RENO, Nev. — Like usual, it's going to be another year of feast or famine for regional contractors and developers.
In this instance, the table is full to overflowing, and bellies are near to bursting from the glut of new development that's keeping most construction personnel working long hours to finish projects on time.
It's in stark contrast to just five short years ago, when construction and development still hadn't fully recovered. The long-term effects of the last building bust are being profoundly felt today.
There's not enough manpower to go around, and the regional construction workforce is extremely stressed as a result, says Jarrett Rosenau, president of Clark & Sullivan's Nevada operations. A combination of factors created a unique firestorm that could potentially lead to delays in development projects or contractor unavailability for future projects.
“Those are some of the factors we look at if sometimes we unfortunately make a hard decision not to pursue a project,” Rosenau says. “We are blessed with the work we have and are focused on the clients we have now. We are mindful of the resources that are available to support projects locally.”
During the downturn, Rosenau says, one of three things happened to a large portion of construction workers:
1. Older tradesmen left the building industry through retirement, creating a rift in knowledge and talent between younger and older tradesmen.
2. Tradesmen left the area completely for areas that recovered more quickly than Northern Nevada.
3. Tradesmen learned a new vocation and left the construction industry altogether.
Other construction executives espouse the same theme. Matt Clafton, vice president and general manager of Alston Construction, says that Alston relies on a core network of trusted vendors to provide adequate manpower for jobs. In Northern Nevada, those tasks falls primarily to Bonanno Concrete and XL Concrete.
With development across Northern Nevada not showing any signs of slowing, the dearth of construction managers and supervisors places added pressure on contractors and developers throughout the New Year.
“There's a demand for contractors and construction, so material prices are rising,” Clafton says. “It's not so much that copper or steel has gone up — and they have because of tariffs — but when you look at the big picture, those things don't move the needle a ton. Our biggest issue is finding supervisors and project managers in this region.”
During the downturn, Clafton says, skilled tradespeople and construction office workers left the industry. Despite the building boom, there remains a scarcity of talent across the industry. Those shortages mean more work for the employees who are in place, he adds.
“We are facing a point of saturation to where we are going to burn people out,” Clafton says. “We have limited people with those skillsets, and we just have to rely on what we have.”
Clark & Sullivan remains bullish on the Northern Nevada market, with plenty of work to come, Rosenau says. The pace of development also will continue to play a large role in the region's fiscal health.
“There's certainly a lot of development going on,” he says. “There's private development, which creates a lot of jobs, and those people need to live somewhere so the development arm is working on multifamily, condo, townhome and residential projects. Washoe County School District is in the middle of a very robust (development) program and has been very active in development and creating jobs.
“When you see a balance between private and public development, that is an indicator of a balanced economy that's moving forward,” Rosenau adds. “Having been through the downturn we feel like the skinny guys at the buffet. We want to put as much food as possible on the plate, but it's also important to focus on being balanced within your business and within your region and with what you know are the available resources.”
STICKER SHOCK WITH HOUSING
Clark & Sullivan's largest project currently underway is construction of the new Hug High School facility at Wildcreek. The longtime regional contractor has begun initial work to re-routing the Orr Ditch, with additional phases including roadwork, traffic light adjustments, creating new sidewalks and construction of the main building and ancillary facilities.
Mike Kazmierski, president and chief executive officer of the Economic Development Authority of Western Nevada, expects housing will continue to be in strong demand in 2020 as regional developers try to keep pace with demand.
Despite the warning that the region needs more housing, it's been too slow in coming, Kazmierski says, and that's what has caused sticker shock for so many homebuyers.
“We need about 6,000 new housing units in the region per year, and that includes all types of housing. We have yet to hit 5,000 units since the recession, and that's causing a lack of supply that's driving prices up,” he notes. “Until we add to our supply we are going to continue to have housing cost challenges.”
One way to help alleviate the housing crunch, Kazmierski says, it to bring modular home builders to the region since modular units can be completed much more quickly than traditional stick-built homes. EDAWN is working with several modular home builders to bring those types of units to Northern Nevada, Kazmierski says.
With development showing no signs of a pending slowdown, regional construction personnel will continue to feast.
“We are blessed right now,” Rosenau says. “Everyone who is in construction and is making good decisions and meeting their commitments should have opportunity to build for many years to come.”
Rob Sabo is a Reno-based freelance writer and former reporter for the Northern Nevada Business View.