91ÊÓƵ

Graham Roy is a senior vice president at Rider Levett Bucknall’s Portland office. The international firm provides construction project management and cost management services. In Oregon it has worked on projects for the University of Oregon, Portland State University, the Portland Development Commission and the city of Portland.

Some of Rider Levett Bucknall’s recent work involves renovations of Jeld-Wen Field and Memorial Coliseum. The firm also releases a quarterly construction costs report, and follows the outlook for construction around the world.

Roy recently spoke to the 91ÊÓƵ about the financial climate.

91ÊÓƵ: How has Portland experienced the last three years differently than the rest of the country, and why?

Graham Roy: In our view, Portland has lagged behind the East Coast in terms of the recession. When our offices on the East Coast were in full recession mode with projects either canceled or deferred, it seemed as though Oregon was still charging along well. Now the full impact has hit Oregon and we’re in full recession along with the recession. We may well be the last to pull out.

What makes us unique is the Intel-level of construction has been tremendous for the region. There’s also a significant amount of university work; the Oregon University System recently announced $260 million worth of capital budget over 2011-2013. In other regions, we’ve got virtually no university work to speak of.

Our office vacancy rates are certainly not good, but they’re not as bad as other regions and other metros around the county. And although the residential market is poor, we’re seeing recent signs in places such as Bend where there’s a sign of some sustained growth.

91ÊÓƵ: Are you expecting a recovery in private-sector work, or is the outlook going the other direction?

Roy: Private developers are finding it incredibly difficult to get the financial lenders to support them. We have Fox Tower 2 (Park Avenue West), which has sat there for many years – somewhat due to lack of funding but also due to lack of interest in preleasing. That empty crate is fairly indicative of the market.

Another example – the early master plan for the Pearl District – was to have towers all the way down to the river, but we’ve still got lots of gap sites down there. And now condos are turning into apartment blocks.

Financial lending is one of the biggest drivers to private development, and with the recent changes in the U.S. credit rating that may even become a bigger issue.

91ÊÓƵ: How concerned are you about S&P downgrading the U.S.’s credit rating?

Roy: That may well postpone construction that was slated to go ahead; it may well postpone it indefinitely. Projects that were on the cusp of getting the green light may have to wait until we all have a clearer idea what’s going to happen.

To encapsulate the effects for the construction industry: The long road ahead has probably become a lot longer. We anticipate that local governments will have problems within various regions within the states, because they’ll have trouble getting financing. Higher interest rates could cause those issues.

91ÊÓƵ: What are your other concerns for Portland in the near future?

Roy: We are concerned about a possible labor shortage, just because there’s so much en masse labor going on at Intel. If other projects came along at the same time there may well be a temporary shortage of labor in Oregon.

Another successful public school bond … came along, or if bridge work came along at the same time as health care work or university work, that could produce a shortage in which Portland-metro has to reach out to other parts of Oregon or other states for temporary labor.

91ÊÓƵ: Do you expect any particular areas of opportunity over the next year?

Roy: The $260 million worth of Oregon University System funds will be very welcome. Other than that there’s the usual infrastructure work with bridges, like the new Sellwood Bridge and a continuation of restoration work on other bridges.

We don’t see any meaningful improvements in the housing market or the office market anytime soon.

With the U.S.’s national Architectural Billings Index continuing to go (down) we are looking to other regions – the usual ones, like North Africa and the Middle East. Our Asian offices and Australia are also faring better than other regions right now.