Northern Colorado construction remains healthy

Northern Colorado builders wake up every morning and pinch themselves to see if it is still real. So far, all they have are bruises, as construction continues at a furious pace throughout the region.

In May 1998, the total value of construction projects in Larimer and Weld counties exceeded $65 million. That is the fourth-highest monthly construction value in history. The all-time high was last June’s $75 million. Activity may be increasing as builders respond to the continuing high demand for retail-sector construction.

“It is busier right now than it was in the spring,´ said Paul Hoffman, president of Delta Construction in Fort Collins. “In the spring, we had the crunch of owners wanting to complete construction before school let out. Now, there’s the additional crunch to complete things before the cold weather sets in.”

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The healthy state of Northern Colorado’s construction industry is due in no small part to the expectation of continued job growth in the region. Although job growth has slowed by about half, the construction industry is still playing catch up with the furious job and population growth of the past several years.

“Retail is one area where construction has not caught up with demand,´ said Broker Steve Pfister, of Realtec Commercial Real Estate Services Inc. of Fort Collins. “We have 760,000 square feet of retail under construction in Fort Collins. There is only 3.2 million square feet of retail in the whole city. That’s close to a 24 percent increase all at once.”

While some economists claim the slowdown in the rate of job creation may put the brakes on construction, those in the trade say there is still plenty of work left to be done.

“We are certainly not overbuilt,´ said Pfister, recalling the criticism directed at Denver in the late 1980s. “We may not retain our high rates of growth because the local economy is slowing down somewhat, but it is not slowing much.”

Hoffman adds that “light commercial as opposed to residential construction is in the strongest demand, and that is what we do.”

The only signs of strain may be in the residential construction market. Residential construction value was nearly $46 million in June 1998. That represents a 77 percent increase over the $26 million in residential construction posted in January 1997, a scant 18 months previous. Since then, some Realtors have come to be concerned that homebuyers would not be numerous enough to meet the furious pace in residential building. So far, the fears are unrealized. In fact, demand seems on the rise as residential construction in Weld County is now keeping pace with Larimer County.

Pfister believes the continued attraction of Northern Colorado explains the seemingly endless good times for the construction industry.

“Real estate is very regionalized,´ said Pfister. “I was in central Texas from 1983 to 1987. At that time, Houston was in a near depression and Austin was booming. We were only 150 miles apart. As long as the overall economy is having some growth, I think the Front Range will have good growth. Real estate is a local matter, not a national one.”

The local market seems to be on a continued roll.

“Right now, I have the highest dollar volume of contracts I’ve had in 12 years,´ said Pfister. The only potential problem he foresees concerns jobs, since “local real estate is very affected by local job growth.” But right now, the problem in Northern Colorado seems to be filling the demand for workers.

“In fact, my biggest problem is getting and scheduling construction crews,´ said Hoffman. “Right now is the equal of the best of times.