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Construction industry poised for growth in Portland-metro area, observers say

By: Jeff McDonald//November 27, 2013//

Construction industry poised for growth in Portland-metro area, observers say

Jeff McDonald//November 27, 2013//

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Jeff Toney, an operator with Canby Excavating, works at the site of Riverscape – four five-story apartment buildings that will total 244 units in Northwest Portland. The project is being built by CANV/NC Construction. (Sam Tenney/91ÊÓÆµ)
Jeff Toney, an operator with Canby Excavating, works at the site of Riverscape – four five-story apartment buildings that will total 244 units in Northwest Portland. The project is being built by CANV/NC . (Sam Tenney/91ÊÓÆµ)

While the recession’s impacts linger, signs of a construction recovery are starting to emerge, regional trade association leaders say.

2013 was a year of slow, but modest growth in Oregon as Intel continued its expansion, data centers popped up and commercial construction started to rebound, said Mike Salsgiver, executive director of the Associated General Contractors’ Oregon-Columbia chapter.

“So far, it’s been an uneven recovery, but we are certainly seeing signs,” he said.

Construction employment peaked in 2007 with 105,400 seasonally adjusted jobs and bottomed out in 2010 with 67,200 jobs, according to the Oregon Employment Department. Year over year, that number jumped 9.3 percent last month to 76,400 jobs.

The challenge, Salsgiver said, will be replacing skilled workers lost in the downturn if and when construction activity approaches previous highs. During the recession, many workers became discouraged and dropped out of the industry, retired or left the state, he said.

“I am hearing from contractors that as soon as this kicks back in, there is going to be a problem,” he said.

Salsgiver expects a general reboot in the next three to five years, but it could take much longer for construction activity to return to 2007 levels, he said.

While big projects for Intel in Hillsboro and technology companies in Central and Eastern Oregon have kept some larger construction firms going, $10 million to $50 million projects are still on the back burner, Salsgiver said.

“There is a fairly large amount of unsold, unoccupied inventory,” he said. “There is not a big demand for large office buildings. People are looking to fill what they already built in the last decade.”

Public work (transportation, in particular), which comprised about 94 percent of the projects during the downturn, has largely dried up, Salsgiver said.

“If you’re one of those firms that positioned themselves to be primarily doing public work, you’re starting to scramble because it’s starting to evaporate,” he said. “Most of the bonded work and (Oregon Transportation Investment Act) work is starting to end.”

Public work also is tapering off in Southwest Washington, where state priorities have shifted to education, said Mike Bomar, former executive director of the Southwest Washington Contractors Association.

Bomar today is stepping into a new role as president of the Columbia River Economic Development Council. He will advocate for allocation of more money for Clark County transportation projects, including a bridge project in Ridgefield that would pave the way for an office and retail development.

“There are a lot of significant transportation needs in the area,” he said. “The challenge is that there is a lack of funding.”

Previous investment at the Port of Vancouver USA bodes well for Southwest Washington, Bomar said. Port officials in October signed a 10-year lease deal with Tesoro Corp. and Savage Cos. for them to operate a crude oil handling facility at the port. The team is expected to invest $100 million over the next 10 years. The facility is expected to create between 80 and 120 permanent jobs, according to port officials.

Another company, Australia-based BHP Billiton, is looking to relocate a facility at the port, Bomar said.

“The port absolutely is growing,” he said. “There have been really good investments in that infrastructure that is very appealing (for relocating firms).”

Meanwhile, the entire Portland-metro area is continuing to experience a need for multifamily housing, Bomar said. About 750 units are expected to become available in Southwest Washington between fall and spring, he said. Demand is coming from younger people who before the recession likely would have been first-time homebuyers, he added.

“They are a little gun-shy on buying a house,” he said. “I don’t know if it’s a bubble, but it’s the hot thing right now.”

According to the latest data from online real estate newsletter Market Action, residential sales activity has nearly rebounded to 2006 levels.

Market Action reported 2,189 closed sales in the Portland-metro area in October, the highest number for that month since 2006. Year-to-date, closed sales are up 16.2 percent compared with the same period in 2012, according to Market Action.

Demand for homes in Portland and Washington County will continue as market values appreciate and inventories remain at record lows, said Justin Wood, associate director of government affairs at the Home Builders Association of Metropolitan Portland.

“What’s really driving things is a supply-and-demand issue,” Wood said. “Moving forward, I only think (supply) is going to get worse.”

Local builders could struggle to take advantage as national builders with access to stock market dollars move into the Portland market, Wood said.

New home construction, particularly multifamily, will continue to be desired as home values appreciate, he said.

More apartments, condominiums and townhomes will be delivered into the marketplace, Wood said.

“That particular product is going to see continued growth,” he said.



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