This article originally appeared in the Orlando Business Journal.
Here’s when decisions will be made:
Lending tightening and material prices climbing in Central Florida are challenging signs for the local construction economy that’s been battered by the pandemic.
However, several local paused projects have restarted construction in recent months, which is positive for the industry, said John Goodner, vice president of operations in Orlando for Birmingham, Alabama-based Hoar Construction. Still, Goodner and other Orlando-area contractors say they’re waiting for first-quarter 2021 to see if projects that are still paused resume construction. Hoar Construction is the ninth-largest national general contractor in Orlando, according to Orlando Business Journal research.
“First-quarter 2021 is going to be a very big quarter for the Central Florida construction industry,” Goodner said. “Hopefully we’re going to see things turn back around.”
Nonresidential construction starts have fallen 34% year over year in Lake, Orange, Osceola and Seminole counties, according to New York-based Dodge Data & Analytics. That’s added up to nearly $1 billion in fewer construction starts in 2020 compared with 2019, which translates to fewer jobs and less revenue for contractors. In fact, the Orlando metro area shed 2,800 construction jobs year over year in August after seeing an increase every year in that month since 2011, according to the U.S. Bureau of Labor Statistics.
For Apopka-based Finfrock, work has started to pick up again on a handful of projects in the past several months after 15 developments were put on hold in March, President Bill Finfrock said. He’s also seen an increase in deals that are in the works for future construction. Finfrock is the biggest local general contractor, according to OBJ research.
Finfrock said many local contractors are looking at that first-quarter window for new construction starts because that several months gap between now and then is potentially enough time to start to turn the corner on the pandemic. “I’m cautiously optimistic,” he said.
Nationally, contractors expect to add jobs in the coming months but foresee falling profit margins, according to the Washington, D.C.-based Associated Builders and Contractors Inc. October report. Commercial and institutional backlog has also declined nationally, meaning there are fewer projects in the pipeline, but the heavy industrial sector has seen an increase in backlog.
Nonresidential construction sales are expected to be flat for the next six months, according to the report. That’s likely due to fewer bidding opportunities, more competition for work, rising material costs and other factors.
“ABC’s survey data indicates that we are in the early stages of a nonresidential construction spending downturn,” ABC Chief Economist Anirban Basu said in the report.