A plethora of big-ticket construction projects in the Capital Region is keeping commercial developers busy amid a nationwide spending pullback in their sector.
Long unfazed by the housing slump, the nation’s commercial construction sector has started to show signs of slowing.
In the Albany area, building for hospitals and hotels has continued briskly, but local lending for commercial projects has been less robust, area developers and bankers said.
Total U.S. construction spending in January took its steepest monthly dive in 14 years, falling 1.7 percent. While residential construction accounted for the bulk of that decline, nonresidential construction slipped 0.8 percent, the U.S. Department of Commerce reported Monday.
January’s nonresidential spending drop marked the sector’s steepest monthly decline since May 2004. It followed December’s flat monthly growth.
“We haven’t seen it here directly yet,” Turner Construction Co. Business Development Manager Peter D’Aloia said of the pullback in nonresidential construction spending.
The local commercial construction market’s reversal in fortune’s was apparent last Friday, when Albany Medical Center announced a $360 million, six-tory addition. Construction on that building, which will supply the hospital with 116 more beds, is slated to start in November 2009.
While developers are not at a loss for construction proposals, many area banks have provided less funding for those projects.
“Over the past year, [TrustCo Bank commercial lenders] have seen softness,” said TrustCo Bank Corp Vice President and Treasurer Kevin Timmons.
By the end of 2007, Berkshire Bank’s commercial construction loan portfolio stood at $125 million, down 3.8 percent from a year earlier. Between Dec. 31, 2007, and Dec. 31, 2006, KeyBank’s same portfolio declined 1.9 percent to $8.2 billion. Arrow Financial Corp.’s commercial real estate portfolio fell 1.8 percent to $189.2 million.
“Right now, we consider ourselves fortunate to be in sectors that are not overly sensitive to economic downturns,” said Stephen Obermayer, the chief financial officer of BBL Construction Services in Albany.
BBL is preparing to begin construction on a $258 million, six-story addition to St. Peter’s Hospital in Albany. Also set to start soon is construction on First Niagara Bank’s regional headquarters near the Harriman State Office Campus and the conversion of a Troy Best Western into a dormitory for the Rensselaer Polytechnic Institute.
BBL, which employs 250 in the region, will also soon add a two-story restaurant and banquet hall to its Courtyard by Marriott hotel in Saratoga Springs. The addition will feature the region’s first Shula’s 347 Grill restaurant, which bears the name the legendary football coach Don Shula.
“It looks like things are doing pretty well, but that could change almost overnight,” said Larry True, the managing director for DR Construction Consultants in Albany.
Even as Turner wraps up its overhaul of the Colonie Center and the construction of RPI’s Experimental and Performing Arts Center, it is not having trouble finding new projects. D’Aloia said new proposals are coming in at a steady or slightly increased rate.
Turner, which employs about 100 locally, will start laying steel within a week for GE Healthcare’s $165 million X-ray mammography plant.
“I don’t want to say we’re secure and jinx us,” said D’Aloia.
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