After a tumultuous past couple of years, commercial construction is beginning to make a comeback. So let’s look at what drives the construction market locally here in Arizona. The harsh reality we have had to deal with is that local construction starts collapsed from just over $20 billion back in 2006 to averaging less than $10 billion each of the last four years, including this year. With private owners making up 75 percent of the total spend, local construction was left on the life support of spending by public entities. And while it is not yet time to celebrate or to hit the gas on construction hiring, for the first time since the crash, our local leading indicators are showing a real jump up.
At Sundt, we track the performance of a local housing market as the best leading indicator of commercial construction. Our work has shown that both office and manufacturing construction follow a lag of one year-plus on the volume and value of local housing stock, and construction in power, education and transportation are on about a two-year lag. We are all aware that Arizona, especially Phoenix, was one of the hardest hit housing markets in the U.S. — 18th on the Case-Shiller index of home values in the top 20 U.S. markets. But in complete contrast, over the last 12 months, Phoenix has become the leading market in the U.S. in terms of home appreciation, with an 11-percent rise in values and inventories returning to normal levels, all while national prices are still dropping. So here at Sundt, we are now actively using our investments in technology and tools that we sustained and enhanced during the downturn to help local developers and corporations work through the early stages of development. While 2012 will still be a tough year for employment growth in the industry, the development cycle has turned and construction is making its return. The next biggest challenge facing the construction industry will be an adequate skilled work force to build the projects as the economy improves.
With input from commercial real estate developers, builders, brokers and land title professionals, In Business Magazine editor RaeAnne Marsh lays out the picture of our Valley’s current commercial real estate market. Spec, industrial, multi-tenant, transplanted newcomers to Arizona and expansion of existing companies are some of the elements impacting it. Also in this issue, our Commercial Real Estate special section spotlights the industry.
A business sector that keeps its eye on the future is architecture, and Kathy McDonald speaks to industry leaders for the “Sector” article exploring the innovations and challenges in a field that defines much of the physical environment in which we live and work. In this issue’s “Marketing” article, nationally recognized expert Martha Guidry shares her expertise on this vital aspect of business in her article on developing the concept around which to build the marketing campaign. The “Roundtable” feature hones in on the hiring and employment environment faced by military veterans returning to the private sector as we look at how business is working with this talent pool.
Presenting these stories and more, In Business Magazine offers a variety of information to help us build our businesses and empower the overall business community. It’s a great read. I hope you enjoy this issue of In Business Magazine.
J. Doug Pruitt
Chairman, The Sundt Companies, Inc.
Chairman, Sundt Construction, Inc.
Doug Pruitt joined the Sundt family of companies in 1966, assumed the position of President and COO of Sundt in 1992 and, in 1998, assumed the position of Chairman and CEO of Sundt. He currently serves as chairman of both The Sundt Companies, Inc. and Sundt Construction, Inc.
The recipient of numerous leadership awards, Pruitt lends his voice and expertise as a member of the board of Arizona Commerce Authority and has also been active with the Associated General Contractors of America. He is an advocate for the development of better technology in estimating, scheduling and construction methods.