Market Report: Central Texas Austin-San Antonio corridor shows growth despite economy

Central Texas appears to be fairing better in the economic downturn than many other areas of the country, in part due to government spending.

By Debra Wood

Construction activity in Austin and San Antonio is not as good as it was before the recession, but it is “certainly better than other places in the country,” says Dave Baer, executive vice president of C.F. Jordan in San Antonio. “We still have institutional and government spending, which helps our economy significantly and provides opportunities for construction companies, like ours, and subcontractors as well.”

C.F. Jordan of Houston is building the new Aloft hotel at the Domain development in Austin.

R. Scott Ziegler, senior principal with Ziegler Cooper Architects of Houston, agrees. He says Texas has not been hurt as much as other regions because job losses are less.

Baer says San Antonio building permits for new and existing commercial building permits are running about the same as 2007, which he called a good year. Permits spiked in 2008. And he adds that this cycle appears to be reaching the bottom

“That’s not to say things aren’t a bit tough out there,” Baer says. “Competitiveness has increased dramatically. People are scrambling to get some backlog in place for fear that this will not hold. That pushes pricing down and profitability down. It’s a good time for owners to buy.”

SpawGlass is building a student activity center at the University of Texas at Austin.

Pat Williams, president of SpawGlass in Austin, says that rather than four or five contractors considering a new project, 20 or 25 might be bidding now.

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“But we are blessed to have anything to look at,” says Williams, adding that he feels the economy is at or near the bottom and he expects things will begin to pick up. SpawGlass is working on a $45-million Student Activity Center for the University of Texas at Austin and a new $70-million, 598,000-sq-ft campus for Austin Community College in Round Rock.

Michael McCollum, manager of preconstruction services at Austin Commercial in Austin, says new work on the private side “is pretty slim, but we’re fortunate in our area that we have a lot of higher education.”

McCollum says university projects take longer to start and are usually funded a couple of years before breaking ground, which means prior to the current economic downtown. Austin Commercial is working on the $100-million, nine-building Northeast Lakeview College Campus for the Alamo Community College District in San Antonio, set to wrap up this summer.

The company also anticipates completion this summer on -a $10.3-million addition to the Bobcat Stadium for Texas State University in San Marcos.

Balfour Beatty Construction is building the Austonian, (Designed by Ziegler Cooper Architects).

As for private development, “there’s just no money,” says Jay F. Nelson, executive vice president of C.F. Jordan in Houston, which expects to finish the $14-million, six-story, 140-unit Aloft hotel in Austin this fall. “[Developers] have to come up with up-front money, and none of them are used to doing that,” Nelson says. “Any normal development jobs are not going ahead, because no one is willing to pony up 35% or put their name on the bottom line.”

Ziegler says two trends are happening.

“One is the conclusion of the golden-era of iconic, high-image projects,” he says. “Those are in construction and broke ground before the big financial meltdown.”

Ziegler says The Austonian, which his firm designed, fits into that category. Balfour Beatty Construction of Dallas continues working on the $150-million, 60-story, 850,000-sq-ft condominium tower. Ziegler says completion is scheduled for mid-2010.

Ziegler says he anticipates that future demand will focus more on functional buildings with cost-effective design, fewer high-end finishes and smaller units.

Austin Commercial began the Block 21/W Hotel project last summer.

Austin “We’re one of several contractors doing high-rise condos in Austin,” says Tim Hess, director of preconstruction services for the Southwest District of Hensel Phelps Construction Co. of Austin, which will wrap up construction of the $70.9-million, 620,000-sq-ft, 44-story Spring Condominiums this summer.

Austin Commercial began construction in August on the $180-million, 850,000-sq-ft Block 21/The W Hotel in Austin. The 35-story, mixed-use condominium/hotel project is scheduled for completion in May 2011.

Hensel Phelps also is completing $20.3 million in end-zone renovation work at the University of Texas Darrell K Royal Texas Memorial Stadium.

The General Services Administration secured $116 million in American Recovery and Reinvestment Act funding to build a new 211,000-sq-ft, seven-floor courthouse in Austin, with construction expected to start this summer. Mack Scogin Merrill Elam Architects of Atlanta designed the project, in collaboration with PageSoutherlandPage of Austin. White Construction Co. of Austin has provided preconstruction services.

Ziegler Cooper Architects designed The Broadway, now under construction in San Antonio. (Photo courtesy Ziegler Cooper Architects.)

Sequin Gov. Rick Perry announced construction and mining equipment manufacturer Caterpillar of Peoria, Ill., would consolidate assembly, test and paint facilities in Sequin, relocating operations from Illinois and South Carolina. The state Texas Enterprise Fund provided a $10-million incentive. The governor expects the project will generate $169.7 million in capital investment. Caterpillar did not return requests for additional information.

San Antonio C.F. Jordan is completing the final stages of The Vistana, a 17-story, 530,000-sq-ft residential building, and Vidorra Condominiums, a 20-story tower, both in San Antonio. Baer would not release cost on these two projects. C.F. Jordan also is working on outdoor exhibit space for Africa Live! at the San Antonio Zoo.

Koontz McCombs of San Antonio continues to work on $50-million, 20-story, 220,000-sq-ft The Broadway, designed by Zieger Cooper.

Many projects related to the 2005 Defense Base Closure and Realignment Commission’s recommendations are under way and keeping contractors in the San Antonio area busy.

Austin Commercial began the Block 21/W Hotel project last summer.

Hensel Phelps Construction Co. of Austin began construction in December on the $73.4-million, 328,000-sq-ft, 1,200-person Dormitory #3, Task Order #2 at the Medical Education Training Complex at Fort Sam Houston for the U.S. Army Corps of Engineers, Fort Worth District. Hensel Phelps continues working on two 1,200-person dormitories under the $140-million, Task Order #1. The company plans to start turning the dormitories over to the owner in early 2010.

Hensel Phelps Construction Co. will complete the Spring Condominiums this summer.

“It’s a modular project, with 70% of the building modules shipped in from Belton, Texas,” says Brian Fischer, project manager for Hensel Phelps. “They are stacked four high.”

There are 341 modules in each structure, which are supported by 60-ft-deep, drilled piers and steel columns and grade beams. A crane lifts the modules into place, and then crews place two or three metal straps around the building. Warrior Group of DeSoto, Texas; Fleetwood Homes of Texas in Belton; TTG Electric of Killeen, Texas; and SNB Mechanical Contractors of Wichita Falls, Texas, are working on the project.

Clark Construction Group ofBethesda, Md., in a joint venture with Hunt Construction Group of Dallas and lead architect RTKL of Dallas, is designing and building the $556-million San Antonio Military Medical Center at Fort Sam Houston. The project includes construction of a new 790,000-sq-ft medical tower; 275,000 sq ft of renovations to the existing Brooke Army Medical Center, previously built by Clark; a 5,000-space parking deck; and a 28,000-sq-ft central energy plant. Construction began in the fall, and completion is scheduled for 2011.

“You have all these military projects, not only the dorm but the major medical facilities, and it is stressing the subcontracting community,” Hess says. “You have to have specialty subs who are major players to help deal with the resource loads that it’s going to take to handle this.”

Hensel Phelps Construction is building dormitories at the Medical Education Training Campus at Fort Sam Houston. (Photo courtesy Hensel Phelps)

In addition to the military work, University Health System of San Antonio plans a $770-million expansion and renovation at University Hospital. In May, the health system selected Broaddus-Muñoz, made up of Broaddus & Associates of Austin and Kell Muñoz Architects of San Antonio, as project manager. Hess says the health system has not selected the architect or prime contractor, and he expects construction will not begin until 2010.