Tampa Bay Report: Busy Downtown and Around Town

Despite a coming lull in the number of multifamily project starts, other markets are poised to keep Tampa's GCs and specialty contractors busy for the next few years.

By Scott Judy

A rapid proliferation of high-rise condominium projects has been one of the most notable recent changes to the greater Tampa Bay construction market, with a variety of these developments dotting the skylines from downtown to the white sandy shores of Pinellas County.

And though the multifamily and broader residential markets may be slowing down while current projects build out, the region is poised for continued, dynamic growth across a range of sectors.

"The commercial construction market continues to be strong, almost as strong as it was last year at this time," said Steve Cona, president of the Gulf Coast chapter of Associated Builders and Contractors of Tampa.

"There's still a lot of school construction, a lot of health-care facilities that include specialty centers, like surgery centers or outpatient care and operating facilities."

Page McKee, senior vice president with Hardin Construction Co.'s Tampa office, agreed that the future looks good. Hardin is, in fact, busy, building the Ventana and Grand Central at Kennedy condo projects in Channelside, The Plaza on Harbour Island condo and the Bartels Middle School in New Tampa. It's just starting The Westin Airport Hotel Tampa Bay.

"We are looking at several large retail projects and additional residential, including high-rise rental apartments," McKee added. "Also, the hospitality and office markets are gaining strength."

Dave Marshall with Batson-Cook Co., added: "There's plenty of work here. We have plenty of backlog." Batson-Cook is the general contractor for the biggest of the Channelside projects, the $85 million Towers at Channelside.

All contractors acknowledge the current downturn in multifamily project starts. An increase in interest rates, an overall downturn in sales prices for residential properties and the continued escalation in materials costs were cited as contributing factors. But while a lull in condo starts is definitely occurring, contractors and developers concurred that the multifamily market would be back strong again. (For additional information on Tampa's multifamily market, see also "Pinellas County Coming Alive" and "Plenty of Action Downtown" elsewhere in this issue.)

"There is a lot more opportunity" in the multifamily market, said Kevin Bowen, senior vice president with Bovis Lend Lease in Tampa, the contractor for the Place at Channelside project. "The Tampa Bay area is a highly desirable location. It has a lot to offer."

"Construction will continue on (multifamily) projects currently under way, and as that product is completed and absorbed, demand will rise," McKee added. "The market is probably entering a 24-month period of slower growth, but the overall demand will be sustained and most of the planned projects that make financial sense will get built, just maybe over a longer period of time."

Christine Burdick, president of the Tampa Downtown Partnership, said Tampa is not yet oversaturated with multifamily product.

"We're lucky being in a market that has not been overbuilt," she said. "I see a relaxing of the pressure (to build), but I don't see a drop in activity. "There is a lot of opportunity here."

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The Numbers

Information from McGraw-Hill Construction, which publishes Southeast Construction, backs up some of the comments about present and future growth.

The company's most recent "Metropolitan Construction Insight" report on the Tampa area indicated the following: "Tampa's economy is benefiting from a low-cost environment and a highly educated workforce. Its port is benefiting from New Orleans' problems as more cargo moves through the metro. The University of South Florida also adds to the metro's strength with its research center."

Additionally, through the first five months of 2006, McGraw-Hill Construction reported that total building construction in the metropolitan statistical area of Tampa-St. Petersburg-Clearwater, which consists of Hillsborough, Pinellas, Hernando and Pasco counties, is approximately 4 percent ahead of last year. However, that includes a 7 percent upswing in the residential sector and an 8 percent decline in nonresidential construction.

Those nonresidential numbers should continue to show a decline through the rest of year, while residential activity will likely turn down by year's end, McGraw-Hill Construction's metro report indicated.

For example, Tampa's nonresidential market should deliver only about 14.7 million sq. ft. of new projects in 2006, down from 2005's historic high of 18.6 million sq. ft. But this sector should grow significantly again in 2007 and remain at a steady level through 2010.

On the residential side, McGraw-Hill's report saw only a slight decrease in the number of units started in '06, compared to '05, with nearly 31,200 new units started this year, down from last year's roughly 32,800 total. The multifamily portion of the residential sector, with nearly 9,900 units started this year, should actually end up slightly ahead of the '05 total of nearly 9,400.

Additionally, the multifamily market should continue to deliver in the range of 9,000 units per year through 2010, the report continued.

Overall, said McGraw-Hill Construction, "Tampa's housing market will stay hot over the next few years thanks to healthy population in-migration. The national slowdown in housing will barely be felt."

Retail is one of the sectors that Tampa contractors are mentioning as gaining momentum lately. And McGraw-Hill's report agreed: "Tampa's strong job gains will help keep retail construction starts at a healthy 2.7-3.0 million sq. ft. in each of the next five years. Big-box and specialty stores will dominate activity."

The report predicted that the value of new retail starts as roughly $208 million in 2006 and ranging between $232 million and $255 million for the four following years.

The Projects

Currently, there's a healthy mix of projects under way around the greater Tampa Bay area. (See "Tampa's Top Projects" list)

Again, multifamily is the highest-profile sector currently, with major projects proceeding downtown, in Channelside and in various locations of Pinellas County. (See "Pinellas County Coming Alive" and "Plenty of Action Downtown" elsewhere in this issue.)

Transportation projects are prevalent, too. Granite Construction Co.'s $79 million reconstruction of the Interstate 4/I-275 downtown interchange - previously referred to as "Malfunction Junction" for being the center of traffic tie-ups - just recently completed. And while that should have eased traffic movement into and out of the downtown core, Gilbert Southern's neighboring $158.2 million reconstruction and expansion of a 3-mi. stretch of Interstate 4 should continue to slow travelers as that project moves forward to its scheduled 2008 completion target.

Meanwhile, commuters using the Lee Roy Selmon Crosstown Expressway may finally get a break with this summer's opening of the $470 million Reversible-Lanes Bridge. The Tampa-Hillsborough County Expressway Authority project was delayed by more than a year after it experienced a structural collapse in early 2004.

Construction, led by PCL Civil Constructors of Tampa, was halted while the project's engineering was investigated. (For more information, see "A Long and Winding Road" in the May 2005 issue of Southeast Construction.)

The reversible-lanes tollway, three lanes wide, connects Brandon and downtown Tampa. In the morning, it flows from Brandon to Tampa, and it reverses in the afternoon for the evening commute.

Elsewhere, a joint venture between Flatiron Constructors of Longmont, Colo., and Tidewater Skanska of Virginia Beach, Va., is just starting work on its $192.7 million Tampa Airport Interchanges contract. The project will remake two State Route 60 interchanges, at Spruce Street and the Courtney Campbell Causeway, and will include a total of 30 phases. The project's scheduled for completion in spring 2010.

Another major transportation project remained in limbo, though. Bids for the reconstruction of Interstate 275 from the Howard Frankland Bridge to Himes Avenue came in roughly $100 million above the Florida DOT's initial estimate. PCL Civil Constructors was the low bidder with an estimate of approximately $363.8 million.

Additionally, hospitals remain a focus of activity.

According to McGraw-Hill Construction, one of the biggest building projects in the Tampa area is the $96 million Trinity Hospital Replacement Facility that Bovis Lend Lease is constructing for Community Hospital of New Port Richey in Pasco County. The Earl Swennson Architects-designed facility will provide 376 beds.

Also, Skanska USA Building of Tampa is heading toward a December completion on its $65 million tower expansion of Tampa General Hospital. Brasfield & Gorrie of Lake Mary is building a $52 million heart center at Morton Plant Hospital in Clearwater.

As Tampa's population continues to grow, school construction should stay steady.

"At least for 2007, the market in school construction will continue to be strong," ABC's Cona said. Florida's class-size reduction mandate will continue to foster new school construction, and "there are still quite a few projects out there that need to get started," he added.

According to McGraw-Hill Construction's Tampa report, it will be better than that. Though 2006 education construction starts will likely be down compared to 2005, totaling about $283 million this year, the company predicted that the value of new starts will range between roughly $355 million and $385 million between 2007 and 2010.