Commercial construction in Montana is as cool as the weather, and a warm-up is not expected in the near future.
Contractors and architects that once specialized in large projects now find themselves bidding for medium-sized jobs. And given the increasing competition, those that once specialized in the medium-sized niche are now bidding for smaller projects.
The State in General
“Business has been OK, and we are cautiously optimistic,” says Russ Olsen, president of R&R Taylor Construction, Bozeman, which does work throughout the state. “These days, we are spending a lot more time chasing work than we have in past years. However, we are not seeing a lot of big projects like we used to.”
Most of the work his company is seeing is small remodels. Anything of a larger size is government work, which isn’t coming easily to contractors in the state.
For Highway Technologies in Missoula, which does subcontract work for highway construction around the state, business is relatively steady. “The state makes a certain number of dollars available each year for work, and that seems to be staying fairly consistent,” says Highway Technologies Manager Gary Pfister.
Connie Dempster, executive secretary of AIA Montana, says business is running “hot and cold” throughout the state. “Some firms report that things are improving,” Dempster says. “Others report that things are flat, and they would like to see more business.” For CTA Architects in Missoula, business is definitely down, but “we are holding our own because we are architects and engineers, and we cover a large market area,” says Kent Bray, principal.
One market that has been hit hard is the high-end home ranches and resorts. “We are still doing some, but most of them are quite a bit smaller than the ones we were doing two and three years ago,” Bray adds.
One area that is growing is government work—anything that has been funded through government programs and grants—but “competition for this work is also growing,” Bray says.
According to Dempster, some areas in the state were hot a few years ago, but they have since cooled considerably. “When you have a boom situation, the bust is always a bit harder to take,” she says. “In fact, some areas of the state were so hot, it seemed unrealistic.”
The eastern part of the state in general seems to be faring well. “Billings is steady and starting to come up a little,” Dempster says.
The southwest is not doing particularly well, Olsen adds. “The east is definitely doing better than we are in southwest Montana, where business is average,” he says.
The northwest is a mixed bag. Some parts seem to be doing well, others not so. “The northwest part of the state came into the recession late, and the hope is that it will come out sooner, but I don't know if that will prove to be true,” Bray says.
Kimberly Morisaki, manager of client development and resources for Montana West Economic Development in Kalispell, says business is steady but slower than in the past. “We have seen three new projects recently,” she says.
One was a new 18,000-sq-ft FedEx facility just south of the city. A second related to two additions to the Kalispell Regional Medical Center. The third was a Super Wal-Mart that opened in July in Hutton Ranch, just north of the city.
“Overall, though, this represents a slowdown of construction compared to previous years,” Morisaki says. “Three or four years ago, the Hutton Ranch area became active in terms of construction, growing from almost nothing.
“In terms of the future, we know of about four or five projects coming up that the owners and developers will pull the trigger either by the end of this year or early next spring.”
Bill Grant, a partner in the architectural firm of AD Graphics in East Glacier, has seen a dip in business. “Over the last year, business has been steady,” he says. “One reason is that the projects I've been working on were ones that were scheduled a couple of years ago.”
He has just finished those and is picking up a couple of new smaller projects. However, he admits that he has been scrambling for new work. “As we’re heading into the fall, I don't have a backlog of work, as I once did,” he says.
“As a reseller of AIA contract documents, I have noticed a slight increase in business since the beginning of the summer,” AIA’s Dempster says. “Document sales are up from what they were earlier this year. This indicates to me that more plans are hitting the streets and more projects are going to contract.”
Pfister says his firm, Highway Technologies, has a fairly good backlog of work for the next few months. “We expect this to remain steady after that,” he adds.
R&R Taylor's Olsen is a bit less optimistic. “In terms of the near future, we just aren't seeing much,” he says. “There was hope that the federal stimulus money would get the private sector starting to spend some money. However, the stimulus money will have run its course by early 2011, and we’re still not seeing much activity in the private sector. This has got us kind of concerned.”