VCC ENR Article

The article can be found HERE

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The year began on a high note, with retail construction spending  some 9 percent higher in January than a year before, the Associated General Contractors of America reports. “The pickup reflects tenant improvements, as the surviving chains move into spaces vacated by defunct or shrinking competitors,”  said Kenneth Simonson, chief economist for Associated General Contractors. “It’s not new construction for the most part.”

Construction industry unemployment, however, is still far higher than the general jobless rate  nationally. It is improving, though, having declined from a staggering 27.1 percent in February 2010 to 17.1 percent this past February, according to Simonson.  A construction outlook survey by Associated General Contractors found that 32 percent  of commercial contracting firms plan to hire this year, versus only 9 percent that are planning layoffs. In last year’s survey 34 percent said they were planning to hire, but 37 percent were planning layoffs.

Some of the busiest  retail contractors now are those with a background in high-performance and sustainable-construction practices, says construction consultant Brian Hill, of San Diego. Enactment of the CALGreen building code in California last year, which set  state mandates for energy and water use and treatment of construction waste, forces the issue, Hill says. Retail contractors and design professionals still face challenges though, says Hill. Some are approaching previous clients and offering  to perform feasibility studies and cost-benefit analyses to upgrade existing spaces, he says. “Some have seen steady work in health care, which seems to be in an interminable cycle of tenant improvements, and in affordable housing, which  was needed after the housing crash,” he said.

Construction starts for shopping centers and stores are flat now, and the projections are for a year-on-year rise of just 0.1 percent, to 12,600 this year, according to Associated  General Contractors. Most of the shopping centers in the planning and schematic stages are ones that were in practically the same stage before the downturn, says Jay Dorsey, president of Pearland, Texas–based Triad Retail Construction.  “A new shopping center is a rarity, but there are several that are being scheduled for light to medium internal renovations,” Dorsey said.

Meanwhile, rising materials prices are putting pressure on thin contractor margins.  In February alone the cost of paint and other coatings spiked 10.5 percent, while copper and brass fittings jumped 5.9 percent, and wallboard rose 5.1 percent — after rising 5.9 percent in January. Contractors’ bids, on the other  hand, remained flat, suggesting that the firms must be swallowing most of those increases.

In a sign of confidence in the region’s recovering economy, developers have resumed construction of a $150-million shopping center in Oxnard.

Work on the Collection at RiverPark, a large outdoor mall intended to look like a small-town shopping district, was halted in 2009 when the nation was in a recession. Consumers closed their wallets and retailers canceled expansion plans.

“There was a lot of fear in the markets in 2008 and 2009, and that has gone away,” said Colm Macken, chief executive of Aliso Viejo developer Shea Properties. “We are seeing employment growth, and retail sales are increasing.”

Most important for Shea: Retailers feel confident enough to sign leases for new stores.

“Fashion tenants and a lot of other tenants we want are back from the sidelines,” Macken said.

At 600,000 square feet, the Collection at RiverPark has a lot of space to fill. There will be about 90 shops and restaurants in addition to anchors Target, Whole Foods Market, REI and Century Theatres.

With commitments from retailers to rent about 40% of the space, Shea and financial partner Oaktree Capital Management felt confident enough to resume construction, Macken said.

Low-price leader Target didn’t pause for the recession and completed its store at RiverPark in July. Next to open will be a 16-screen Century Theatres complex in November. Also coming in the fall are Starbucks Coffee, Menchie’s Frozen Yogurt, Five Guys Burgers & Fries, Panera Bread, Massage Envy and Color Me Mine.

There will also be 60,000 square feet of offices for rent above stores on the main street. Grocer Whole Foods and outdoor outfitter REI are expected to open in the spring.

The Collection at RiverPark lies along the 101 Freeway between the Vineyard Avenue and Oxnard Boulevard exits and takes its name from the nearby Santa Clara River, Macken said.

It will be an outdoor center similar to Victoria Gardens in Rancho Cucamonga, where visitors can park on the street. The mall is intended to seem like a village, with public gathering places that have such features as fountains, sculpture and a children’s play area. Local artists have been hired to paint murals.

Most work on the shopping center will be completed by the end of the year, Macken said.

“We certainly would have liked to open the center earlier, but let’s face it, times have been difficult for all of us,” he said.

The construction at RiverPark reflects a national trend, said Jesse Tron, a spokesman for the International Council of Shopping Centers, an industry trade group. Some stalled shopping centers are being finished, and other malls are being expanded or upgraded.

“There are still not a lot breaking ground,” Tron said.

Several national retail chains are back in expansion mode, he said. “During the recession they were closing stores. Now the opposite is the case.”

Congratulations to the project team for continuing to keep safety first!

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We wish everyone a safe and productive week!

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The economy created jobs at the fastest pace in nine months in January and the unemployment rate dropped to a near three-year low of 8.3 percent, indicating last quarter’s growth carried into early 2012.

Nonfarm payrolls jumped 243,000, the Labor Department said on Friday, the most since April and beating economists’ expectations for a gain of only 150,000.

Economists had expected the jobless rate to hold steady at 8.5 percent. The rate has dropped 0.8 percentage point since August.

The decline last month reflected large gains in employment in the separate household survey from which the unemployment rate is derived. Fewer people left the labor force.

Job gains last month were widespread, with even the transportation and warehousing sector increasing payrolls.

The tenor of the report was further strengthened by revisions to November and December payrolls data, which showed 60,000 more jobs created than previously reported.

In addition, average hourly earnings rose four cents, which should help to support spending. The report suggested that expectations of a slowdown in U.S. economic growth in the first quarter were not yet impacting on companies’ hiring decisions.

The continued labor market improvement could be a relief for President Barack Obama who faces a tough re-election.

The U.S. Federal Reserve last week said it would probably hold interest rates near zero at least through 2014, citing still-high unemployment.

Chairman Ben Bernanke said the Fed was mulling further purchases to speed up the recovery, but the last employment numbers could cause policymakers to step back. The U.S. central bank has already bought $2.3 trillion in bonds to keep rates low and spur the economy.

JOBS DEFICIT HUGE

Employment in the private sector surged 257,000 – the largest gain since April. Government payrolls fell 14,000, the least amount since September.

The U.S. economy grew at a 2.8 percent annual rate in the final three months of 2011, quickening from 1.8 percent in the third quarter. However, the rebuilding of stocks by businesses accounted for two-thirds of the rise, setting the economy up for a slower growth pace this quarter.

Growth is also seen moderating as the European debt crisis, which has already pushed some economies in the region into recession, takes an edge off U.S. exports.

Still, there are signs that the economy continues to have momentum. Auto sales were buoyant in January, factory activity hit a seven-month high and the four-week average of new jobless claims fall through the month.

While job growth has quickened there are no jobs for three out of every four unemployed people and 19.3 million Americans are either out of work or underemployed.

This project is great example of new product types that VCC has pursued and successfully completed.