May You Have a Healthy, Prosperous and Happy New Year!
Updates: In our last newsletter we anticipated a few things we expected to see happen in the Greater Boston construction industry. Here's how they worked out:
CASINOS: The governor and others let this fly below the radar for nearly a year, but negotiations had been ongoing, and the bill that was signed recently was a big victory for construction unions and contractors who will build three new casinos (with related hotels), and a slot parlor. The Foxboro bid from Kraft / Wynn came as a surprise to many (including insiders.) Site selection may drag on for a while. No significant construction before 2013, at the very earliest.
APARTMENTS: Across the country construction of new rental units has begun with a real burst. The Wall Street Journal (WSJ) reports housing starts surged 9.3% in November, fueled by construction of apartments and multi-family developments. Developers of mall and office properties are quickly switching to rental construction.
Boston: For the first time in years, cranes are on the Boston skyline, a sign of recent groundbreakings, including large apartment projects in downtown. In a recent meeting at his city hall office, Mayor Menino told the PHCC and representatives from Local 12 that in 2012 there are sure to be more projects -- including new college construction. He continues to work to resolve the eyesore at Filenes. "More than once we were on the one-foot line," he said.
Offices & Research: According to the Boston Globe, 1.6 million square feet of office space is now under construction in town. This is an eight-fold increase compared to a year ago. 100% of this space already has committed tenants… More high tech / biotech firms are looking to relocate to the "Innovation District" on the waterfront, where Vertex Pharmaceuticals is constructing an $800 million headquarters.
Hospitals: Brigham and Women's Hospital wants to build another huge research building in the Fenway, on land it would lease from Emmanuel College. The hospital had already committed to building a 12-story research building, and this second project would include a 360,000 square foot lab building, and parking for up to 455 cars.
Weymouth: The Navy has finally sold the last 900 acres of the former Weymouth Naval Air Station to a development group from local towns. This should speed the development of a large construction project.
Home Sales & Employment: Signed contracts for new homes rose 7% in November -- the highest level in a year and a half, according to the National Association of Realtors.... Meanwhile, the four-week average for unemployment claims fell to its lowest level in three-and-a-half years.
The Link: The link between home sales and employment is very strong. The New York Timesreports that Boston home prices in 2011 dropped only 1.1%. Home prices dropped in 19 of 20 metropolitan areas around the country, but Boston's rate was among the lowest. The Timesattributes this to Boston's relatively low unemployment rate: 6.2%, compared to the national average of 8.6%.
Investors: Real estate investors are taking advantage of today's low prices, and historically low interest rates. Investor purchases made up 19 percent of all national home sales in November, compared with fewer than 10 percent in healthier housing markets.
A Brighter 2012?: Nationally, it is expected that home construction will increase by 15% next year, according to KIPLINGERS. Prices for the first time in years will show increases. Some of this is already happening, in the Mid-West, where the energy industry is bringing new life to the economy.
Survey: A recent survey in CONTRACTOR MAGAZINE reported that 59% of HVAC contractors expect that 2012 will be better than 2011. Another 13% think it will be "much better."
Small Apartments / High Rents: In Boston, plans are afoot to build some small studio apartments in downtown, to attract more young people to live in that part of town. The mayor is backing this effort.... Boston rents have continued to rise. The GLOBE reports that a quarter of Suffolk County residents devote more than half of their income to paying rent.
Business Owners: If you put an unemployed military veteran to work, you can get a tax credit of up to $5,600.
Contractor of The Year: PHCC contractor J.C. Cannistraro Co. of Watertown has been named Contractor of the Year by PHC News (Plumbing + Hydronic Contractor). Founded in 1963 by John Cannistraro, Sr., the company has been involved in major projects throughout New England, including Gillette Stadium and the new Lunder Tower at Mass General Hospital. In the wake of the 2010 earthquake in Haiti, Cannistraro sent pre-fabricated materials -- as well as several members of Plumbers' Local 12 -- to Haiti to construct a new hospital. See the full story.
Also Congratulations To: Frank Callahan, the hardworking head of the Massachusetts Building Trades, who recently met with President Obama at a White House conference on job creation.
Leaks: The GLOBE reports that utility companies admit there are 21,000 leaks in their underground gas piping systems around Massachusetts. They say there is no immediate danger. Meanwhile, the devastating blast a year ago in San Francisco was caused by numerous bad welds, and because the utility had rejected installing automatic shut-off valves.
International Construction: Any contractor or engineering firm who works internationally will find some good opportunities on the horizon. There is much pent-up demand in other parts of the world (Japan; New Zealand; England; the Panama Canal).
Commodity Prices: More projects around the globe mean that commodity prices are likely to rise in 2012. Wood, copper, tin, etc. will all cost more.
Internet Spending: The $1.25 billion in online sales on Cyber Monday (the Monday after Thanksgiving) was the biggest day for Internet commerce in history, according to research firm comScore Inc.
You're Doing Well, If You're Doing Well: The non-partisan Congressional Budget office (CBO) says that between 1979 and 2007, after-tax income of the top one percent of American households rose 275 percent. For the poorest one-fifth of the country, it's gone up just 18 percent. And for the biggest slice of 'middle class' America - the three-fifths of homes between the top and bottom 20% - incomes have risen just 40%. These figures include not just wages -- but any benefits such as dividends, bonuses, Medicaid, 401(k)s, Social Security, etc.
Tough News: When you look simply at wages, the NYT reports that about 1 in 3 Americans is now living in poverty, or close to it. The real median income of working-age households has declined from $61, 600 in 2000 to $55,300 in 2010.
Your Hometown: There are growing differences in average incomes from one town to the next. Family income in Lawrence ($36,573) has dropped 20% since 1979. Thirty miles away in the town of Harvard, incomes have jumped more than 144%, and now average $150,396.
Contract: Ford workers accepted a new labor contract that keeps wages in check, but promises profit-sharing payouts and billions in new plant investments.
GE: Is returning much of its water heater manufacturing to the US, according the NYT. They are hiring at some plants, but average wage for new workers is $10 to $15 an hour less than the pay scale for workers already on staff. The union approved this new wage rate.
Small Businesses: Women-owned businesses are increasing at a rate 50% faster than the overall rate of small business growth. KIPLINGERS reports that by 2018, one-third of all new jobs will be generated by female-owned companies.
Drugs: A huge problem -- here and everywhere. The Quincy Patriot Ledger did a series showing that 99 people in Quincy, Braintree, and Weymouth died of drug overdoses in the past two years. About a quarter were men in the construction trades -- but there were men and women from many professions and all economic groups.
3-D Bathtubs: 3-D printers are now available for about $700: They print in layers of plastic or similar materials. Symmons Industries is using them to design bath fixtures.
Joe The Plumber: Remember Joe, the outspoken 'plumber' from the 2008 election? He may be running for congress in Ohio. Both the UA (national plumbers union) and the Plumbing-Heating-Cooling Contractors Association in Washington have pointed out that Joe is not actually a licensed plumber.
