Architecture Billings Index Reaches 7-Year High

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According to the American Institute of Architects, commercial building has reached its highest point since 2007. The Architectural Billings Index, which is used to predict construction spending for the next 9-12 months, scored the current market at 55.8. Scores of 50 or higher indicate market growth. According to AIA chief economist Kermit Baker, “We’re going to see some reasonably healthy numbers for architecture billing.”

While the commercial and residential markets are strong, the institutional market, which includes hospitals, government buildings, and schools, has been lagging somewhat. Although institutional construction did pick up later in the fiscal cycle, Baker said that the lag is “holding back a broad-based recovery.”

The Index projections indicate that demand for manufacturing, retail, hotel, and distribution will increase to about 8% in 2015. The institutional market is expected to improve in 2015 as well. The architectural billings will doubtless increase as long as client confidence in the economy remains high.

Regional scores for the index also indicate market gains in each area, with 55.5 in the Northeast, 55.1 in the South, 54.1 in the Midwest, and 53.5 in the West. The gains were particularly strong in the West, which saw a jump from 48.7 in June, bringing an end to the 3-month slump in that regional market. The South continues its reign as leader in new design activity, having shown steady increases for 25 consecutive months.

The Architectural Billings Index is taken from AIA’s Work-on-the-Boards Survey and Panel, a monthly study conducted by the AIA’s Economics and Market Research Group. The survey tracks an architectural firm’s availability to engage additional work as well as the rate of billings as compared do the previous month.

Major Development in Dallas Enters Phase II Construction

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Many HBWeekly subscribers in the Dallas construction market seeking residential building leads and commercial construction job leads have been following the building activity of Preston Hollow Village, at the corner of Walnut Hill and North Central Expressway, with tremendous interest.

The development has been under construction since August of last year. Currently, office and retail projects are underway at Preston Hollow Village. The retail center will be anchored by a Trader Joe’s grocery store, and Frost Bank will anchor the office park. Within the next 60 days, the 42-acre development will begin Phase II of its construction, adding 508 rental units to the complex. The residential component will be comprised of three 7-story apartment buildings.

The residential units will feature landscaped courtyards, a resort-style pool with open-air loggia and swim-up bar, a fitness center as well as a club house with a greatroom, outdoor and gourmet kitchens, a private dining room, a movie theater, and an arcade and virtual golf facility. Each building will cater to a specific demographic, ranging from young professionals to empty-nesters.

Phase I of the project included the 14,000 sq. ft. Trader Joe’s store, 61,000 feet of retail space, and the 3-story, 46,000 sq. ft. Frost Bank office building, all of which wraps around a multi-level parking garage. Gensler, an international architecture firm, designed the retail and office construction of Preston Hollow Village. Ziegler Cooper Architects of Houston were brought on to design the residential portion of Preston Hollow. The buildings will feature sleek, contemporary styling in a mixture of brick, stone, and glass, as well as green spaces, patios, and outdoor dining.

Preston Hollow Village sits on the site formerly occupied by Willow Creek Apartments, an aging rental housing complex demolished in 2008. Due to the severe economic downturn, the expanse remained vacant until last year, when new investors stepped in. Kroenke Holdings of Missouri purchased the property in 2010, and retained Provident Realty Advisors, Inc—the site’s original developers–to develop the property.

Contact HBWeekly today to get information on home building and commercial construction job leads in the Dallas area. HBWeekly has proudly served builders fin Florida, Georgia, Alabama, Texas, and now Oklahoma for more than two decades. We provide the latest and best building permit data information, as well as building activity reports and market analysis. To see how HBW can help your business succeed, we are happy to provide you with complementary building data report or one of our specialized White Paper Reports. Contact us today and start making your business more profitable.

August Finds Homebuilder Confidence Riding High

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According to the National Association of Home Builders/Wells Fargo Housing Market Index, confidence in the national homebuilder market is decidedly up, marking August as the third consecutive month for gain in the index. August brought the average two points higher to 55, which is the highest level since January. Index ratings of 50 or higher indicate good conditions in the housing market.

The NAHB compiles the index from a monthly survey, which generates a confidence score from 1 to 100. Optimism regarding sales growth in the next six months measured 65, with the confidence in current sales sitting at 58.

Reasons for the uptick include continuing low interest rates, lower than expected home prices in most of the nation’s markets, and an improving job market. David Crowe, NAHB’s Chief Economist, says that “each of the three components of the HMI registered consecutive gains for the past three months, which is a positive sign that builder confidence appears to be firming following an uneven spring,” and that “Factors contributing to this rise include sustained job growth, historically low mortgage rates and affordable home prices, which are helping to unleash pent-up demand.”

Each of the NAHB’s regions saw gains in the index, with the Midwest showing a seven-point increase to 55, the West increasing four points to 56, and the South gaining a point to 52. The Northeast gained two points but still ranked last at 38.

NAHB Chair Kevin Kelly says that, “as the employment picture brightens, builders are seeing a noticeable increase in the number of serious buyers entering the market,” although he is quick to add that “builders still face a number of challenges, including tight credit conditions for borrowers and shortages of finished lots and labor.”

The steady increase in homebuilder confidence is welcome news. The second half of 2013 brought a housing slowdown, which was exacerbated by the building delays caused by winter weather. This slowdown was also worsened by the shortage of lots and lack of skilled labor combined with rising materials costs. This led to a low housing inventory and high house prices, which along with a mortgage rate spike further discouraged new home buyers.

Meritage Makes Itself at Home in Atlanta

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Meritage Homes Corp. is coming to Atlanta. The veteran home building firm has opened a South Region division that will be based in Atlanta. The move is an exciting one for the Scottsdale, Arizona-based Mertiage, which is America’s ninth-largest home builder. The South Region will serve the Atlanta, Nashville, and Greenville-Spartanburg markets, with plans to expand as the division gains footing. Meritage currently has three other divisions: Wet, Central, and North.

The move follows on the heels of Meritage’s decision to acquire the Douglasville, Georgia-based Legendary Communities for nearly $130 million. Legendary has built more tan 80,000 homes in the last 28 years, and during 2013, the company generated over $156 million in revenue from the sales of 500 homes. Given the stalled development pipeline that is currently strangling the otherwise keen American housing market, Meritage was especially attracted to Legendary’s inventory of 4,000 ready-to-build home sites.

The single-family housing market in Atlanta is the second-largest and fastest-growing in America. Projections indicate that the Greenville-Spartanburg single-family housing market will grow about 20% from now through 2015.

Steven Hilton, CEO of Meritage Homes, says the company plans to focus intensely on building the South Region division. “We are going to be putting more capital into Atlanta, we are buying this as a five parameter growth, starting point to ending point,” Hilton said, adding, “I’m just bullish about Atlanta.”

Meritage plans to build 1,000 homes in metro Atlanta sites between 2014-2017. This would seem to put them in stiff competition with PulteGroup and D. R. Horton, two other home building giants with major development plans in Atlanta. Hilton isn’t terribly concerned with the competition, he says, “Horton can get theirs and we can get ours and I think we can both do really well.”

To solidify Meritage’s business strategy, the company hired James Thrower as president of the South Region division, bringing 25 years of experience in home building and real estate in Georgia and the Carolinas. Of the company’s decision to hire thrower, Hilton says that “we are excited to have Jay join us to lead and grow our new South Region. Jay brings a wealth of experience in this region and an impressive record of accomplishments in such areas as land acquisition and development, product design and development, sales, construction, finance, purchasing, estimating, marketing, operations, and management. He will be a valuable addition to our organization and help us continue to expand and diversify our geographic footprint.”

Phased Building Permits Kickstart Construction in Miami.

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HBW subscribers in the Miami area have already noticed the sharp uptick in phased permits, and how it affects their potential for residential construction job leads and commercial construction job leads. The economic meltdown of the last six years has left the land development pipeline running dry nationwide, but developers in Miami and Miami Beach are increasingly turning to phased building permits  as a way to get the pipeline flowing again.

The phased permit process allows for developers to begin construction on a property much more quickly than traditional building permits do. The Florida building code authorizes city permit offices to issue phased permits at the discretion of the permit officials, as per Section 105.13 of the Florida Building Code. Builders may also seek trade-phased permits (electrical, plumbing, mechanical, etc.) during the construction process..

Developers in Miami and Miami Beach are increasingly turning to phased permits to keep the construction process running until the master permit is issued. Both areas have recently added the requirements of approval from the Department of Environmental resources management, and verification from the Water and Sewer division before phased permits can be obtained. Applicants in those areas must also execute a hold Harmless letter that relieves the municipality

Each phased permit lasts for only six months, within which time the Master permit on the property must be issued. The costs of phased permits are not applied to the cost of the final, master permit. It’s important to remember that a phased permit is issued as “pending” a master permit, and does not stand ‘in lieu of’ a master permit. Developers who seek these permits do so in agreement to undertake construction at their own risk and with no liability held against the city for problems that may rise in connection with the phased permit. Phased permit construction proceeds with the understanding that any and all construction may have to me modified or even removed in order to receive the master permit.

Although there are significant risks to take into account when deciding to apply for phased building permits, there is one major benefit to working with them. Phased building permits allow construction to proceed according to the preferred completion schedule. It is easier for projects to stay on schedule and meet deadlines, and not be handicapped due to bureaucracy in the permit office. Phased building permits make developers more ready to capitalize on market demand.

HBW serves builders in Florida, Georgia, Alabama, Oklahoma, and Texas.  In addition to our Building Trend Activity for Residential Construction Reports, HBW can create a number of custom reports for any need you might have. We also offer exclusive White Paper Reports to help you market your business. Upon request, HBW is glad to provide you with complementary building data report or one of our specialized White Papers. Contact us today and start making your business more profitable! Check our newsletter for more information!

 

New Construction Boom Reined In By Consumer Caution

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Fannie Mae’s July 2014 National Housing Survey takes a conservative view of the current home building boom. Mixed attitudes toward the housing market drive consumer caution toward buying new homes, although an increasingly positive personal financial outlook may cause those attitudes to shift throughout the third quarter of 2014.

The phone survey is conducted on a monthly basis, and polls an average of 1,000 Americans on their view of current housing market conditions. Respondents are asked to weigh in on the topics of “owning and renting a home, home and rental price changes, home ownership distress, the economy, household finances, and overall consumer confidence.”

Of those surveyed, 67% of Americans felt it is a good time to buy a house, but only 43% felt it was a good time to sell. The closing gape between these percentages indicates that the supply and demand in the market seem to be evening out. 42% overall felt that home prices would increase in the coming 12 months 54% thought that Americans will see an increase in mortgage rates, with fully 50% responding that it would be difficult for them to qualify for a mortgage. 43 % of those surveyed said they felt their personal financial situation was likely to improve in the next 12 months, and this optimism is predicted to positively impact home ownership attitudes in the next year.

Of July’s survey results, Fannie Mas senior vice president and chief economist Doug Duncan noted a distinct slowdown, saying that “[the] continued cautious sentiment expressed across the range of consumer indicators this month gives weight to our view that the first phase of the housing recovery is decelerating, and 2014 will be a year of mixed housing outcomes with home prices rising more slowly and home sales falling slightly.”

However, Duncan added that the long-term numbers are likely to improve, because “[r]ecent data indicating the creation of more than 200,000 jobs over each of the last six months, combined with this month’s improvement in the share of consumers reporting significantly higher household income than a year ago, does provide some reason for optimism. If these trends continue, they could lead to some upside in housing in 2015.”

Appealing to the Strong Senior Housing Market

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Builder confidence in the 55+ senior housing market, according to the National Association of Home Builders’ 55+ Housing Market Survey. The two major sub-markets for this demographic are the single-family and multifamily condominium home buyer markets. One of the factors contributing to builder confidence is the slow, steady increase in sales of existing homes. The 55+ market “is strongly driven by consumers being able to sell their existing homes at a favorable price,” says NAHB Chief economist David Crowe.

With builder confidence in the 55+ market running high, it’s a good idea to understand what, exactly, seniors are looking for when they buy homes. According to a recent article by Forbes, there are 6 major considerations seniors have when buying a new home: renting, buying, cost, neighbors, location and meals. Builders who plan to serve this burgeoning market need to keep those things in mind. Seniors who plan to purchase a new property rather than rent a residence are looking for a solid cost-to-square footage ratio and good community amenities. They also demand close proximity to health care, grocery shopping, and healthy restaurants with robust take-out offerings.

When building for a senior demographic, it helps to understand that today’s seniors—of whom there are 77 million in the continental US, with the number growing every day—wish to remain active mentally and physically. And they need to do so economically, because the economic downturn left the average boomer $500,000 short of the cash they need to have the lifestyle they prefer. This has left many seniors in a state of part-time employment and semi-retirement and working from home. Amenities such as public transit, continuing education course providers, pre-wired broadband or T1 line, and home office space are as important for seniors as for young professionals.

The most important thing for investors in the senior housing market to realize is that buyers are looking at properties that will continue to meet their health and social needs as the progress from independent living, to assisted living, to full-time care. Properties that can be easily modified to meet future healthcare needs are much more appealing than those that aren’t.

Hot Residential Construction in Broward County

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HBW subscribers know that the residential construction employment is skyrocketing in Broward County. Southeastern Florida has always been an enormously popular residential market. During the housing bust, the area suffered tremendously. But with the real estate market recovering and empty-nester baby boomers flocking to retirement in the Sunshine State, Florida’s real estate market is recovering more quickly than other areas in the nation. “There’s tremendous demand in Parkland,” Mayor Michael Udine says, “people want to be in our city and this [new construction] allows that to happen.”

Parkland, an affluent suburb in the Miami-Pompano Beach-Fort Lauderdale Metro area, is benefitting from the improved buyer and builder confidence. More than 1500 homes are scheduled for construction in Parkland during the next year, with Toll Brothers, WCI Communities, and Lennar Corp. responsible for much of the development activity. The lush landscape and top-rated school districts have made Parkland one of the last areas left in Broward county for large-scale development.

Toll Brothers acquired the Parkland Golf & Country Club in 2010. Toll Brothers has finished 58 homes, and is in the process of building 220 more. Upon completion, there will be 900 homes in the Toll Brothers’ luxury Golf resort.  This Mediterranean-inspired community  features one- and two-story homes ranging from 2285-3000 square feet set along an 18-hole Greg Norman Signature golf course. Home prices start at $550,000.

Of the 738 lots available in Lennar Corp.’s Mira Lago property, 250 homes and townhomes have been built and sold. Although many of the amenities, such as the clubhouse and pool are still under construction, 70 families have already moved into Mira Lago.  Most of Mira Lago’s lots are small peninsulas, which allow for individual properties to have panoramic lake views. Home prices range from $571,990-$681,990 and are between 2,264-4,676 square feet.

Much of the current development is being built on property sold off by WCI over the last five years. WCI sold significant acreage in order to focus their efforts on the massive Heron Bay development. Each of the 196 homes in two of the project’s neighborhoods sold out last year. 60% of the homes in Osprey Lake, Heron Bay’s newest neighborhood, have been sold, with 60 move-ins available expected to take place by year’s end. Homes in Heron Bay start at $527,900 and range from 2677-2914 square feet.

Spray-On Solar Tech May Change Green Building

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Of all the green building technologies available to the construction industry, spray-on solar cells could become one of the most important. Everyone wants to decrease their carbon footprint and increase their energy efficiency, and solar panels are one way of accomplishing those goals. But the expense and inconvenience of current solar panel technology has been a major stumbling block for large-scale adoption of solar power. All that is changing with the advent of spray-on solar cells.

The “efficiency” of a solar cell is the fraction of light hitting a cell which is converted to useful power. Conventional silicone-based cells have about 25% efficiency. Spray-on cells have 11% efficiency, and when combined with the plentiful and inexpensive perskovite material, can reach efficiency levels of 19%. Recent lab trials have amped up the efficiency of spray-on cells up to 40% efficiency.

As spray-on solar efficiency improves, so does the potential for spray-on solar to make a huge dent in the green building industry. Because a spray-on solar cell rig looks a lot like a car painting rig, solar cells can be sprayed onto literally any surface. Instead of installing rooftop solar panels piecemeal, an entire roof could be coated in solar cell material for a fraction of the cost of a solar panel array.

Currently, residential applications of spray-on solar involve converting traditional windows into solar cells. The first company to develop spray-on solar cells, New Energy Technologies, Inc., has patented the SolarWindow coating that, when applied to glass windows or tinted plastic film, enables any transparent surface to generate electricity. The SolarWindow coating collects energy even from low-intensity irradience from artificial light sources. Another benefit of this SolarWindow technology is that it doesn’t require high-temperature or high-vacuum production methods. Because it’s sprayed on at room temperature, SolarWindow production isn’t as resource-intensive as is the production of conventional solar cells.

Birmingham’s Hottest New Residential Developments

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Birmingham’s bustling Crestline Park neighborhood will soon be home to The Gladstone townhome complex, an $11 million dollar multifamily townhome development. The Gladstone will occupy the site of the now-defunct McElwin school at the intersection of Montelvallo Road South and Gladstone Ave. H2 is excited about the development’s future, as Birmingham now ranks second in the nation for cities attracting millennial home buyers. Birmingham building trades professionals are excited about the home building job leads to be had.

The 60-unit townhome project, being built by H2 Real Estate in partnership with Hughes Capital partners, will be completed in phases, with the 7-units of phase 1 expected to be completed in the summer  of 2015. Dungan-Nequette Architects have designed the townhome project, which has received zoning approval. The Gladstone will be the first major new residential project to be built in Crestline Park  in 50 years.

H2 real Estate principal Carter Hughes says that the Gladstone is geared towards “empty nesters and young professionals” who prefer the investment of ownership rather “than rent an apartment for virtually the same price.” The Gladstone will offer floorplans of 2-3 bedrooms and 2.5-3 bathrooms for prices ranging from $209,000-$239,000 unfurnished.

Development of the project is expected to move quickly. The sales from each completed phase of townhomes will spur the construction of the next several development phases until all 60 townhomes are built.

Ideally located between Crestline Village and Eastwood, The Gladstone is convenient to shopping and dining with easy access to downtown. One of The Gladstone’s particularly appealing neighbors is the $2.6 million Operation Schoolhouse project, announced earlier this year by PreSchool Partners.

H2 and Hughes Capital partners are hardly now to the development game, and while much of their previous work was developing multi-million dollar high-end homes in Smith Lake, The Gladstone is one of their first projects in Birmingham. Dungan-Nequette’s Abbey Road development in Red Mountain, and Hughes Capital Partners’ redevelopment of the 16-story historic Brown-Marx Tower into loft apartments are two of their other current projects. The redevelopment has qualified H2 for over $20 million in state historic preservation tax credits.