Glimmer of Light, Experts Say

There's a glimmer of light at the end of the long dark tunnel of low construction activity we've been passing through.. and it doesn't appear to be an oncoming train. That's what two individuals intimately familar with the St. Louis construction project pipeline told those attending the Jan. 20 meeting of the Midwest Council, American Subcontractors Association (ASA).

The construction cycle which ended in 2008 was 18 years long — more than twice as long as the previous two cycles, Biderman said. "We were spoiled. There was plenty of work, so it wasn't hard to find work," stated Biderman, who headed business development for construction firms prior to joining McGraw Hill. Biderman pointed out that the current  market cycle for the business marketing remains the same as people rotate on or off the project.

In the St. Louis area, McGraw Hiill sees education and healthcare as strong areas, following the increase in the number a kids and grandkids of Boomers, who themselves will increasingly require medical treatment.  Retail and office will continue to lag, driven by lowered levels of purhases, tight credit, and high unemployment, he said.

McGraw Hill sees the various segments breaking out in this fashion:

• Economy Overall: While manufacturing losses will continue to lead the downturn, the commercial and office markets are not far behind.
• Retail: Rising unemployment and weakening credit conditions will continue to deter this investment. More projects will be deferred or abandoned.
  
• Warehouse: Deteriorating in the manufacturing and retail sectors is driving the rise in vacancies.
• Office: A low cost to doing business and relatively low rents will make St. Louis an attractive place to do business.
  
• Hotel: Starts will continue to weaken, reaching a low of 150,000 square feet in 2010.
  
• Education: Elementary and senior high school resiliency has created a floor ton the contraction in activity seen in 2009.
  
• Healthcare: The short contraction is over. Healthcare is projected to grow two percent in 2010.
  
• Multifamily housing will bottom out this year. A moderate recovery will also be seen in single family.
  

Doug Rasmussen, vice president for Business Development for the St. Louis County economic council saw opportunites such as the planned Express Scripts prescription filling center at NorthPark and the shuuttering of the Chrysler plant in Fenton as possiblities for job creation.  Rasmussen noted that the glut of empty spaces on the market create far more opportunities for renovation of existing properties than for new construction.

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