After a busy year on K-12 school projects, Triangle Associates Inc. is expecting more of the same in 2019 with the passage of multiple school bonds in the November midterm election. According to Senior Vice President and Partner Mitch Watt, these long-term school projects will carry the general contractor in the event of a slowdown in the construction market.
What’s your outlook for 2019?
What we saw this year will be a continuation into next year. A lot of our work is focused on K-12 public education in West Michigan. We work with some private educators that build projects outside of the West Michigan area and that’s been fairly strong. We’ve also seen an expansion over the last couple of years — and we think that will continue — in the higher ed market, especially state-funded schools. Western Michigan University, Ferris State, Michigan State University are all implementing a number of projects that signify continued advancement and improvement in the state funding mechanisms, the tax dollars coming into the coffers and being able to fund those public projects.
What kind of work are you seeing in higher ed?
The bigger universities are doing all sorts of projects from research and development to general classroom space. Our focus has been very driven around dining hall experience and housing, simply because that’s a real strength that our firm has. A lot of it is growing campuses, but also keeping students on campus and not seeing them leave the campus and go live in off-campus housing. It eliminates some of the older dorms that were there and just the crummy living experiences. Kids today want to have a nice (place), they want their own bathroom or they want nicer environments and so most of the universities are trying to keep up with that.
Since voters approved many school bonds this year, is that where your focus shifts next year?
The one strong point of K-12 schools is once they do get their funding through the electorate, the constituents vote on it, those typically are several-year projects. They’re not real short projects; they tend to drag on and that’s good for our backlog. We do have a number of those projects that are three- or four-year projects that will be good, sustainable work for our firm in the coming year or so. I think we have three bond issues in May. We have several clients that are considering bond issues for next year or we’re already working with them on bond issues for 2020.
How are you dealing with the labor shortage and other challenges?
We’re doing fine as far as staffing, but we do still see certain sectors in our subcontractors that we hire that are struggling to find manpower, especially those subcontractors that are broader than West Michigan. Our staff is pretty strong right now and we feel we have enough to cover the workload for next year, but if you land one or two big projects that you weren’t expecting, then that can create a challenge.
What could drag down the construction market next year?
Interest rates seem to be a concern and could slow certain sectors down. Some of the early forecasting I’m seeing is that the markets will slow, there might be a small recession later next year, which certainly wouldn’t be as strong as it was a few years ago, but just something that will slow the workload down. I think that will only be a continuation of the slowdown we’ve seen in the commercial and retail markets.
Where does the focus shift if you do see that slowdown?
The public funding projects typically don’t slow down until there’s a real significant impact on the economy. We don’t see publicly-funded projects like higher education or K-12 being significantly affected in the next two or three years. I think we’re starting to hear buzzwords that are concerning, that the economy is going to take a little bit of a hit and that will certainly slow those privately-funded projects. The minute those projects slow, then other people start to focus on public projects and then you have more competition and less work. There could be some potential for slowdown in our practice over the next year or two years.
Interview conducted and condensed by Sydney Smith.