Making it Big

Cooling Off?

According to the census bureau, construction spending in the commercial category, which includes retail, warehouses, and farms, was up 10.5 percent for the first 10 months of 2007. But Simonson expects things to slow. Contractors, architects, and engineers surveyed by the Associated General Contractors of Minnesota agree. More than half of the respondents to the September survey expected to have less work in 2008, while 32 percent of respondents thought the amount of work would remain steady in 2008—and 17 percent predicted the volume of work to increase this year.

Of all the construction categories, residential has been hit hardest, down nearly 16 percent for the first 10 months of 2007.

No one expects things to come to a screeching halt. “Industrial projects are going to gain speed in the next couple of years, especially as influencing factors, such as fuel prices and functional obsolescence, compel companies to rework their distribution-center strategies,” says Collin Barr, Ryan’s president for the Minnesota region. “Increased fuel cost will put more weight on the transportation variables when companies do their logistics analysis, which could result in more distribution centers that are closer to store locations, as opposed to fewer distribution centers that are farther apart.”

Also, Barr believes, “the new technologies for racking, carton conveyor systems, and digital tracking of product in transport will trigger more new construction of distribution centers, as the older buildings simply cannot accommodate these new technologies.”

Retail construction, Barr predicts, “will be status quo, with no growth.” But there has been recent activity there, too. Ryan handles a lot of build-to-suit for corporate clients like Target and Home Depot, and recently completed several large retail projects, including the SuperTargets and Home Depots in Maple Grove’s The Grove and Richfield’s Cedar Pointe Crossings. It is also wrapping up a SuperTarget in Apple Valley’s Cobblestone Lake.

Opus also has an impressive retail portfolio. One of its high-profile national projects, the recently completed Hill Country Galleria, is a 1.3-million-square-foot lifestyle center 16 miles west of Austin, Texas. Phase I of the project features more than 50 retailers in 650,000 square feet of retail space. The development also includes office and residential space—two construction sectors that are showing signs of slowing down.