Ron Glaser, vice president of preconstruction services for Walton Construction, was recently quoted in the St. Louis Post-Dispatch “Ask the Experts” column on the impact of the slowing housing market on commercial construction:

“So far, commercial construction has not been affected by the slowdown in the housing market nearly as much as residential construction. Many sectors of commercial construction are moving forward with new projects. Plus, many of the traditional residential specialty contractors are beginning to compete in the commercial construction market.

In the last six months, we’ve seen subcontractors that had been focused on residential work for the last several years starting to bid on commercial projects. The cost of construction materials is beginning to stabilize from the increases we have seen over the years. The prices of items such as lumber and gypsum drywall actually are on the decline.

We are optimistic that the economic stimulus operations being put in place as a result of the slowing housing market also will boost the commercial construction market and turn around residential construction.”

Source: St. Louis Post-Dispatch

Non-residential construction remains active in spite of the residential market slowdown and credit crunch, according to the Turner Building Cost Index, published by leading national construction company Turner Construction.

The index shows a continuing shortage of skilled labor and uncertainty about the availability and cost of materials, putting upward pressure on construction costs over the next several quarters.

At the same time, a decline of nine points in the Architecture Billings Index in February indicates tougher times ahead for both design firms and contractors. The downturn could indicate a noticeable slowdown in commercial construction projects coming online over the next nine to twelve months, according to the American Institute of Architects (AIA).

Some AIA members, however, are still reporting strong business from a billings and demand standpoint.

The one bright spot in commercial construction continues to be the institutional sector, which is showing positive conditions for school, hospital and government construction.

Source: Building Design+Construction

St. Louis-based Walton Construction Co. has completed construction of a $15 million Wal-Mart Supercenter located in Jacksonville, Illinois, according to REBusiness Online. The grand opening for the 200,000-square-foot retail center was held last week. During construction, 90 percent of the project subcontractors hired by Walton were residents of the Jacksonville community.

Source: REBusiness Online

Perhaps the most accurate word for predicting the construction economy in 2008 is “tumultuous,” according to Ken Simonson, the chief economist for the Associated General Contractors of America (AGC).

Simonson reports that some nonresidential segments such as energy will grow, while others such as lodging will slow or decline. Diesel fuel, copper and steel prices will increase but a slumping demand for gypsum and other residential construction products may help moderate building costs.

Labor accounts for roughly half the cost of a construction project, and shortages mean higher wage. Simonson predicts that some crafts may experience labor shortages, but workers in the residential specialty trades will be plentiful.

Overall, Simonson predicts overall nonresidential building cost increases of less than 6% and wage increases from 4.5% to 5.5%.

Kwame Building Group of St. Louis played a key role as program manager in helping St. Louis Community College achieve LEED Gold certification on its new Wildwood campus. The project received the certification this month.

The $18 million 75,000-square-foot St. Louis Community College Wildwood campus is the largest community college facility in the United States to receive U.S. Green Building Council Leadership in Energy and Environmental Design (LEED) Gold certification.

“Having KWAME as our full-time, on-site construction manager on a job of this size and complexity insured that the work progressed as it should and that all prerequisites were met to qualify for LEED,” said Carla Chance, vice chancellor of business and administration services at St. Louis Community College.

“Without question, KWAME was a key player in our LEED Gold accomplishment,” she said.

The new campus construction included high-tech classrooms, a science lab, faculty and administrative offices, an art studio, and a bookstore. The rooftop was planted with 4,000-square-feet of sedum, a drought-tolerant plant that reflects heat in the summer and insulates the building from cold in the winter. The facility will be 30 percent more energy efficient than a typical code-compliant building of the same size.

Nonresidential construction starts were down 13.1% in January as compared to January 2007, according to Reed Construction Data. Monthly starts have been slowing since October 2007 and were down down 8% from December 2007

In 2007, nonresidential starts were up 10.6% as compared to the 2006.

The slowdown in nonresidential construction starts is expected to continue into the summer and then recover enough to end 2008 at about the same level as 2007. Commercial building starts are expected to be impacted most by an abrupt slowdown in Gross Domestic Product in the first half of 2008, according to Reed.

Statistics show that the education and health care sectors are both weakening, while starts in public safety buildings and cultural/religious facilities have not declined. Construction starts for heavy/engineering projects were down 13% from last January.

Source: Reed Construction Data