Thursday, April 26, 2018
Business

Florida construction industry on verge of a comeback, seers say, thanks to influx of newcomers

The next big thing driving Florida's job growth could be the same as the last big thing: construction.

If forecasts prove true, the archetypical boom-and-bust state will soon be at it again as jobs tied to the building trades rank among the fastest-growing between now and 2019.

Certainly, job opportunities in health care and information technology will still grow. But government analysts predict that the state's two fastest-growing types of companies over the next eight years will be specialty trade contractors (up 4.1 percent annually) and building construction (up 3.3 percent). Three of the five "hot jobs" in that time span are tied to construction and home repair. The hottest job: "cost estimators," used by developers to predict the price of construction projects.

According to prognosticators within Florida's Department of Economic Opportunity, the hard-hit construction industry is expected to grow at a 3.6 percent annual rate this decade, the fastest clip of any sector.

That's no surprise to number crunchers like Tony Polito of Tampa's Metrostudy, who tracks home starts in the region.

"No question the worst is past for Tampa Bay," Polito says. Construction "is all trending in the right direction, and that's the biggest issue with job creation going forward."

The number of bay area housing starts in the second quarter was up 24 percent from a year ago, while closings were up nearly 66 percent.

No one foresees a return to the housing boom's 2006 peak, when the region was pumping out an annualized rate of 23,000 housing starts. But Polito does see growth of 25 percent or more within a couple of years.

That means by 2014, Tampa Bay would be in the range of 6,000 to 7,000 housing starts, up from 4,000 at the trough of the housing bust.

Several factors set the stage for a construction comeback: the foreclosure glut is winding through the courts; home prices have been rising in recent months; and the inventory of available homes has fallen dramatically, from a four-month supply a year ago to just under three months.

The single biggest element fueling optimism, however, is demographics. Researchers predict the state's population will grow by more than 600,000 over the next three years as it stays on track to overtake New York as the third-largest state.

As a recent report from the Legislature's Office of Economic and Demographic Research phrased it, Florida's population growth will remain the "primary engine" fueling its economy.

A tempered view

Working in a state that has seen the workforce of its once-mighty construction industry sliced in half by the Great Recession, some builders are understandably gun-shy to speculate about a rebound.

Construction workers are still looking for a bottom. In June, the number of construction jobs statewide tumbled to a new low of 307,000, down a stunning 56 percent from its peak of 692,000 six years ago.

Because of that drop, even if construction grows as predicted in the next eight years, the industry will recapture only about 30 percent of the earlier job losses, Florida Department of Economic Opportunity spokesman James Miller said.

Nonetheless, tens of thousands of new jobs would be enough to make a significant dent in Florida's current unemployment rate of 8.6 percent.

At a recent Southeast Building Conference in Orlando, the mood was decidedly more upbeat, said Paul Thompson, head of the Florida Home Builders Association. Some were reporting double-digit increases in sales, he said, and there were even scattered reports of home bidding wars.

A jump in home sales or home starts, however, doesn't necessarily indicate jobs will grow in tandem.

"Having been burned by this recession, I think people are very cautious … about coming back too quickly in terms of personnel, in terms of overhead," Thompson said.

That sentiment holds true at K. Hovnanian Homes, one of Tampa Bay's biggest home builders.

George Schulmeyer, who runs the Tampa and West Palm operations for K. Hovnanian, says home sales in communities where the company has been active for more than a year were up 50 percent between 2011 and 2012. The company is actively looking for more land.

The 35-employee local operation has added three employees within the last 30 days and has open positions for three more.

But don't look for a hiring binge beyond that. K. Hovnanian hasn't cut any workers here since 2009, and wants to stay as lean as possible. Just in case.

"We've made it over three years (without any cuts)," Schulmeyer said, "and the last thing we want to do is hire too aggressively."

Still, he said, "I think the recovery is here. I don't see a dip backward at all."

Jeff Harrington can be reached at [email protected]

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