If there’s any immediate glimmer of hope in the construction industry, it will come from the residential sector.
Nationally, residential building has begun to show faint signs of a turnaround.
However, John Burns Real Estate Consulting reported this month that total U.S. new home permits for 2009 will still be off by 79 percent from the market’s peak.
Colorado as a whole has seen residential starts slow to pre-1990 levels.
Denver hasn’t suffered the slowdown that has occurred in Florida, California, Nevada and Arizona cities, but total single-family permits were at 2,671 through August — and at best, will end the year near low 2008 levels, according to Burns.
Even fast-growing Grand Junction has seen a double-digit drop in single-family permits during the past two years.
Pikes Peak region residential builders, it seems, are in fair shape, with single-family permits during 2009 expected to reach about 2,000 by year end. That’s off by 50 percent from 2006 totals of about 4,200, but represents less than 20 percent of all building permits issued at the height of the economic boom, according to the Pikes Peak Regional Building Department.
Commercial contractors, hoping to hang on and build on momentum created by a recovering residential sector, are relying on jobs already in the pipeline or on stimulus-funded federal, state or voter-approved schools with bond funding.
Tyson Nunn of Nunn Construction said his company has managed to stay busy with both state and school district work. But his project teams are no longer pushed by the busy — even hectic — schedules of 2005 and 2006.
“We’re working on one project for the Cherry Creek school district and another for Western State College in Gunnison,” he said, adding that locally, commercial builders have seen business contract by 30 percent to 40 percent “across the board.”
The company continues work on “different college projects” that were approved by the state legislature during 2008 and re-approved during the last budget year. Nunn attributes some of the firm’s good fortune to stimulus funding, which might have indirectly allowed those jobs to move forward, avoiding the budget ax.
But he’s not overly confident.
“We’d be very happy with last year’s revenue,” he said. “I think close to 30 percent of companies have left the market at this point, and the remaining competition is strong. There are a lot of great companies, all competing for the same projects.”
So far, none of the firm’s projects have, like a number of others, run into financing challenges in the middle of construction, stalling completion.
“We are involved with several that haven’t become projects where developers are trying to find new financing,” he said. “The banks always say they have a lot to lend, but there are always too many strings.”
For now, he said, Nunn Construction has been able to keep its team intact and hasn’t had big layoffs.
“Challenging times are just part of the business,” Nunn said. “When I came back to Colorado Springs just after 9/11, it was tough then, too — and took us a couple of years to battle back. My dad (Ray Nunn) went through the RTC days back in the late 1980s and early 1990s. He said this is the worst he’s ever seen; it’s not a regional problem, it’s nationwide. In other downturns, there was always someplace you could go to find work. Now there’s no region to escape to. It’s bad everywhere.”