The cranes are back: Commercial construction in Whatcom County is ticking up steadily, though it’s nothing near pre-recession levels before 2008.
As a gauge, look at employment. In 2007, the construction industry statewide employed 270,000 workers; 195,000 in 2012 and 218,000 in 2014.
The industry stands at 18 percent below its pre-recession high in size of workforce, and Whatcom County feels that along with the rest of the state, according to Jeremy Carroll, vice president at Dawson Construction. Labor is tight across all trades: wood-framing carpenters, concrete-forming carpenters, roofing, drywall, plumbing, mechanical, electrical, flooring, et al.
That loss of skilled labor cuts into the amount of work the commercial construction industry can take on capably. The industry feels busier, but that’s due to fewer workers rather than a lot more work.
“We saw last year’s surge in hotel-building, and the year before,” Carroll said. “That’s subsided.”
Taking its place is a pent-up demand for college student housing and for public schools of K-12. Several school districts, including Bellingham, Blaine, Lynden, and Nooksack, have projects in the bidding stage this summer. Blaine’s is $29 million; Bellingham Options High School and Lynden Middle School, $15 million each. The $50 million new Sehome High School, contracted by Dawson Construction on the existing site, has advanced into the design phase.
For Carver Academic Facility at Western Washington University, Dawson is working on the foundations, structural steel site concrete, and finish carpentry for general contractor Mortenson Construction (office in Seattle, headquarters in Minneapolis).
This year student housing seems to spring up everywhere, like mushrooms after rain. WWU recently bid a new renovation for Ridgeway Gamma Residence Hall. Another new WWU residence hall has architect selection underway now, with construction one or two years out. WWU renovated its Ridgeway Kappa Residence Hall last summer.
One project nearing completion is NXNW Student Housing on Lincoln Street, south of the Fred Meyer store on Lakeway Drive. That 368,000 squarefoot project will have several buildings housing up to 648 students in 248 units. Students can already submit a lease application for occupancy this fall.
More college student housing is coming on the former site of the Seventh Day Adventist Church on North Forest Street. Drivers exiting the roundabout at State Street and traveling north up Forest Street crane their necks at the massive project on the east side of the road, but most of Dawson Construction’s work there is still underground. “What you see now (mid-summer) is the below-grade parking structure,” Carroll said.
You’ll eventually see four stories of student housing called Gather Bellingham, a 145-unit, 423-bed facility slated for move-in August 2017. Its 290,000 square feet includes the parking garage. Gather Bellingham’s owner is Rael Development Corporation (offices in California and Texas).
Not for students, but for farm workers and their families, Catholic Housing Services is building housing on Bakerview Road scheduled to open this autumn. The 85,000 square foot project comprises 50 apartments in three buildings. “CHS always does a great job with their facilities,” Carroll said. “Good quality, and good use of space.”
Nearby in the Cordata area of Bellingham a facility for dementia care also approaches completion this fall. Silverado Memory Care Community on Columbine Drive comprises 41,000 square feet and 45 units. Silverado Care (headquarters Irvine, Calif.) has similar facilities in Utah, and offers related services in California and Texas. The Bellingham building reflects a unique approach to dealing with dementia, featuring a sizable courtyard and other sunrooms that bring natural light inside to affect caregiving positively.
Construction in oil-dependent Alaska has slowed considerably due to falling oil prices. Dawson Construction, which maintains corporate offices in Ketchikan and Juneau, feels the effect, as well as some other area contractors. Tumbling crude prices also lowers spending by Whatcom County’s refineries.
A BP Economic Impact Report shows BP’s external spending on all vendors in Washington during 2013 was $290 million; but falling 43 percent the next year, $165 million, and another $5 million last year to $160 million. That includes spending on service providers, construction, material, and supply.
Alaska might be cold, but tech-boom Seattle is “hot, hot, hot,” said Liz Evans, district manager of the Associated General Contractors of Washington (AGC) that services Whatcom County. “The big revenue is derived from the south,” Evans said.
Several locally-based companies benefit from commercial construction in the Seattle area. Tiger Construction Ltd of Everson is building a new cafeteria at Marysville Pilchuck High School, to replace the one abandoned after mass shootings in 2014. Other Whatcom County contractors such as Faber, Moncrieff, Exxel Pacific, Haskell, IMCO, Diamond B, Tiger, Colacurcio Brothers, Rosendaal-Honcoop and numerous others have active projects to the south of the county – and some even further in Oregon and California, or up in Canada and Alaska.
“We’re all over the place,” Evans said, “but the money’s coming back to Whatcom County.”
Exxel Pacific, for example, displays numerous projects on its website; many are local, and many show a far reach for the No. 2 private company on the Business Pulse Top 100 list, as you would expect from a business grossing nearly $280 million.
“We’ve always been a company that travels and does work all over. We have projects from here to Seattle,” said Kevin DeVries, the 27-year-old company’s CEO. But he reiterated Evans’s point, saying, “It’s an important distinction that we’re still basically a local contractor. We’re proud of our many projects here at home – Lynden Christian School campus, apartment and student housing projects, and many other examples.”
The general contractor construction giant among our Top 100 Private Company listings represent a massive footprint on the local economy and workforce.
DeVries said, “The most significant thing is that we all live here, we work here, and we employ here and our workers travel. And, we pay a lot of taxes from our work – wherever it is – back into the city and county economy. We’re proud that we work from Bellingham, and it’s a key to our sustainability.”
Advanced technology allows local companies to manage work projects remotely from home base here, but the workforce must have mobility. Workforce development remains a serious issue affecting contractors. “The new generation doesn’t seem to be as interested in this industry…not as interested in working out in the field with their hands,” Evans said.
Big-box retail construction in our region typically doesn’t award to local contractors. The new Costco on West Bakerview Road went to Ferguson Construction (Bellevue). The interior remodel of Whole Foods at Lakeway Center went to J.R. Abbott Construction (Seattle).
Non-local contractors usually bring in subcontractors from outside the county as well as hire locally. “They say they try (to hire locally) but typically it’s more difficult to go to work for those contractors. They have their subs that they like,” Evans said.
The construction industry statewide – with a payroll of $12.4 billion – provides nearly 9 percent of Washington’s private sector workforce. Construction sales make up 16 percent of all sales. For perspective: The construction industry contributes 21 percent of total state sales tax; restaurants and bars contribute 9 percent, and auto dealers and gas stations together contribute 12 percent.
For each dollar spent on new construction, an additional $1.89 is generated in Washington’s economy, as reported last year by a University of Washington study contracted by the state’s AGC.
Other ongoing issues for contractors includes the ever-increasing cost of health insurance, wages and benefits, and materials.
On a brighter note for the construction industry, the state’s new 11-cent gas tax will phase in this summer. This is the largest gas-tax increase in state history, and the first in a decade. It designates $8.8 billion to roads, $1 billion to bike-paths, pedestrian walkways, and transit, and $1.4 billion to maintenance.
A significant portion of those allocations will enrich Whatcom County. “The gas tax,” Evans said, “will bring work our way.”
Overall, the business looks good, then? “Contractors never say things are good,” Evans said. “They can be good, but they know they can turn bad tomorrow. We are cautiously optimistic that this (uptick in commercial construction) will hold for another couple of years.”