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The Joe and Joan Martin Center in Charlotte was recently completed by RodgersHardin.
(Photo courtesy of Rodgers Builders.).
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With a 6 percent growth rate being predicted - and actual growth even better - North Carolina's construction industry is optimistic. But increasing oil prices and doubts about the economy's long-term health is causing concern about the sustainability of this latest surge in activity.
The projects are in hand, more work is in the pipeline and prognosticators are calling for a 6 percent growth rate in North Carolina's construction activity this year and next. Yet the optimism is also accompanied by a strong dose of caution.
That caution, says University of North Carolina at Charlotte professor Tony Plath, can be summed up by three factors: a shortage of trained workers, rising fuel prices and increasing interest rates.
Earlier this year, those concerns overwhelmed the good news, and the Carolinas AGC Construction Barometer - a snapshot of where the industry is headed - fell 2.4 percent from 4Q 2004 to 1Q 2005. Plath is the author of the report.
"From Wilmington to Asheville, people say things are going well, and you can feel a palpable sense of relief and optimism," said Dave Simpson, the North Carolina building director for CAGC. "But it seems every time we get good news, we get another elbow in the ribs.
"There are concerns about gas shortages and that price increases could postpone construction or scale back projects. People with contracts without an escalating cost clause are going to take a hit."
Pat Rodgers, president and CEO of Charlotte-based Rodgers Builders, agreed. Her company is on course for its best year ever, she said. But Rodgers added, "Higher oil prices drive up the operating costs for everyone, and we are being forced to do things more economically and to be more creative."
Nevertheless, McGraw-Hill Construction is calling for 6 percent growth in the state's construction this year, and Plath predicted that rate will continue into 2006. Raleigh-based FMI Corp. is forecasting 6 percent growth in nonresidential building and 4 percent in nonbuilding projects.
For the first seven months of 2005, McGraw-Hill Construction reported that the value of new contracts signed for future construction was 9 percent ahead of last year and totaled $13.8 billion. Residential was the strongest of McGraw-Hill's three sectors, with 11 percent growth year-to-date, but the other two were positive for the year as well.
Nonbuilding construction, which includes roads, bridges, sewers and other types of projects, was 7 percent ahead for the year, and nonresidential was 4 percent ahead.
The activity is coming from a variety of sectors. Even manufacturing and distribution is making a comeback, although not in the state's traditional textile sector.
Charlotte-based National Gypsum Co. is investing up to $125 million to build a new high-speed gypsum wallboard plant in Mount Holly set to open in late 2007. The Cheesecake Factory is building a 100,000-sq.-ft. bakery and distribution center in Rocky Mount.
Health Care Health care is a major source of activity. For example, Birmingham, Ala.-based Robins & Morton Group, a leading health-care contractor, has $248 million worth of hospital construction projects under way in the state.
That includes the Levine Children's Center, a $102 million, 234-bed facility on the campus of Carolinas Medical Center in Charlotte; 100,000 sq. ft. of new construction at Grace Hospital in Morganton and the Valdese Hospital in Valdese; $30 million in projects at Betsy Johnson Regional Hospital in Dunn and the Southeast Regional Medical Center in Lumberton; a $20.6 million addition to Morehouse Memorial Hospital in Eden; and a $43 million addition to the Rowan Regional Medical Center in Salisbury.
In Winston-Salem, a joint venture of Rodgers Builders and Rentenbach Constructors is working on a $143.2 million expansion of Forsyth Medical Center that includes a five-floor addition, a new women's center and emergency room, plus a 130,000-sq.-ft. renovation project.
Rodgers is also involved in projects at Presbyterian Hospital in Charlotte and Nash General Hospital in Rocky Mount.
In Asheville, for Mission Hospitals, Bovis Lend Lease of Charlotte is building a 75,000-sq.-ft. children's hospital and providing preconstruction services for a 220,000-sq.-ft. surgery expansion and adult critical-care center. Skanska USA Building is building the $180 million North Carolina Clinical Cancer Center for the University of North Carolina Hospitals as a construction manager-at-risk.
Other Trends Higher education work continues to be active. The state's 16-campus university and 59-campus community college systems are still building projects funded by a $3 billion statewide bond passed by voters in 2000. For example, new centennial campuses - adjacent to the schools' main campuses - are being built from the ground up at UNC Charlotte and North Carolina State University in Raleigh.
Duke University in Durham, a private college, is also expanding. Set to open in late 2006 is the $115 million French Sciences Building, a 285,000-sq.-ft. project that will provide additional space to connect the departments of biological anthropology and anatomy, chemistry, mathematics and physics. The project is funded in part by a gift from the Bill and Melinda Gates Foundation; Melinda French Gates is a Duke graduate.
In addition, the William R. Perkins Library at Duke is being renovated and expanded in a $52 million, three-part project due for completion next fall.
North Carolina has also joined the national trend of building new convention centers. Skanska USA Building and Barnhill Contracting Co. are building the $128 million, 500,000-sq.-ft. Raleigh Convention Center (with an adjacent Marriott Hotel) set to open in spring 2008. In Concord, John Q. Hammons Hotels & Resorts and the City of Concord are getting ready for a 2006 opening of a $60 million hotel and 75,000-sq.-ft. convention center complex.
The urban cores of the state's cities are undergoing revitalization, with high-rise and mid-rise condominium projects sprouting like mushrooms, especially in Charlotte.
There, the city's old convention center was demolished this summer to make way for the EpiCentre, a mixed-use development featuring a 46-story residential tower as well as shops, restaurants and a movie theater.
Renovating old buildings into shops and condos is occurring in the center city areas of Durham and Raleigh.
There is still plenty of highway construction going on across the state - including loop roads around the urban areas of Charlotte, Greensboro and Wilmington - but increases in construction costs and growing infrastructure needs mean the state is not keeping up with demand. During the last legislative session, the N.C. Department of Transportation announced it was spending monies from the state's Highway Trust Fund faster than anticipated.
Berry Jenkins, N.C. Highway Division director for the Carolinas AGC, estimated there is a $3 billion backlog of projects that are not being funded. "We're going to have to face it - we need a major infusion of money to get back on track," he said.
Not all the state's transportation projects are focused on roads. The Charlotte Area Transportation System has recently begun work on its 9.6-mi. South Corridor light-rail line, the first such line in the state. It is the first phase of a multicorridor system and is scheduled to open in mid-2007.
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