Market Report: East Texas

From Texarkana and Tyler to Lufkin and Nacogdoches, population gains in East Texas fuel K-12 and health-care construction. Retail, roadwork and historic courthouse renovations round out the activity.

By Jennifer Hiller

The success of school bond packages and population growth continue to fuel commercial construction throughout East Texas.

An interior rendering shows the lobby of Pittsburg’s new East Texas Medical Center campus, which is scheduled for completion in June. Image courtesy HGA Architects and Engineers.

Jack Baxley, executive vice president of operations at QUOIN, the Dallas/Fort Worth chapter of the Association of General Contractors, which serves a 26-county swath of East Texas, says the market looks good for contractors through late 2008 and into 2009.

“I think overall in East Texas the construction climate is going to stay strong. There’s a lot of public and private work and a substantial amount of money that should be in the market for the next 36 months.”

Region courts baby boomers East Texas has aggressively courted retirees and baby boomers, touting the region as an affordable alternative to the popular Texas Hill Country. The East Texas Council of Governments qualified Tyler as the first Certified Retirement City, while Athens, Longview, Lufkin, Nacogdoches, Texarkana and Winnsboro qualified under the Texas Department of Agriculture’s Certified Retirement Community Program.

As a result, “there’s a lot of retirement communities being built,” Baxley said. And that should continue to fuel both medical and retail growth.

K-12 bonds provide nuts and bolts But it’s school districts that have provided one of the steadiest work streams for contractors in recent years with construction, renovation and technology programs. “That’s likely to continue,” Baxley says.

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The current school funding system, known as “Robin Hood,” has helped some of the smaller school districts throughout the region because the state has picked up a large portion of the bill for construction and renovation.

“Overall, you’re seeing the majority of bond programs passing,” Baxley says. “We’re not seeing a lot of voter turnout, but the ones that are failing a lot of times have some aspect of the bond program that the voters may think is frivolous. They may not want to do stadium improvements or build an aquatic center. Voters want to see the nuts and bolts. They want to see new facilities, technology and renovations.”

And school districts have realized that it’s less costly - due to the rising cost of construction materials - to build now rather than later, he adds. “School districts see that they need to ask voters to move forward with some of the programs because of the price fluctuations,” he says. “It’s a world market now. You’ve got some big countries in Asia and the Middle East that are in building booms.”

Baby boomers and a baby boomlet are driving health-care expansions in East Teas. Shown, a rendering of the NICU infant room at Trinity Mother Frances’ hospital in Tyler. Image courtesy of WHR Architects.

Longview voters recently passed the region’s largest bond program, $268 million for the construction of five elementary schools and three middle schools. The measure passed by just 14 votes, with 1,552 voting for the plan and 1,538 against it. Huckabee & Associates of Fort Worth is the architect and construction manager for the bond program. Brian Bowman, spokesman for Longview ISD, says Huckabee will subcontract work to local contractors and architecture firms. “Currently we are negotiating for land and the first phase of construction will begin in the next few months, with possible groundbreaking taking place in early to late fall,” Bowman says.

The entire bond program will be complete in three years.

Voters in Central ISD, Hoggsville ISD and Orr City ISD also were among the districts approving bond programs in the May. And some East Texas school districts plan to ask voters in November to approve another round of bonds.

Tyler ISD recently wrapped up a $96 million bond package that renovated or built eight elementary schools, using The Staubach Co., a Dallas-area consulting firm, as bond manager. Now that those projects have wrapped up on time, the district has turned to Facilities Group of Okla. for advice on what to tackle next.

Most of the district’s facilities are at the half-century mark, and that the school district’s student population is expected to continue growing. “The next phase of the project would be possibly five schools,” says Angela Jenkins, spokeswoman for the school district. “We’re hoping to take it to the voters for the November election.”

Voters in Athens in May rejected a $28.4 million bond issue--by just 170 votes. The school district spent the summer repackaging the issue and plans to take it to voters again in November. A $25.5 million program would include both new construction and renovation work.

Health-care expands Competition between two major hospital systems in the region – East Texas Medical Center Regional Healthcare System and Trinity Mother Frances – continues to generate hospital expansions and health clinics construction.

Houston-based Vaughn Construction Co. broke ground last fall on a new $38 million ETMC facility in Pittsburg. The 104,000-sq-ft hospital, designed by architecture/engineering firm HMA (Hammel, Green and Abrahamson Inc.) of Minneapolis, Minn., is located on 40 acres at the intersection of U.S. Highway 271 and County Road 4114 just north of Pittsburg.

The one-story hospital is designed so that a vertical expansion can be constructed in the future. The new 10,000-sq-ft Patty and Bo Pilgrim Olympic Center will also be part of the ETMC Pittsburg campus. The fitness facility will be located on the north side of the property and provide outpatient physical therapy and cardiopulmonary rehabilitation.

The project is expected to complete in 2009.

ETMC is also building new physician clinics in the region. Berry and Clay Commercial Construction of Rusk is building a $1.4 project located on the campus of ETMC Trinity, while The Construction Management Co. of Tyler is building a $1.2 million clinic in Mount Vernon.

Vaughn was scheduled at press time to start work on new wings to the fifth and sixth floors of ETMC Tyler, adding 72 private beds to the facility, mini work-stations, conference rooms and waiting area space. A seventh floor will be added to house mechanical equipment, while a new parking garage will add an estimated 500 new spaces to the campus. The $20 million project is scheduled to be completed in early 2010.

Denson Construction Co. of Tyler is building the region’s first Level IIIA neonatal intensive care unit at Trinity Mother Frances Hospital System’s Tyler hospital. The 12-bed, high-tech unit, designed by Houston-based WHR Architects, will provide specialized care that East Texas families previously had to travel to Dallas to find.

Rising construction costs increased the cost of the project from $1.3 million to $1.7 million, says Trinity Mother Frances spokesman John Moore, but the hospital has raised money to help fund the project, which should be completed later this year.

Higher education credentials The University of Texas at Tyler now boasts more than 6,100 students, almost double the enrollment 10 years ago. Chip Clark, director of facilities planning, construction and operations, says the school is trying to keep pace with its growth by adding a $15 million, three-story, 36,000-sq-ft addition to the 60,000-sq-ft University Center. The building includes food service area, a sports grills, 350-seat conference center and student government offices.

Retail follows road work John Steger, East Texas director of QUOIN, said the entire Tyler area has been particularly busy for contractors, especially as the Texas Department of Transportation has continued to work on Loop 49, the long-planned outer loop for Tyler that began construction in 2003. Loop 49, a toll road, is open on the city’s south side, but will eventually be a divided four-lane roadway allowing quick access to the south and west sides of Tyler and north to Interstate 20.

“The footprint of Tyler is going south and showing strong growth,” Steger says. “The toll loop just opened and there’s been a lot of retail and bank growth that’s following the roadway.”

A $32 million renovation/restoration of Beaumont’s 1932 art deco Jefferson County Courthouse, on the National Register of Historic Places, is under way. Image courtesy of Bailey Architects.

Workforce, economy shifts Construction firms continue to face labor challenges, although there has been a bit of relief in 2008 as some companies have hired workers from the slowing housing industry. “We’re starting to see some overlap from the slowdown in residential construction,” says Raleigh Roussell, president and CEO of QUOIN. “The skills don’t exactly translate and they may need additional training, but they do create some bodies.”

Randy Garrett, president of Garrett & Associates in Whitehouse, says that as long as oil prices stay high, the East Texas economy – and construction – should stay busy. “It’s usually good for the region when oil is high because we are so close to the oil and gas well and refineries. I really don’t see a slowdown in Tyler. We’re as busy as we’ve ever been. But it’s hard for us to find good qualified carpenters and superintendents, and plumbers are having a hard time finding workers.”

Garrett’s firm has been busy with new bank construction in Tyler and Kauffman, church construction in Tyler and was working with Jacksonville ISD for an interior classroom renovation to be completed before the start of school.

Historic courthouses get makeovers Courthouse renovation work also is happening throughout East Texas.

Anderson County Commissioners over the summer considered bids for $600,000 in updates and interior renovation for the county’s historic courthouse in Palestine. Work to the 1914 building will need approval from the Texas Historical Commission. The Classical Revival building is on the National Register of Historic Places.

In Jefferson County, a $32 million renovation to the 1932 art deco courthouse is getting started. As part of the first phase of work, the brick, limestone and granite building will have a new tri-colored tile roof in the building’s original chevron pattern, says Gerald Moorhead, associate principal with Bailey Architects of Houston. The courthouse, which is also on the National Register of Historic Places, originally had a tile roof that was replaced by copper in the 1940s.

Also in Beaumont, local firm SeTEX Construction Corp. has a $3.9 million contract to renovate a terminal at Southeast Texas Regional Airport that was damaged during Hurricane Rita.

Editor’s note: The East Texas Market Report went to press prior to Sept. 13, when Hurricane Ike made landfall in Southeast Texas. Visit texas.construction.com for updates on damage and recovery in the region.