Happier days are here again for northern Nevada’s construction industry.
Hit hard by the recession, the commercial building business started its comeback in late 2013, gained momentum in 2014 and is expected to pick up steam in 2015.
Spec building came back, especially in the industrial arena where the vacancy rate for existing buildings is half what it was during the recession. Tesla Motors’ gigafactory broke ground and is expected to employ thousands of construction workers next year. There is pent-up demand from existing businesses and more new companies are on the way here, won over by Tesla’s confidence in the area, which will lead to more new construction or retrofitting of standing structures. A new business with 400 jobs, for example, is expected to be announced just after the start of the new year by the Economic Development Authority of Western Nevada.
Construction was the fastest growing employment sector for the first eight months of 2014, adding 6,700 jobs for the year, according to the Department of Employment, Training and Rehabilitation. DETR predicts the industry will add 7,700 jobs in 2015, 8,600 in 2016 and 9,800 in 2017.
In Washoe County, building permits jumped at least 11 percent, from 2,819 permits issued in 2013 to 3,142 permits pulled just two weeks shy of the year-end 2014. Valuations nearly doubled, from $131.1 million in 2013 to roughly $253 million in 2014.
“Based on what I’m hearing about the ability to secure dollars, and with all the positive news about Tesla and other projects, that will certainly continue to create demand,” says Aaron West, executive officer of the The Builders Alliance.
West says the biggest challenge for the industry now is to find workers.
“I don’t know one trade that isn’t looking for workforce,” says West.
West thinks workers who jumped industries and left the area during the downturn may return now that mining and oil exploration are experiencing slumps. The industry is also working with local colleges to recruit graduates and with state agencies to launch campaigns. West says there are even bounty or incentive programs that pay people for referring construction workers.
“It’s the most encouraging we’ve seen it since 2008,” says Craig Madole, assistant executive director of the Nevada chapter of the Associated General Contractors. “Private investment continues to grow, but we’re very concerned in the lack of infrastructure work at the state level.”
Madole points to highlights in ongoing public projects such as the Regional Transportation Commission’s SouthEast Connector project, improvements to Interstate 580 and sewer projects in both Reno and Carson City.
But he says billions of dollars are needed in capital investment projects at schools and other government buildings. During a meeting of the state’s Public Works Board earlier this month, Gus Nuñez, the state’s public works manager, estimated that there is $3 billion in deferred maintenance projects in state buildings.
“All our work is private, we’re not doing any public works projects,” says Matt Clafton, vice president and general manager for Alston Construction in Reno. “I just finished our business plan review and I am forecasting 20 percent increase in volume in both the Reno and Las Vegas market. Last year we did $50 million and I’m projecting $60 million to $65 million in 2015.”
Alston is working with Panattoni Development Co. to build the 770,000-square-foot Petco warehouse in Stead, north of Reno, for completion in May.
Next to that, Alston and its development partner are building a 200,000 =-square-foot spec warehouse. And Panattoni is has plans on the drawing board for 100-acre park in Lemmon Valley, says Doug Roberts, partner in Panattoni’s Reno office.
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