Feb 06, 2009
Commercial construction strong in Billings
At least for 2009
By: Billings Gazette, Jan Falstad
At least for this year, commercial construction in Billings remains strong
By JAN FALSTAD
Of The Gazette Staff
The five local contractors who compete for the big commercial projects in the Billings area say they are feeling pretty good about having enough work to carry them through 2009.
In fact, Billings looks like a boom town compared with many U.S. cities where construction has virtually stopped.
While the value of home construction in Billings fell 38 percent to $45.3 million in 2008, compared with 2007, at least two dozen commercial buildings are under way, with more in the pipeline.
Commercial projects, including some major medical buildings, totaled $97.6 million in 2008, a 36 percent increase over 2007.
Greg Hardy, president of Hardy Construction, said 2008 was the second best year for his company since it was started in 1953.
"We're looking as good this year as last year, which was good," Hardy said. "However, for 2010, we'll wait and see."
Still, a couple of projects Hardy wouldn't identify have been postponed because of the economic troubles.
The largest commercial contracts in the region generally are awarded to one of five local competitors: Fisher Construction Inc., Hardy Construction, High Tech Construction, Jones Construction Inc., and Langlas & Associates. Leaders at all five companies said they are seeing a healthy level of work for 2009, although more projects are always welcome.
Langlas & Associates Vice President Dave Langlas said he remains "eternally optimistic" about Billings. The company just completed the GE Commercial Finance building on the West End. It also is working on the West Park Plaza remodeling and has the 14-screen complex for Carmike Cinemas at Shiloh Crossing.
He said 2010 is too far away to make accurate predictions.
"People are thinking of projects, but there are too many variables between now and then," he said. "Will the financing be 10 percent instead of 5 percent?"
On the horizon
Crews working for Jones Construction Inc. are busy with the First Interstate Operations Center, among other projects.
"Things still are in the pipeline for '09, but there's certainly some concern beyond that," Jerry Jones said.
Large commercial projects generally sit on the drawing boards for a year before the architects, engineers and contractors finish their planning and the city issues building permits. That means many of the cranes and construction equipment dotting the Yellowstone River valley represent work planned during a stronger economy.
A building slowdown across the West caused CTA Architects Engineers of Billings to cut the work force at its offices by an average of 7 percent. However, at CTA headquarters in Billings, where the construction environment is healthier, the work force cuts were a milder 5 percent.
With Seattle, Denver and some other Western cities hit hard by the recession, CTA had to reposition itself for leaner times, said Mike Tuss, principal and director of design.
President Barack Obama's plan to improve the nation's infrastructure may help, but the details of the stimulus bill are too uncertain right now, Tuss said.
"If it gets better, great, but we're not going to bet the farm," he said.
Permits bloom with tulips
The city of Billings building permit report showed $61.2 million of commercial construction in Billings in 2007. That jumped to $97.6 million for 2008, a 36 percent increase.
Yet how strong 2009 will be remains an open question.
"This is always a slow time, so we probably won't have a good feel for future commercial construction permits until March," said Building Division Manager Kim Palmieri.
Builders usually wait until the last minute, until the tulips pop up in the spring, before asking for the city for a building permit, Palmieri said.
So local contractors trying to determine whether Billings will continue to sail through relatively calm construction waters are studying predictions by economists and talking to builders in other cities.
On Monday, Jones spoke with a developer originally from Sheridan, Wyo., who now is building in Payson, Ariz., 50 miles north of Phoenix, where 50,000 homes are in foreclosure. The friend told Jones that commercial construction falters after home building declines, so Montana may be due for a correction.
If it comes, Jones Construction crews will hit the road again, as they have in past recessions, Jones said.
"There's stuff going on around the state," he said. "It might not be as easy as it's been, but there's work."
Schools and medical buildings
Fisher Construction President Ed Morgan said despite the national gloom and doom, his company has started building a $13 million hospital in Red Lodge and will work on two projects in Baker this spring: remodeling a nursing home and building a fire station. Also this spring, Fisher employees will start building a $4.3 million data center in Miles City for the state of Montana.
Fisher is among the companies bidding on a remodeling of the existing RiverStone Health facility on South 27th Street and construction of a neighboring four-story office building, projects totaling $10 million, Morgan said.
After surviving Billings' steep economic downturn in the mid-1980s, Morgan said experienced companies like his weather the slowdowns better than less-experienced companies.
"They have the tendency to get so busy they don't know where they are financially all of the time until it stops and catches up with them," Morgan said.
High Tech Construction also started business in 1984, just in time for economic doldrums.
In those days, the company had a handful of employees who worked day and night and did everything, High Tech Executive Vice President Scott Chartier said. Those recession years were probably the most profitable years in the company's history because overhead was so low, he said.
Chartier, along with High Tech's other executive vice president, Brian Bolton, President Kevin Hintt, and Chairman Jim Haar, like to have two years of work lined up. One year, virtually no work was booked on Jan. 1, yet the year turned out profitable.
So far, 2009 looks pretty good for High Tech, Chartier said. It was one of the local contractors completing estimates last week of what it will cost to build another school for Huntley Project, after an arson fire in September.
The dramatic decline in residential and commercial construction in Bozeman is washing over Billings builders somewhat. After construction at Big Sky slowed way down and the exclusive Yellowstone Club next door went bankrupt, the hungry builders moved down the Gallatin Valley to Bozeman.
"There were so many people competing for each project that it was the person making a mistake on a bid that got the work," Chartier said. "So we decided that wasn't a good place to keep an office."
High Tech closed its Bozeman office in October.
Some out-of-state contractors and some Bozeman builders are even bidding on projects in Eastern Montana, which they never considered doing during the boom days, Chartier said.
"For whatever reason - Billings as the trailhead maybe - but Billings isn't going to see as much of a trough as other parts of Montana or the country," he said.
THE BROKERS