Commercial slowdown takes toll on contractors

Commercial builders are preparing for a long winter.

Optimism is in short supply these days, as lenders tighten purse strings and firms bid for fewer jobs.

Many contractors are looking for any sign that business will begin to pick up again.

"There are a lot of folks that are trying really hard to make anything happen, but it all boils down to money," said Dave Robertson, president of the Springfield Contractors Association and an estimator at Prestressed Casting Co.

The majority of jobs lately come from public projects - think schools and Federal Emergency Management Agency shelters - versus privately funded projects, said Kit Carson, president of Carson-Mitchell Inc.

And as several large school projects have wrapped up - Kickapoo High School and David Harrison Elementary among them - contractors say there aren't as many public projects to keep commercial builders busy.

A look at building permits filed in the city and Greene County for the last few years sheds light on the slowdown.

Through Sept. 30, a total of 33 commercial building permits with a combined value of $59 million were issued by the city of Springfield.

For the same period in 2008, 100 permits were filed, worth an estimated $94.6 million, and slightly up from the 91 city permits issued for the same period in 2007. The 2007 permits were worth substantially more at an estimated combined value of $181.5 million.

Though year-to-date commercial permits in Greene County have increased to 57 as of Oct. 23, compared to 49 for the same period in 2008, that's still off from the 72 county commercial permits filed in 2007. The county was not able to supply estimated project costs at press time.

Adjusting to market shifts

Building volumes are down at DeWitt & Associates Inc., said President and CEO Randy Ganz.

Though he declined to disclose the company's year-to-date revenues, Springfield Business Journal's list research shows that the company had 2008 billings of $79.6 million.

"Percentage-wise, 2009 is as good profit-wise as 2008 was," Ganz said, noting that crews are now at work on projects that were bid at least a year ago.

"We're working hard to try to shore up 2010 at this point," he said.

To stay competitive, Ganz said DeWitt has started bidding more work at the subcontractor level and is expanding the region it works in, increasing its usual 50- to 60-mile radius to projects 100 or more miles away.

Local contractors, however, aren't the only ones making changes in the downturn.

Ganz said he's noticed more St. Louis contractors bidding on jobs in this area, and Carson said he's seen more subcontractors that once specialized in residential work bidding commercial jobs.

"It used to be on relatively smaller jobs, in that $3 (million) to $5 million dollar range, sometimes owners were having trouble getting even two to three bids, because everyone was busy," said Kevin Wagner, senior project manager at J.E. Dunn Construction Co. "Now, you're seeing anywhere between 15 to 20 people bidding."

Wagner estimates his company's billings will come in about 50 percent less than those of the last few years, including $42 million in 2007 and $38 million in 2008, according to SBJ list research.

At Carson-Mitchell, 2009 revenues are flat compared to 2008, but down 33 percent from the $18 million the company reported in 2007.

Carson-Mitchell reports $14 million in backlog on SBJ's list of the area's largest general contractors (see page 16), but Carson's not sure that early 2010 will be any better in terms of new work.

"There's a real good chance that the first six months, there will be very little work," Carson said. "None of the architects are busy, so that's usually a good leading indicator."

Signs of hope?

The latest American Institute of ArchitectsArchitecture Billings Index shows that there may be reason for hope. The index increased to 43.1 in September from 41.7 in August.

That number, according to AIA, serves as an estimate of nonresidential construction activity in six to nine months. Additional projects may be in the early planning stage, as AIA's Project Inquires Index is at 59.1, the highest it's been since September 2007.

Todd Bolin, a senior associate and architect at H Design Group LLC and president of the American Institute of Architects' Springfield chapter, said the firm has seen more interest from potential clients regarding new projects.

"Six months ago, we weren't even talking about new projects," he said. "But now there are at least inquiries."

Another opportunity for work on the horizon rests in the hands of Springfield voters.

Robertson noted that the $50 million schools bond issue on Springfield's Nov. 3 ballot would have a positive effect on builders if passed.

Projects slated for funding if the measure passes include electrical upgrades and remodeling at Hillcrest High School, development of a K-8 campus at the Westport Elementary site and a new gymnasium for Jeffries Elementary School, according to www.springfieldpublicschoolsmo.org.