West should prep for commercial slowdown

November 20, 2007
COMMERCIAL : TRENDS & ANALYSIS

Nonresidential construction economy vibrant in short term


Part one of four

The October Architectural Billings Index from the American Institute of Architects, Washington, D.C., released Nov. 16, projects a slowdown for nonresidential construction, as billings slow nationwide with the West hit hardest. The index, derived from a work-on-the-boards survey of architects, is a projection of nonresidential construction activity six months down the road.

October billings in the West continued a downward slope from September, reaching 48; scores above 50 indicate growth. “This is the first time in nearly three years that billings have fallen for two consecutive months in the West,” said Jennifer Riskus, AIA research specialist, in the article. Click here to read the e-glass weekly financial report on the latest ABI.

The forecast for a weakening market comes at a time of surging growth for the region, says John Heinaman, president of Heinaman Contract Glazing in Lake Forest, Calif. “I don’t see a slowdown on the immediate horizon, but the volume of business we have now will not last forever. … I expect we will begin to see a slowdown in mid 2008,” he says.

The most recent Beige Book report from the Federal Reserve documented the West’s continued growth in commercial construction and real estate. To read the Oct. 5 report from Oct. 5, click here.

The report echoes the results of a Nov. 13 e-glass poll that shows glass industry respondents remain confident in the West’s construction environment. Twenty-one percent of respondents said the Southwest has the healthiest construction market, and 13 percent said the Northwest.

“The nonresidential market continues to be strong in the West,” Heinaman says. “In Las Vegas, [contractors] continue to build hotels, some condos, timeshares. In southern California, we’re unable to keep up with all the request for quotes,” he says.

Bryan Buckholz, president of Structural Glazing Systems Inc. in Phoenix, says other than high-rise residential, the construction market remains vibrant in the West. Structural Glazing Systems serves the Southwestern United States, from Dallas to San Diego.

“We see a lot of office industrial, industrial parks, office buildings, mostly in the private sector,” Buckholz says. “The only leveling off we’ve seen is in the high-rise condominium market, where we’ve seen several projects put on the back burner.”

Christine Shaffer, marketing manager for Viracon, Owatonna, Minn., says the building segments with the most growth are office and hotel. “In Texas, Arizona and California, the healthcare market is strong.”

Check out the next three issues of e-glass weekly for reports and forecasts for the Midwest, Northeast and South.

--By Katy Devlin, e-Newsletter Editor, e-glass weekly