The construction boom is definitely over.
There are fewer cranes dotting Orange County’s skyline these days,a sign of tough economic times and a current lack of demand for commercial development here. There aren’t any big industrial or flex buildings getting started and only five sizable office buildings in the works, according to CoStar Group Inc.
That could lead to an acceleration of job losses for the construction sector in 2009, after an already tough 2008 for the industry. But the lack of activity likely suits the area’s beleaguered office and industrial landlords,who are busy just keeping their existing buildings full,just fine.
Less than 200,000 square feet of office space was under construction here at the end of the first quarter, according to the latest data from CoStar.
It’s a quick drop in volume for the area’s commercial developers.
One year ago, there was about 1.6 million square feet of office space being built.
More than 7 million square feet of office space was built during the past three years, according to data from Voit Commercial Brokerage LP, bringing the total office space in the county to about 108 million square feet.
Groundbreakings in OC are near their lowest point in five years, according to the latest quarterly report from Delta Associates, the research affiliate of commercial development company Transwestern.
Chalk the slowdown up to the credit crunch, as well as concerns about adding more space to a market under pressure, Delta Associates reports.
New construction,particularly for office space,isn’t expected to resume in the foreseeable future.
“There is so much supply on the market from the construction boom of the last three years that it will probably take a few years for all this excess office space to be absorbed,” said the latest quarterly report from the Irvine office of Colliers International.
Currently, office space is close to 20% empty.
That could make 2009 a much worse year than many predicted just a few months ago.
Chapman University economists predicted in December that the value of non-housing related construction in OC would total about $1.4 billion in 2009.
That’s down 8% from 2008 levels and is a decline of 42% from the region’s recent peak year of 2006.
Reaching those modest 2009 figures could prove difficult, based on first quarter data.
Only two office buildings, totaling about 120,000 square feet, were finished up in the first quarter, according to Jerry Holdner, vice president of market research for Voit.
The only big office being built right now is in Santa Ana, where Laguna Hills’ Muller Co. has an 80,500-square-foot building going up along the Costa Mesa (55) Freeway.
Nearly 4.5 million square feet of office construction is currently on hold, according to Colliers data.
Other than a 52,840-square-foot building that broke ground last quarter in Fountain Valley for metalworking product maker Mitsubishi Materials USA Corp., there’s no substantial industrial buildings on tap for the county.
For big construction companies such as the Newport Beach office of St. Louis-based McCarthy Building Cos., that’s meant turning the company’s local focus to hospitals, parking structures and education facilities, rather than traditional offices.
As new development has slowed to a trickle, jobs in the construction industry have fallen to levels in line with those seen during the last recession.
There were 19,500 jobs in OC related to the construction of buildings as of this February, a 12.6% decline from a year ago, according to the California Employment Development Department’s labor division.
That’s the lowest level of jobs that sector’s seen since 2003. The highest level of employment was in 2007, when building-related construction jobs totaled 24,200, according to state records.
All construction-related jobs in OC totaled 77,900 in February. That’s a 17.7% drop from a year ago, as well as the lowest level seen here since 2000. Construction-related em-ployment in OC peaked in 2006, when the region counted 106,600 such jobs.
Chapman’s predicting 9,000 construction job losses this year.
The Los Angeles County Economic Development Corp., which tracks OC, predicts about 7,500 construction job losses in OC this year, with big infrastructure projects such as the Metrolink upgrade picking up the slack from nonexistent building construction.
