Southeast’s Top Projects

Value of Contracts Included in This Year’s Ranking Jumps to Approximately $6.9 Billion

By Scott Judy

The impact of rising construction costs, a seeming last spurt of high-rise residential activity, increased transportation spending by the Georgia Department of Transportation, continuing steady growth in the health-care sector and other factors led to this year’s Top Projects ranking reaching a record total volume of approximately $6.9 billion.

Southeast Construction’s annual “Top Projects” report, a ranking by contract value of the biggest projects to break ground during the preceding calendar year within Florida, Georgia, North Carolina and South Carolina, provides a snapshot of the sectors that are helping to drive and define the Southeast’s construction market.

Collectively, the contracts included within this year’s Top Projects ranking represent approximately $6.9 billion worth of construction activity, up significantly from last year when the list included roughly $5.9 billion worth of projects. As Southeast Construction did last year, this year’s ranking includes all projects with a construction value of $100 million or more. Last year’s Top Projects list included 39 such projects; this year’s features 41 to meet that minimum value criteria.

Our initial sources included reports generated by the McGraw-Hill Construction Network, a survey of general contractors working in the region, information from the various state transportation agencies, items previously reported in Southeast Construction and other sources. After assembling a preliminary list, we followed up with general contractors, owners and other sources for the latest information on their projects. Again, the project costs listed here are the reported values of the construction contracts, and are not intended to represent overall development costs.

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An Overall Snapshot

First of all, there are similarities with last year’s ranking. Three market sectors make up the vast majority of projects included here: residential/multiresidential; health care; and transportation. On last year’s ranking of projects starting in 2005, 31 of the list’s total 39 projects were from these three sectors, or roughly 79% of the total number of projects. This year’s ranking of ’06 starts includes 35 from these three sectors, of the overall 41, for approximately 85%.

However, the percentages of the residential and health-care categories varied somewhat. For example, 51% of last year’s ranking (of ’05 starts) were residential projects. That number declined for this year’s ranking (of ’06 starts), to total about 41%.

Meanwhile, the number of health-care projects jumped for this year’s Top Projects ranking, to include 10 contracts, up from the four included last year. That’s a change from about 10% to about 25%.

The other major contributor to the list was transportation—including both infrastructure and building projects—which was more steady. There are eight projects on this year’s Top list of ’06 starts, up from the seven on last year’s.

Residential

Those familiar with the Southeast construction market know that high-rise residential construction has been one of the region’s strongest markets over the past few years, but has lately hit the skids. It may be surprising to some, then, to see the large number of multifamily/residential projects still populating this year’s ranking.

For example, of the 39 projects included in last year’s Top list of contracts that started during 2005, 20, or 51%, were residential. That number dropped slightly this year, with 17 residential contracts. That includes this year’s #1 project, the Residential Communities Initiative at Fort Benning, Ga. Though this project included the construction and development of a significant number of single-family homes—a type of construction the magazine generally does not include on this ranking—Southeast Construction decided to include it here because of the military nature of the project, and its uniqueness compared to other residential subdivision developments.

Overall, at this point in time, it’s hard to imagine that high-rise residential projects will make up such a large part of next year’s list, however. The projects included in this year’s Top Projects ranking are those that started construction in 2006, and were thus probably “sold” before then. As has been widely reported, the residential market has taken a big downturn nationally, and especially in Florida.

For example, as Southeast Construction reported in its May issue (p. 47), residential is off to an incredibly weak start in 2007, compared to 2006. Orlando’s market—the second strongest in the Southeast through the first two months of ’07—was down by 32% compared to the same period of a year ago. And that city was certainly not alone: Miami’s was down 69%; Tampa, 49%; Jacksonville, 40%; Cape Coral-Fort Myers, Fla., 58%; Sarasota, Fla., 56%; Charlotte, N.C., 15%; Raleigh, N.C., 18%; and Charleston, S.C., 31%. Even Atlanta, the Southeast’s and nation’s top residential market through the same time period, was also down by 10% compared to last year.

Other Hot Markets

Health care was the second biggest contributor to this year’s ranking, with an impressive 10 projects making the grade. While many of these projects were new hospitals in Florida, not all were. The top health-care project was actually Turner Construction Co.’s $250 million Building 23 contract for the Centers for Disease Control and Prevention’s Roybal Campus near Atlanta.

Also notable was the much-delayed Scripps Research Institute project in Jupiter, Fla., that a joint venture of The Weitz Co. in West Palm Beach and DPR Construction in Atlanta is finally building. The $157 million project, first announced by former Florida Gov. Jeb Bush a couple of years ago to wide fanfare, quickly became bogged down in community activism and litigation that delayed its development and ultimately forced the owner to pick a new site.

Another notable project is the $100 million Core Lab Building that Turner Construction Co. of Charlotte is overseeing at the North Carolina Research Campus in Kannapolis, N.C. Southeast Construction published a feature story on the $1 billion research campus project in its March 2007 issue.

The transportation sector again made a similar contribution to this year’s ranking, though the mix of projects had a notable twist. In last year’s Top Projects ranking of ’05 starts, four of the seven projects were from Florida, and only one, a people-mover project at Hartsfield-Atlanta International Airport, was from Georgia.

This year’s list definitely shows the impact of Georgia’s Fast Forward program, with four of this program’s bigger projects making the grade this year. Additionally, only one project involving the Florida Department of Transportation is included here, the Interstate 4/State Route 408 Interchange project in Orlando that PCL Civil Constructors is building. The other Florida projects are owned by the Orlando-Orange County Expressway Authority. A separate story on OOCEA’s expansion of its East-West Expressway project—the source of these Top Projects—is also included in this month’s issue of Southeast Construction.

State-by-State

This Top Projects ranking also helps illustrate the four-state region’s activity level on a state-by-state basis. Compared to last year’s list, this year’s Top Projects ranking illuminates a slight shift here as well:

• Last year, Florida projects made up 62% of the ranking with 24 of the 39 projects located in the Sunshine State. This year, that figure was down to 20 of the 41 projects, or 49%.
• Georgia jumped. In last year’s list, Georgia projects numbered only five, or 13% of the ranking. This year, that number jumped to 14, to make up 34% of the list.
• North Carolina stayed steady, with six projects on this year’s Top Projects list, compared to seven from a year ago.
• South Carolina, the smallest state market in the region, had three projects on last year’s ranking of ’05 starts. This year, only one ‘06 project start, the $125 million American Gypsum Plant in Georgetown, S.C., made the grade.

Editor’s Note

Southeast Construction should also note one project actually repeats from last year’s ranking. The $110 million Canyon Ranch Living/Carillon II project in Miami Beach, moved forward in 2006 under the management of KM-Plaza Construction Services, Miami. The project had previously been reported as starting in 2005, with Bovis Lend Lease as the contractor.

During this year’s research, the information related to this project was reconfirmed and therefore included based on the new information.

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