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Since 1951, Baker Construction has been a pillar on the local development scene, emerging as one of the leading commercial builders in Eastern Washington – but like many other businesses, the Spokane Valley-based operation understands that the national recession represents more than a footnote in the company newsletter.
As the warm weather descends, Baker is hoping the spring and summer months will be accompanied by the blue skies of a resurgent economy – and the sounds of bustling building sites.
“This could be our best year, it could be our worst year,” said Baker senior Vice President Reed Caudle. “Hopefully, it will be somewhere in between.”
Caudle said he has seen “a positive sentiment” as far as construction trends go, despite the general pessimism brought on by the lingering recession. Baker – with a payroll of around 50 employees – has a handful of projects scheduled to start in the next 30 days. A new 21,000-square-foot structure at University and Fourth Avenue is also in the works.
“Construction costs and interest rates are great right now,” Caudle said. “There’s good potential out there.”
Statistics kept by the city of Spokane Valley community development department confirm that commercial construction has withstood the economic downturn to a certain extent. In 2008, the city distributed 220 commercial building permits, compared to 216 in 2007. Building applications last December included projects such as a 236-unit apartment complex while the pre-application list featured a large boat storage facility and a 19,000-square-foot office building.
“Construction here doesn’t seem to be as in decline as other areas,” said Kathy McClung, community development director for the city of Spokane Valley.
The economy’s ripple effect has permeated some areas of local development, however. Permits issues by the city’s Building Division – which include work ranging from renovations to electrical upgrades – were down from 3,972 in 2007 to 3,535 last year. Residential construction has also dipped. In 2008, a total of 344 permits were issued for new 1-and-2-dwelling units, although Mike Turbak, a Spokane Valley permit specialist, said a recent upturn in residential development “is reason for encouragement.”
According to the National Association of Realtors, sales of existing homes were up 5.1 percent in February. A range of benefits – such as a tax credit of up to $8,000 for first-time homebuyers and incentives from the Federal Housing Administration – seem to bode well for future residential growth.
“In spite of the constant stream of negative economic news we hear from the national media, I am optimistic about the future of the local housing industry,” said Joel White, executive officer for the Spokane Home Builders Association.
The decrease in residential development has meant more competition for construction involving commercial and infrastructure work, according to Mike Schimmels of Red Diamond Construction, a Spokane Valley-based company that was recently awarded the bid for a major reconstruction project on Argonne Road.
A total of eight companies bid on the resurfacing work. The winning bid came in nearly $200,000 less than originally anticipated.
On the commercial side, more development is taking place in buildings vacated by businesses due to foreclosure or financial struggles, said Turbak who pointed to WinCo Foods moving into the abandoned Home Base site as one example of the renovation trend.
“You have buildings once occupied by businesses like Circuit City and Linens and Things that are now empty,” Turbak said. “Companies are looking at this instead of moving into a brand new space.”
Brad Pring of Spokane Valley-based Pring Corp. is one of many local developers hoping that the economy’s recent upturn – which includes the Department of the Treasury and the Federal Reserve shoring up credit markets and reports of more companies borrowing money from the bond markets – will translate into a boost in construction ventures.
“It’s a great time to build,” Pring said. “I think a lot of people are seeing there’s a better value for your investment right now.”
The company, which got its start when John Pring, Brad’s grandfather, established the first auto dealership on Appleway in 1928, is now seeing more rentals than property purchases. Still, Brad remains optimistic that development will pick up as the economy emerges from the shadows of the recession.
“It seems like Spokane is one of the last areas to feel the effect and one of the first to bounce back,” Pring said. “I think we’re taking some good strides forward.
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By
Craig Howard
