Nonresidential projects to drive construction in 2007

Although the downturn in home sales has softened demand for residential construction, construction executives in northern Nevada remain bullish about 2007.

Explosive growth in commercial and industrial construction will lead the way even as residential construction remains slow, they say.

Sean Carnahan, private works manager for Granite Construction, Inc., says Granite is doing extensive grading for Centex Homes in the South Meadows as one of the area's largest homebuilders prepares to add even more inventory in 2007.

"Several of our clients are doing that," Carnahan notes. "They want to keep a certain level of inventory and keep operations going to prepare for the housing recovery. The bubble has popped, and we are seeing a bottoming, but we still have a lot of migration from California that will eat up existing inventory. We will be well positioned to recover."

The development of major industrial and business parks as well as retail centers will provide much of the fuel for builders this year.

Large-scale downtown redevelopment projects in Reno and Sparks, major additions to Renown Health ($250 million by Clark and Sullivan) and the Peppermill Hotel and Casino ($300 million by Sierra Bay Contractors Inc. of Concord, Calif.), and big projects at the Reno-Tahoe Industrial Park at Tracy and Spanish Springs Business Center keep construction companies busy.

"If look back you see that residential was going up much faster than commercial, and once you bring in houses you have to bring in all the other entities, such as schools, churches and shopping centers," says Pat Schlosser, chief operating officer at Clark and Sullivan. "We are just catching up to the splurge in housing that was started two or three years back."

Craig Willcut, president and CEO of Reno-based United Construction, says his company will erect more than 1 million square feet of non-residential space this year.

"Usually commercial falls a year or two behind residential," says Willcut, who is also president of the Nevada Chapter of Associated General Contractors and co-chair of the Association of Builders and Contractors. "This year will be just as strong if not stronger than the last couple years. We anticipate a slowdown in the next couple of years, but in the next 12 to 18 months it will still be going crazy."

Among its projects in the northern half of the state, United is building 230,000 square feet at the Spanish Springs Business Center, 900,000 square feet designated for two new distribution centers, two new Longs Drugs Stores, a 400,000-square-foot build-to-suit industrial building, and an expansion to Fernley's City Hall.

Granite's Carnahan says public works and highway maintenance projects are seeing a decline in funding due to the massive scale of extensions to the Carson City Freeway and the Interstate 580 project between Mount Rose Highway and the Washoe Valley.

In assessing the upcoming year, Granite looks at projects pending with the Nevada Department of Transportation, the Regional Transportation Commission, and municipalities.

"They are certainly taking a bite out of the '07 program," Carnahan says of NDOT's two mega-projects. "We are not going to be depressed by any stretch; it is just not as active as the last two years. We are seeing a little dip in public funding right now, and that is taking a lot of regular maintenance and reconstruction resources away from the normal highway program.

Regional and city roadwork won't take up the slack.

"The RTC has a relatively small construction program this year, and most local agencies have moderate programs as well," Carnahan says.

Because of the sheer number of commercial and industrial projects, Willcut says employers will continue to struggle to find qualified tradesmen.

"It has been going on for a couple of years without any end in sight. It is a nationwide problem," he says.