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South Carolina Report: In Gear and Rolling
2006 Should Be a Positive Year
for S.C. Contractors
By Carter Langston
Coming into 2006, contractors
were cautiously optimistic about the trends taking place in
South Carolina construction. With the fourth quarter results
tallied, one forecaster expects business and economic activity
to meet or beat the 2005 performance.
Other industry watchers support this changing tone.
"Overall, things look quite good for South Carolina,"
said Tony Plath, UNC-Charlotte associate professor of finance.
"Business and economic activity seems to be increasing
nicely and is gaining momentum across the state."
Plath compiles survey data from panelists who also are members
of the Carolinas Associated General Contractors, and he writes
that association's Construction Barometer report. He recently
worked on the fourth quarter report, which illustrated renewed
optimism and a historic twist for South Carolina.
Traditionally, the smaller and less robust South Carolina economy
is a weaker and more volatile financial environment than North
Carolina. But the increasing optimism among the panelists led
Plath to forecast a 5 percent to 6 percent uptick for commercial
construction in the state, compared to a slightly slower rate
of business growth for contractors in North Carolina.
McGraw-Hill Construction - the parent company of Southeast Construction
- is even more optimistic, predicting a 9.6 percent gain in
the value of construction starts compared to '05. (See "2006
Southeast Construction Market Outlook," Southeast Construction,
January 2006.)
McGraw-Hill's prediction pointed to a nearly 28 percent improvement
in the state's nonresidential construction market over '05,
which includes commercial, manufacturing and institutional construction.
Adding to increasing business confidence is the recent announcement
that Duke Energy and Southern Co. will build two nuclear reactors
near Gaffney, S.C., along the Interstate 85 corridor that spans
the state's northwestern border with North Carolina. Though
regulatory approvals are pending and major construction is not
expected until 2007 or later, current project estimates are
between $4 billion and $6 billion.
Despite McGraw-Hill's forecast for the year as a whole, the
company reported that South Carolina construction activity started
the year at a relaxed pace, down 3 percent in the first month
of 2006. And the third quarter Construction Barometer, which
Carolinas AGC published in January, indicated a moderate decline
in construction spending partly due to the fuel and material
cost spikes after hurricanes Katrina and Rita.
According to the latest data for the fourth quarter Construction
Barometer report, local contractors remain concerned about the
looming issues of costs related to materials and labor. Fuel
and cement costs have slid back a bit from their highs, Plath
said. And early indications are that the South Carolina panelists
are anticipating continued pricing pressure, but it hasn't diminished
hiring forecasts, he said. The South Carolina panelists, though
more optimistic overall than their North Carolina counterparts,
reported that they are more pessimistic about cost increases.
There are a number of projects keeping the construction industry
churning in the state. And McGraw-Hill Construction estimates
the total value of new construction throughout South Carolina
will be about $13.3 billion in 2006. Of that amount, researchers
estimate residential should account for $8.4 billion, nonresidential
about $3.2 billion and nonbuilding approximately $1.7 billion.
In residential construction,
the $75 million Tides condominium project in Mount Pleasant,
S.C., near Charleston, is under construction. The Tides project
is located on the Mount Pleasant side of the newly completed
Cooper River Bridge.
R.J. Griffin and Co. and David M. Sidbury, both of Charlotte,
are the general contractors at work on the Tides. Carolina
Eastport LLC of Mount Pleasant is the owner-builder/developer.
Multifamily construction, particularly along the coast, is
keeping its frenetic pace.
"Developers are buying up land in Myrtle Beach and that's
expected to continue for the next 25 years," said John
Cone, the executive director of the Home Builders Association
of South Carolina.
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Condominium specialist A. Shaw Dargan
III, president of Dargan Construction Co. in Myrtle Beach,
said he continues to benefit from the development frenzy.
"I've never seen anything like it," Dargan added.
"We have been blessed with phenomenal projects, and I
just pray that it continues."
He does have concerns, however. He continues to monitor fuel
costs, interest rates and material shortages for signs of
inflation and pricing pressure. And depending on the action
lawmakers might take concerning immigrant workers, he remains
cautiously optimistic.
Nonresidential and commercial projects show some vigor in
the Lowcountry and Upstate regions. While the Lowcountry portion
of the state traditionally has slower population growth and
higher unemployment rates, there are a number of projects
there, including two Santee Cooper generating station projects
totaling $1.4 billion. Santee Cooper is the state's largest
electric utility.
WorleyParsons, of Reading, Pa., is the engineer and managing
contractor on both projects, which are expected to be completed
in 2007 and 2009.
"The South Carolina Upstate has done a remarkable job
with economic development among the tier one and tier two
automotive suppliers," said Doug Harper, president of
Harper Corp. in Greenville, S.C. "In fact, the state's
economic development efforts and policies earned it a first-place
rank in a real estate newsletter."
Harper referred to a recent report issued by Pollina Corporate
Real Estate, based in Park Ridge, Ill. "Pollina Corporate
Top 10 Pro-Business States for 2005" ranked the 10 most
business friendly states and South Carolina topped the list.
Other Southeastern states included in the list are Virginia,
North Carolina, Georgia, Alabama and Florida.
In Spartanburg, Turner Construction Co.'s Charlotte office
is providing preconstruction and construction services for
the Renaissance Park Hotel and Convention Center's new nine-story,
147,000-sq.-ft., 250-room hotel and 112,000-sq.-ft. convention
center. In addition, the contractor is excavating and building
a two-level, 138,000-sq.-ft. underground parking garage with
310 spaces.
The Clemson University International Center for Automotive
Research, with ongoing building activity on a 250-acre campus,
is the centerpiece for considerable activity in the Upstate
area along the I-85 corridor between Spartanburg and Aiken.
Harper Corp., of Greenville, the general contractor on the
now completed 80,000-sq.-ft. Information Technology Research
Center, is now building The Timken Co.'s research and development
facilities on the site. That roughly $14 million project is
under way at the same time that Harper's $27 million Hubbell
Lighting headquarters project moves toward completion. Hubbell
Lighting, which manufactures a wide range of specialized lighting
fixtures, is moving its headquarters from Spartanburg to a
site close to the International Center for Automotive Research.
In Greenville, where Michelin and BMW are located, two Charlotte
firms are putting the finishing touches on shopping centers.
Shelco and Myers & Chapman are the general contractors
on the $64 million Shops at Greenridge and the $30 million
Shops at the Point.
Also in Greenville, Pizzagalli Construction Co., of Garner,
N.C., anticipates completing the $88.5 million Pelham Wastewater
Treatment Plant in 2007.
There are a number of highway construction projects keeping
the pace. Among them are two projects in Spartanburg County.
Widening continues on SC 296 to relieve congestion, and crews
are making progress on the Interstate 585/U.S. 176 interchange,
which effectively upgrades U.S. 176 to interstate standards
with the goal of eliminating high-speed accidents.
Sloan Construction of Duncan, S.C., was awarded both contracts
in November 2003. Completion is scheduled for summer and fall
2006, respectively.
In 1997, South Carolina instituted a plan to fund 27 years
of needed highway improvements in 7 years. The state identified
$5 billion in projects on its long-range transportation plan,
which concludes in 2008.
As the state transportation department's $5 billion "27
in 7" roadbuilding program winds down, highway construction
is down from its peak of $1.1 billion in 2001.
McGraw-Hill Construction has forecasted an 8 percent growth
this year to $686 million.
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