Orlando Report

Market Shows Further Signs of Economy in Transition

Office and residential condominium projects continue to populate Orlando's cityscape these days, and the attractions area is warming up again with the development of numerous upscale lodging properties.

And there's more. Throughout the region, schools, road authorities, health-care providers and retail developers are building to keep up with demand.

"It's a hot market, but I see it adjusting a little as it relates to residential projects," said Scott Skidelsky, vice president and general manager of Turner Construction Co. of Orlando. "The costs of construction are definitely impacting residential condos."

Steve B. Rivers, senior vice president of Hardin Construction Co. of Orlando agreed that the market is still active, but sees indicators of a slowdown of some residential condominium work.

"Material prices are continuing to escalate, and interest rates are going up," he added.

Rivers said that with sales off, owners are stretching out construction starts, something he perceives as good for the industry.

"We were working at a frenetic pace a year ago. The trades were stretched thin. If they stretch [new starts] out and not sell them so fast, so we don't have to build them so fast, we can get back to a normal pace."

Mark Wylie, president and chief executive officer of the Central Florida chapter of Associated Builders and Contractors in Winter Park, also expressed some nervousness about the condo market, but said that overall, members' attitudes are positive.

"The successful contractors have been under a lot of pressure over the last 12 months or so and looking downstream for probably the next 12 months, there's a lot of pressure to meet schedules, to meet budgets and produce," he said.

Downtown

While some announced projects, such as the $175 million Tradition Towers condominium project, have yet to break ground, cranes dot the downtown skyline.

"The trend is back into the urban core," said Cameron Kuhn, developer of a 400,000-sq.-ft., mixed-use project being built by Brasfield & Gorrie of Lake Mary. "People want to live efficiently. I can shop, eat, work and play and do it all from within 500 steps from my house."

The complex includes Solaire at the Plaza residential condominiums and Premiere Trade Plaza office condos. The residential units sold out within seven days during last year's real estate boom.

In addition to Premiere Trade Plaza, Kuhn is converting existing buildings to office condos and plans to announce another tower construction project by yearend. He has outsourced all of his commercial property management to Trammell Crow Co. of Maitland while he focuses on developing more office condominium projects.

"This is an avenue to hedge the inflationary trend we are under," Kuhn said. "The amount of investors I have to buy product with an existing lease exceeds inventory. I cannot buy product fast enough."

Elsewhere downtown, Turner has poured about two-thirds of the floors on the 35-story, 323-unit residential tower called The Vue at Lake Eola. The owner is Churchill Development Group of Orlando. Skidelsky said he expects to complete the project at the end of 2007.

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Hardin broke ground in April on the Paramount on Lake Eola, a 16-story, 476,000-sq.-ft., 313-unit, downtown condominium tower, with a 28,000-sq.-ft. grocery store on the ground floor for Paramount Lake Eola LP and Zom Development, both of Fort Lauderdale.

Attractions area

Michael Chatham, senior vice president and director of design at Helman Hurley Charvat Peacock/Architects of Orlando, said there has been a trend toward mixed uses in resort developments. HHCP designed the Wyndham Vacation Ownership Resort at Bonnet Creek and is now working on a preliminary concept for an on-site hotel. Similarly, HHCP is designing timeshares to complement Caribe Royale, a hotel resort at Little Lake Bryan near Walt Disney World.

"There's an interesting synergy created bstween a hotel and timeshare property," Chatham added. "There are opportunities to upgrade amenities, create some diversity and to enhance their identity and their brand."

Hospitality Development Group of Fort Lauderdale, has announced plans for Palazzo del Lago, a 42-acre destination resort also in the Little Lake Bryan area. The project includes 1,260 luxury hotel and hotel condominium units, 994 resort residential condominiums and convention, meeting and banquet space.

Turner will wrap up construction later this year on Reunion Grande, a 12-story condo-hotel scheduled for completion this year at Reunion Resort & Club, a development of The Ginn Co. near Walt Disney World. Reunion includes private homes, two golf courses and concierge services.

Hardin is building The Village of Imagine, a collection of condominium hotel rooms surrounding a village center near the Orange County Convention Center for Intrawest Resort Development Group of Orlando. The first phase, now under construction, includes a 437,100-sq.-ft., 463-unit Westin condo-hotel with 300 elevated parking spaces and an elevated corridor to the convention center. Rivers expects to start the 248,500-sq.-ft. second phase this fall. It will include 234 units and a 500-car parking structure. The Village includes shops and restaurants.

"The condo-hotel product is temporarily filling the hotel need," said Rivers.

Also near the convention center, WELBRO Building Corp. of Maitland, Fla., recently completed the 1,500-room Rosen Shingle Creek resort.

Farther north along Universal Boulevard, but still in the midst of the attraction area, CMA Cos. of Miami selected PCL Construction Services of Orlando to build The Blue Rose, an $850 million, 39-story, 1,500-unit condo-hotel.

Transportation

Trying to decrease traffic congestion, the Orlando-Orange County Expressway Authority continues its $640 million widening of State Road 408, the East-West Expressway. The road will grow from three lanes in each direction to four lanes.

Hubbard Construction Co. of Orlando is building the $73.9 million section from Hiawassee Road to Tampa Avenue, with completion expected in February, said Christie Klammer, spokesperson for the OOCEA.

The Lane Construction Corp. of Meridian, Conn., is working on the 2-mi., $61 million section from Rosiland Avenue to Crystal Lake Drive, Klammer said. The company began work last month on the 2.1-mi., $125 million segment from Conway Road to Goldenrod Road, which includes building a new toll plaza.

The Florida Department of Transportation selected PCL Civil Constructors of Tampa to partially reconfigure the SR 408/Interstate 4 interchange. The $119 million project began in April and includes new westbound and eastbound ramps to eastbound I-4, reconstruction of the Anderson Street Bridge, closing of several exit and entrance ramps and creation of new ones. It will take three years, said FDOT spokesperson Jim Martin. Fully upgrading the interchange must wait until I-4 is widened, he added.

Additionally, Gov. Jeb Bush recently announced a plan for commuter rail transit. Trains are scheduled to begin running on track purchased by the state of Florida from Orlando to DeBary in Volusia County to the north by 2009, and south to Osceola County by 2013. FDOT will oversee design and construction.

In Orange County, Mayor Rich Crotty has proposed spending $250 million on roadway improvements, $155 million on pedestrian safety and community enhancements, and $125 million on environmental preservation. Funding will come from extra tax revenue generated by the large increase in property values and debt. The plan nearly doubles Orange County's current $280 million, five-year road program.

Supporting Growth

Retail typically follows residential. In growing West Orange County, Hardin began building Winter Garden Village at Fowler Groves in March. It's a 584,609-sq.-ft. open-air retail center for the Sembler Co. of St. Petersburg. The project includes rerouting County Road 535 and is scheduled for completion next October.

Health-care facilities also are growing. Brasfield & Gorrie began work in 2004 on an expansion project at Florida Hospital Orlando. The company completed a new energy plant, relocated a public road and added space for 500 cars to a parking deck before breaking ground on the 15-story, 636,000-sq.-ft., poured-in-place concrete patient tower in January.

Crews poured 11,650 cu. yds. of concrete to form a 5-ft. thick foundation during a 10-hour overnight pour in June, said Peyton Robertson, senior project manager for Brasfield & Gorrie.

The project should wrap up by late 2008 or early 2009.

HHCP is designing an outpatient diabetes center at Florida Hospital. The firm also has designed a seventh expansion for Heart of Florida Regional Medical Center in Haines City and an enlarged emergency department for Orlando Regional Sand Lake Hospital. Both facilities are near the tourist corridor, which has experienced population increases, said Chris O'Brien, senior vice president and partner at HHCP in the health facilities design division.

School work has been steady throughout the three-county Orlando metro area. "There's a terrific demand for classroom space because of the class-size amendment passed a couple of years ago and growth in Orange County," said ABC's Wylie.

The Orange County School Board has adopted a revised capital budget and 10-year building plan, projecting revenues of $1.46 billion in 2006-2007 to pay for work on 29 comprehensive school projects, 15 replacement projects and 34 new schools. $685 million of those revenues will be applied to job started in prior school years.

Skanska USA Building Inc. of Orlando received contracts from Orange County Public Schools to build two high schools in Apopka, Fla., said spokesperson Tracey Renner. The company recently completed two new classroom buildings at the Colonial Ninth Grade Center in Orlando.

In February, the Seminole County School Board approved a $418 million five-year capital improvement plan, with some new construction as well as renovations to existing schools.

The School District of Osceola County has plans to build 35 schools during the next 10 years. Turner has the contract to build a new $55 million high school for the School District of Osceola County, Skidelsky said.

Construction is also ongoing at the University of Central Florida. Turner is providing preconstruction services for a library expansion and Hardin is building a parking deck at the campus. Most notably, Wharton-Smith Construction Group recently broke ground on a $45 million, 45,000-seat football stadium.

Upcoming projects

While condos may be slowing, Orlando leaders are looking for other opportunities to grow and diversify the city's economy, while at the same time adding amenities and enhancing the city overall.

Looking further ahead, Orange County raised the resort tax to fund more promotion of the city and to building a performing arts center downtown, rehabilitating the Citrus Bowl and replacing the basketball arena. The University of Central Florida will build a medical school at Lake Nona, near the airport. And the Veterans Administration plans to place a hospital in the same development.

And after receiving millions in incentives, the Burnham Institute for Medical Research of La Jolla, Calif., will locate its new East Coast research facility in Lake Nona as well. Burnham plans to build a 300-person operation in Orlando to expand its work in chemistry, pharmacology and genomics. The state approved a $155 million incentive package with an equal match from local money and services.

"I think [Burnham is] a real shot in the arm for the construction industry in that sector," Wylie said. "For the foreseeable future, the market continues to be very positive. There are still contractors moving to the area to take on new work. There's still growth and expansion possibilities in Central Florida."

Useful Sources:
The Vue at Lake Eola
http://www.vueorlando.com/

SR 408 and Interstate 4
http://www.trans4mation.org

SR 408
https://epass.oocea.com/futureplans/projectsandstudies/projects_stateroad408.shtml

Wyndham Lake Buena Vista Hotel and Spa at Bonnet Creek Resort
http://www.wyndhamworldwide.com/media_center/pr/show_release.cfm?id=54&category=2

Reunion Resort & Club
http://www.reunionresort.com/

The Villages of Imagine
http://www.villageofimagine.com

Winter Garden Village at Fowler Groves
http://www.wintergardenvillage.com/html_files/facts.htm