Construction industry pauses in November

by The City Wire staff ([email protected]) 53 views 

Local home construction began to slow in November with builders across Northwest Arkansas requesting fewer permits for new single family homes than in October.

The uncertainty in the construction industry was likely linked to the federal tax debate that continued throughout the last two months of 2012.

Home builders tend to request more permits between October and November as these are generally the homes that will be finished in time for the early spring selling season. While local builders expressed cautious sentiment in October, they requested a record number of permits.

November was a slower month. The cumulative value of new single family residential permits issued by the cities of Fayetteville, Springdale, Rogers, Siloam Springs and Bentonville totaled $15.995 million. This was down from $34.831 million in October, but still more than the $13.182 million in November 2011, according to the respective cities.

Associated General Contractors of America officials recently warned that unresolved issues about federal construction spending, including storm relief for northeastern states, will hold down public construction spending across the U.S. in the first few months of 2013.

“Preliminary data from the Census Bureau for November shows overall U.S. construction spending slipped 0.3% from October’s total after seven months of steady gains,” said Ken Simonson, the association’s chief economist.“The more significant comparison, however, is with year-ago levels, and the November report shows a respectable 7.7% gain over the past 12 months.”

Single-family construction across Northwest Arkansas was steady, with three cities reporting more and two reporting less activity in November 2012, when compared to the prior-year period. There were 71 new permits issued for single family homes between the five cities in November, this compared to 63 in the year-ago period.

Bentonville $6.154 million, up 50.1%
Fayetteville $4.541 million, up 36%
Rogers $2.99 million, down 11%
Siloam Springs $490,280, up 196%
Springdale $2.31 million, down 2.9%

Nationwide, Simonson said private single- and multi-family spending continues to grow. Spending on new single-family houses climbed 1.3% for the month and 29% year-over-year, while multi-family spending rose 0.5%  and 46%, respectively.

Locally, Fayetteville was the only city to approve multi-family permits in November. The city issued three permits for 47 units during November with a value of $4.180 million. Multi-family construction was up 100% from November 2011.

All five cities report significant gains year-to-date in total residential permit values when compared to 2011. (The complete yearly comparison will be reported at the end of January, when Fayetteville releases its year-over-year statistics.)

This uptick in overall residential activity has led to a 3% increase in construction-related jobs in the Northwest Arkansas metro area, according to the Bureau of Labor Statistics. The region ranked No. 84 out to 337 metro areas in terms of recovering employment in this sector in November. The local region was one of 126 metro areas to post year-over-year gains in construction-related employment.

Between November 2011 and November 2012, the local construction market added 200 jobs to total 7,800.

Construction across the commercial sector of Northwest Arkansas remained somewhat tepid throughout 2012, with a smattering of large projects announced in various cities every other month or so.

The cumulative commercial permits issued in November for the five cities reporting totaled $12.376 million, down from $37.307 million a year earlier.

In November, Rogers issued a permit for a large office building along Northgate Road which was valued in excess of $5.61 million. Hancock’s Fabrics at Pinnacle Promenade was approved as well as a small shopping center on Green Acres Road. Total new commercial permits in Rogers were valued at $7.263 million. This compared to just one permit issued a year earlier with a value of $575,000.

Siloam Springs approved two new permits worth $1.795 million which included a Casey’s General Store valued at $1.7 million. The city did not issue any commercial permits in Novermber 2011.

Bentonville approved two office projects with a cumulative value of $3.241 million in November. Construction activity was up from a year one when there was just one permit valued $544,000.

Springdale did not issue any new commercial permits in November, but a year ago the city approved a $32 million project – Hylton Junior High School.

Commercial permit values were also down sharply in Fayetteville in November with just two new projects valued at a combined $76,789. A year ago the city issued permits worth $4.23 million.

“Private nonresidential construction across the nation has been in a holding pattern for the past several months, but the recent passage of a tax bill should encourage many businesses to go ahead with projects they have held in reserve,” Simonson predicted. “Despite a drop of 0.7% in November, the year-over-year total was up by 8.2%, and this figure appears poised to return to double-digit percentage gains in the next few months.”

Simonson pointed out a few categories of private nonresidential construction that posted increases of more than 10% between November 2011 and November 2012, although results for the latest month were mixed.

Lodging construction declined 1.3% for the month but jumped 26% over 12 months. Locally, the 21C Museum Hotel is the only lodging project in the works.

Office construction shrank 0.9% from October but grew 17% from November 2012. Locally, there are several new office projects under way in Washington County and Benton County, after several years of near total stagnation.

Simonson observed that public construction spending, which has alternated between monthly increases and decreases in 2012, sank 0.4% in November and 2.6% year-over-year. He said the two biggest categories of public spending both rose for the month but declined from November 2011 levels.

Locally, there a number of public projects which began in 2012, namely schools and college facility expansions.

Highway and street construction spending was up 0.5% from October but down 6% from a year ago.

There are numerous road projects underway across Northwest Arkansas and work will continue along Interstate 540 for a few more years as the exchange and widening projects begin this year.

Permit Comparisons(January through November)
2012: $284.757 million
2011: $111.331  million

2012: $159.337 million
2011: $133.892 million

2012: $60.168 million
2011: $67.747 million

2012: $88.082 million
2011: $62.243 million

Siloam Springs
2012: $14.074 million
2011: $26.426 million
(Permits are for new construction, additions and remodels are not included.)