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AGC Survey: Construction Expected to Pick Up in 2012, Self-Storage Developers Remain Hopeful


By Hayden Harrison

During the recession, self-storage new construction slowed, and some jobs even halted. The slowdown led many self-storage developers to re-evaluate their staffing commitments, and some companies were forced to make reductions.

This year, the overall construction industry may face fewer layoffs and company improvements on are on the horizon, according to a recent survey by the Associated General Contractors (AGC) of America and Computer Guidance Corp. In fact, 32 percent of construction firms plan to hire this year, and half will add six or more employees. "While there are some promising signs, especially when it comes to construction employment, the outlook for the industry is mixed," said AGC CEO Stephen Sandherr. "More than four years after the demand for commercial construction began to plummet, economic conditions remain difficult."

In the self-storage industry, new construction remains slow, said Caesar Wright, president of Mako Steel Inc., a Carlsbad, Calif.-based self-storage developer and consulting firm. "That is concerning," he said. “We're hopeful lending will loosen up in 2012 to allow some of what we think are good projects to move forward.”

Even with firms planning to hire, the AGC survey also reported 9 percent will have still layoffs this year. This percentage decreased from 37 percent over last year.

Jamie Lindau, national sales manager for self-storage developer Trachte Building Systems, expects to see hiring in the self-storage construction industry increase in most areas because many companies have already endured the pain of eliminating staff. "We are very busy working with clients who are planning on building in 2012,” Lindau said. “Some of these clients are from states that have shown almost no new development for years, but finally their markets have been picking up and the demand for new units is there."

In addition to beginning new projects, the construction industry is making improvements to being more efficient and spending less. One way companies are doing this is by investing in new technology. "Contractors are looking for software and technology that increases the efficiency of existing staff and allows firms to do more with fewer people," said Roger Kirk, president and CEO for Computer Guidance, which produces management software for the construction industry.

Individual workers will no longer be responsible for only their department, and every worker will be expected to work in multiple departments. "This is how [businesses] increase efficiencies—with all this new technology," Lindau said.

According to the survey, 31 percent of businesses are currently using Building Information Modeling services (BIM) as a way to increase efficiency and reduce costs. Another 47 percent of businesses expect the use of BIM to increase this year.

Construction companies are also being "cautious with their plans for acquiring new construction equipment," said Ken Simonson, AGC’s chief economist. Some firms will purchase new equipment; however, 66 percent will lease, according to the survey.

"Many will try to buy equipment if they can," Lindau said. "The long-term cost is lower than if they lease. The interest rates are still low, so if they have the credit it makes more sense to purchase capital equipment."

With the impact the recession has made on construction slowly declining, the industry's expectations to revive it may be set too high. "There are definitely some conflicting trends when it comes to contractors' expectations for 2012," Simonson said. "The construction industry will improve this year, but we are going to have to wait until at least 2013 before contractors experience the kind of recovery this industry needs."

Wright remains optimistic about new self-storage development in 2012. “We definitely sense this year will outperform 2011,” he says. “Our quote activity has picked up and we do see a few projects that were tabled coming back to life. We'll continue to work hard in building successful projects for our clients.”

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