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Sunday, 03 April 2016 15:49

Downtown GR contractors, architects inundated with multi-story projects

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Pioneer Construction Co. has started building a 12-story, $40 million mixed-income apartment tower for Midland-based Brookstone Capital LLC at 20 East Fulton Street in Grand Rapids. The project will also offer new ground-floor retail space. Pioneer Construction Co. has started building a 12-story, $40 million mixed-income apartment tower for Midland-based Brookstone Capital LLC at 20 East Fulton Street in Grand Rapids. The project will also offer new ground-floor retail space. Nick Manes

West Michigan contractors and architects point to the diversification of backlogged projects as further proof of a healthy regional economy. 

Just ask Chris Beckering, vice president of strategic business operations at Grand Rapids-based Pioneer Construction Inc., whose pipeline includes manufacturing, higher education, health care, hospitality and multifamily residential projects.

“Our backlog is as strong as it’s ever been,” Beckering said. “We are not experiencing any slowdown in terms of the quality of new contracts.” 

One of the firm’s most visible projects at the moment involves the construction of a 12-story, $40 million mixed-use tower at the corner of Fulton Street and Sheldon Avenue in downtown Grand Rapids. 

The long-anticipated development from Midland-based Brookstone Capital LLC will, upon completion, bring 110 new housing units to the burgeoning downtown market. The apartments will be a mix of income-restricted and market-rate units. 

The building at 20 East Fulton St. will also create two new commercial storefronts, according to public building documents. 

Additionally, Pioneer Construction is currently the general contractor for several multifamily housing developments around the city, each of which are in various stages of progress. 

Beckering said the company will be paying close attention to absorption rates over the summer as more residential units come online. 

“There’s always ebbs and flows across markets,” Beckering said. “One area is just the quantity of multifamily apartments. The total amount is consistent with what they say can be absorbed, but we’re paying attention to absorption rates as new construction comes online.”

While Beckering declined to put a dollar amount to his firm’s pipeline of business, Pioneer Construction’s diversity of projects and lengthy backlog is consistent with current national trends identified by Washington, D.C.-based Associated Builders and Contractors Inc. (ABC), a construction industry trade group. 

According to a late March report from ABC, the national backlog for construction work in the last three months of last year expanded nearly 3 percent to 8.7 months.

The south saw the biggest expansion of backlogged work, growing almost 9 percent from the third quarter of 2015. “Middle states” such as Michigan also expanded their backlog 1.8 percent to 6.5 months. States in the northeast and western parts of the country had shrinking backlogs, according to the ABC report. 

The growing backlog in states such as Michigan stemmed from activity in the industrial sector — mainly the automotive industry — as well as health care construction. 

“For the first time in years, some contractors are reporting that they are turning away work,” ABC Chief Economist Anirban Basu said in a statement. “Skill-worker (sic) shortages are a frequently cited reason. The recent uptick in backlog suggests that demand for construction workers will remain elevated going forward, which will translate into faster wage growth, but also potentially rising costs and extended timelines.”

While Pioneer Construction’s Beckering said he pays attention to ABC’s numbers, the most important indicator he watches is the American Institute of Architect’s Architecture Billing Index (ABI). 

“When architects are busy, that usually means we’ll be busy,” Beckering said, adding that the ABI number is typically seen as a leading indicator because architects tend to do their billings nine to 12 months ahead of contractors getting their work. 

The Washington, D.C.-based architectural trade organization released its February ABI figures in late March, and the results could be considered as modestly good news for contractors. 

According to the ABI report, February’s index grew to 50.3, indicating a minor increase in billings, as any score above 50 marks a positive trend in the sector. 

“March and April are traditionally the busiest months for architecture firms, so we should get a clearer reading of underlying momentum over the next couple of months,” AIA Chief Economist Kermit Baker said in a statement. “Hopefully, the relatively mild weather conditions recently in most parts of the country will help design and construction activity move ahead at a somewhat faster pace.”

Similar to the ABC findings, the AIA’s research showed the southern region had the highest billings activity with an average score of 51.1. The Midwest was actually last with an average of 49.3. 

The regional numbers released by AIA reflect a three-month moving average. 

While the Midwest may have lagged other regions in the last few months, West Michigan area architects say they’ve felt no slowdown. 

Grand Rapids-based Concept Design Group PC has a backlog of design work at least nine months long, with a number of construction projects expected to last more than two years, according to Vice President Tom Tooley. 

At least two of the firm’s upcoming projects are high-rise office and residential towers in the downtown Grand Rapids area. The firm is working with New York developer Time Equities Inc. on the proposed 16-story apartment tower at North Monroe Avenue and Trowbridge Street, as well as a twin-tower project at 150 Ottawa Ave. NW proposed by Orion Construction Inc. that will be anchored by law firm Warner Norcross & Judd LLP.

According to Tooley, the height of the proposed downtown projects is a pleasant change.

“It’s all positive because we’re still growing and that construction will continue,” he said. “It’s going to be interesting to watch the influx and see if it all gets absorbed.” 

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