Expert: Builders have long road back

It will take at least five years for the Phoenix-area construction industry to regain its former status as a leading provider of jobs, one of the industry's top economists said.

Still, Anirban Basu, chief economist of the Arlington, Va.-based Associated Builders and Contractors Inc., said out-of-work contractors in Maricopa County - and their counterparts nationwide - were likely to see a limited increase in job opportunities within the next year.

Basu was among a group of economists that presented their six-month national and regional forecast Wednesday for the commercial construction, homebuilding and architectural industries.

He said 2011 was likely to go down as the low point in employment for building contractors after the construction boom and subsequent bust that has contributed greatly to Arizona's economic woes.

Most construction projects funded with federal economic-stimulus money in 2009 are winding down or have been completed, Basu said, along with a spate of private contracting jobs for health-care-related businesses.

The next wave of opportunity for building contractors is likely to come from the development of new apartment communities expected to begin within the next year, he said, along with some new-build projects in the industrial sector and renovation projects inside office properties as they are acquired by new investors.

"The sale of commercial real estate really matters to the economy, because it's transferring from cash-poor sellers to buyers with money to spend on upgrades in order to make gains in market share," Basu said, speaking about the Phoenix and Tucson markets.

Unlike the past two years, during which most of Arizona's construction jobs were paid with government checks, there's likely to be very little public-sector work for contractors in the near future, he said.

While the projected increase in private construction work is significant, Basu said it won't come close to replacing the more than 91,000 construction-related jobs lost in the Phoenix area since January 2007.

He also noted that retailers weren't likely to provide much work for contractors during the next few years because of the existing glut of space in area malls and shopping centers.

Likewise, homebuilders are not expected to see a major increase in demand until 2015 or 2016.

The lag in retail- and residential-construction recoveries could lead to another dead spot if other economic factors don't improve, Basu said.

"Once those (upcoming) projects are done, then what?" he said.

by J. Craig Anderson The Arizona Republic Jun. 9, 2011 12:00 AM




Expert: Builders have long road back