Leader Blues

Tuesday, September 22, 2009

TOP STORY >> Area seeing no bump in construction

By JOHN HOFHEIMER
Leader senior staff writer

Housing and commercial construction starts in Jacksonville and Cabot languished during the first six months of the year, even as construction in the more urban parts of central Arkansas increased for the first time since 2007, according to Jonathan Lupton, a research planner for Metroplan.

Lupton said that central Arkansas —which Metroplan defines as Pulaski, Lonoke, Faulkner and Saline counties — seems to be experiencing an economic turnaround ahead of much of the rest of the United States, but that the more highly urbanized areas such as Little Rock and North Little Rock are experiencing much of that growth.

“The high-amenity areas in the center city seem to be where people want to be,” said Lupton.

In the first half of 2009, Cabot issued building permits totaling only $6.5 million, down from $10.8 million for the first half of 2008 and $7.4 million for the second half of the year.

In Jacksonville, building permits for the first half of 2009 totaled $8.3 million, with $2.9 million of that for residential single-family and $4.4 million for commercial.

That total is down from $15.7 million in permits in the first half of 2008, and up from $5.9 million in the second half of that year.

The uptick in Jacksonville’s permits from the last half of last year is attributable to an increase in commercial construction and, although the number of new single-family housing starts fell from 19 to 14, the average cost per house increased $121,000 to $204,000, according to Metroplan’s data.

“Both Jacksonville and Cabot are bedroom communities, with a lot of people commuting to jobs in the core area – Little Rock and North Little Rock,” Lupton said.

In Jacksonville, the share of working poor grew 28.6 percent in 2000-2006, second-fastest among the 10 largest cities in the metro area. In Cabot, the increase was 19.4 percent, the sixth-fastest growing rate.

Lupton said the American dream is no longer the Brady Bunch with a house in the suburbs and a mini van.

“Cities are interesting places to be,” he said, “where people can walk to a coffee shop or a restaurant.”

“Recent trends, nationally and now locally, are favoring central urban areas. Poverty rates are rising in the suburbs at a faster clip than in central cities,” Lupton said.

He said that higher energy prices have made the long commutes to work from a home in the suburbs less attractive and that increasingly poor and the working poor migrate out there.

Overall in central Arkansas, following a sharp decline in the second half of 2008, construction permit values totaled $543 million in the first six months of this year, according to Lupton.

That’s an increase of nearly $21 million over the first six months of 2008 and an increase of more than $186 million over the last six months of the year.

“The positive direction of (central Arkansas) numbers is especially striking when compared to the rest of the country during the same time period,” Lupton said.

“When you compare the second half of 2008 with the first half of 2009, our local residential and nonresidential construction values have increased while national values have fallen – creating a dramatic difference as we look for trends,” Lupton explained.

“There are no guarantees that residential construction will turn around soon but it is significant that after an 18-month decline, residential construction-permit values have increased slightly this year from the last half of 2008,” says Lupton. “This is not conclusive evidence that the residential construction downturn is behind us but it certainly is a good sign.”

In central Arkansas, nonresidential construction increased 76.1 percent from the second half of 2008 to the first half of 2009 while national construction values dipped 12.2 percent. During the same time period, residential construction in central Arkansas increased 10.3 percent while national values fell a whopping 30.5 percent.

“Our region benefits from its well-educated, comparatively high-income population and diverse economy,” Lupton says. “We have a track record for stability and solid income growth during recessions.”

Nonresidential construction has increased most significantly in central Arkansas – totaling $351.3 million, up more than 30 percent from the first half of 2008 and up more than 73 percent from the second half of 2008.

“The uptick in commercial construction sends a strong, positive message about the economy of our region,” Lupton says. “The figures are not driven by any single project, but rather by a multitude of construction investments.”

Permit values have also increased in the remodel/repair/addition category – up to $48.4 million, an increase of 52.5 percent over the first six months of 2008 and up by nearly 98 percent over the last six months of 2008.

While single-family and multifamily permits declined from the first half of 2008 to the first half of 2009, both categories increased from the last six months of 2008 to the first six months of 2009.

Single-family permits are down nearly 34 percent from the first half of 2008 to the first half of 2009, but are up 11 percent from the second half of 2008 to the first half of this year.

Multi-family permits are down 39 percent from the first six months of 2008 to the first six months of 2008, but have increased 8 percent from the second half of 2008 to the first half of 2009.