Getting Hot in Georgia

Georgia's construction market is sizzling with opportunity. In its second year of increased activity, multifamily residential and education remain strong, and even the formerly moribund office market is showing signs of recovery.

By Debra Wood

Georgia's growing population seems to be fueling sustained construction activity. A rebounding economy is spurring development and also forcing governmental infrastructure to keep up.

"There is an upbeat feel," said Bill Pinto, president and chief operating officer of Hardin Construction Co. of Atlanta. "The economy is better. The market is better."

Georgia experienced the fourth largest percentage increase in housing starts from 2000 to 2003, according to the U.S. Census Bureau, with six metro Atlanta counties in the top 10 for new housing units.

However, in the Georgia Economic Outlook 2005, officials at the Selig Center for Economic Growth at the University of Georgia Terry College of Business predict a downturn in 2005 residential starts, if an anticipated 1 percent increase in interest rates occurs. It anticipates 9.7 percent fewer new homes and 36 percent fewer multifamily units.

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The Atlanta Regional Commission, a planning and intergovernmental coordination agency, reports that the Atlanta region has averaged more than 71,000 new residents annually over the last several years, spurring both infrastructure improvements and private development. McGraw-Hill Construction Dodge Analytics reports 2004 construction activity was up 17 percent over 2003.

"The market has improved considerably from where it was a year ago," said Mike Dunham, executive vice president of the Georgia Branch of Associated General Contractors. "The membership tells me they are reaching the point where they are looking for people again, which is a positive sign. For us, all markets with the exception of one have shown improvement."

Even that one - the overbuilt office segment - has started stirring.

"A lot of members are seeing the market for offices and hotels, markets that have been really slow for the past couple of years, picking back up in activity," said Bill Anderson, president of Associated Builders and Contractors of Georgia.

Turner Construction Co. of Atlanta began construction on 1180 Peachtree in Atlanta in October 2003. It expects to complete the 41-story, 670,000-sq.-ft. office tower early in 2006.

Hardin is building the Southern Company Center at One Centennial in downtown Atlanta. The eight-story, 259,000-sq.-ft. office building sits atop a seven-level parking deck and first-floor retail center and is scheduled for completion in October.

Hardin also received the contract to build an office tower in the Buckhead area for Cousins Properties of Atlanta. Pinto expects to break ground during the second quarter.

"There are several major office buildings being discussed," Pinto added. "The market probably will not support all the ones being talked about, but there will be a couple that, in my opinion, will get off the ground."

Much of Georgia's activity takes place in metro Atlanta.

"Atlanta is the driving force for most of the state," Anderson said. "It's where the activity is happening, and it trickles out to other areas. What's good for Atlanta is good for the entire state."

Atlantic Station, a 138-acre, mixed-use, urban-renewal project, bustles with activity. Construction manager VCC of Atlanta has multiple buildings under way in the project's retail, dining and entertainment section, which will open in the fall.

In addition, R. J. Griffin & Co. of Atlanta is building the 26-story Twelve Atlantic Station for Novare Group and Wood Partners of Atlanta. The 404 condominiums and 101 hotel rooms are scheduled for completion late this year. And Lane Co. of Atlanta has begun construction on its second condominium project at Atlantic Station, a $55 million, five-story condo complex expected to wrap up in 2006.

Mixed-use developments are on the rise, too. Daniel Corp. and Selig Enterprises, both of Atlanta, are developing the Plaza Midtown, a 20-story residential, retail, dining and entertainment center in midtown Atlanta.

The Integral Group of Atlanta announced plans for the $35 million Sweet Auburn Village project, with town homes and retail and entertainment space in the Sweet Auburn neighborhood as well as the $45 million Centennial Park East, a seven-story residential and retail complex near Centennial Olympic Park.

Manufacturing and distribution facilities also remain strong. Honda will construct a $100 million, 250,000-sq.-ft. automatic transmission plant in Tallapoosa. Kubota Corp. will expand its Gainesville tractor-implement manufacturing facility by 400,000-sq.-ft. Yates Construction of Atlanta is building a 247,000-sq.-ft. automated distribution center in Kennesaw for FedEx Ground, a division of FedEx Corp.

The Selig Center predicts that developers saw the bottom of the market cycle in 2004, but it anticipates meager demand and high vacancy rates will keep some office and industrial projects on hold, with construction employment dropping 1.4 percent.

Public Developments

State universities continue to face budget constraints, but enterprising developers have stepped in to fill the housing void on some campuses. Place Properties of Atlanta hired Hardin to build the 65,500-sq.-ft. Kennesaw State University Village Center. And the company will soon start a 2,000-bed student housing facility at Georgia State University, Atlanta, for Ambling Cos. of Valdosta.

"It's a trend we see all over the Southeast, where public developers are doing student housing at public schools that don't have funding," Pinto said. "It's providing beds where public funding is geared more toward classrooms."

Similarly, the military has tapped private-sector partner GMH Military Housing of Newtown Square, Pa., to build and maintain housing for active-duty personnel. Centex Construction Co. of Dallas will construct 1,868 new housing units and renovate 1,597 additional units at Fort Stewart and Hunter Army Airfield near Savannah.

Public projects also are keeping contractors busy. Hartsfield-Jackson Atlanta International Airport is in the midst of a $5.4 billion expansion.

In December, the airport began the second phase of its $215 million inline baggage-screening project, which is expected to be operational by the end of 2005. Construction of a 9,000-ft., $1.2 billion fifth runway is on budget and ahead of schedule for a summer 2006 completion, said Ben DeCosta, aviation general manager for the airport.

The airport awarded a joint venture team of Holder, Manhattan, Moody and Hunt of Atlanta to design-build a $746 million international terminal, scheduled for completion in 2008. The partners include Holder Construction Co., Manhattan Construction Co., C.D. Moody Construction, all with offices in metro Atlanta, and Hunt Construction Group of Scottsdale, Ariz.

Around the state, school construction, which has been boosted by communities passing sales tax referendums, has kept many contractors busy, the Associated General Contractors' Dunham said.

Also, road construction received a six-year, $15.5 billion boost from Gov. Sonny Perdue to speed up several projects, including a $1.3 billion expansion of high-occupancy vehicle lanes in the Atlanta area and $1.5 billion for additional lanes on rural interstates.

Utility work includes Southern Company's new electric generating units at its McIntosh Power Plant near Rincon, scheduled for completion this summer. Chicago Bridge & Iron Co. N.V. of The Woodlands, Texas, continues work on a liquefied natural gas terminal expansion project near Savannah for Southern LNG of Savannah. And Western Summit Constructors is expanding the F. Wayne Hill Water Resources Center in Gwinnett County, tripling the water reclamation facility's capacity.

Great Lakes Dredge and Dock Co. of Oak Brook, Ill., is dredging the inner harbor channel of the Brunswick Harbor to deepen it from 30 ft. to 36 ft. The $65 million U.S. Army Corps of Engineers project is scheduled for completion in 2006.

"Everyone is optimistic about 2005," Anderson said. "And it's based on the current workload and what they see coming down the pike."

Useful sources:

Georgia Ports Authority
http://www.gaports.com/

Fast Forward Road Program
http://www.gov.state.ga.us/issues_gov/transportation.shtml

Hartsfield-Jackson Atlanta International Airport
http://www.atlanta-airport.com

U.S. Army Corp of Engineers
http://www.sas.usace.army.mil/nr04_45.html

University of Georgia Terry College of Business
http://www.terry.uga.edu/news/releases/2004/geo_ss.html

Selig Center for Economic Growth
http://www.selig.uga.edu/