energy environmental cleanup
EPA water infrastructure
Military construction
- Infrastructure accounts financed by trusts funds are largely exempt from the sequester
Including – Federal-aid highway funding
Airport Improvement Program construction grants
Some transit aid
Veterans Administration construction accounts also exempt.
7
McGraw Hill Construction Confidential. All information presented @ McGraw Hill Construction, 2013. All rights reserved.
U.S. Macroeconomic Picture
Funding from federal government still constrained.
Fiscal 2013 Appropriations
Federal Budget Surplus/Deficit
•
Billions of Dollars, CBO Projections
400
200
0
-200
•
-400
-600
-800
-1,000
-1,200
A continuing resolution passed in September 2012,
kept funding essentially steady through
March 27, 2013. (Included 0.6% hike for domestic
discretionary programs.)
In late March, Congress passed another continuing
resolution, financing federal programs through
September 30, 2013. Sets highway and transit
funding at MAP-21 levels.
Fiscal 2012 Appropriations
-1,400
•
-1,600
90
92
94
96
98
00
02
04
06
08
10
12
14
Federal highway program trimmed 5% to $39 bil.
High-speed rail received zero funding again
Mass transit account increased 5%
• Other accounts generally lower:
Clean Water SRF’s cut 4%
Drinking Water SRF’s cut 5%
GSA new construction account cut 39%
GSA repairs &renovation account unchanged
DOD base closure account cut 77%
DOD other military construction cut 8%
VA major construction projects cut 45%
Corps of Engineers construction increased 5%
8
McGraw Hill Construction Confidential. All information presented @ McGraw Hill Construction, 2013. All rights reserved.
U.S. Macroeconomic Picture
State fiscal health improving, although still fragile for some states.
State & Local Governments
• Many states have faced large budget
shortfalls, including the following states with the
gaps closed when fiscal year 2012 budgets
were adopted:
Year-end Balance, Percent of Expenditures
12
10
8
– California ($23 billion)
6
– Illinois ($5 billion)
4
– New Jersey ($10 billion)
2
– New York ($10 billion)
0
– Florida ($4 billion)
90
92
94 96
98
00
02
04
06
08 10 12
14
Note: For fiscal year 2012, if TX and AK
excluded, then year-end balance is 3.8%.
For fiscal 2012, 12 states enacted budgets
with balance levels below 1%, while 19 states
enacted budgets with balance levels
between 1% and 5%.
Adequate fiscal cushion for a state is when yearend balance is at least 5%.
9
Source: Center on Budget and Policy Priorities
• Significantly – State Fiscal Stabilization Fund
support under ARRA has diminished
substantially –
2010: $61 billion
2011: $52 billion
2012: $ 5 billion
2013: $ 0.5 billion
McGraw Hill Construction Confidential. All information presented @ McGraw Hill Construction, 2013. All rights reserved.
U.S. Macroeconomic Picture
Lending standards for commercial real estate loans continue to show
gradual easing.
Survey of Bank Lending Officers
Survey of Bank Lending Officers
Percent Reporting Tighter Lending Standards
for Commercial Real Estate Loans
Percent Reporting Stronger Demand for
Commercial Real Estate Loans
100
60
80
40
60
20
40
0
20
-20
0
-40
-20
-60
-40
-80
90
92
94
96
98
00
02
04
06
08
10
12
14
90
92
94
96
98
00
02
04
08
10
12
14
• Lending standards for commercial real
estate loans have eased for 9 straight qtrs.
• Several major projects have resumed construction
• Impact of financial regulatory reform?
• Lending standards for C&I loans have
eased for 13 out of 14 quarters.
• Mortgage Bankers Survey results –
• But, lending standards for residential
mortgage loans have only recently shown
some easing –
commercial and multifamily mortgage
originations up 24% in 2012.
5% of lending officers in Jan. 2013 survey
8% of lending officers in Apr. 2013 survey
10
06
McGraw Hill Construction Confidential. All information presented @ McGraw Hill Construction, 2013. All rights reserved.
U.S. Single Family Housing
Signs of improving single family market – rising home sales, stabilizing prices.
Single Family Housing
Home Sales - New & Existing Homes
Millions
Thousands of Dwelling Units
1,800
1.6
7.5
1,600
1.4
6.9
1,400
1.2
6.2
1.0
5.6
0.8
4.9
1,200
1,000
800
0.6
600
400
0.4
200
0.2
4.3
New Homes (L)
3.6
Existing Homes (R)
88 90 92 94 96 98 00 02 04 06 08 10 12 14
3.0
01
02
03
04
05
06
07
08
09
10
11
12
13
14
13
14
S&P Case-Shiller Home Price Index
Single Family Housing
20-Metro Composite, Indexed Jan 2000=100
220
2009 435,000 units -21%
2010 446,000 units +2%
2011 413,000 units -7%
200
180
160
140
2012 516,000 units +25%
120
100
01
11
02
03
04
05
06
07
08
McGraw Hill Construction Confidential. All information presented @ McGraw Hill Construction, 2013. All rights reserved.
09
10
11
12
U.S. Single Family Housing
Signs of improving single family market.
Supply of Single Family Housing
Number of Months, New Homes
14
•
Inventory of new homes for sale fell to
4.0 months in January, lowest since 2004.
•
Record low mortgage rates – reached 3.3%
In late 2012, although edged up to 3.4% -3.6%
in early 2013, before retreating to 3.4%.
•
However, lending standards for home
mortgages remain tight.
•
Demographic demand: 1 to 1.2 million units
per year. Will it be helped by by echo boom
moving into their 20’s?
12
10
8
6
4
2
90
92
94
96
98
00
02
04
06
08
10
12
14
Mortgage Rates - Weekly
Percent
11
10
9
Single Family Housing
8
7
2013 640,000 units +24%
6
5
4
3
2
90
12
92
94
96
98
00
02
04
06
08
10
12
14
McGraw Hill Construction Confidential. All information presented @ McGraw Hill Construction, 2013. All rights reserved.
U.S. Multifamily Housing
Construction has shown steady gains since 2010, still going.
Multifamily Housing
• Apartments led early upturn.
Thousands of Dwelling Units
750
• Some benefit from stimulus act -Affordable housing projects
received a boost.
600
• Helped by push for
downtown redevelopment.
450
300
•
150
0
88
90 92
94
96 98
00
02 04
06
08
Multifamily Housing
10 12
14
Demographics supportive,
from both empty-nesters
and now young adults.
• Rental vacancy rates retreating,
rents are increasing.
• Condominium projects now picking up.
2009 136,000 units -55%
2010 157,000 units +15%
2011 215,000 units +37%
• Compared to commercial building,
still a relatively attractive investment
target given more stable revenue.
2012 274,000 units +28%
.
2013 330,000 units +20%
13
McGraw Hill Construction Confidential. All information presented @ McGraw Hill Construction, 2013. All rights reserved.
U.S. Commercial - Stores
After steep decline in 2008-2010, store construction is turning the corner.
Stores and Shopping Centers
400
350
Millions of Square Feet
• Derived demand from housing
market – definitely true on
the downside of the cycle;
now beginning to show on upside.
300
250
• Recent retail sales have fluctuated.
Payroll tax increase could be a negative
for consumer spending in near term.
200
150
100
50
0
88 90 92 94 96 98 00 02 04 06 08 10 12 14
• Some outlet mall projects starting,
along with projects by a few major
retailers.
Stores and Shopping Centers
• Extreme discounters (Family Dollar,
Dollar General) still expanding.
2009
2010
2011
• Store renovations have seen
much smaller decline.
96 msf -54%
81 msf -16%
84 msf +4%
2012 104 msf +23%
2013 122 msf +18%
14
McGraw Hill Construction Confidential. All information presented @ McGraw Hill Construction, 2013. All rights reserved.
U.S. Commercial – Stores
Major alterations projects for stores has been much more stable than projects
classified as new and additions, including growth in 2010-2012.
Stores Alterations
8
Billions of Dollars
2011
2012
+1% +5%
6
4
2
0
86 88 90 92 94 96 98 00 02 04 06 08 10 12 14
15
McGraw Hill Construction Confidential. All information presented @ McGraw Hill Construction, 2013. All rights reserved.
U.S. Commercial - Warehouses
Warehouse construction now seeing healthy percentage growth.
Warehouses
Millions of Square Feet
• Vacancy rates still high, but easing.
Reached 14.5% in 2010 Q2, and have
since retreated to 12.3% in 2013 Q1.
350
300
250
• Some larger regional facilities being
built by major retailers. In 2011 and
2012, several large facilities built for
Amazon.com.
200
150
100
50
0
88 90
92
94 96
98
00 02
04 06
Warehouses
2009
2010
2011
68 msf -65%
49 msf -28%
63 msf +28%
2012
93 msf +48%
08
10 12
14
• Continued need for updated facilities
to handle improved inventory management
practices.
• Increased trade would help lift demand
for warehouse space Imports/exports
likely to be dampened in near term,
due to global economic slowdown.
2013 114 msf +23%
16
McGraw Hill Construction Confidential. All information presented @ McGraw Hill Construction, 2013. All rights reserved.
U.S. Commercial - Hotels
Hotel construction up sharply in 2011-2012; more growth underway.
•
Hotels
Millions of Square Feet
120
100
More positives now:
Business travel has improved
Industry financials stronger
• Casino building becoming more active
80
•
60
Several major projects reaching
groundbreaking,
40
Occupancies for 2012 at 61.4%
Revpar for 2012 up 6.8%.
20
0
88 90 92 94 96 98 00 02 04 06 08 10 12 14
Revenue Per Available Room
Smith Travel Research
Hotels
10%
8.2%
5.7%
5.5%
6.8%
6.4%
2012
2013
YTD
5%
2009
2010
2011
28 msf -64%
17 msf -39%
26 msf +55%
2012
33 msf +26%
0%
-1.9%
-5%
-10%
-15%
-16.9%
-20%
2007
2013
17
2008
2009
2010
38 msf +15%
McGraw Hill Construction Confidential. All information presented @ McGraw Hill Construction, 2013. All rights reserved.
2011
U.S. Commercial – Office Buildings
Major office alterations projects stayed strong though 2009,
retreated in 2010, and essentially stabilized in 2011-2012.
Office Building Alterations
Billions of Dollars
10
2011
2012
+5%
-7%
8
6
4
2
0
86 88 90 92 94 96 98 00 02 04 06 08 10 12 14
18
McGraw Hill Construction Confidential. All information presented @ McGraw Hill Construction, 2013. All rights reserved.
U.S. Commercial – Office Buildings
Office market fundamentals are improving.
U.S. Office Vacancy Rates
Change in Office Employment
Thousands of Workers
25
1,500
CB Richard Ellis
Suburban
1,000
20
500
17.0%
15
0
-500
12.4%
10
-1,000
Downtown
5
-1,500
-2,000
86
88
90
92
94
96
98
00
02
04
06
08
10
12
14
0
88 90 92 94 96 98 00 02 04 06 08 10 12 14
• Office vacancy rates have topped off,
now retreating gradually.
• Overbuilding is less than
in past cycles.
• Corporations remain hesitant about hiring.
19
McGraw Hill Construction Confidential. All information presented @ McGraw Hill Construction, 2013. All rights reserved.
U.S. Institutional – Educational Buildings
Educational buildings continue to lose momentum.
Based on Sq. Ft
Educational Buildings
Millions of Square Feet
Primary, Jr. Highs
-15%
High Schools
-10%
Colleges/Univ.
-7%
Libraries
-8%
Laboratories
-9%
Museums
+9%
Comm. Colleges
-1%
Vocational Schools -16%
300
250
200
150
100
50
88 90
92
94 96
98
00 02
04 06
Educational Buildings
20
2011
2009
2010
2011
174 msf
149 msf
132 msf
-22%
-15%
-11%
2012
109 msf
-17%
2013
105 msf
-4%
08
10 12
2012
-9%
-19%
-18%
-39%
-39%
-26%
-36%
-28%
14
• Several large bond measures passed
in November 2012 elections, in Texas,
California, New Jersey, among other
states.
.
• College endowments were basically flat
in 2012, a shift after strong gain in 2011.
• Major universities still re-visiting deferred
capital spending plans. .
McGraw Hill Construction Confidential. All information presented @ McGraw Hill Construction, 2013. All rights reserved.
U.S. Institutional – Educational Buildings
K-12 school construction larger and more volatile than colleges/universities.
Educational Buildings -- Segments
Educational Buildings -- Segments
Millions of Sq. Ft.
200
175
K-12
Billions of Dollars
40
K-12
32
150
125
24
100
75
Colleges/ Comm. Colleges
16
Colleges/ Comn. Colleges
50
8
25
0
0
86 88 90 92 94 96 98 00 02 04 06 08 10 12
In 2012, sq. ft. for K-12 school
construction was 3.6 times the size
of Colleges/Univ./Comm. Colleges.
21
86 88 90 92 94 96 98 00 02 04 06 08 10 12 14
In 2012, dollars for K-12 school
construction was 2.1 times the size
of Colleges/Univ./Comm. Colleges.
McGraw Hill Construction Confidential. All information presented @ McGraw Hill Construction, 2013. All rights reserved.
U.S. Institutional – Educational Buildings
Major alterations for educational buildings have been relatively resilient.
For K-12 –
2010, +4%; 2011, -6;
2012, -7%.
For Colleges/Univ./Comm.Col. – 2010, +21%; 2011, -11%; 2012, +12%.
Educ. Bldg. Alterations -- Segments
Billions of Dollars
8
7
6
5
4
3
2
K-12
Colleges/ Comm. Colleges
1
0
86 88 90 92 94 96 98 00 02 04 06 08 10 12 14
22
McGraw Hill Construction Confidential. All information presented @ McGraw Hill Construction, 2013. All rights reserved.
U.S. Institutional – Healthcare Facilities
Healthcare facilities slipped back again in 2012, putting the modest
recovery on hold in the near term.
Healthcare Facilities
90
Millions of Square Feet
75
Clinics
60
Based on Sq. Ft
2011
2012
Clinics/
Nursing Homes
+12%
-5%
-7%
-13%
Hospitals
45
30
Hospitals
15
0
88 90 92 94 96 98 00 02 04 06 08 10 12 14
23
• Hospital chains hard-hit in 2009
by tight credit conditions.
• Debate over healthcare reform
created near-term uncertainty.
Healthcare Facilities
• U.S. military Veterans Admin. projects
helped to ease some of the near-term slowdown.
2009
2010
2011
68 msf
73 msf
75 msf
-38%
+8%
+3%
• Now – uncertainty over reduced
Medicare reimbursements,
Affordable Care Act implementation
More healthcare mergers.
2012
69 msf
-8%
2013
68 msf
-2%
• Sector still supported by –
Need to replace aging facilities
Growth of elderly population.
McGraw Hill Construction Confidential. All information presented @ McGraw Hill Construction, 2013. All rights reserved.
U.S. Institutional – Public Buildings
Public Buildings continue to lose momentum.
Public Buildings
Millions of Square Feet
Based on Sq. Ft.
2011
2012
Detention Facilities
Armories/Military
Courthouses
Police/Fire Stations
Post Offices
-29%
-17%
-24%
-10%
-98%
-25%
-20%
+2%
-20%
-0-
75
60
45
30
15
0
88 90 92 94 96 98 00 02 04 06 08 10 12 14
Public Buildings
24
2009
2010
2011
48 msf
34 msf
27 msf
-3%
-29%
-21%
2012
22 msf
-17%
2013
20 msf
-10%
• Received benefits of 2009 federal
stimulus act for courthouses,
federal buildings, land ports of entry.
• Now affected by winding down of
stimulus support, in combination
with diminished federal spending.
McGraw Hill Construction Confidential. All information presented @ McGraw Hill Construction, 2013. All rights reserved.
U.S. Institutional – Amusement & Rec.
Amusement/Recreational appears to be turning the corner.
Amusement & Rec. Buildings
Millions of Square Feet
120
100
80
60
40
Based on Sq. Ft
2011
Convention Centers
Sports Arenas
Theaters
Other (inc. theme parks)
-11% -39%
-12% +31%
-19% +4%
-2% -1%
2012
20
0
88
90 92
94 96 98
00 02
04 06
08 10
Amusement & Rec. Bldgs.
25
2009
2010
2011
42 msf
35 msf
33 msf
-29%
-17%
-5%
2012
32 msf
-2%
2013
35 msf
+8%
12 14
• This category is affected by both public and
private financial support.
• The year 2010 included several large
amusement renovation projects in NYC -$850 million for Madison Sq. Garden,
$400 million for the Javits Convention Center,
$53 million for Carnegie Hall.
• Casino projects gaining some momentum.
McGraw Hill Construction Confidential. All information presented @ McGraw Hill Construction, 2013. All rights reserved.
U.S. Institutional – Airport Terminals
Airport terminal work in sq. ft. up in 2012, while dollars retreated.
In general, renovation work has moderated decline in dollars relative to sq. ft.
Airport Terminals
Airport Terminals
10
Billions of Dollars
Millions of Square Feet
3.0
2.5
8
2.0
6
1.5
4
1.0
2
0.5
0
0.0
88
26
90
92
94
96
98
00
02
04
06
08
10
12
14
88
90
92
94
96
98
00
02
04
06
08
Airport Terminals
Airport Terminals
2009
2010
2011
4.4 msf
3.0 msf
1.5 msf
+49%
-33%
-49%
2009
$2.6 bil.
-4%
2010
2011
$2.6 bil.
$2.4 bil.
-0-6%
2012
1.8 msf
+20%
2012
$1.8 bil.
-25%
2013
1.6 msf
-10%
2013
$1.8 bil
-0-
McGraw Hill Construction Confidential. All information presented @ McGraw Hill Construction, 2013. All rights reserved.
10
12
14
U.S. Manufacturing Buildings
Plant construction decelerated in 2012, due to the economic and political
uncertainty, as well as trade slowdown. Dollars pulled back after strong ’11.
Manufacturing Buildings
Manufacturing Buildings
Billions of Dollars
Millions of Square Feet
250
40
200
30
150
20
100
10
50
0
0
88 90
27
92
94 96
98
00 02
04 06
08
10 12
14
88
90
92
94
96
98
00
02
04
06
08
10
Manufacturing Bldgs.
Manufacturing Bldgs.
2009
2010
2011
36 msf
47 msf
54 msf
-55%
+29%
+16%
2009
$9.7 bil.
-69%
2010
2011
$9.5 bil.
$17.2 bil.
-2%
+81%
2012
56 msf
+3%
2012
$12.2 bil.
-29%
2013
58 msf
+5%
2013
$13.2 bil
+8%
McGraw Hill Construction Confidential. All information presented @ McGraw Hill Construction, 2013. All rights reserved.
12
14
U.S. Public Works – Highways and Bridges
Highways/bridges retreated through 2012; several large projects will help in 2013.
Highways and Bridges
•
Waning stimulus support, combined with tough
state fiscal environment has dampened
construction near term.
•
Fiscal 2012 appropriations – federal highway
funding cut 5% to $39 billion. Some additional
funds provided for disaster relief reconstruction.
•
MAP-21 (Moving Ahead for Progress in the
21st Century) will keep transportation funding
at current levels through 2014.
Contains mechanisms to “stretch” funding.
Highways and Bridges
•
2009
2010
2011
$57.2 bil. +8%
$59.5 bil. +4%
$56.8 bil. -5%
Federal funding for highways and bridges will
not be hit hard by budget sequestration,
since funding comes via Highway Trust Fund.
•
2012
$52.4 bil.
-8%
Added lift in 2013 could come from large
projects, including a portion of the $3 billion
Tappan Zee Bridge project in New York.
2013
$53.8 bil
+3%
Billions of Dollars
70
60
50
40
30
20
10
86 88 90 92 94 96 98 00 02 04 06 08 10 12 14
28
McGraw Hill Construction Confidential. All information presented @ McGraw Hill Construction, 2013. All rights reserved.
U.S. Public Works – Environmental
Environmental public works adversely affected by tight budgets.
Sewers, Water Resources
Water Supply Systems
Billions of Dollars
18
Billions of Dollars
15
Sewers
15
12
12
9
9
6
6
Water Resources
3
3
0
0
86 88 90 92 94 96 98 00 02 04 06 08 10 12 14
Environmental Public Works
2009
2010
2011
$36.6 bil.
$33.2 bil.
$31.5 bil.
-5%
-9%
-5%
86 88 90 92 94 96 98 00 02 04 06 08 10 12 14
• Projects generally take longer to reach
construction start stage compared to
transportation work.
• Construction often the result
of EPA mandates to local governments.
•
29
2012
$28.8 bil.
-9%
2013
$28.1 bil
-2%
Budget sequestration will hit environmental
projects harder than transportation work.
McGraw Hill Construction Confidential. All information presented @ McGraw Hill Construction, 2013. All rights reserved.
U.S. Public Works – “Other” Public Works
Diverse set of project types can be volatile; rail-related work picked up in 2012.
"Other" Public Works
35
Billions of Dollars
• Includes site work, rail-related work, pipelines,
airport runways, outdoor sports stadiums.
• Pipelines strengthened though 2010, retreated
30
in 2011, made partial rebound in 2012 with
segment of Keystone oil pipeline. Will the
major part of the Keystone oil pipe start in 2013?
25
20
15
10
• Mass transit account has fared relatively
well, raised 5% for fiscal year 2012.
5
0
86 88 90 92 94 96 98 00 02 04 06 08 10 12 14
“Other” Public Works
30
2009
2010
2011
$29.9 bil. -0$28.1 bil. -6%
$18.1 bil. -36%
2012
$23.1 bil. +28%
2013
$22.4 bil
• In 2012 – numerous rail projects –
- $877 mil. RTD Eagle commuter rail in Denver CO
- $326 mil. Metro Gold Line in Pasadena CA
-$280 mil. Warm Springs St. Ext. in Fremont CA
• High-speed rail plans? Received zero federal
funding for fiscal 2012, but still has support of
Obama Administration.
California high-speed rail project in progress.
-3%
McGraw Hill Construction Confidential. All information presented @ McGraw Hill Construction, 2013. All rights reserved.
U.S. Electric Utilities
New electric utility starts reached record high in 2012; downturn now underway.
Electric Utilities
50
•
Energy Bills of 2005-2007 – provided tax
incentives for electric utilities, transmission lines,
etc.
•
Stimulus act also provided boost – incentives for
alternative sources of electricity generation.
•
Capacity utilization was at 87% for 2007;
utilization retreated to 74% in 2012,
reflecting surge of new plants.
•
Gas-fired plants strong in 2012.
•
Vogtle and Summer nuclear plants (at $8.5
billion each) started in 2012. Prospects for
nuclear plants being re-evaluated, however.
•
Alternative energy power plants very
strong – 2010 up 124% and 2011 up 55%
But 2012 down 38%.
Loan guarantees extended another year.
•
Power lines also strong – 2010 up 52%
and 2011 up 8%. But, 2012 slipped 12%.
Billions of Dollars
40
30
20
10
0
86 88 90 92 94 96 98 00 02 04 06 08 10 12 14
Electric Utilities
31
2009
$21.1 bil.
-37%
2010
2011
$28.6 bil. +36%
$43.8 bil. +53%
2012
$48.4 bil. +11%
2013
$32.0 bil
-34%
McGraw Hill Construction Confidential. All information presented @ McGraw Hill Construction, 2013. All rights reserved.
U.S. Total Construction Starts for 2013
Billions of Dollars
Total Construction
Single Family Housing
Multifamily Housing
Commercial Bldgs.
Institutional Bldgs.
Manufacturing Bldgs.
Public Works
Electric Utilities
2008
2009
2010
2011
2012
2013
558.2
426.3
434.4
442.2
471.7
507.1
-13%
-24%
+2%
+2%
+7%
+8%
122.4
94.3
100.0
97.3
125.8
160.3
-39%
-23%
+6%
-3%
+29%
+27%
38.1
17.9
21.7
29.2
38.8
47.6
-37%
-53%
+21%
+35%
+33%
+23%
81.4
47.3
41.9
48.1
52.9
60.8
-19%
-42%
-11%
+15%
+10%
+15%
130.6
112.3
111.9
100.1
89.2
88.9
+11%
-14%
-0-
-11%
-11%
-0-
31.0
9.7
9.5
17.2
12.2
13.2
+50%
-69%
-2%
+81%
-29%
+8%
121.2
123.6
120.7
106.4
104.4
104.3
-0-
+2%
-2%
-12%
-2%
-0-
33.5
21.1
28.6
43.8
48.4
32.0
+77%
-37%
+36%
+53%
+11%
-34%
524.7
405.2
405.8
398.4
423.3
475.1
-16%
-23%
-0-
-2%
+6%
+12%
Total Construction
Excluding Elec.Utilities
32
McGraw Hill Construction Confidential. All information presented @ McGraw Hill Construction, 2013. All rights reserved.
The Southeast Region (FL, GA, SC, NC, TN, AL)
Comparing the pattern of total construction starts to the U.S.
Total Construction
in 2012, by State
M-H Construction Starts
Indexed, 1991 = 100
400
Southeast
%ch
12/05
325
FL
$28.0
+23%
-61%
250
GA
19.7
+56%
-29%
SC
16.1
+100%
+25%
NC
15.2
-0-
-38%
TN
9.2
+12%
-32%
AL
6.4
+6%
-34%
Total
$94.6
175
United States
100
25
88
33
$ Bil.
%ch
12/11
90
92
94
96
98
00
02
04
06
08
10
12
14
McGraw Hill Construction Confidential. All information presented @ McGraw Hill Construction, 2013. All rights reserved.
+30%
-41%
The Southeast Region
The employment decline in the Southeast during 2008-2010 was generally
steeper than the U.S. Job growth in 2011-2012 close to U.S.
Employment Growth, % change
2008
2009
2010
2011
2012
2013
2014
U.S.
-0.6%
-4.4%
-0.7%
+1.2%
+1.7%
+1.5%
+1.7%
FL
GA
-3.5%
-1.0%
-6.3%
-5.4%
-0.8%
-1.0%
+1.1%
+1.1%
+1.8%
+1.3%
+1.9%
+1.1%
+2.4%
+1.8%
SC
-1.0%
-5.9%
-0.2%
+1.1%
+1.5%
+1.3%
+2.0%
NC
-0.3%
-5.5%
-0.8%
+1.2%
+1.8%
+1.8%
+1.9%
TN
AL
-0.8%
-0.7%
-5.6%
-5.3%
-0.2%
-0.8%
+1.7%
0%
+2.0%
+0.7%
+1.4%
+1.1%
+1.5%
+1.9%
Florida Pluses: Still a leading retiree and tourist destination.
Strong international ties, particularly to Latin America.
Georgia Pluses: High population growth.
Strong potential in trade and distribution.
Growing auto manufacturing industry.
North Carolina Pluses: Important high-tech base.
Universities that attract tech firms and professionals.
34
McGraw Hill Construction Confidential. All information presented @ McGraw Hill Construction, 2013. All rights reserved.
The Southeast Region
Single Family Housing now heading upward.
Single Family Housing
Thousands of Units
500
2012 2013
+24% +25%
425
350
275
200
125
50
86 88 90 92 94 96 98 00 02 04 06 08 10 12 14
35
Single Family Housing
in 2012, by State
Units
(thous.)
%ch
11/10
%ch
11/05
FL
NC
40.0
28.6
+37%
+20%
-79%
-64%
GA
TN
SC
AL
18.2
15.2
14.8
11.6
+24%
+20%
+19%
+6%
-80%
-63%
-64%
-59%
Total
128.5
+24%
-73%
McGraw Hill Construction Confidential. All information presented @ McGraw Hill Construction, 2013. All rights reserved.
The Southeast Region – Recent Large Projects
Multifamily Housing and Commercial Building
36
Value
Sq. Ft.
$ Millions
Thous.
250.0
1,000
231.0
Start Date
City
State
Year: Mo
Cabana Bay Beach Resort Hotel
Orlando
FL
2013:01
1,208
Brickell CitiCentre - condo/apartment portion
Miami
FL
2012:09
200.0
1,000
A T & T Data Center
Kings Mountain NC
2012:06
180.0
580
Four Season Luxury Resort
Lake Buena VistaFL
2012:01
150.0
700
University Town Center Shopping Mall
Sarasota
FL
2013:02
139.7
1,650
Ross Dress for Less Warehouse Distribution Ctr Rock Hill
SC
2012:04
131.9
734
Oceana Key Biscayne Luxury Condos-Villas
Key Biscayne
FL
2012:08
130.6
385
Brickell House Condominium
Miami
FL
2012:11
110.9
375
US Federal Office Building
Miramar
FL
2012:09
96.4
935
Publix Warehouse & Distribution Center
Orlando
FL
2012:12
94.0
377
The Mansions at Acqualina II
Sunny Isles Beach
FL
2012:08
91.1
1,000
Home Depot Online Distribution Center
Mcdonough
GA
2012:07
90.5
520
Brickell CitiCentre - store portion
Miami
FL
2012:09
84.7
276
AFTAC Headquarters
Patrick A F B
FL
2012:03
McGraw Hill Construction Confidential. All information presented @ McGraw Hill Construction, 2013. All rights reserved.
The Southeast Region
Multifamily Housing and Commercial Building
Multifamily Housing
Thousands of Units
250
Stores and Warehouses
2012 2013
+45% +27%
Millions of Square Feet
90
Stores Stores
2012 2013
+34% +13%
Stores
75
200
60
150
45
100
30
50
Warehouses
15
0
0
86 88 90 92 94 96 98 00 02 04 06 08 10 12 14
Offices
Millions of Square Feet
86 88 90 92 94 96 98 00 02 04 06 08 10 12 14
2012 2013
-16% +10%
Hotels
Millions of Square Feet
75
30
60
25
2012 2013
+32% +15%
20
45
15
30
10
15
5
0
0
86 88 90 92 94 96 98 00 02 04 06 08 10 12 14
37
86 88 90 92 94 96 98 00 02 04 06 08 10 12 14
McGraw Hill Construction Confidential. All information presented @ McGraw Hill Construction, 2013. All rights reserved.
The Southeast Region – Atlanta Metro Area
Multifamily Housing and Commercial Building in the Atlanta metro area
Multifamily Housing
Thousands of Units
25
2012
+7%
Stores
2013
+23%
Millions of Square Feet
2012
+74%
2013
+10%
20
20
15
15
10
10
5
5
0
0
86 88 90 92 94 96 98 00 02 04 06 08 10 12 14
Offices
Millions of Square Feet
2012 2013
-46% +25%
Hotels
20
4
15
3
10
2
5
1
0
Millions of Square Feet
2012 2013
+178% -10%
0
86 88 90 92 94 96 98 00 02 04 06 08 10 12 14
38
86 88 90 92 94 96 98 00 02 04 06 08 10 12 14
86 88 90 92 94 96 98 00 02 04 06 08 10 12 14
McGraw Hill Construction Confidential. All information presented @ McGraw Hill Construction, 2013. All rights reserved.
The Southeast Region – Recent Large Projects
Institutional and Manufacturing Buildings
39
Value
Sq. Ft.
$ Millions
Thous.
500.0
1,000
346.0
0
312.6
Start Date
City
State
Year: Mo
Baxter Blood Plasma Fractionation Plant
Covington
GA
2013:03
Horsehead Corporation Production Facility
Rutherfordton
NC
2012:05
1,900
KTG USA Plant (Expansion)
Memphis
TN
2012:01
216.8
1,500
Mercedes-Benz C-Class Plant (Expansion)
Vance
AL
2012:05
171.7
741
Broward County Courthouse
Fort Lauderdale FL
2012:11
150.0
900
Continental Tire Plant
Sumter
SC
2012:08
140.0
431
Memorial Hospital Expansion Phase II
Chattanooga
TN
2012:03
134.6
1,124
Caterpillar Manufacturing Plant
Bogart
GA
2012:06
131.8
180
Miami's Frost Museum of Science
Miami
FL
2012:04
129.9
479
New Broughton Hospital
Morganton
NC
2012:06
115.0
400
Kissam Quadrangle (College Halls Phase II)
Nashville
TN
2012:07
115.0
30
Greenville Spartanburg Airport (Renov/Exp)(Ph 1)
Greer
SC
2012:08
110.7
245
St Joseph's South Hospital & Medical Office Bldg
Riverview
FL
2012:10
110.0
264
Northeast Georgia Medical Ctr South Hall Hospital
Braselton
GA
2013:03
McGraw Hill Construction Confidential. All information presented @ McGraw Hill Construction, 2013. All rights reserved.
The Southeast Region
Institutional Buildings
Educational Buildings
Millions of Square Feet
2012 2013
-15% -5%
Healthcare Facilities
Millions of Square Feet
75
25
60
20
45
15
30
10
15
5
86 88 90 92 94 96 98 00 02 04 06 08 10 12 14
86 88 90 92 94 96 98 00 02 04 06 08 10 12 14
Amusement & Rec. Bldgs.
Millions of Square Feet
2012
-4%
2013
+3%
Other Institutional Bldgs.
50
20
40
15
30
10
20
5
10
Millions of Square Feet
2012 2013
-5% +1%
0
0
86 88 90 92 94 96 98 00 02 04 06 08 10 12 14
40
2013
+8%
0
0
25
2012
-9%
86 88 90 92 94 96 98 00 02 04 06 08 10 12 14
McGraw Hill Construction Confidential. All information presented @ McGraw Hill Construction, 2013. All rights reserved.
The Southeast Region
Airport-related Work and Manufacturing Buildings
Airport Runways&Terminals
Billions of Dollars
1.8
2012 2013
+9% +2%
1.5
Manufacturing Buildings
50
Millions of Square Feet
2012 2013
+64% +3%
40
1.2
30
0.9
20
0.6
10
0.3
0.0
0
86 88 90 92 94 96 98 00 02 04 06 08 10 12 14
41
86 88 90 92 94 96 98 00 02 04 06 08 10 12 14
McGraw Hill Construction Confidential. All information presented @ McGraw Hill Construction, 2013. All rights reserved.
The Southeast Region – Recent Large Projects
Public Works and Electric Utilities
Value
Start Date
$ Millions
42
City
State
Year: Mo
Waynesboro
GA
2012:03
8,500.0
Nuclear Power Plant Units 3 and 4 at Plant Vogtle
8,500.0
Nuclear Power Plant Units 2 and 3 - V.C. Summer Plant Jenkinsville
SC
2012:04
1,300.0
Riviera Beach Next Generation Clean Energy Center
Riviera Beach
FL
2012:02
668.0
Palm Beach Renewable Energy Facility No 2
West Palm Beach FL
2012:04
132.0
US-1/FEC RR Structures Runway
Fort Lauderdale
FL
2012:02
125.0
CW Bill Young Regional Reservoir Repairs
Lithia
FL
2013:02
100.0
Washington White Post Solar Farm (25 MW)
Bath
NC
2012:10
96.6
Center Hill Dam Project (Foundation Rehabilitation)
Lancaster
TN
2012:07
90.9
Islamorada Village Wastewater System
Islamorada
FL
2013:02
72.0
Atlanta Streetcar Project
Atlanta
GA
2012:02
71.6
Passenger Terminal Apron (Reconstruction) (RE-BID)
Memphis
TN
2012:06
71.4
Clarksville Wastewater Treatment Plant Improvements
Clarksville
TN
2013:01
65.0
South County AWTP Expansion (4.5 to 10 MGD)
Ruskin
FL
2012:06
56.4
GA/DOT (I-285/SR 407) Resurfacing
Marietta
GA
2012:08
McGraw Hill Construction Confidential. All information presented @ McGraw Hill Construction, 2013. All rights reserved.
The Southeast Region
Public Works and Electric Utilities
Highways and Bridges
12
Billions of Dollars
2012
-11%
2013
-2%
Environmental Public Works
7
10
6
8
5
2012 2013
-7% +3%
4
6
3
4
2
2
1
0
0
86 88 90 92 94 96 98 00 02 04 06 08 10 12 14
86 88 90 92 94 96 98 00 02 04 06 08 10 12 14
"Other" Public Wks
6
Billions of Dollars
Billions of Dollars
(site work,etc.) 2012 2013
+42% -15%
5
Electric Utilities
20
Billions of Dollars
2012
2013
+208% -75%
15
4
3
10
2
5
1
0
0
86 88 90 92 94 96 98 00 02 04 06 08 10 12 14
43
86 88 90 92 94 96 98 00 02 04 06 08 10 12 14
McGraw Hill Construction Confidential. All information presented @ McGraw Hill Construction, 2013. All rights reserved.
Southeast Total Construction Starts for 2013
Billions of Dollars
Total Construction
Single Family Housing
Multifamily Housing
Commercial Bldgs.
Institutional Bldgs.
Manufacturing Bldgs.
Public Works
Electric Utilities
2008
2009
2010
2011
2012
2013
107.69
73.17
72.66
-22%
-32%
-1%
72.85
94.59
91.67
-0-
+30%
-3%
31.46
22.10
23.54
24.07
31.54
40.06
-42%
-30%
+7%
+2%
+31%
+27%
6.97
2.91
3.53
4.05
6.06
7.75
-44%
-58%
+21%
+15%
+50%
+28%
16.49
8.54
7.27
8.09
8.61
9.96
-26%
-48%
-15%
+11%
+6%
+16%
22.04
18.46
15.18
14.18
12.56
12.86
+14%
-16%
-18%
-7%
-11%
+2%
6.20
1.10
1.91
2.50
3.05
3.26
+3%
-82%
+74%
+31%
+22%
+7%
17.70
16.71
18.28
13.65
13.34
12.92
-15%
-6%
+9%
-25%
-2%
-3%
6.83
3.35
2.94
6.30
19.42
4.86
+148%
-51%
-12%
+115%
+208%
-75%
100.86
69.82
69.73
66.54
75.16
86.82
-25%
-31%
-0-
-5%
+13%
+16%
Total Construction
Excluding Elec.Utilities
44
McGraw Hill Construction Confidential. All information presented @ McGraw Hill Construction, 2013. All rights reserved.
Points of Perspective – U.S. Construction
Total Construction Activity by Cycle
Cyclical
Troughs
1975
1982
1991
2011
Cyclical Trough (T) =100, Based on Constant Dollars
190
175
160
145
130
115
1991-2011
1982-1991
2011-??
100
1975-1982
85
70
T
T+2
T+4
T+6
T+8
T+10
T+12
T+14
T+16
T+18
T+20
Years from Cyclical Trough
Note: the 2011-?? Cycle includes 2011-2012 historical data and estimate for 2013.
45
McGraw Hill Construction Confidential. All information presented @ McGraw Hill Construction, 2013. All rights reserved.
Points of Perspective – U.S. Construction
Nonresidential Building by Cycle
Based on Constant Dollars
Cyclical
Troughs
1975
1982
1991
2011
Cyclical Trough (T) =100, as determined by Total Construction
190
175
160
145
2011-??
130
115
1982-1991
100
1975-1982
1991-2011
85
70
T
T+2
T+4
T+6
T+8
T+10
T+12
T+14
T+16
T+18
T+20
Years from Cyclical Trough
Note: the 2011-?? Cycle includes 2011-2012 historical data and estimates for 2013
46
McGraw Hill Construction Confidential. All information presented @ McGraw Hill Construction, 2013. All rights reserved.
Thank You Very Much!
47