Spending on construction projects across the country could rise by 4 percent this year over 2017, the American Institute of Architects forecasts, and that’s welcome news for Arkansas architects and engineers.
“Architects had a good year in most regions of the county in 2017, and throughout last year, not only were they really busy, but they had more work coming into their firms than they were completing,” said Kermit Baker, the chief economist for the AIA of Washington.”
Baker said construction spending will still be fueled by natural-disaster rebuilding and repair efforts, tax changes and strong consumer and business confidence.
In addition, the AIA’s Consensus Construction Forecast released last month showed construction spending is likely to increase 3.9 percent in 2019, which is a good sign, Baker said.
“It’s a very significant leading indicator of broader economic growth,” Baker said. “I don’t think too many folks would want it to grow much faster than that because [architectural firms] don’t have the staff to keep up.”
Baker said if a downturn in the economy is coming, it won’t stem from the construction industry.
Architectural and engineering firms in Arkansas agreed. Several firms briefed Arkansas Business on their works in progress and said that they are looking to hire employees.
Engineering companies expect a number of projects to come from the Arkansas Department of Transportation, including road and bridge jobs, said Michael Burns, president of the American Council of Engineering Companies of Arkansas.
“Right now, every engineering firm I talk to, they all seem to be pretty busy,” said Burns, who also is a senior vice president of the engineering firm Crafton Tull of Rogers.
Hawkins-Weir Engineers Inc. of Van Buren had “an exceptional” year in 2017 with about $7 million in revenue, said Brett Peters, its president and CEO.
“We don’t really see that dropping off in ’18,” Peters said. “We continue to be blessed with an ample amount of municipal water, wastewater work, and sprinkled in there is some pretty nice street drainage projects as well.”
Peters said the increase in private work started about a year or year and a half ago across the state, especially in northwest Arkansas.
Several architectural firms in Arkansas also told Arkansas Business that they, too, had a healthy year last year and expect that trend to continue.
The health care sector is expected to continue to generate significant work in Arkansas, said David Sargent, principal and CEO of WER Architects/Planners of Little Rock.
He said senior living facilities will see steady growth over the next decade as baby boomers get older. “We’re seeing more of these senior living neighborhoods, where there’s either duplexes or apartments for 55 and up,” he said.
In the meantime, WER Architects recently started working on plans to renovate the headquarters of Delta Dental of Arkansas and add a building to its campus in Sherwood, Sargent said.
A spokesman for Delta Dental said it is working with WER to do a feasibility study, but “at this point we don’t have anything official planned.”
Sargent said other health care projects involving WER include renovating space in a medical building owned by Jefferson Regional Medical Center in Pine Bluff for a 33,000-SF clinic that will be used by the University of Arkansas for Medical Sciences.
He expected construction to start in about three months. UAMS spokeswoman Leslie Taylor said the space will be for the UAMS Family Medical Center, physician residency education and administrative programs associated with UAMS South Central. She said that UAMS will lease the space from JRMC.
In 2017, the Arkansas Legislature passed the Public Facilities & Infrastructure Act, which allows private entities to fund public construction projects.
That legislation could help finance higher education projects, said Lindsey Humphries, principal and director of business development for the engineering firm Bernhard TME of Little Rock, which specializes in heating, ventilating and air-conditioning, plumbing and electrical work.
The Arkansas Economic Development Commission is developing guidelines for these public-private partnerships, and those could be in place by the end of the year, she said.
Humphries said that higher education institutions needed more funding options for projects like new dorms, central energy plants or infrastructure.
The recently passed federal tax cuts for companies could also increase business, the AIA’s Baker said. He predicts that companies will use the tax savings to invest in their facilities, noting that consumer and business confidence is up.
Rob Seay, a principal at Cromwell Architects Engineers Inc. of Little Rock, said his firm has a number a jobs from manufacturers across the country. “Our ongoing clients that maybe held back a little bit are feeling a lot of optimism” about the economy, he said.
As a result, Cromwell has hired between five and 10 employees in the last six months and Seay expects the hiring to continue this year.
However, Reese Rowland, principal of Polk Stanley Wilcox Architects of Little Rock, said long-range predictions are hard to make. “Our profession is one that you can’t forecast out more than six or seven months.”
But he hopes the firm’s revenue will continue to grow. In 2017, it was up 20 percent over 2016, he said.
Polk Stanley’s current projects include the United States Marshals Museum in Fort Smith. Construction of the 50,000-SF museum is expected to begin this spring. It is set to open in September 2019.
Polk Stanley also is working on the 247,000-SF headquarters for Bank of the Ozarks Inc. of Little Rock. The project was announced in September, and the publicly traded company said investment in the project would be more than $100 million.
Another large project for Polk Stanley is the $101 million, 415,000-SF Southwest High School in Little Rock, which had its groundbreaking in October.
Tax benefits could spur other projects. WER’s Sargent said an investment group in Pine Bluff has applied for historic tax credits to restore the closed and dilapidated Hotel Pines in Pine Bluff.
The proposed project also calls for a microbrewery and an entertainment area.
“The project won’t go ahead without the tax credits,” he said. An investor in the project, Tom Reilley, the co-founder of Highland Pellets, which operates a wood pellet plant in Pine Bluff, has “already put some money into stabilizing the building so it doesn’t get any worse,” Sargent said.
Market Segment Consensus Growth Forecasts
|Retail & Other Commercial
|Amusement & Recreation
Source: The American Institute of Architects
FTN Associates Ltd. of Little Rock, which does environmental compliance projects, recently started working on the $1.3 billion Mid-Barataria Sediment Diversion project for the state of Louisiana, said Dennis Ford, the company’s president. That project calls for designing a structure to divert water and sediment out of the Mississippi River to help rebuild the coastal areas, Ford said.
“We’re doing all of the mathematical modeling for that to look at and predict how much buildup of sediment you’ll have,” Ford said.
Ford said the project will take about three years and generate about $2 million for the firm.
“It looks like it’s going to be a real good year for us,” he said.