Glaziers look to commercial jobs to compensate for falling multifamily construction
In 2002, office construction starts were falling, and the residential building market led growth in the building market. During the past five years, the situation reversed.
Nonresidential building starts that lingered at an annual rate of $160 billion in June 2002 reached an annual rate of $253 billion in June 2007, according McGraw Hill Construction. While, the residential market that reached its peak in 2005 took a big hit in the past year, with multifamily construction starts falling 27 percent in the first half of 2007 alone, according to a July 25 report from McGraw Hill.
Contract glaziers that shifted their focus to the multifamily residential market have quickly had to grow back their commercial building to compensate for the falling housing market.
Glazing giant Harmon Inc. of Eden Prairie, Minn., was starting to become a player in multifamily projects when the market began to deflate, said Chuck Mowrey, Harmon president, in a June article in Glass Magazine.
“We were just about to [enter the multifamily residential market], and fortunately the economy in the areas that we’re familiar with—commercial office buildings, hotels—picked up, and we were able to fill our capacity without getting too deep into it,” Mowrey said. “We’ve done some, but not enough to feel the slowdown.”
Read the full Mowrey interview here.
In a June 5 e-glass poll, about 57 percent of glazier respondents said they have seen a decline in high-rise residential jobs, coinciding with the slipping housing market. About 20 percent of respondents said they haven’t seen a drop yet for multifamily projects but expect one soon.
“Five years ago, residential projects amounted to about 30 percent of our work, says Mike Downs, president of Downs Glass in Sarasota, Fla. “Today, we’re at about 10 percent. We’re turning 90 percent commercial, because that market is doing so well now. … We’ve got more work than we can handle, and we’re able to pick and chose our jobs.”
The segment of the residential market that remains steady includes the high-end jobs, Downs says. “The jobs we do are all upscale—a lot of butt glazing; large aquarium windows.”
High-end urban jobs have also boosted the multifamily market in Minneapolis and St. Paul, Minn., says James Bringle, general manager for Empirehouse Inc. in New Hope, Minn. Residential jobs make up about 20 percent to 25 percent of work for Empirehouse, he says.
“We have some nice high-rise projects in the Twin Cities—all high-end condominium projects,” Bringle says. “The [multifamily market in the] suburbs hasn’t been strong since last year. For a lot of people in our industry who focus on the residential side, it has affected them.”
Empirehouse is focusing on its commercial projects until the residential market comes back, Bringle says. “Residential developers are holding back, while a lot of corporate projects are starting up,” he says. “That end has just exploded for us.”
—By Katy Devlin, e-Newsletter editor, e-glass weekly