By Lucia Mutikani
Reuters

WASHINGTON (Reuters) – U.S. construction spending edged up in May despite the Middle East conflict constraining homebuilding.

The Commerce Department’s Census Bureau reported that construction spending rose 0.1% after a downwardly revised 0.3 percent increase in April. Economists polled by Reuters had forecast construction spending gaining 0.1 percent after a previously reported 0.4% increase in April.

Construction spending fell 1.5 percent on a year-over-year basis in May. Spending on private construction projects was unchanged after rising 0.3% in the prior month. Investment in residential construction increased 0.3 percent, reflecting renovations.

Spending on new single-family housing projects dropped 0.1 percent. It tumbled 4.0 percent year-on-year in May.

The U.S.-Israeli war with Iran boosted oil prices, driving up inflation and mortgage rates. The average rate on the popular 30-year fixed-rate mortgage has increased by about 50 basis points since the conflict started at the end of February, data from mortgage finance agency Freddie Mac showed.

Spending on multi-family housing units, which account for a small share of the housing market, dipped 0.1 percent in May.

Investment in private nonresidential structures such as power plants and factories declined 0.3 percent in May. Spending on factory construction dropped 1.3 percent, while outlays on power plants eased 0.1 percent, despite a surge in the construction of data centers to support artificial intelligence.

Investment in public construction projects increased 0.5 percent after a similar gain in April. State and local government construction spending rose 0.4 percent in May while outlays on federal government projects jumped 1.3 percent, likely boosted by the building of detention centers as part of an immigration crackdown.

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Two middle housing buildings are being constructed two blocks apart on Division Street in Portland. The projects, E and Hutch, are designed by a small firm made up of two experts in multifamily housing.

The two architects, founder Armin Quilici and partner Keith Fugate, partnered last year on Quilici’s firm, Quilici Architecture, which is now QUAD Architects. Both architects have a combined 50 years of experience in multifamily housing.

QUAD Architects is a small firm that specializes in multi-family development and provides a range of services, from initial feasibility studies to comprehensive architectural and planning services. The firm is mainly focused on projects in the Portland area.

Quilici and Fugate first worked at Bora Architecture & Interiors in the late 1990s and moved on to different firms in the early 2000s.

Quilici started his firm, Quilici Architecture, in 2016 when Portland developer Jim Winkler, of Winkler Development Group, asked for help on a Southwest Portland project, The Gabe. Quilici said he always liked the idea of starting his own firm and liked smaller firms.

“It’s just a little bit more exciting to do all aspects of a project rather than specializing on part of a project,” Quilici said.

The project was put on hold but came back online around 2020 and was twice as big as originally proposed, with 121 residential units. Quilici was looking for some help and Fugate started doing contract work for the firm when construction began.

“We found that we both fill out each other’s weaker spots,” Fugate said. “He’s more the designer; I’m more the project manager.”

The two became official partners and transitioned the firm to QUAD Architects in the fall of last year.

Fugate said multifamily housing is the firm’s “bread and butter.” The firm also works on smaller tenant improvements, some single-family housing and education projects, such as student housing.

“The way things are in Portland, (with the economic downturn), we’re really focused on smaller TIs and things like that, which are kind of backfilling what was multifamily housing over the past 10 years,” Fugate said.

Fugate said the firm is always in contact with developers they have worked with historically and continues to check in with them about work, which lately has been improvement projects. Because of its smaller size, the architects can work directly with clients at each step of a project.

On the boards, the firm has a couple of warehouse tenant improvements, potentially a wine bar project in Dayton and some food cart studies.

Quilici said the firm has seen a demand for middle housing lately. The firm’s middle housing projects, E and Hutch, are currently under construction. The E and Hutch are two separate buildings located two blocks apart, with the same floor plans. The E is at 2515 SE 30th Ave. and the Hutch (also known as 32D) is at 2508 SE 32nd Ave.

These buildings fulfill the need for middle-housing, which is defined as more denser development than duplex housing, but smaller than the more typical four- to five-story double loaded corridor style housing, according to the firm’s website.

The three-story buildings are 12,500 square feet each with 11 residential units, plus 3,000 square feet of ground floor retail space that could be a café or similar use. The buildings include a single staircase. Quilici said the design could be replicated on other lots, with different exteriors.

“The idea of this design is that you can repeat the basic layout in different lots,” Quilici said.

Quilici said it is a simple and efficient smaller-scale apartment building and that the basic layout makes sense for the 5,000-square-foot lots.

The project team includes civil engineer Humber Design Group Inc., structural engineer Aman Structural Engineering and owners/developers and general contractors Don Mutal and Aaron Jones. QUAD Architects led landscape design.

The total project cost is $7.12 million. Construction began in the fall of 2024 and is on track for a Dec. 31 completion.

“We know coming out of this housing and construction recession we’re going to be building more middle housing, small-scale apartments,” Quilici said. “We can help out.”

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Supreme Builders, started by Eric Hernandez in 2021, specializes in residential and commercial construction, including new builds, renovations and remodels. Its projects range from single-family homes to multiunit apartment buildings and commercial spaces. Hernandez occasionally has one or two temporary employees, and most of his work is subcontracted out.

“I wanted to start my own company to have more control over the projects I work on and to bring my vision and values to the construction industry. By starting my own company, I could ensure that quality, integrity and customer satisfaction were always at the forefront of our work.” he said.

“Additionally, having my own business allowed me the flexibility to innovate and implement solutions that I felt would best serve the clients and the community,” Hernandez added.

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Crenshaw Construction Group is a versatile construction company specializing in remodeling, architectural ceilings, water mitigation solutions, carpentry and drywall demolition. From structural improvements to aesthetic enhancements, Crenshaw Construction Group strives to transform spaces with durability, functionality and excellence.

Based in Dallas and led by owner Rolando Crenshaw, the company’s team provides high-quality craftsmanship for residential, commercial and industrial projects. The team prides itself on delivering personalized service, attention to detail, and efficient project completion that stays within budget.

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David Avalos Hernandez and Sabrina Pawn Hernandez joined forces as a husband-wife business team in 2024 by rebranding David’s previous company and building on his experience with trades such as framing, siding, painting and remodels.

As Avalos Kahana Construction, they employ three people to do remodels, framing, siding, painting, trash outs and cleaning, and they specialize in energy-efficiency products. Sabrina, who has a background in health care administration, manages the company’s back office.

“We like building relationships and friendships with everyone we meet, whether it be customers, vendors or business associates, and seeing our vision come to fruition with a completed job and happy homeowner,” Sabrina said.

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For future electric car owners, a suburban home might just have the answer for a convenient overnight recharge.

Developer Vic Remmers is incorporating electric-car charging stations into two suburban Portland subdivisions where he’s building homes. His company, West Hills Homes NW, recently broke ground at Pioneer Highlands in Happy Valley, where he plans to build 65 homes. Remmers plans to begin building 118 homes in August at Thompson Woods in the Bonny Slope-Bethany area of Washington County.

All 183 homes will feature electric-car charging stations in their garages. The homes also have WiFi-capable thermostats and garage doors, and WiFi boosters to eliminate dead spots of wireless coverage in homes.

Remmers’ homes show home builders continuing to adjust to and stay in front of buyers’ expectations.

“One thing we’re really focused on here in 2017 is the technology in the homes and pushing forward with what we can do,” Remmers said.

In higher-income portions of the Portland metro area, Teslas seemingly have become as common as Hondas. As Teslas and other electric cars become more common, in-home charging stations begin to become a sensible amenity for developers to consider.

Remmers first tested the reception for in-home car charging stations at homes in Portland. “It’s been really well received,” he said. “It gets your homes ready for the future.”

While many homeowners have installed electric car chargers on their own, Remmers may be the first developer to do so in new homes on a wide scale in Oregon.

“It’s not common at all,” said Terry Bernhardt, an appraiser in Southwest Portland who tracks green home technologies. “Normally you have to have it installed at considerable expense.”

He estimates adding a charging station adds about $4,000 to the cost of building a home.

Paul Grove of the Home Builders Association of Portland said he was not aware of any other housing developments with charging stations installed in each home. But he said he’s noticed more public charging stations, even in rural areas.

Some downtown Portland parking garages include electric charging stations.

“You can definitely see a trend as more and more people choose to drive electric vehicles,” Grove said.

While Tesla vehicles can be plugged in directly to a wall outlet, it can take about eight hours to fully charge when connected to a 110-volt outlet. Dedicated chargers are much faster.

Bernhardt sees more residential developers adopting charging stations as electric vehicles and plug-in hybrids become more common. “The market’s going to catch up,” he said. “I think it’s a technology which has arrived now.”

Homes that include useful technology like electric car chargers both set housing apart and increase its resale value, Bernhardt said.

Electric cars can be charged in the home or at public charging stations. But most vehicle owners prefer the convenience of charging their vehicles at home, typically overnight, said Beau Snyder, an owner advisor at the Tesla dealership on Macadam Avenue, one of two in the Portland area (Tesla also has a dealership at Washington Square).

Tesla operates public charging stations that are free for Tesla owners to use. The Portland area has two so-called Superchargers, one in Woodburn and another in Sandy. There are also charging stations run by various private vendors that use differing technologies.

Some government agencies are working to expand charging stations, too. Seattle City Light, a publicly owned utility, announced plans to install 10 charging stations for drivers.

Oregon’s Building Codes Division also has discussed how to make sure new homes are electric-vehicle ready, said Jon Chandler, chief executive of the Oregon Home Builders Association.

A new era for electric cars appears to be dawning as automakers race to meet emissions mandates. Tesla is the current market leader in electric vehicles, with plans to produce 500,000 fully electric cars in 2018. But other automakers are following close behind. Volvo on July 5 announced plans to offer every vehicle with an electric motor beginning in 2019. Volvo will launch five fully electric models between 2019 and 2021, supplemented by plug-in hybrids and vehicles with so-called “mild hybrid” engines that automatically shut off when a car comes to a stop. Mercedes is also heavily investing in a new line of electric vehicles.

As electric cars become more popular, developers of single–family homes are facing fast-changing demands to respond.

“It’s something that we’re doing across the board right now,” Remmers said. “We think it’s the right thing to do, and we think it’s a feature buyers are going to appreciate in their new homes.”

Remmers uses electrical contractors Three Phase Electric, based in Canby, and Garner Electric, in Portland and Hillsboro.

West Hills Homes NW is developing Pioneer Highlands first, having garnered building permits from the city of Happy Valley. Remmers purchased the unbuilt lots in Pioneer Highlands from Holt Group, another residential developer.

“Over the years we’ve been watching Happy Valley, and it’s been growing tremendously,” Remmers said. “The demographics are excellent.”

Remmers said new Fred Meyer and New Seasons grocery stores have increased interest in the area.

The Pioneer Highlands homes are 2,500 square feet to 4,000 square feet, and are designed by an in-house architect, Brad Hosmar. Some of the homes will be one level, which is in demand for older buyers, Remmers said. Other homes will also have the master bedroom on the ground floor.

The single-family housing market has suffered from a lack of inventory. The Portland metro area had only 1.6 months of inventory in June, according to RMLS, a listing service. Total time on market for sold homes averaged 38 days.

“It’s a lot like the inner city where there really is a lack of inventory,” Remmers said. “It’s definitely a strong demand right now.”

Remmers had focused on the urban infill market before last year, when he began to build in Findley Heights, a subdivision in the Bethany-Bonny Slope area of Washington County.  A 40-lot buildout there is almost complete.

“That was tremendously received,” Remmers said. “We have a handful of homes left there that we’re building. Those have all sold well.”

Remmers is still building apartments and some condos in urban Portland, but has sought suburban developments to diversify and grow his business.

“We’re still doing a tremendous amount of homes in the infill market, just like we’ve been doing,” he said.  “This is another avenue for us to add some volume. That’s what families are looking for.”

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