| Local Outlook
Southwest
Strength
By K. Robert Wendel The
Arizona, Nevada and New Mexico markets appear solid in 2005 with large public
works projects, retail work and a thriving housing market.
A recent report by the Milken Institute named Las Vegas as No.2 and Phoenix
as No. 3 in the country for economic performance. The report is based on job growth,
wage and salary changes and the concentration of high tech.
Albuquerque
and Tucson broke into the top 20 for the first time, with the Duke City ranked
at 20 and the old Pueblo coming in at No. 17.
Fort Meyers. Fla. ranked No.
1.
That growth, though, is putting a strain on labor and materials. Prices
on steel, lumber, concrete and cement soared in 2004, and experts said there was
little chance builders would see relief. A Vegas Correction
Although the Las Vegas single- family housing market had
a correction in October, moving from a 4,000-unit deficit to a 14,000-unit surplus,
construction is running fast and furious in other sectors.
About 50 residential,
timeshare and casino projects are in planning or construction in Las Vegas, with
a total of 80 new towers on the books.
"I know of about 30 timeshare
towers either under construction, planning or design," said Gary Siroky,
president >> of CORE Construction of Nevada.
"A lot of those
may not get built, but it's a big trend."
One project that has the town
buzzing is the recent announcement that
MGM/Mirage plans to build "Project
City Center," an 18-million-sq.-ft., master- planned, mixed-use development
on the Las Vegas strip. Plans call for a 4,000-room hotel, three, 400-room boutique
hotels, 1,650 luxury condos and 550,000 sq. ft. of retail space.
MGM/Mirage
has retained Ehernkrantz Eckstut and Kuhn Architects of New York to design the
project, which should break ground in approximately three years. Project completion
is scheduled for 2010.
Of course, in Las Vegas, it's all about keeping
up with the Jones'.
Wynn Resorts, Limited also recently said it intends to
expand the Wynn Las Vegas project on 20 acres of land adjacent to the existing
building. The new development, tentatively named "Encore at Wynn Las Vegas,"
could include an approximately 1,500 suite hotel tower, additional casino space
and additional restaurants, a spa and swimming pools, and retail and convention
space designed to capitalize on the significant infrastructure of Wynn Las Vegas,
which is scheduled to open on April 28.
While the plans for the expansion
have not been finalized, Encore at Wynn Las Vegas is expected to cost approximately
$900 million.
Retail is also hot. There was 38.8 -million -sq. -ft. of
inventory in 248 anchored centers during the third quarter, with 513,000 -sq.
-ft. of absorption, which is more than six times the amount recorded in 2003,
according to Applied Analysis, a Las Vegas-based economic research firm.
New
retail projects underway include Montecito Companies' new $3.3 million, 46,397-sq.-ft.
Tenaya Village, located at Tenaya Way and Azure Avenue in Las Vegas; Venture Development
Group's 40,000-square-foot, 4.5-acre Eastern Crossings, located at Eastern Avenue
and Ione Road in Henderson; Bullseye Commercial Real Estate's $5.1 million, 22,700-sq.-ft.
Lake Mead Promenade, located at Lake Mead Boulevard and Torrey Pines Drive in
Las Vegas; and Laurich Properties' $18 million, 100,000-sq.-ft. Simmons Centre,
located at Simmons Street and Ann Road in North Las Vegas.
"We remain
optimistic about the growth prospects for our local economy, which bodes well
for the retail real estate market," said Brian Gordon, principal of Applied
Analysis. ""With tax cuts and historic low interest rates, there is
more disposable cash available resulting in increased consumer spending."
According
to the McGraw-Hill Construction Information Group, there are 889 commercial and
public projects valued at $1 million or more under planning in Clark County for
a total of more than $24 billion. Another 357 projects are currently under construction
and are valued at $4.3 billion.Arizona
Markets Remain Strong The Phoenix and Arizona housing markets
remain strong, with Maricopa County recently pushing into first place nationally
for new home construction.
Along with all the new red roof tops, new shopping
centers are going up at a quick pace, especially on the west side of Phoenix.
Building
permits for homes jumped 44.6 percent from 2003 as low interest rates continue
to drive residential construction.
"The west side is the hot place
to be right now," said Jim Constance, Southwest Division president of Howard
S. Wright Construction in Phoenix.
"Retail is going to be solid and
what they have on the boards is looking good."
In metro Phoenix, there
are 175 retail projects currently under construction with a total value of just
more than $926 million. Some of the larger projects include the $37 million Scottsdale
Waterfront on Scottsdale Road and Camelback. The project will eventually feature
high- end, mixed-use shopping, office and condos.
On the west side of
town, the Ellman Cos. is developing Westgate, a master- planned retail and office
development surrounding the Glendale Arena.
Another $7 billion in retail
construction is in planning in Maricopa County, with several projects in the $50
million range.
Public works is holding up its share of construction with
several large projects under way and more planned. Work on the first phase of
the $1.6 billion light- rail system is planned to start this month, and work on
a $60 million train maintenance yard is under way.
Maricopa County voters
also recently approved two measures that will inject billions into the construction
industry.
Proposition 400, the extension of a half-cent sales tax for
another 20 years, will help fund new highways, buses and light- rail extensions.
The tax is estimated to collect nearly $16 billion during the next two decades.
Proposition
401 will give the Maricopa Community College system $951 million for capital improvement
projects.
In downtown, the Phoenix Convention Center is undergoing a massive,
$600 million renovation and addition, with Symphony Hall also undergoing a $19
million renovation.
Meanwhile, the city has chosen the team of Arquitectonica
in Miami and RSP Architects in Tempe to design a new, 1,000-room hotel, also in
downtown.
Perini Building Co. of Phoenix will construct it and Brennan Beer
Gorman Monk Interiors in Scottsdale is the interior designer. The estimated $300
million hotel is on a 3-acre site at the northwest corner of Van Buren and Third
streets and will be operated as a Sheraton by Starwood Hotels and Resorts Worldwide.
"While
I think the overall economy might be a little bumpy, it will continue to grow,"
said Elliot Pollack of Elliot D. Pollack and Co., a Scottsdale-based economic
analysis firm. "I think the construction market here in Arizona looks good
for several years." Steady in New Mexico New
Mexico hasn't seen the rocketing growth of either Arizona or Nevada, but it weathered
the last recession in good form. Numbers from the McGraw-Hill Construction Information
Group show a 6 percent increase in work from 2003. Contractor's built nearly $380
million in Albuquerque in 2004, up from $360 million in 2003. Residential construction
posted the strongest performance, jumping 23 percent from $730 million in 2003
to nearly $900 million in 2004.
"We've been on an upswing as part
of the recovery, but we never really had it that bad in New Mexico," said
Larry Waldman the senior economist at the Bureau of Business and Economic Research
at the University of New Mexico.
"In 2003, it was not that good,
but 2004 has been better and 2005 should be better still.
Waldman said
there was a good possibility that New Mexico might see more manufacturing jobs
come to the market, and local officials in Albuquerque are pinning their hopes
on an 300-acre Aerospace Technology Park on
Albuquerque's west side near
Double Eagle II Airport. The first phase is part of a total $35 million package
for the site.
The city hopes to work off synergies developed by Eclipse
Aviation, which plans to begin manufacturing a small and economical business jet
by 2009 in Albuquerque.
"Right now Eclipse Aviation is looking at
2,000 job at their facility and we are hoping to encourage a lot of their suppliers
to locate at the aerospace technology park," said Jim Hinde, Albuquerque's
aviation planner.
Funded by the city, AUI will install infrastructure and
utilities, with the bulk of the work scheduled for completion in 2004. Roadway
and storm drainage improvements will be installed by 2007-2008.
Road builders
also have better prospects with funding from the $1.2 billion Gov. Richardson's
Improvement Program hitting the streets and highways.
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