Economy hampers new construction

By BILL O'BRIEN
bobrien@record-eagle.com

October 11, 2008 12:00 am

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TRAVERSE CITY -- New building activity plunged in Grand Traverse County during the first three quarters of 2008, and the skidding economy doesn't create much hope for a late-year construction surge.

New construction value for projects approved through the county's construction code office totaled around $68.4 million through Sept. 30, a drop of 28 percent from the $94.8 million for the first three quarters of 2007. The county issued 628 building permits during the first nine months of the year, down 20 percent from the 792 permits issued for the same period in 2007.

New home construction represented the biggest fall-off, totaling around $23.7 million, off 38 percent from the same period last year. Area builders said the housing slump is at the root of the problem, with numerous properties available through foreclosure or forced sales because of the ongoing downturn in Michigan's economy.

"I think it's supply and demand," said Jim Lewis, a project manager and estimator at Hallmark Construction Co. in Traverse City. "There's a lot of homes out there available right now, and I think it makes people think twice about building a new one."

New construction in the county peaked at $220.4 million in 2005, and has trended downward since. It fell to around $185.4 million two years ago, to $152.6 million in 2007, and likely will drop again this year.

The decline would be even more pronounced if not for a handful of major commercial construction projects. Those include a $6.2 million Cambria Suites hotel going up along Munson Avenue in Traverse City, and a $3.8 million Tom's Food Market complex in Interlochen.

Commercial building is slightly ahead of last year's pace, but it's not making up for the steep drop in residential building.

Matt Hughey of Hughey Construction LLC said he's had an "OK" year because of commercial construction work. But he only has one residential project going right now and doesn't expect that segment to turn around anytime soon.

"I think everybody's afraid. They're not moving on anything right now," he said.

Traverse City building officials said their land-use permits are running about 11 percent behind last year's pace. A steady number of renovation and remodeling projects kept those numbers from falling off even more.

"We're slower than typical, but it hasn't completely dried up," said David Weston, the city's zoning administrator. "It seems like people are still investing in their properties."

County numbers don't include Garfield Township, which runs its own building department. Garfield officials said their total permits are nearly equal to last year, but could not provide valuation numbers.

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