[caption id="attachment_33769" align="alignleft" width="216" caption="Roger Nelson, president of Midstate Construction, surveys local architecture firms about their current and expected workload, a metric he calls the Nelson Index. Such surveys can show how much business the construction industry can expect several months or a couple of years in the future. (click image to enlarge)"][/caption]
Potential for significant projects on the horizon is limited to a few "bright spots," or business sectors that are moving forward with construction, according to a poll of North Bay architecture firms to be presented at the Business Journal’s Construction Conference 2011 on Tuesday.
Construction Conference 2011
Tuesday, May 10, 2011
Paul Campos, vice president of governmental affairs and general counsel, BIA of the Bay Area
"Super-regulators" of the Bay Area
Roger Nelson, president of Midstate Construction
Nelson Index survey of future local construction activity [see related story]
Keith Woods, chief executive officer, North Coast Builders ExchangeGreen Construction Panel
Michael Kimberlain, regional engineer, KriStar Enterprises
Dave Leff, president, Leff Construction
John McGarva, president and CEO, Western Water Constructors
Mark Soiland, president, Soiland Co.Read responses from the Green Panel to several questions on industry trends.
Paul Elmore, president, RNM Properties
Bob Mitsch, vice president for facility planning and development, Sutter Health
Keith Rogal, partner, Rogal + Walsh + Mol, redeveloper of the Napa Pipe plantRead responses from the Opportunities Panel to several questions on industry trends.
This year, 10 of the 14 polled design firms are looking for work this year and next and are doing so with substantially reduced staffs, according to responses from about a dozen firms collected by Roger Nelson, president of Petaluma-based commercial general contractor Midstate Construction. Results of his informal barometer of building business activity on the horizon -- what he calls the Nelson Index -- have been presented at the Construction Conference over the years.
"It is certainly down from 2000 and 2007, when it was done before," Mr. Nelson said about the survey.
The indexes for expected workload in 2011 and 2012 were both 1.36. An index of 1 means a firm is "actively looking for projects"; 2, "busy but room for new good projects"; and 3, "full plate," or "all the work we can handle." The indexes for 2000 and 2007 were 2.55 and 2.44, respectively, suggesting the pipeline of projects was nearly full at the time.
2000 and 2007 were turning points in local construction. The first was amid a white-hot commercial real estate building boom to meet demand from telecommunications systems developers and software companies; the second, the year after the housing bubble burst.
Schools and public projects are most of the types of jobs Nelson Index firms are tackling, and less than a quarter of their work is coming from office, industrial and retail projects, the firms told Mr. Nelson.
And because of the large inventory of available commercial space and flurry of recent leasing activity from firms taking advantage of low rents on buildings that have sold recently for as little as a third of the cost to build new ones, contractors should be gearing up to do more tenant-improvement jobs for the foreseeable future, he said.