Phoenix was one of the worst affected cities after the housing bubble spectacularly burst several years ago. From 2006 to 2011, there was a 55 percent reduction in the price of houses in Phoenix and it consistently ranked in the top 20 cities when it came to foreclosures. However, a recovery of sorts began to take place in 2011 as the city’s metro area enjoyed an increase in construction of 40 percent, which totaled more than five billion dollars worth of projects. While this burst of growth will not be as spectacular in 2014, it is hoped that the commercial construction sector will remain stellar in Phoenix over the next 12 months.
One of the biggest commercial construction projects likely to begin in Phoenix in 2014 is the $80 million high rise hotel that will be built in the Luhrs block in the downtown area of the city. It will consist of 19 stories and 320 rooms and it is hoped that construction will begin in early spring. Estimates say that construction will take approximately 22 months, so the project should be finished in early 2016.
There were hopes that 2014 would be the breakthrough year for commercial construction in Phoenix, but that is not likely according to experts. Instead, we should expect a slow and steady recovery in both the residential and commercial sectors. The residential sector enjoyed a brief boost as Wall Street targeted the Phoenix metro area and companies bought residential properties and rented them out. Now that housing prices are increasing and foreclosures are decreasing, the money men are looking elsewhere.
Advances in technology have negatively affected the office and retail construction sectors. Indeed, experts in the office construction sector believe it won’t begin to make a real comeback until 2017, which is worrying for businesses that specialize in that niche. This is because the job market will only really grow at that point and then the vacant space remaining will be completely absorbed. As retail recovery generally doesn’t happen until the office sector grows, it could be 2018 or even 2019 before the market gets back on track.
Another potential issue is a shortage of highly skilled construction workers in Phoenix Metro. The construction industry has actually experienced shrinkage in the number of employees in the last 30 years, but the recession coupled with immigration reform in the state has combined to hit the industry hard. Assuming the construction sector begins its recovery sooner rather than later, it is the lack of laborers that could prevent this recovery from accelerating.
We conclude with the exciting news that Arizona’s population is expected to increase by 60 percent within the next 25 years. It is believed that this will result in Tucson and Phoenix becoming a ‘megapolitan’, which is great news for the future of the commercial construction industry. Even if the industry doesn’t get back to the heights of the pre-housing bubble anytime soon, it will certainly experience good times in the not too distant future.
