Orlando Report

Contractors Struggle to Keep Up as Numerous Markets Expand

By Debra Wood

Hospitality, housing, health care and education construction projects keep Orlando a busy city for contractors.

With tourism continuing to rebound and 1,000 people moving to Central Florida each week, the region is "hotter than a firecracker."

Mark Wylie, president and CEO of the Central Florida Chapter Associated Builders and Contractors in Winter Park, added that the hottest items in the market are "high-rise condominiums and condominium/time-share developments."

Construction projects in hospitality, heath care and education are also booming.

Most of the high-rise residential is taking place in downtown Orlando, an area bustling with activity. About 4,800 residential units are under construction, in permitting or planned, in addition to the 2,000 that recently opened, said Frank Billingsley III, executive director of Orlando's Downtown Development Board/Community Redevelopment Agency.

Hospitality

Disney's Saratoga Springs Resort & Spa at Walt Disney World leads the list of interval-ownership projects. It opened in 2004 and immediately announced additional phases, with completion expected in 2007.

Hardin Construction Co. LLC of Orlando is building the Disney complex. It is also providing preconstruction services for Villages of Imagine, an Intrawest Corp. of Canada condo-resort community across from the Orange County Convention Center. Groundbreaking on the Villages is set for later this year.

"We have a shortage of convention hotel space," and traditional hotel construction has lagged despite a rebound in tourists, said Charlie Dorr, Hardin vice president. Financing dried up after the Sept. 11, 2001, terrorist attacks, leading developers to become more creative in securing equity for projects.

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"Condo-hotels sell in the residential market," Dorr said. "Financing that is readily available and cheap is the engine behind the equity in these deals."

Owners of condo-hotel units make them available for overnight guests. Turner Construction Co. of Orlando recently began construction on Reunion Grande, a $60 million, 12-story condo-hotel for The Ginn Co. of Celebration, Fla., at its Reunion Resort & Club of Orlando, near Walt Disney World.

Also in the tourist corridor, WELBRO Building Corp. of Maitland, Fla., is working on the 1,500-room, Rosen Shingle Creek Resort near the Orange County Convention Center. It is scheduled for completion in fall 2006.

Housing

Multiple residential projects under way in downtown Orlando demonstrate that people want to live where they can walk to restaurants, galleries or other activities. Many of the projects incorporate space for restaurants, retail and offices.

"There's not much inventory in the city," said Scott Skidelsky, vice president and general manager of Turner.

Turner began construction this past spring on the $100 million, 35-story downtown condominium The Vue at Lake Eola for Churchill Development Group of Orlando. The company also provided construction-management services for the Sanctuary Downtown, a $50 million, 18-story condominium project.

GDC Properties of Orlando selected Turner to build The Ivanhoe apartments in downtown Orlando. The $80 million Ivanhoe features two 37-story towers and will include retail and office space.

Brasfield & Gorrie of Lake Mary, Fla., is building The Plaza, a $140 million, mixed-use project that includes the 27-story Solaire at the Plaza condominiums and Primeier Trade Plaza, containing two towers with condominium offices, retail and a movie theater. Brasfield & Gorrie will self-perform about 1.3 million sq. ft. of concrete framing.

When it's completed in the second half of 2006, the complex will include more than 60,000 cu. yds. of concrete.

John Mills, regional vice president for Brasfield & Gorrie, said he expects the condominium boom to spread to nearby beaches.

Office

While office construction has not picked up as much as other segments, some projects have taken off, and Mills said he is receiving inquiries from developers.

Billingsley, the Orlando Downtown Development Board official, said a local firm, Lincoln Property Co., expects to break ground later this year on the 27-story mixed-use Dynetech Centre, which will become the international headquarters for Dynetech Corp. of Orlando.

Skanska USA Building of Orlando serves as owner representative for Veranda Park, a nine-building, $78 million development in MetroWest, southwest of the city core. It also includes some residential space, as well as three business centers with more than 200,000 sq. ft. of office condominiums. Skanska is constructing two buildings at the site for Veranda Partners of Orlando.

Health Care

Both of Central Florida's health systems have broken ground on major additions to their campuses. The state no longer requires existing hospitals in growing communities to seek a certificate of need, which has spurred some of the construction.

"There is lots of health-care work," Mills said. "It's a function of aging baby boomers and hospitals gearing up for that increased demand."

Florida Hospital selected Brasfield & Gorrie to build a $250 million, 15-story tower at its main campus in Orlando and a $70 million, six-story patient tower at its Altamonte Springs campus in Seminole County. The Robins & Morton Group of Birmingham, Ala., is building a $63 million patient tower at Florida Hospital East Orlando.

Not all the growth aims to meet older adults' needs. Robins & Morton is constructing the 273-bed Winnie Palmer Hospital for Women & Babies for Orlando Regional Healthcare, scheduled to open in spring 2006.

"Young people are moving to this area," said Cathie Brazell, Orlando Regional's project manager for the new facility. "We've outgrown our current facility, and it was time to expand."

Education

Public schools and universities are also experiencing construction growth, again to meet the demands of an influx of new residents.

"Education is raging," said Mathew Breen, senior vice president of Skanska's Orlando office. "K-12 and higher education will be strong for at least the next five years."

Skanska is ramping up to begin building the Apopka relief high school for Orange County Public Schools. The project is one of dozens supported by a half-cent sales-tax initiative passed in 2002. The school district has 20 schools under construction or about to break ground.

Turner is working on a $33.9 million addition to Winter Park High School and building a $12 million replacement elementary school for Orange County. It also is starting a new high school and converting an empty store into a ninth-grade center for neighboring Osceola County's school district.

At the University of Central Florida, Turner received the construction management contract for a $60 million library.

Roads

With all those people moving in, roads have become increasingly congested. The Orlando-Orange County Expressway Authority has several projects under way to improve flow on 16 mi. of State Road 408 through the city. It broke into seven packages the $640 million widening and open-road toll-plaza reconfiguration.

Hubbard Construction Co. of Orlando is building an express toll plaza and a separate ramp plaza on the west section of the SR-408. The Lane Construction Corp. of Maitland, Fla., assumed responsibility for all Central Florida projects belonging to Martin K. Eby Construction Co., including $93 million in contracts related to rebuilding the eastern portions of SR-408.

Granite Construction Co. of Tampa is reconstructing the Interstate 4 interchange at John Young Parkway for the Florida Department of Transportation. The $39.2 million project is scheduled for completion early next year.

Clouds on the Horizon

All of the activity has created new opportunities for construction managers and subcontractors and changed how some companies do business. Material costs and labor shortages, exacerbated by reconstruction demands after last year's hurricanes, also present challenges in bidding new work and bringing in jobs within budget.

"The workload and number of opportunities in Central Florida is placing a premium on the qualified people required to perform the work across all stages of the design and construction industry," Skanska's Breen said. "Most firms are competing fiercely to attract the required people with the necessary skill sets to help meet their clients' needs."

Wylie, the CEO of the Central Florida Chapter Associated Builders and Contractors, said as subcontractors' capacity becomes strained, the companies are being more selective in what jobs they accept. The area is at full employment, which is expected to continue for the next several years, and he said a significant number of foreign nationals are working in the market, including some undocumented workers.

He added that tightening of the U.S. borders could exacerbate the local labor shortage.

"Our members are extremely busy," Wylie said. "They are happy to be making more money but are desperate because they don't have enough people to take advantage of all of the opportunities."

Useful Sources:

Orlando Downtown Development Boar
http://www.downtownorlando.com/

Orlando Orange County Expressway Authority
http://www.oocea.com/