Economic Future: Swiss Cheese

A number of industry professionals gathered in the nation's capital in October to hear business and construction experts' take on how the economy will fare next year. Unfortunately, the news was not hear tening.

Aside from health care, labs and pharmaceutical projects, says Ken Simonson, an economist with the Associated General Contractors, the rest of the non-residential market is "appalling."

More disturbingly, Simonson noted, the warehouse market—a strong sector for M/Es—may experience a "permanent shift downward," as many stores such as Walmart look to expand just-in-time delivery.

Simonson was among a number of economic experts speaking at Reed Construction Data's annual North American Construction Forecast.

Scott Simpson, an architect with Cambridge, Mass.-based Stubbins Assocs., was a little more optimistic, likening the market to Swiss cheese. "It's mostly solid, but there are a few holes."

Simpson's firm, however, resides in the hotbed of the bio-tech/pharmaceutical world, a market that is a little too busy. "We already have 2003 booked."

But with that full docket has come an onerous workload. "The big issue is speed," he says. "We're beyond hypertrack, and now on 'psychotrack' jobs where we need to be setting casework five weeks later."

Work should also continue to emerge from the government sector, most notably from the General Services Administration, as the federal government may need to carry the economy. GSA is specifically looking to significantly improve its under-performing buildings, which should mean lots of retrofit opportunities for M/Es, according to Bill Gueren, GSA's deputy assistant commissioner. "We've identified $4 billion worth of modernization projects," he says.

GSA is also in the midst of an aggressive courthouse building program (see "Hot Sun, Cold Justice," p. 30).

Elsewhere, work on university projects remains healthy, but that market is expected to dip, as donations are curtailing. Along the same lines, the elementary school market also might begin to dry up, as referendums are not passing at the community level.

Editor's note: Next month, CSE will provide a more extensive economic analysis of the year to come.