Surviving the Slump in North Texas

Construction activity slows, but new starts are still happening in North Texas.

Work continues on The House in Dallas’ Victory Park The 28-story tower, being built by Manhattan Construction Co., is expected to be complete by summer. Photo courtesy of Manhattan Construction.

Private development work in North Texas has tapered off, but many public, health care and education projects are moving forward.

“Dallas and North Texas have fared better than other areas of the country,” says Matt Papenfus, general manager and vice president of Turner Construction Co. in Dallas. “What we will see into first quarter is a tentative market, as we see what happens with various bailout plans. Banks need to start lending money again to get projects started.”

Papenfus expects health care and education to remain strong but says that difficulty in securing construction loans has meant that some projects in other areas—including those near the new Dallas Cowboys Stadium and the Museum Tower in the Arts District—have been “put on hold or shelved indefinitely.”

Doug Jones, division president and CEO of Balfour Beatty Construction in Dallas, says there are a few large opportunities in the pipeline. The company hopes to break ground on the $350 million, 28-story Dallas Convention Center hotel in March.

Manhattan Construction continues erection of the new Dallas Cowboys Stadium’s retractable roof. Photo courtesy of Manhattan.

Other projects expected to start include a modernization of Love Field and replacement of the UT Southwestern University - Saint Paul and Parkland hospitals—all public work.

“It looks rather bleak after that,” Jones says.

Raleigh Roussell, president and CEO of the QUOIN chapter of the Associated General Contractors, which represents Dallas, Fort Worth and East Texas, agrees work has slowed.

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In the fall, Walton received a $7.5 million contract to expand Hanger 1048 at the Naval Air Station Fort Worth from 20,000 sq ft to 40,000 sq ft. At the same base, Walton is renovating Hangar 1050, a $4.5 million project replacing a roofing system, coating all flooring and replacing doors.

In 2008, the company started work on several other NAS Fort Worth project, the $6.4 million 30,000-sq-ft Eighth Marine Administration Building; a $4.3 million, 335-space parking garage; and a $10.8 million, 120-ft tall air traffic control tower.

“Dallas is strong,” says Ralph Hawkins, chairman and CEO of HKS in Dallas. “I still see cranes everywhere, but, of course, the work is wrapping up quickly.”

HKS designed the new $1 billion, 2.3 million-sq-ft, 80,000-seat Dallas Cowboys Stadium, which Manhattan Construction of Dallas will complete this summer. Crews are working on interior finishes, the retractable roof, the video board and exterior sitework, says Bob Bowen, Manhattan Executive vice president. 

“Long-term demographic projections are still strong in our state and north Texas in terms of growth,” Bowen says. “We’re certainly set back by the current economy and marketplace, but we’re hopeful about our region.”

Hawkins credits the Barnett Shale, a natural gas and oil source, with helping to protect the Dallas-Fort Worth market from the economic meltdown. HKS >> continues to receive new health care, K-12 and higher-education work. University projects include sports facilities, housing and classroom buildings. And the company is working on master planning for several clients.

“That’s not atypical when we go into down periods,” Hawkins says. “People start thinking about what they need to be doing in the future.” 

Mary Miano, senior associate and director of business development at PageSoutherlandPage in Dallas, anticipates growth for her firm in 2009.  “Typically, Dallas trends 18 months behind whatever the nation’s doing,” Miano says. “The Metroplex has done a good job of diversifying.”

Tom Reisenbichler, managing principal of the Texas practice of Perkins+Will in Dallas, attributes continued activity in Dallas to Texas still having a good amount of in-migration and unemployment numbers not as high as in other parts of the country.

“We are still doing well and hope to have growth in 2009,” Reisenbichler says.

Health care “The institutional markets are still holding our own, things like schools, higher education and hospitals, but we are starting to see some of the hospital sector—private hospitals—slow down their capital commitments,” Reisenbichler says.

A rendering of the Perkins+Will-designed new cancer center at Baylor University Medical Center. Image  courtesy Perkins+Will.

Miano also reports a decline in the number of hospital projects, with patients choosing not to have as many elective procedures.

 “There are some large, public hospital projects in Texas, funded through bond elections, and those projects are moving forward,” Reisenbichler says.

In November, Dallas County voters approved a $747 million bond referendum to rebuild Parkland, a public hospital. The hospital issued a request for proposals and expects by spring to name an architect, construction manager and program controls manager. AGC’s Roussell cautions that the hospital still needed to sell the bonds.

Hawkins says he believes an aging population drives the need for health-care projects, and that will not change. HKS is designing a new critical care tower at Presbyterian Hospital of Dallas for Texas South Resources.

Turner broke ground in July on an $18 million, 50,000-sq-ft addition and 15,000-sq-ft renovation of the existing Weatherford Regional Medical Center in Weatherford, Texas. The project, expected to wrap up by yearend, includes an expanded emergency department, intensive care unit and testing and diagnostic center.

Perkins+Will designed a new $177 million, 496,000-sq-ft, 10-story, crescent-shaped cancer center for Baylor University Medical Center. A 14,000-sq-ft conference center will operate on the top floor. The project includes remodeling seven stories and 240,000 sq ft of existing space.

Education In the K-12 market, Dallas and Fort Worth school districts have bond programs already under way, Roussell says. 

Most of Perkins+Will’s school clients have recently sold bonds, and Reisenbichler expects work will continue through 2009. The firm has projects pending with the Dallas and Plano school districts. Reisenbichler says he expects design work will slow by 2010, but construction will continue.

In higher education, Reisenbichler says a lot of projects received funding in previous years and are now ready to go. Perkins+Will designed the $42 million, 113,63-sq-ft Richland College Science Building for the Dallas County Community College District, now under construction by Gilbane Building Co.’s Grapevine office.

Perkins+Will is also designing the $27.5 million, 75,804-sq-ft, LEED-platinum Student Services Building for the University of Texas at Dallas. The school expects groundbreaking this spring by construction manager Hill & Wilkinson General Contractors of Plano.

“I think the higher-ed sector will do OK,” says Reisenbichler, indicating population growth will spur more demand for university projects.

W.W. Webber Contractors is working on the $143.8 million Interstate 30 Mobility Improvement Project. Photo courtesy TxDOT.

Highway  W.W. Webber Contractors of Houston continues work on the $143.8 million Interstate 30 Mobility Improvement Project, a partnership between the city of Arlington and the Texas Department of Transportation. A portion of the work should finish in May with the balance in 2010.

Also part of the I-30 project, Zachry Construction Corp. of San Antonio is building the $18.6 million Center Street Bridge. 

In Frisco, W.W. Webber is completing earthwork and preparing a $21.2 million, 2.8-mi stretch of the Eldorado Parkway roadbed to begin concrete paving. Completion is scheduled for 2010.

Zachry is replacing the Center Street Bridge on Interstate 30. Photos courtesy TxDOT.

Jensen Construction Co. of Sand Springs, Okla., has begun the signature steel arch for the $122 million, 1.7-mi Lewisville Lake Toll Bridge, connecting Swisher Road in Lake Dallas to Eldorado Parkway, for the North Texas Tollway Authority.

TxDOT has several large projects expected to start in 2009, including public-private partnerships to add managed lanes to Interstate 635 and improve the North Tarrant Expressway and an approximately $400 million project to enhance capacity on the 16.2-mi DFW Connector.

Manhattan Construction expects to complete the second phase of the Ritz Carlton Hotel & Residences this summer. Photo courtesy of Manhattan.

Other significant projects In Fort Worth, Trinity Bluff Development continues work on its $500 million, 42-acre Trinity Bluff mixed-use project. The developer assembled a couple of hundred blighted parcels to create the development, talking with residents about what they felt was needed and incorporating that before pushing forward. The city installed new sewers and utility lines.

Lincoln Properties has 608 apartments under construction, and 23 condominiums owned by Trinity Bluff should finish in April. 

Manhattan still has some residential work nearing completion, including The House, a 27-story $74 million condominium in Victory, and the second phase of the $91.4 million, 23-story Ritz Carlton Hotel & Residences in Dallas’s uptown area.

At the Dallas Center for the Performing Arts, supported by both private and public dollars, McCarthy Building Co. of Addison expects to finish the $50 million, 80,000-sq-ft Dee and Charles Wyly Theatre in April. The theater features column-free corners, 30-ft-high glass windows and offices above the auditorium.

McCarthy Building is wrapping up construction of the $50 million, 80,000-sq-ft Dee and Charles Wyly Theatre. Photo by Jeffrey Buenner.

McCarthy will break ground and complete a second performing arts center parking deck sometime this year. Once complete, the company will build the $35 million, 2,000-seat City Performance Hall atop that garage.

Linbeck Construction Corp. of Fort Worth is building the Winspear Opera House at the performing arts center.

Austin Industries of Dallas began construction on the $137 million, 275,000-sq-ft first phase of the Irving Convention Center in the Las Colinas Urban Center, scheduled to open in November 2010. Austin is also constructing the 25-story Saint Ann Court office building, with completion set for October.

The city of Fort Worth is building a 1,057-care parking deck as part of a $75 million expansion of the Fort Worth Convention Center.      

The Sheraton Dallas Hotel announced at the end of 2008 it had begun construction on the first phase of a $90 million renovation project, with completion of all four phases planned by summer.

Civic work continues if bonds were approved and funding is in place, Reisenbichler says, but he expects a slowdown in that sector in 2010. Perkins+Will is starting design on a 66,000-sq-ft Dallas Police Academy Training Complex.

Looking ahead Although Walton has a healthy backlog for 2009, Pinson expressed some concern about 2010.

“We’re all having to scramble for fewer jobs than were out there before, and we’re having to really dig deep to see what other markets we might go back into, such as schools,” Pinson says. “We’re seeing competition and people looking outside of the box to where they might fill in until the economy starts coming back.”

Construction managers, vendors and specialty subcontractors have tightened up operations and sharpened their pencils, resulting in lessening of overall construction costs, Bowen says.

Balfour Beatty’s Jones and HKS’s Hawkins also report a more competitive marketplace as new opportunities dry up.

“There is a higher intensity of pursing work, but I’m feeling tremendous collegiality amongst all our competition,” says Hawkins, adding that the various design firms are helping employees about to be cut find positions with other companies. “We are going into an economic slump, but I think we will come out of it stronger in about three years, with more demand.”

Surviving through those years could be a challenge.

“Everyone is holding their breath going into the new year,” Papenfus says. “It will be a function of how long and to what extent these impacts will have.”