Dodge 2013
Construction Outlook
Robert Murray
Vice President, Economic Affairs
McGraw-Hill Construction
Robert Murray is vice president, economic affairs for McGraw-Hill Construction, a
division of The McGraw-Hill Companies.
Bob has been with McGraw-Hill since 1980, and he is the author of the widely
circulated McGraw-Hill Construction Outlook. He coordinates the company’s five
year forecast product, the Construction Market Forecasting Service, which offers
detailed projections of construction activity for the U.S and nine major regions. He
is frequently quoted by such major newspapers as the Wall Street Journal on
industry developments, and his comments have appeared in Business Week,
Engineering News-Record, CNN, and other media outlets. In addition, Bob serves
as anchorman for McGraw-Hill's prestigious Construction Industry Outlook
Conference, held in Washington each October. He also conducts a series of
construction outlook seminars each spring and fall in various cities across the U.S.
and Canada.
Bob received his bachelor's degree from Princeton University, and he holds both
an M.B.A. and a master's degree in economics from Columbia University.
2
Major Questions Facing Construction
•
What are the prospects for the U.S. Economy – Will it be able to
avoid the “fiscal cliff” and recession?
•
Will the degree of uncertainty ease in 2013?
•
What impact will the outcome of the 2012 Presidential Election have
on construction?
•
Will financing for commercial building show improvement?
•
What funding limitations are being faced by public construction?
•
What’s the impact on major construction sectors?
3
U.S. Construction Market Outlook -Percent Change, 2008-2013, for Total Construction and Major Sectors
30%
$458 Billion
Total Const.
$158 Billion
Residential
$148 Billion
Nonresidential
$152 Billion
Nonbuilding
2012 Value
20%
10%
0%
-10%
-20%
-30%
-40%
08 09 10 11 12 13
08 09 10 11 12 13
History
08 09 10 11 12 13
08 09 10 11 12 13
Forecast
4
U.S. Construction Market Outlook -Nonresidential Bldg. Dollars – down 10% in 2012, up 5% in 2013
20%
$148 Billion*
$50 Billion
$86 Billion
Total Nonresidential
Commercial
Institutional
2012 Value
10%
0%
0%
-10%
-20%
-30%
-40%
-50%
08
09
10
11
12
*Includes Manufacturing
at $12 Billion for 2012
13
08
09
10
History
11
12
13
08
09
10
11
12
13
Forecast
5
U.S. Construction Market Outlook -Nonresidential Bldg. Sq. Ft. – up 1% in 2012, up 6% in 2013
30%
703 MSF*
376 MSF
276 MSF
Total Nonresidential
Commercial
Institutional
2012 Sq. Ft.
20%
10%
0%
0%
-10%
-20%
-30%
-40%
-50%
-60%
08
09
10
11
12
*Includes Manufacturing
at 52 MSF for 2013
13
08
09
10
History
11
12
13
08
09
10
11
12
13
Forecast
6
U.S. Construction Market Outlook -The Dodge Momentum Index offers insight on what’s ahead.
Dodge Momentum Index
Index: 2002 = 100
The Dodge Momentum Index (DMI) tracks
the first (or initial) reports for nonresidential building
projects at the planning stage.
200
175
150
125
Some recent points:
100
• The DMI bottomed out in July 2011,
75
50
02
03
04
05
06
07
08
09
10
11
12
13
DMI Components
and has been trending upward tenuously
since then.
• Recent hesitation in DMI indicates that early
Index: 2002 = 100
225
stage of recovery will be subject to pauses.
200
• The DMI has picked up some of the timing
175
150
shown by commercial and institutional starts.
Institutional
125
Recent increases in DMI for institutional
component suggests that decline for this sector
may be near an end.
100
Commercial
75
50
02
03
04
05
06
07
08
09
10
11
12
13
7
Agenda
•
The Environment -- Macroeconomic Picture
•
Single Family Housing and Multifamily Housing
•
Commercial Buildings
•
Institutional Buildings, plus Manufacturing Bldgs.
•
Public Works and Electric Utilities
•
Total Construction, including risks to the forecast
8
U.S. Macroeconomic Outlook
After strong finish to 2011 (up 4.1%), GDP has weakened so far in 2012.
GDP Pattern:
Real GDP Growth - Quarterly
'12 Q3
+2.0%
Annualized Percent Change
6%
History
4%
2009
2%
-3.1% +2.4% +1.8%
2010
Forecast
2011
2012
2013
+2.1% +2.2%
0%
Shape of Recovery:
-2%
•
-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 has been adversely
affected by
Continued uncertainty, due to
European debt crisis
November 2012 elections
Fiscal Cliff
• One plus – corporate profits healthy
but are they now slipping?
9
U.S. Macroeconomic Outlook
After weakening in 2012 Q2, employment growth strengthened in July-Oct. period.
Change in Total Employment
Thousands of Workers
Unemployment Rate
Oct. '12
+171,000
600
450
11
10
300
150
9
8
0
-150
-300
7
6
-450
-600
5
4
-750
-900
3
05
06
07
08
09
10
11
12
13
2012 By Month
300
Oct. '12
7.9%
Percent
275
250
192
181
171
143
150
148
68
0
Jan
Feb
Mar
Apr
May
04
05
06
07
08
09
10
11
12
13
• Job growth in May-Aug. ’11: 80,000 /mo
in Jan.-Mar. ’12 : 226,000 /mo
in Apr.-June ’12: 67,000 /mo
45
50
03
in Sept.-Dec.’11: 174,000 /mo
87
100
02
• Jobs lost from Feb.’08 to Feb. ’10: 8.8 Million.
• Job creation so far in 2010-2012:
4.5 Million. Unemployment rate at 7.9%
259
200
01
Jun
Jul
Aug
Sept
Oct
in July-Oct. ‘12: 173,000 /mo
10
U.S. Macroeconomic Outlook
Inflation overall remains subdued, despite volatile oil and gas prices.
Consumer Price Index
Price of Oil
Percent Change, Year-over-Year
Dollars Per Barrel, West Texas Intermediate
6
150
5
125
4
CPI
3
100
2
75
1
Core CPI
0
50
-1
25
-2
0
-3
01
02
03
04
05
06
07
08
09
10
11
12
13
• Inflation has settled back during 2012,
reflecting decreased demand for
commodities as the result of the
global economic slowdown.
01
02
03
04
05
06
07
08
09
10
11
12
13
• The price of energy remains volatile,
affected by instability in the Middle
East and refinery shutdowns in
California.
Some easing of gas prices could
cushion negative impact of tax hikes
in early 2013.
11
U.S. Macroeconomic Outlook
Short and long term rates very low; expected to stay low through 2015.
Monetary Policy
10-Year Treasury Bill
Federal Funds Rate, Percent
Percent
7
7
6
6
5
5
4
4
3
3
2
2
1
1
0
01
02
03
04
05
06
07
08
09
10
11
12
13
• Since Dec. 2008, the federal funds rate
target set at 0% to .25%.
• Federal Reserve expects “exceptionally low
levels for the federal funds rate at least
through mid-2015.”
01
02
03
04
05
06
07
08
09
10
11
12
13
• At its September 2012 policy meeting, the
Fed announced that it will buy large quantities
of mortgage bonds ($40 billion per month), to
“generate new jobs.”
• Latest round of “quantitative easing” through
the purchase of securities. Emphasis this
time on job creation and housing market.
12
U.S. Macroeconomic Outlook
Lending standards for commercial real estate loans are 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
• Lending standards for commercial real
estate loans have eased for 7 straight qtrs.
• Lending standards for C&I loans have
eased for 11 out of 12 quarters.
• But, lending standards for residential
mortgage loans have shown little or no
easing.
90
92
94
96
98
00
02
04
06
08
10
12
• Oct. 30, 2009 – Federal bank regulators issued
guidelines on commercial real estate loans,
encouraging banks to rework loans.
• A few major projects have resumed construction
• Uncertainty surrounding European debt crisis
has made banks more cautious once again.
• Impact of financial regulatory reform?
• Mortgage Bankers Survey results
13
U.S. Macroeconomic Outlook
Funding from federal government constrained; fiscal cliff looms.
Fiscal 2012 Appropriations
Federal Budget Surplus/Deficit
•
Billions of Dollars, CBO Projections
400
200
0
Federal highway program trimmed 5% to $39 bil.
High-speed rail received zero funding again
Mass transit account increased 5%
• Other accounts generally lower:
-200
-400
Clean Water SRF’s cut 4%
Drinking Water SRF’s cut 5%
-600
-800
-1,000
GSA new construction account cut 39%
GSA repairs &renovation account unchanged
-1,200
-1,400
-1,600
90
92
94
96
98
00
02
04
06
08
10
12
DOD base closure account cut 77%
DOD other military construction cut 8%
VA major construction projects cut 45%
Corps of Engineers construction increased 5%
Fiscal 2013 Appropriations
• A continuing resolution passed in September,
keeping funding near current levels through
March 2013. (Has 0.6% hike for domestic
discretionary programs.)
14
U.S. Macroeconomic Outlook
Other federal funding issues.
•
Passage of MAP-21 (Moving Ahead for Progess in the 21st Century)
- Provides roughly $105 billion over two years, including $80 billion for highways,
$21 billion for transit, and $3 billion for highway safety programs.
- Funding still determined by annual appropriations process
- Finds ways to stretch funding – increases TIFIA loan program,
loosens some restrictions on tolling for new interstates, HOV lanes.
•
Impending Fiscal Cliff
- Uncertainty as to extent Bush-era tax cuts will be extended, also degree to which
automatic spending cuts will be implemented.
- CBO Study – allowing existing policies to remain in place could lead economy
back into recession, with economy contracting 1.3% during first half of 2013.
- Payroll tax cut, which lowered rate from 6.2% to 4.2%, virtually certain to expire.
- Sequestration share for 2013 is $109 billion, with non-defense programs cut by 8%.
- Programs financed by trust funds (e.g., the Highway Trust Fund) won’t be cut.
•
Impact of November 2012 Presidential Election
- Obama re-election – continued emphasis on infrastructure
- Romney election – easing of regulatory restraints, focus on energy projects
15
.
U.S. Macroeconomic Outlook
State and local finances improving, but budgets remain tight.
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
6
– California ($23 billion)
4
– Illinois ($5 billion)
2
– New Jersey ($10 billion)
0
– New York ($10 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%.
– Florida ($4 billion)
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
16
U.S. Residential – Single Family Housing
After stalling in 2011, construction has picked up 2012.
Single Family Housing
Thousands of Dwelling Units
1,800
•
Single family starts in 2010 were helped by
greater demand from homebuyer tax credits,
now expired.
•
Level of construction in 2011 fell below
recession low of 2009. From 2005 peak to
2011, a decline of 75%.
•
Only limited success for various programs to
have at risk” homeowners rework their
mortgages.
•
Home foreclosures beginning to ease.
•
Housing developers still limited by tight credit.
1,600
1,400
1,200
1,000
800
600
400
200
0
88
90
92
94
96
98
00
02
04
06
08
10
12
14
615
549
510
435
446
413
-41%
-21%
+2%
-7%
+24%
+21%
2008
2009
2010
2011
2012
2013
17
U.S. Residential – Single Family Housing
Signs of improving single family market – rising home sales, stabilizing prices.
Home Sales - New & Existing Homes
S&P Case-Shiller Home Price Index
Millions
20-Metro Composite, Indexed Jan 2000=100
1.6
7.5
220
1.4
6.9
200
1.2
6.2
1.0
5.6
0.8
4.9
0.6
4.3
180
160
140
New Homes (L)
0.4
120
3.6
Existing Homes (R)
0.2
01
•
100
3.0
02
03
04
05
06
07
08
09
10
11
01
12
Demand for single family homes has begun
to improve, relative to end of 2010 –
•
Existing home sales up 11%
New home sales up 14%
.
02
03
04
05
06
07
08
09
10
11
12
13
S&P Case Shiller Index up for three months
in a row through July 2012.
Year-over-year gain for 20 Metro composite
in July is +1.2%, including:
Phoenix, +16.6% Minneapolis, +6.4%;
Detroit, +6.2%; Denver, up 5.4%.
But, Atlanta, -9.9%; New York, -2.6%;
Las Vegas, -1.0%; Chicago, -0.9%.
.
18
U.S. Residential – Single Family Housing
Signs of improving single family market.
Supply of Single Family Homes
Mortgage Rates - Weekly
Number of Months, New Homes
Percent
11
14
10
12
9
10
8
8
7
6
6
4
5
2
4
0
3
90
92
94
96
98
00
02
04
06
08
10
90
12
92
94
96
98
00
02
04
06
08
10
12

Inventory of new homes for sale was
4.5 months in July and Aug., lowest since 2005.
•
Record low mortgage rates – 3.4%, and
will stay low through 2013.
•
Demographic demand: 1 to 1.2 million units
per year. Will it be helped by by echo boom
moving into their 20’s?
19
U.S. Residential – Multifamily Housing
Multifamily has led housing recovery; more growth in 2013.
Multifamily Housing
• Apartments led early upturn.
Thousands of Dwelling Units
• Some benefit from stimulus act -Affordable housing projects
received a boost.
600
500
400
• Helped by push for
downtown redevelopment.
300
200
•
100
0
88
90
92
94
96
98
00
02
04
06
08
304
10
12
285
250
• Rental vacancy rates retreating,
rents are increasing.
• Condominium projects now picking up.
210
136
14
Demographics supportive,
from both empty-nesters
and now young adults.
156
• Compared to commercial building,
still a relatively attractive investment
target given more stable revenue.
-32%
-55%
+15%
+34%
+19%
+14%
2008
2009
2010
2011
2012
2013
.
20
U.S. Residential – Multifamily Housing
Recent Large Projects
Value
$ Millions
Dwelling
Units
Project Description
City
State
Start Date
YR: Month
231.0
893 Brickell CitiCentre – Condo/Apartment portion
Miami
FL
2012:09
200.0
359 398 Park Avenue South – Apartment portion
New York
NY
2012:04
New York
NY
2012:05
200.0
65 Baccarat Luxury Hotel & Condominium
200.0
510 1 North 4th Place
Brooklyn
NY
2012:08
184.4
378 Apartment Bldg.
Brooklyn
NY
2012:03
150.0
585 East Coast Tower V
Long Island City
NY
2012:08
146.6
589 Estuary-Lincoln Harbor Residential Complex
Weehawken
NJ
2012:06
144.3
535 Blvd 6200 Phase 1 – Apartment portion
Hollywood
CA
2012:06
New York
NY
2012:04
140.0
97 The Watershed Condominium Apartment Building
131.9
142 Oceana Key Biscayne Luxury Condos-Villas
Key Biscayne
FL
2012:08
126.6
240 120 Kingston Residential
Boston
MA
2012:08
119.0
299 One Rincon Hill Condo – Tower Two
San Francisco
CA
2012:09
21
U.S. Residential – Multifamily Housing
Top 10 Metros – 9 months year-to-date, 2012 vs. 2011. Based on dollars.
+37%
New York
-12%
Washington DC
+135%
Miami
+13%
Los Angeles
+29%
Boston
+19%
Dallas-Ft. Worth
+26%
Seattle
+66%
San Francisco
2011
2012
3.0
3.5
+336%
Austin
+38%
Houston
0.0
0.5
1.0
1.5
2.0
2.5
4.0
Billions of Dollars
22
U.S. Residential – Multifamily Housing
Top Owners, based on BuildShare database
Miami FL metro area – Top 10 Owners/Developers
Jan. 2008- Sept. 2012
Swire Properties Inc.
Wood Partners
The Related Companies of Florida
ZOM Development
Consultatio Key Biscayne, LLC
Alliance Residential Company
Trump Group
The Carlisle Group
Golden Beach Developers
C C Devco Homes
$0
$50
$100
$150
$200
$250
Millions of Dollars
23
U.S. Commercial Buildings – Stores
After steep decline in 2008-2010, store construction is turning the corner.
Stores & Shopping Centers
Millions of Square Feet
• Derived demand from housing
400
market – definitely true on
the downside of the cycle;
now beginning to show on upside.
350
300
250
• Recent retail sales have fluctuated.
Higher gas prices 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
208
• Extreme discounters (Family Dollar,
Dollar General) still expanding.
96
-33%
2008
14
• Some outlet mall projects starting,
along with projects by a few major
retailers.
96
113
81
84
-54%
-16%
+3%
+15%
+18%
2009
2010
2011
2012
2013
• Store renovations have seen
much smaller decline.
24
U.S. Commercial Buildings – Stores
Recent Large Projects
Value
$ Millions
400.0
300.0
250.0
Sq. Ft.
(000s)
Project Description
0 Macy’s Herald Square Renovation
326 Linq Observation Restaurant & Entertainment Venue
0 Winter Garden (Renovation)
State
Start Date
YR: Month
New York
NY
2012:04
Las Vegas
NV
2012:02
New York
NY
2012:04
City
90.5
520 Brickell CitiCentre – shopping center portion
Miami
FL
2012:09
70.0
250 Tivoli Village at Queensridge Phase 2
Las Vegas
NV
2012:07
60.0
430 Shops at Dakota Crossing
Washington
DC
2012:02
Escondido
CA
2012:04
55.0
0 North County Mall (renovate/modernize)
52.2
700 Fashion Outlets of Chicago
Rosemont
IL
2012:06
50.0
300 Market Street at Lynnfield Retail Stores (Shells)
Lynnfield
MA
2012:08
49.4
615 The Fountains at Farah Retail Shell
El Paso
TX
2012:07
Indianapolis
IN
2012:03
Nanuet
NY
2012:03
40.0
40.0
37 The Fashion Mall (Expansion)
350 Nanuet Mall (Renovation)
25
U.S. Commercial Buildings – Stores
Construction by Major Retail Chains
Projects Started January-September 2012
Millions of Dollars for Projects Valued at $1 million+
Wal-Mart
Macy's
Menards
Target
Kroger
Costco
CVS
Kohls
Academy Sports
Fred Meyer
0
200
400
600
800
1,000
1,200
1,400
26
U.S. Commercial Buildings – Warehouses
Warehouse construction seeing healthy percentage growth in 2011-2012.
Warehouses
Millions of Square Feet
350
• Vacancy rates still high, but easing.
Reached 14.5% in 2010 Q2, and have
retreated to 13.1% in 2012 Q3.
300
250
200
• Some larger regional facilities still
being built by major retailers. In 2011 and
2012, several large facilities built for
Amazon.com.
150
100
50
0
88
90
92
94
96
98
00
02
04
06
08
10
12
193
67
-24%
2008
49
86
95
62
-65%
-28%
+28%
+38%
+10%
2009
2010
2011
2012
2013
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.
27
U.S. Commercial Buildings – Hotels
Hotel construction up 54% in 2011; more growth underway.
•
Hotels
Millions of Square Feet
120
100
Negatives in 2009-2010:
Sluggish economy,
Reduced business travel
hotel/casino overbuilding
80
• More positives now:
60
Business travel has improved
Industry financials stronger
40
20
0
88
90
92
94
96
98
00
02
04
06
08
10
12
14
Occupancies for 2012 YTD at 63.0%
Revpar for 2012 YTD up 7.3%.
77
Revenue Per Available Room
Smith Travel Research
8.2%
10%
5.7%
28
27
33
37
7.3%
5.5%
5%
0%
17
-1.9%
-5%
-10%
-9%
-64%
-38%
+54%
+23%
+12%
-15%
2008
2009
2010
2011
2012
2013
-20%
-16.9%
2007
2008
2009
2010
2011
2012 YTD
28
U.S. Commercial Buildings – Hotels
Recent Large Projects
Value
$ Millions
Sq. Ft.
(000s)
Project Description
City
State
Start Date
YR: Month
180.0
580 Four Seasons Luxury Resort
Lk. Buena Vista
FL
2012:01
120.0
373 Los Angeles Marriott Hotel Complex
Los Angeles
CA
2012:04
100.0
120 Baccarat Luxury Hotel & Condo – hotel portion
New York
NY
2012:05
87.0
300 Hyatt Regency McCormick Place (Expansion)
Chicago
IL
2012:01
68.4
117 The Seville Beach Hotel/Condominiums Addition
Miami Beach
FL
2012:09
66.7
270 Margaritaville Casino Resort/Hotel
Bossier City
LA
2012:03
New York
NY
2012:02
62.4
0 Westin Hotel (Renovation)
52.5
240 The Grand Beach Hotel Surfside
Surfside
FL
2012:03
50.0
300 Mohegan Sun at Pocono Downs Hotel
Wilkes Barre
PA
2012:07
50.0
150 Potawatomi Hotel
Milwaukee
WI
2012:08
47.0
200 Brickell CitiCentre – hotel portion
Miami
FL
2012:09
Atlanta
GA
2012:09
45.0
0 Westin Peachtree Plaza (Renovations)
29
U.S. Commercial Buildings – Office Buildings
Construction has stabilized, but renewed expansion has yet to begin.
• Tight credit conditions caused
Office Buildings
Millions of Square Feet
more projects to be deferred in
2008-2009. Volume of deferred
projects now easing.
400
350
300
• Market fundamentals –
vacancies peaked in 2010,
now retreating.
250
200
150
100
50
0
88
90
92
94
96
98
00
02
04
06
08
10
12
159
73
57
60
59
64
14
• Much of recent activity:
Government office buildings
Data Centers
Corporate buildings,
including headquarters.
• Corporate earnings have been
strong – will that translate into
more corporate headquarters?
• A few signs that speculative
development is slowly stirring.
-27%
2008
-54%
-22%
+6%
-2%
+8%
2009
2010
2011
2012
2013
30
U.S. Commercial Buildings – Office Bldgs.
Recent Large Projects
Value
$ Millions
200.0
200.0
Sq. Ft.
(000s)
Project Description
215 Clifton Cloud Connection Center
1,000 A T & T Data Center
State
Start Date
YR: Month
Clifton
NJ
2012:05
Kings Mountain
NC
2012:06
City
120.0
100 680 Folsom St/Hawthorne St Office Bldg. (Add/Ren.)
San Francisco
CA
2012:03
120.0
340 Panasonic Corporate Headquarters
Newark
NJ
2012:05
112.5
319 Biogen Idec New Office & Existing Office Alterations
Cambridge
MA
2012:01
105.9
538 Soc. Sec. Admin. Metro West Lease Facility – Ph 1
Baltimore
MD
2012:02
101.3
0 AJ Celebrezze Federal Building Façade Re-cladding
Cleveland
OH
2012:03
598 UHG Office Buildings and Parking Garage (Ph 1)
Eden Prairie
MN
2012:07
469 Hyundai Motor Co. Headquarters Expansion
Fountain Valley
CA
2012:05
Ashburn
VA
2012:05
W. Des Moines
IA
2012:01
Washington
DC
2012:02
101.0
99.4
92.4
84.7
74.5
0 Data Center
110 Microsoft Data Center (Phase 2)
0 U.S. Dept. of Commerce Bldg. Renovations – Ph 2 & 3
31
U.S. Commercial Buildings – Office Buildings
Top 10 Metros – 9 months year-to-date, 2012 vs. 2011. Based on dollars.
-16%
NewYork
+20%
Washington DC
+10%
Houston
-27%
Boston
+79%
Dallas-Ft. Worth
Chicago
+3%
Kansas City MO
+337%
+23%
San Francisco
Minneapolis
-30%
Los Angeles
+274%
0.0
0.2
0.4
2011
0.6
0.8
1.0
1.2
1.4
1.6
2012
1.8
2.0
Billions of Dollars
32
U.S. Commercial Buildings – Office Buildings
Office market fundamentals are improving.
Change in Office Employment
U.S. Office Vacancy Rates
Thousands of Workers
CB Richard Ellis
1,500
25
1,000
20
Suburban
500
0
15
-500
10
17.3%
12.4%
Downtown
-1,000
5
-1,500
0
-2,000
86
88
90
92
94
96
98
00
02
04
06
08
10
12
14
88
90
92
94
96
98
00
02
04
06
08
10
12
14
• Most of the cuts in office employment
have already taken place.
• Office vacancy rates have topped off,
now retreating gradually.
• Overbuilding is less than
in past cycles.
33
U.S. Institutional – Educational Buildings
Educational buildings continue to lose momentum.
Educational Buildings
Based on Sq. Ft.
2011
2012 YTD
350
Primary, Jr. Highs
-15%
-12%
300
High Schools
-10%
-24%
250
Colleges & Universities
-6%
-14%
200
Libraries
-9%
-40%
Laboratories
-9%
-50%
Museums
+9%
-34%
Community Colleges
-1%
-33%
Vocational Schools
-16%
-31%
Millions of Square Feet
150
100
50
0
88
90
92
94
96
98
00
02
04
06
08
10
12
224
• Numerous states during 2005-2008
174
148
132
107
+2%
2008
14
101
-22%
-15%
-11%
-18%
-6%
2009
2010
2011
2012
2013
passed large school construction
bond measures, especially
California and Texas. Money now spent.
• Major universities re-evaluated
capital spending plans in 2008-2009
due to shrinking endowments;
now re-visiting those plans.
34
U.S. Institutional – Educational Buildings
Recent Large Projects
Value
$ Millions
Sq. Ft.
(000s)
Project Description
City
State
Start Date
YR: Month
290.0
330 National Museum of African American History
Washington
DC
2012:05
166.0
277 William Eckhardt Research Center – Univ. of Chicago
Chicago
IL
2012:06
136.0
400 San Marcos High School Rebuild
San Marcos
CA
2012:04
131.8
180 Miami’s Frost Museum of Science
Miami
FL
2012:04
110.0
250 Science, Educ. & Research Center – Temple University
Philadelphia
PA
2012:09
105.3
0 Bartlett Hall Science Building – Phase 2 – West Point
West Point
NY
2012:03
105.0
339 Duxbury High School & Middle School
Duxbury
MA
2012:09
102.0
176 Maryland Public Health Laboratory
Baltimore
MD
2012:01
101.0
337 Essex & North Shore Agricultural Technical School
Danvers
MA
2012:06
100.0
129 Andlinger Ctr. For Energy & Environ – Princeton Univ.
Princeton
NJ
2012:05
100.0
120 The Broad Collection – Art Museum
Los Angeles
CA
2012:05
100.0
560 Lake Central High School (Addition/Renovation)
Saint John
IN
2012:08
35
U.S. Institutional – Educational Buildings
Top 10 States – 9 months year-to-date, 2012 vs. 2011. Based on dollars.
-9%
Texas
-21%
California
-38%
New York
+37%
Illinois
-5%
Massachusetts
-22%
Pennsylvania
+8%
Georgia
Maryland
+2%
Ohio
-36%
2011
2012
-34%
Florida
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Billions of Dollars
36
U.S. Institutional – Educational Buildings
Top Owners, based on BuildShare database
State of Illinois – Top 10 Private Colleges/ Universities
Jan. 2008- Sept. 2012.
University of Chicago
Northwestern University
Roosevelt University
Monmouth College
Loyola University
Illinois Wesleyan University
Bradley University
Midwestern University
Chicago Theological Seminary
Wheaton College
$0
$20
$40
$60
$80
$100
$120
$140
Millions of Dollars
37
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.
Billions of Dollars
200
40
175
35
150
30
K-12 Schools
K-12 Schools
125
25
100
20
75
15
Colleges/Universities,
Community Colleges
50
Colleges/Universities,
Community Colleges
10
25
5
0
0
88
90
92
94
96
98
00
02
04
06
08
10
12
14
In 2011, sq. ft. for K-12 school
construction was 3.3 times the size
of Colleges/Univ./Comm. Colleges.
88
90
92
94
96
98
00
02
04
06
08
10
12
14
In 2011, dollars for K-12 school
construction was 2.1 times the size
of Colleges/Univ./Comm. Colleges.
38
U.S. Institutional – Healthcare Facilities
Healthcare facilities fell sharply in 2012.
Healthcare Facilities
Millions of Square Feet
90
Based on Sq. Ft.
2011
2012 YTD
Clinics
+12%
-11%
-8%
-25%
80
Hospitals
70
Clinics
60
50
40
• Hospital chains hard-hit in 2009
30
Hospitals
20
by tight credit conditions.
10
0
88
90
92
94
96
98
00
02
04
06
08
10
12
14
109
68
73
75
63
64
• Debate over healthcare reform
created near-term uncertainty.
• Sector still supported by –
Ongoing need to replace aging facilities
Growth of elderly population.
• U.S. military Veterans Admin.
projects helped to ease some
of the near-term slowdown.
+5%
-38%
+8%
+3%
-16%
+2%
2008
2009
2010
2011
2012
2013
• Now – renewed uncertainty over
healthcare reform.
More healthcare mergers.
39
U.S. Institutional – Healthcare Facilities
Recent Large Projects
Value
$ Millions
Sq. Ft.
(000s)
Project Description
City
State
Start Date
YR: Month
583.3
800 Exempla St. Joseph Replacement Hospital
Denver
CO
2012:01
420.0
490 Jacobs Medical Ctr/USSD Medical Center
La Jolla
CA
2012:04
335.0
825 St. John’s Mercy Medical Center (Replacement)
Joplin
MO
2012:02
300.0
600 CHOP Ambulatory Care Center
Philadelphia
PA
2012:04
299.8
409 Riverside Methodists Hospital Tower
Columbus
OH
2012:06
233.8
757 Jennie Sealy Hospital (Replacement)
Galveston
TX
2012:04
199.2
705 Northwestern Memorial Medical Office Building
Chicago
IL
2012:05
180.0
256 Highland Hospital Acute Tower
Oakland
CA
2012:02
New York
NY
2012:01
171.3
0 Goldwater North Memorial Hospital Redevelopment
156.3
216 Fort Irwin Hospital (Replacement)
Fort Irwin
CA
2012:07
140.0
355 Community Memorial Hospital
Ventura
CA
2012:02
140.0
431 Memorial Hospital Expansion Phase 2
Chattanooga
TN
2012:03
40
U.S. Institutional – Healthcare Facilities
Top 10 States – 9 months year-to-date, 2012 vs. 2011. Based on dollars.
-37%
California
-49%
Texas
+4%
New York
+34%
Colorado
Ohio
-1%
Illinois
-18%
+131%
Missouri
+157%
Tennessee
2011
2012
+59%
Pennsylvania
-15%
Florida
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Billions of Dollars
41
U.S. Institutional – Amusement & Recreational
Amusement-related project leveling off; modest gain in 2013.
Amusement & Rec. Buildings
Based on Sq. Ft.
2011
2012 YTD
Millions of Square Feet
Convention Centers
-11%
-32%
Sports Arenas
-12%
+12%
Theaters
-19%
+28%
Other (inc. theme parks)
-2%
+2%
120
100
80
60
40
20
0
88
90
92
94
96
98
00
02
04
06
08
10
12
14
59
• This category is affected by both public and
private financial support.
• The year 2010 included several large
amusement renovation projects in NYC --
42
35
33
32
34
$850 million for Madison Sq. Garden,
$400 million for the Javits Convention Center,
$53 million for Carnegie Hall.
• Casino projects gaining some momentum.
-9%
-29%
-17%
-5%
-3%
+7%
2008
2009
2010
2011
2012
2013
42
U.S. Institutional • Amusement & Recreational
Recent Large Projects
Value
$ Millions
Sq. Ft.
(000s)
Project Description
City
State
Start Date
YR: Month
105.0
130 San Jose Convention Center Expansion/Renovation
San Jose
CA
2012:02
100.0
300 Sioux Falls Events Center (Addition)
Sioux Falls
SD
2012:07
196 Univ. of Alaska at Anchorage Seawolf Sports Arena
Anchorage
AK
2012:06
Charleston
SC
2012:08
80.0
78.0
67 Gaillard Auditorium (Add/Renovation) Municipal Bldg
70.0
226 Penn State University Pegula Ice Arena
State College
PA
2012:02
63.5
273 Wind Creek Casino
Wetumpka
AL
2012:08
Indianapolis
IN
2012:09
63.0
0 Pepsi Coliseum (Renovation) (Indiana State Fair)
50.0
65 Kennedy Space Center Visitor Complex
Kennedy Sp. Ctr.
FL
2012:02
45.0
69 Rec. Facilities Improve. Univ. of Colorado Boulder
Boulder
CO
2012:05
43.6
64 Brooklyn College Performing Arts Bldg. (Addition)
Brooklyn
NY
2012:08
Pomona
CA
2012:06
Minneapolis
MN
2012:06
41.2
38.0
125 Recreation Center Cal Poly Pomona
30 Minnesota Orchestra Hall (Expansion)
43
U.S. Institutional – Airport Terminals
Airport terminal work in sq. ft. down, dollars stronger, due to renovation work.
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
88
90
92
94
96
98
00
02
04
06
08
10
12
14
0.0
88
90
92
94
96
98
00
02
04
06
08
10
12
14
4.4
2.7
3.0
2.6
2.6
2.4
3.0
1.5
1.8
1.6
1.8
1.8
+34%
+49
-33%
-49%
+20%
-10%
47%
-4%
-0-
-6%
-25%
-0-
2008
2009
2010
2011
2012
2013
2008
2009
2010
2011
2012
2013
44
U.S. Institutional – Airport Terminals
Recent Large Projects
Value
$ Millions
200.0
160.0
115.0
99.7
95.7
77.5
64.3
43.9
42.0
28.5
21.9
20.0
Sq. Ft.
(000s)
Project Description
145 JetBlue JFK International Arrivals Term. Expansion
0 Delta Airlines LaGuardia Hub (Renovations)
30 Greenville Spartanburg Airport – Renov. Phase 1
273 Wichita Mid-Continent Airport Air Capital Terminal 3
60 Main Terminal East West Baggage Basements
216 Terminal B South Side (Replace) - Bush Intercontinental
0 SF International Terminal – Term. 3 Boarding Area F
60 BWI B-C Security Checkpoint and Connector
0 Raleigh-Durham Airport Terminal 1 (Reconfiguration)
144 Bombardier Learjet Expansion
45 Charlotte Int’l - W.Terminal and Baggage Screening
0 Tampa Int’l – Main Terminal Modernization
State
Start Date
YR: Month
Jamaica
NY
2012:08
Flushing
NY
2012:05
Greer
SC
2012:08
Wichita
KS
2012:09
Dulles
VA
2012:07
Houston
TX
2012:02
San Francisco
CA
2012:08
Linthicum
MD
2012:05
Rdu Airport
NC
2012:06
Wichita
KS
2012:05
Charlotte
NC
2012:09
Tampa
FL
2012:07
City
45
U.S. Manufacturing Buildings
Plant construction has weakened once again in 2012 – uncertainty, trade slowdown.
Manufacturing Buildings
Manufacturing Buildings
Millions of Square Feet
Billions of Dollars
250
45
40
200
35
30
150
25
20
100
15
10
50
5
0
0
88
90
92
94
96
98
00
02
04
06
08
10
12
14
88
90
92
94
96
98
00
02
04
06
46
53
52
12
14
56
17.1
36
2008
10
31.0
80
-12%
08
9.7
9.5
11.8
12.8
-55%
+28%
+14%
-3%
+6%
+50%
-69%
-3%
+81
-31%
+8%
2009
2010
2011
2012
2013
2008
2009
2010
2011
2012
2013
46
U.S. Public Works – Highways and Bridges
Highways/bridges retreating through 2012; 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.
•
Federal funding for highways and bridges will
not be hit hard by budget sequestration,
since funding comes via Highway Trust Fund.
•
Added lift in 2012 could come from large
projects, including a portion of the $5 billion
Tappan Zee Bridge project in New York.
Billions of Dollars
70
60
50
40
30
20
10
0
88
90
92
94
96
98
00
02
04
06
08
10
12
59.4
57.2
14
56.3
52.9
52.3
50.6
-1%
+8%
4%
-5%
-10%
+3%
2008
2009
2010
2011
2012
2013
47
U.S. Public Works – Highways and Bridges
Recent Large Projects
Value
$ Millions
Project Description
261.0 Sellwood Bridge (Replacement)
City
Portland
212.4 TX/DOT: Widening – Grading Surfacing
State
Start Date
YR: Month
OR
2012:07
TX
2012:03
132.2 I-405 NE Sixth to I-5 widening/Express Toll Lane
Seattle
WA
2012:06
132.0 US-I (Roads/Bridges)
Ft Lauderdale
FL
2012:02
124.3 San Gabriel Trench Grade Separation Project
CA
2012:09
106.2 PA/DOT: I-95 – Main Lane Replacement
PA
2012:08
93.2 NY/DOT: Expressway Reconstruction
Staten Island
NY
2012:04
89.8 MA/DOT: Bridge Replacement
Worcester
MA
2012:05
89.5 CA/DOT: Replace Roadway Pavement
Bakersfield
CA
2012:04
89.3 CA/DOT: Pavement Rehab – Slab Replacement
R. Cucamonga
CA
2012:04
86.6 CA/DOT: Replace Pavement and Widen Median
Castaic
CA
2012:04
NY
2012:08
79.1 NY/DOT: I-678 Kew Gardens Interchange
48
U.S. Public Works – Highways and Bridges
Top 10 States – 9 months year-to-date, 2012 vs. 2011. Based on dollars.
+27%
California
-41%
Texas
-1%
Illinois
Florida
-16%
New York
+29%
Ohio
-19%
Pennsylvania
-16%
New Jersey
+15%
2011
2012
+3%
North Carolina
+12%
Minnesota
0.0
1.0
2.0
3.0
4.0
5.0
6.0
Billions of Dollars
49
U.S. Public Works – Rail, Mass Transit
Highways/bridges retreating through 2012; large projects will help in 2013.
Mass Transit - Rail, Rail Terminals, Rail Tunnels
8.0
Billions of Dollars
• Mass transit account has fared relatively
well, raised 5% for fiscal year 2012.
• New York City area in recent years has
seen start of major projects, including:
- Second Avenue subway line
- No. 7 subway line extension
- $3.0 bil. Subway, Path Train Regional Hub
- $148 mil. for phase 1 of Moynihan Station
- $ 44 mil. renovation for Grand Central Station
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
88
90
92
94
96
6.6
98
00
02
04
06
08
10
12
7.2
5.8
3.7
5.2
3.5
+3%
+78%
2008
2009
+8%
-51%
+65%
-10%
2010
2011
2012
2013
14
• 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.
50
U.S. Public Works – Environmental
Environmental public works adversely affected by tight budgets.
Water Supply Systems
Sewers, Dams/Water Resources
Billions of Dollars
Billions of Dollars
14
18
16
12
Sewers
14
10
12
8
10
8
6
Dams, Water
Resources
6
4
4
2
2
0
0
88
90
92
38.3
94
96
98
00
02
04
06
08
10
12
36.6
33.0
31.4
28.7
27.5
88
14
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.
•
+2%
2008
-5%
-10%
-5%
-9%
-4%
2009
2010
2011
2012
2013
Budget sequestration will hit environmental
projects harder than transportation work.
51
U.S. Electric Utilities
New electric utility starts reaching record high; downturn likely in 2013.
Electric Utilities
•
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 has since retreated to 74% for
2012 YTD, reflecting surge of new plants.
•
Gas-fired plants strong in 2012, up 700% YTD.
•
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 YTD down 30%.
Loan guarantees are expiring.
•
Power lines also strong – 2010 up 53%
and 2011 up 8%. But, 2012 YTD down 33%.
Billions of Dollars
60
50
40
30
20
10
0
88
90
92
94
96
98
00
02
04
06
08
10
12
14
51
44
35
34
29
21
+79%
2008
-38%
2009
+36%
2010
+53%
2011
+17%
2012
-31%
2013
52
U.S. Electric Utilities
Recent Large Projects
Value
$ Millions
Project Description
City
State
Start Date
YR: Month
8,500.0 Nuclear Power Plant Units 3 and 4 at Plant Vogtle
Waynesboro
GA
2012:03
8,500.0 Nuclear Power Plant Units 2 and 3 at V.C. Summer Plant
Jenkinsville
SC
2012:04
1,300.0 Riviera Beach Next Generation Clean Energy Center
Riviera Beach
FL
2012:02
1,100.0 Warren County Power Station
Front Royal
VA
2012:04
1,099.0 Ivanpah Solar Energy Complex (Plant 1 - 2 & 3)
Ivanpah
CA
2012:01
TX
2012:02
CA
2012:05
KS
2012:03
880.0 Los Vientos I & ll Wind Power Project
803.0 Tehachapi Wind Farm – Phase 2
Tehachapi
783.0 Flat Ridge Wind Farm Phase 2
750.0 Hereford Windfarm (400 MW)
Hereford
TX
2012:09
721.0 Entergy Ninemile Point Plant Generation Unit Expansion
Westwego
LA
2012:05
685.4 240 Mile Transmission Line
Brookings
MN
2012:05
535.0 Natural Gas-fired Combined- Cycle Unit
Horseshoe Bay
TX
2012:07
53
U.S. Construction Market Outlook
Billions of Dollars
2008
2009
2010
2011
2012
2013
Total Construction
558.6
426.3
433.7
437.7
457.9
483.7
-13%
-24%
+2%
+1%
+5%
+6%
122.4
94.3
100.0
97.3
123.5
153.1
-39%
-23%
+6%
-3%
+27%
+24%
38.1
17.9
21.6
28.6
34.6
40.3
-37%
-53%
+20%
+32%
+21%
+16%
81.4
47.3
41.8
47.7
50.1
55.9
-19%
-42%
-12%
+14%
+5%
+12%
130.6
112.3
111.8
99.5
86.3
86.6
+11%
-14%
-0-
-11%
-13%
-0-
31.0
9.7
9.5
17.1
11.8
12.8
+50%
-69%
-3%
+81%
-31%
+8%
121.1
123.6
120.4
103.8
100.6
100.0
-0-
+2%
-3%
-14%
-3%
-1%
33.9
21.1
43.7
51.0
35.0
+79%
-38%
28.6
+36%
+53%
+17%
-31%
Single Family Housing
Multifamily Housing
Commercial Bldgs.
Institutional Bldgs.
Manufacturing Bldgs.
Public Works
Electric Utilities
54
Risks to the Forecast
Baseline Forecast
Alternative Forecast
2012
2013
2012
2013
Total Construction
+5%
+6%
+4%
-7%
Single Family Housing
+27%
+24%
+25%
-2%
Multifamily Housing
+21%
+16%
+20%
-5%
Commercial Bldgs.
+5%
+12%
+5%
-6%
Institutional Bldgs.
-13%
-0-
-13%
-3%
Manufacturing Bldgs.
-31%
+8%
-31%
-5%
Public Works
-3%
-1%
-3%
-7%
+17%
-31%
+17%
-35%
Electric Utilities
55