Clichés. I’ve heard my share of phrases describing the construction market here in the South:

Why don’t we make the simplest statement possible;

“The construction industry is in the tank and it won’t be recovering anytime soon.” There, I’ve said what many of you are saying; now what? If this statement expresses your view, you also know you are not alone in expressing those sentiments. I’ve been known as a bit of a contrarian. I pulled permit figures from several southeastern markets and there is a general trend that you can see quite clearly. First, residential permits have hit bottom and are on the rise from year ago levels. Year-to-date numbers are actually higher for most urban areas in the southeast with some notable exceptions, especially in South Florida and in quite a few waterfront areas. Commercial permits have stabilized in most urban areas with some areas up a bit and a few others down in a very uneven manner. There are many, many projects in the planning stage waiting on money or better economic conditions to become clearly understood and accepted. There is a huge amount of money sitting on the sidelines being held by companies, individuals and investors of all kinds. While there are definitely a lot of single family houses to absorb; paradoxically, the southeast had more inventory at the beginning of the recession than almost every other area, but that inventory has been worked down from being above the national average to below the national average almost across the board. By across the board, we mean that residential properties in many geographic areas are being absorbed at faster and faster rates as their pricing comes more in line with the market’s ability to pay. Never let it be said that Americans will miss a bargain! There is plenty of money available at fire sale prices. (Fire sale is defined as well below replacement cost)  New commercial development depends to a large degree on two factors: first, new single family growth that in turn, fuels the need for new infrastructure, i.e. shopping centers, schools, offices, etc. and second, positive consumer confidence, as in my wallet is open and I’m spending. Neither of these two conditions exist at the moment; therefore we are trapped at the current slow pace of construction.

 

Take heart though, the hammer has been pulled back and the starting gun could go off sooner, rather than later. Geopolitical events have, up to this time, become self-reinforcing and ultimately self-referencing for the last couple of years; this cycle, like all cycles, will end and this one is definitely long in the tooth. While this may seem like more of a pep talk than a scientific rationale for action, historians like to look at past events to predict future ones. As a nation we are practically bursting at the seams to get back to work. Money is never patient and there are trillions of dollars lying idle at the moment waiting for an opportunity. That opportunity will ultimately present itself and sooner rather than later. The issue we want you to think about is that when things do pickup, those left standing will enjoy a “bounce” that can refill their coffers and restore confidence in our system; a system that has been under fire and threatened to an extraordinary degree these last couple of years.

I don’t believe we are going to see a double dip recession, and I, like you, are in business today because we put our money where our mouth is.  Now, is the time that you should be positioning yourself for growth, whether it is next month or six months away. You need not spend a lot of money, but this is the time you should be making the kind of decisions that will lead to prosperity and profit on the next “up” cycle; you know, the time people make real money! At BidAlert.com our motto is “Get to work!” Won’t you take that first move and discover the opportunities in the pipeline right now that will be first out of the gate when the market turns? That’s what we are here for and I’d love to have your comments.

Allan Feifer is the President of DEC International. Allan started DEC more than 35 years ago and has background in the process and construction industries as well as many years as a recognized authority on construction trends and analysis. Allan lives in Florida with his wife and two cats. You can reach him at allanf@dec-international.com.