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Friday, February 12, 2010

McGraw-Hill: Fla. home construction to rise - South Florida Business Journal:

Holy Crap. If this is true, then it's definitely the beginning of the end. Florida's architecture/engineering business came to an abrupt halt in the beginning of 2007 and this can only be a sign of good things to come. Of course, they're going to be requiring Revit, so it's time to buy it before the March 16th Autodesk Simplified (but expensive) Pricing goes into effect.


Home construction in Florida will rise by 14 percent this year, but office and other commercial starts will dip by 2 percent, as falling asset prices weigh down the sector, according to a construction report by McGraw-Hill.

Overall, the market analyst is predicting a “modest recovery” of 5 percent for Florida construction starts in 2010, the first sign of growth in four years.

Jack McCabe, CEO of Deerfield Beach-based real estate information firm McCabe Research & Consulting, said McGraw-Hill’s projection way off.

He said that the cost of new residential construction can’t compete with the high volume of distressed property on the market for sale. Foreclosed residences and owners seeking short sales are still pricing property at below replacement value.

McCabe also said the commercial market is primed for more downward pressure on rents and occupancy.

“All you have to do is take a drive down Federal Highway between Boca Raton and Fort Lauderdale to see all the empty storefronts right now,” he said.

McGraw-Hill’s report maintains the residential sector is on the rebound. The company asserts single-family homes will benefit from foreclosure mitigation programs and stronger affordability, signaling growth for the first time since 2005.

Among the McGraw-report’s conclusions:

  • Residential construction starts are expected to grow 14 percent, to $8.9 billion in 2010, with single-family housing rising 17 percent, to $7.6 billion, and multifamily housing declining 1 percent, to $1.3 billion.
  • Institutional construction starts in the commercial sector are predicted to suffer from budget constraints at the state level, falling 8 percent in 2010.
  • Public works continues to reap the benefits of billions in stimulus dollars, with highway construction being its largest recipient, at $1.35 billion. Overall, public works will gain 36 percent in 2010, offsetting a 67 percent decline in the utilities sector.

On Thursday, Florida Realtors reported sales of existing single-family homes and condos were up in Miami-Dade, Broward and Palm Beach counties in the fourth quarter, compared to the same period a year earlier.

Commercial and residential developer Gus Gil, former president of the Latin Builders Association, is finishing a 46,000-square-foot medical office building in South Miami. He said it’s half leased at a gross rate of $28 to $30 a square foot.

His Miami-based company, Gil Development, has no new commercial or residential projects planned in the immediate future. He said big residential players, such as Lennar Corp., are more active than they have been in some time.

In fact, Lennar said it expected a better year in 2010 than it has had in some time, based in part on its performance in the last quarter.

Miami-based Lennar, one of the nation’s largest homebuilders, reported a profit of $35.6 million, or 19 cents a share, in the fourth quarter. In the prior-year period, it reported a loss of $811 million, or $5.12 a share.

Lennar (NYSE: LEN; NYSE: LEN.B) ended 2009 in the red. The net loss for the fiscal year, which ended Nov. 30, was $417.1 million. The company would have ended both the fourth quarter and the year with much more significant losses if not for tax refunds of $320 million and $314 million, respectively.

Said Gil: “Guys with deep pockets like Lennar are still moving things here and there, but small companies, family-owned companies, are not doing much new construction.”

McGraw-Hill: Fla. home construction to rise - South Florida Business Journal:


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