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2013 Economic Forecast for Southeast Construction Industry

Construction contract activity in the Southeast states of Florida, Georgia and the Carolinas will likely parallel national trends during 2013 while at the same time showing significant deviations from the bigger picture, according to economists with McGraw-Hill Construction and local industry officials.

As a result of significant increases in overall new starts in 2012 due to two nuclear power projects beginning construction last year—collectively valued at $17 billion by McGraw-Hill—the states of Georgia and South Carolina will most likely incur major overall declines in 2013, even while most building markets in both states improve. At the same time, each of the Southeast states will experience considerable improvement in residential construction, mirroring the forecast for the nation as a whole.

On a positive note, in October The Boeing Co. announced it had hired Global Performance of Greenville, S.C., to manage construction of an expansion of its aft body and paint facilities located at the company’s new campus in North Charleston.  Growth in the state’s residential sector could top 40% in 2013, according to McGraw-Hill Construction, while nonresidential manages a gain of around 5%—the result of increases in institutional construction overcoming declines in the commercial and industrial markets.

“Housing is definitely on the comeback, even in the hard-hit state of Florida,” says Kim Kennedy, manager of forecasting for McGraw-Hill Construction, which publishes Engineering News-Record. “This is important since a recovery in housing could help to spur the recovery in nonresidential building as well.”

National Outlook: Modest

On a national level, McGraw-Hill Construction is essentially forecasting continuing, but modest growth in the overall value of new contracts. The company’s figures reflect the cumulative total value of new construction contracts at the time of award.  According to the company, total starts should total roughly $483.7 billion in 2013, or 6% better than in 2012, which in turn represented a 5% gain over the year prior.

In announcing the 2013 outlook, Robert Murray, McGraw-Hill Construction’s vice president of economic affairs, sounded like he could have been describing the Southeast’s market conditions when he summed up the national situation this way: “The modest gains experienced during the past two years have in effect produced an extended bottom for construction starts, in which the process of recovery is being stretched out.”

Nationally, McGraw-Hill Construction expects residential contracts to show the most improvement, increasing by 22% in volume and totaling about $193.4 billion in cumulative value. Commercial construction should gain momentum, too, with this sector’s 2013 starts expected to total about $55.9 billion nationwide, for a 12% gain.

Regional Forecast: Mixed, Cautious

In the Southeast, despite predictions of increased construction activity at the state and local levels, sources contacted for this story remain mostly tentative in their estimations for the coming year.  “We think Georgia and Florida are going to come back strong at the end of next year, and the Carolinas would come right behind them,” Southerland says. Florida definitely appears to be leading the way in the Southeast, with building markets showing considerable resilience in 2012.

And while McGraw-Hill Construction has not yet finalized its 2013 state-level forecasts—or its final estimates for 2012 construction—preliminary data shows that Florida’s growth in new construction starts could jump by more than 20% in the coming year. Even so, industry officials there are tentative in their enthusiasm.

North Carolina, meanwhile, may eke out a 1% overall gain for 2012, as increases in residential help offset an expected 29% decrease in non building contracts, according to McGraw-Hill Construction. For 2013, North  Carolina may prove to be the Southeast state that most closely parallels national construction trends. Phil Southerland, president with KBR Building Group, Charlotte, foresees slow growth for the start of 2013, with the Southeast gradually building increased momentum as the year continues.

McGraw-Hill Construction’s preliminary data currently anticipates a 5% overall gain in new North Carolina construction starts for 2013, led by a 20% jump in residential contracts and a 3% boost in commercial work. (McGraw-Hill’s official state forecasts will be finalized later in 2012.)

But North Carolina’s nonresidential building sector could be down for the coming year, with industrial and institutional building contracts currently poised to decline. Additionally, the non building category, which includes infrastructure projects, could decline by roughly 10% during 2013.  Read More



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