Surge in Residential Construction Lifts Building Activity
REAL ESTATE: Commercial Side Not Faring as Well Locally
Monday, August 2, 2010
San Diego County residential construction led a continued rebound in overall building activity during the month of June, helping the region post an overall 24.9 percent increase in new permit valuations from June 2009.
However, a 48.7 percent rise in residential permits was partly offset by a 15.8 percent drop in valuation on the commercial side, according to data released July 26 by the Construction Industry Research Board.
For the first six months of 2010, total residential permit valuations, including construction and renovations, were up 27.2 percent from the same period of 2009, to $590.5 million. Commercial valuations dropped 10.9 percent from a year ago for the six months, to $306.2 million.
The end result was a 10.9 percent lift from the first half of 2009 for residential and commercial valuations combined, according to board data. The total $896.8 million is still well off from the first half of 2006, when the region saw more than $2.3 billion in construction activity.
Borre Winckel, president and chief executive officer of the Building Industry Association of San Diego, said the first-half data — indicating starts on 1,381 new single-family housing units in the first six months of 2010, compared with 936 units for the same period of 2009 — represent the first glimmers of upbeat news that local home builders have seen in several months.
“Builders are going to stay cautiously optimistic right now, with the emphasis on cautious,” Winckel said.
Conservative Approach
Most of the local building permits taken out in the latest quarter are for houses that will hit the market in the first quarter of 2011. Winckel said how those homes fare will depend on whether current low mortgage rates hold in place; and also whether banks and government agencies are releasing more foreclosed resale homes back on to the market at cut-rate prices.
“Builders can’t compete with those foreclosed properties,” Winckel said.
With credit remaining tight compared with pre-recession levels — both for developers and potential buyers — he said builders will continue to play things conservatively by releasing homes in small phases.
Russ Valone, president and CEO of locally based research firm MarketPointe Realty Advisors, said there are several signs pointing to continued improvement on the residential side in coming months.
More of the smaller, privately owned builders are taking out permits for new home construction than was the case during the past two years, when most of the completed projects were by larger public companies with regional or national operations.
Valone said that’s an indication that smaller firms are gradually getting more access to financing as lenders become more confident in their prospects of selling homes.
Housing Market Improves
One result is that 13 new housing projects were delivered to the San Diego County market in the first quarter of 2010, followed by 14 in the second quarter. That’s much better than the average of four projects coming online per quarter in 2008 and 2009, though still less than half the number delivered in 2004 and 2005.
Also, absorption of those new homes has improved. Valone noted that there is currently about a 17- to 18-month supply of new homes on the local market, reflecting an equilibrium between what’s being built and what’s being bought.
Today’s supply and demand are much better matched than in 2008 and 2009, when there was about 32 months worth of unsold new homes. Continued local job growth should contribute to healthier home sales in the months ahead, he said.
Dip in Private-Sector Projects
While San Diego-area commercial contractors are being helped by a steady flow of military and education-related construction work throughout the region, development of private-sector projects has trailed off significantly from pre-recession levels in segments including office and retail.
According to the U.S. Bureau of Labor Statistics, San Diego County in June saw a drop of 3,000 construction jobs compared with June 2009, going from 61,500 to 58,500.
The region ranked 133 out of 337 metro areas for creation of new construction jobs, according to a July 27 report issued by the Virginia-based Associated General Contractors of America, which is based on Bureau of Labor Statistics data.
The contractors group said construction employment declined in 285 of the 337 metro areas during the past year, noting that weak overall demand for construction is “outpacing the benefits” of a national stimulus program’s $135 billion in construction-related investments.
“While more metropolitan areas have started adding construction jobs, most are still experiencing losses nearly four years after the construction downturn began,” said Ken Simonson, the association’s chief economist, in a statement.
| Monday, September 6, 2010 During the past 50 years, San Diego’s exponential growth as a globally respected scientific hub has developed on a canvas of excellence born from rigorous scientific research and development and the private sector’s transfer of technology for commercialization. Two primary factors play a key role in San Diego’s qualitative and quantitative growth. San Diego’s institutions of higher learning recruited top academics in all disciplines, and encouraged public/private partnerships fostering countless startups and many major corporations. Secondly, San Diego receives support from major corporate and foundation grants and government funding from agencies such as the Department of Defense, Defense Advanced Research Projects Agency, National Institutes of Health, and The National Science Foundation, to name a few. With the close collaboration of academia, R&D and entrepreneurs, San Diego has evolved into a megalopolis with a thriving cultural life, and pilot programs in education and social reform — a city thriving in the context of creativity and innovation with constructive solutions, actionable plans and marketable products. San Diego’s basic precepts include the following: Education • Identifying exceptional youngsters, regardless of socioeconomic and ethnic background. • Developing and testing innovative education pilot programs. Academia • Offering stimulating, comprehensive academic environments. Technology Transfer • Fostering research and development of creative, innovative technologies. • Stimulating public/private partnerships. Public Sector • Promoting and nurturing entrepreneurship, startups and early stage companies. • Fomenting business growth and job creation. Arts and Culture • Supporting wide-ranging venues for arts and culture. Community Building • Cultivating quality of life and community building. • Embracing and celebrating ethnic diversity. San Diego is poised to serve as a national template for aggressive economic recovery, and to play a key role in the evolving global arena. Education Several ongoing and thoroughly tested education entities stand out as pilot programs that could be successfully duplicated throughout the nation. Among them: Originated by a coalition of San Diego business leaders and educators, High Tech High includes a number of public charter schools specializing in math, science and engineering. With 3,500 students, 100 percent of High Tech High graduates have been accepted to college; 80 percent to four-year institutions. With an enrollment of 826 students, the Preuss School at UC San Diego is a charter middle and high school dedicated to providing a rigorous college preparatory education for motivated low-income students who will become the first in their families to graduate from college. It pioneers best practices in the preparation of low-income urban students for college admission. Academia The 107-year-old Scripps Institution of Oceanography, a world leader in “advancing the science needed in the search for a sustainable balance between the natural environment and human activity,” was instrumental in the UC Regents’ decision to develop UCSD. The 50-year-old campus that is ranked as one of the top academic institutions in the nation also counts farsighted divisions such as California Institute for Telecommunications and Information Technology, aka Calit2, and the School of International Relations and Pacific Studies, the only such program in the U.S. focused on the Pacific region — Asia and the Americas. SDSU — which offers 84 bachelor’s, 75 master’s and 15 doctoral degrees as well as 78 minors in seven colleges — works in close collaboration with nonprofit organizations and the private sector. SDSU was named the No. 1 small research university in the nation for the third consecutive year. Recently, it received four highly competitive Challenge Grants from the National Institutes of Health, and 45 American Recovery and Reinvestment Act of 2009 grants. Technology Transfer In 2009: • 300 new technology startups were formed in San Diego — up 13 percent from 2008. • These new businesses created more than 1,000 jobs. • Federal funding from the National Institutes of Health and National Science Foundation reached nearly $1.2 billion — up 35 percent from 2008. Together, UCSD and Connect have served as incubators and springboards for San Diego’s thriving biotech, high-tech and wireless industries. Since its inception 25 years ago, Connect has assisted more than 2,000 entrepreneurial-driven, innovation-based startups. This independent, nonprofit organization is regularly given as a national and international model for enabling technology transfer and guiding effective public/private partnerships. Private Sector In addition to a broad-based economy, fueled partly by a strong tourism industry based on the natural beauty of the area, its climate, and the world-renowned San Diego Zoo and San Diego Wild Animal Park, San Diego has sprung business clusters in virtually every innovation sector including: • Security and defense (250) • Biomedical (600) • Information technology and wireless (1,100) • Clean technology (350) Material sciences behind sports equipment and an array of related product development and commercialization is another thriving sector of the San Diego economy that counts more than 600 companies. Art and Culture San Diego supports cultural venues people expect from a city the size of San Diego: art museums and other topic-focused museums, live theaters, a symphony, an opera, and dance companies. A few cultural organizations brought national attention to San Diego, among them: La Jolla Playhouse and The Old Globe, two institutions that have originated many shows that made subsequent headlines on Broadway; the Museum of Photographic Arts, one of the few museums in the country exclusively dedicated to the arts of photography, videography and cinematography; Mingei International Museum, a nationally praised craft museum; and the Museum of Contemporary Art San Diego, one of the few museums in the country dedicated to showing art on the cutting edge. Two core cultural destinations include the famed Balboa Park, the nation’s largest urban cultural park, home to 15 major museums and performing arts venues and the San Diego Zoo, and the NTC Promenade, a 28-acre indoor/outdoor educational and recreational center, a San Diego flagship destination for arts, culture, science and technology. Community Building A number of innovative pilot programs that address the needs of underserved, lower socioeconomic neighborhoods are leveraging assets by bringing to the table a variety of local and national partners from nonprofit and for-profit, corporate and civic sectors. The City Heights Initiative is a model of a successful partnership between residents, nonprofits, government, businesses, labor and religious organizations. The Initiative was conceived by the late Sol Price as a holistic approach to the revitalization of an inner city community. In 1994, City Heights had the highest crime rate in San Diego County; today, through creative development of the 3-square-mile area, the multi-racial City Heights community flourishes with confidence and hope for the future. Education, professional training, social services and economic incentives have given the 72,000 City Heights residents opportunities to become stakeholders in the rehabilitation of their neighborhood. This editorial is likely to alienate key progressive institutions, organizations and corporations that space constraint does not allow me to mention. For this, I apologize. The examples selected in no way reflect the richness of a dynamic city that is no longer “San What?” south of Los Angeles. Christine Forester is principal of Christine Forester Catalyst. She can be reached at forester@san.rr.com or www.foresteronline.com. |
