Confidence Builds: Developers see aggressive optimism in marketplace

Investing in spec buildings may – or may not – be an anomaly in the marketplace. Dan Withers, president of D.L. Withers Construction says he’s seeing risk-taking entrepreneurs coming back into the market.
“It’s been difficult for people to assess the timing in this recession,” he says. “There is enough optimism out there that we are seeing projects starting.”
Kitchell Vice President Dick Crowley is less effusive but still optimistic.
“In our core markets, we’ve noticed limited appetite for our customers to build speculative projects,” he says. “Lenders are still holding on to more conservative underwriting strategies.”
“Developers are being cautious, but we’re seeing more activity,” echoes Bo Calbert, president of McCarthy Building Companies’ Southwest Division. “Some industries are being a little bolder than others, such as hospitality, higher education and renewable energy. We’re building three large hospitals, but most big healthcare projects seem to be in a holding pattern.”
On the design side of the market, Rebecca Timmer, a corporation relations representative for Dibble Engineering says a few companies have broken ground on large spec projects but not many.
“We’re seeing end users dictating the decision,” Timmer says. “If they find what they need in an existing building, it is cheaper to go that route.”
Michael Rauschenberger, DPR Construction corporate office leader for the Southwestern United States, has been asked to look at proposals for a number of large buildings, including office towers, over the past months.
“Maybe about half of those will be built, but even if it’s just half, add it to Hayden Ferry, State Farm, and the number of projects in the southeast Valley, and that’s a lot of big projects coming on the market,” he says.
Many builders kept afloat during the recession with smaller projects and tenant improvements. “By volume, they were a big part of the market,” says Timmer. “As things are improving, we’re starting to see increases in volume for projects of all sizes.”
McCarthy reports that its job order contracting business is busy. “We’ve expanded that division,” says Calbert. “It results in a significant incrase in the amount of work we can do for our longstanding and new clients on smaller projects. To make it work, we have to be efficient and bring personal expertise into the jobs.”
Withers agrees, “There is a definite upturn for small business expansion. The result is existing building expansion and infill of existing buildings. That fuels an overall expansion and optimism in the marketplace.”
Pulling out a proverbial crystal ball, Crowley says, “Kitchell is cautiously optimistic as we see the global and national economy improving. This will impact Arizona and lead to increased job creation. Arizona will be a top job growth market over the next five years.”
“The need has truly increased and, at this moment, it looks good out there,” forecasts Rauschenberger.
“I see continued optimism,” agrees Withers, adding, “Barring other negating factors like our Congress, and world politics and economics.”