Nationwide survey shows rising optimism among builders

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Jim Leute
Thursday, May 23, 2013

— Ask David Cullen to assess the state of his family's contracting and construction management company, and one can almost see the smile on the other end of the phone line.

“Things are looking much better for us,” said Cullen, president and chief executive officer of J.P. Cullen & Sons, the Janesville construction company that now includes a fifth generation of family members and last week issued 574 paychecks.

Across the nation, commercial contractors such as Cullen struggled through the economic recession. So, too, did local and national homebuilders.

Indications are that both are starting to rebound.

The National Association of Home Builders recently reported its survey of builders' optimism increased again in May. In fact, one component of the survey—expectations for future sales—reached a level not seen since February 2007.

“In Rock County, new homes are slowly starting to pick up, but it's really remodeling that's driving the local industry right now,” said Chad Barnes, owner of Barnes Building & Remodeling and president of the South Central Wisconsin Builders Association.

In Janesville, the city issued 19 permits for new single-family or duplex construction over the first four months of this year. That's an increase of nearly 19 percent from the same period a year ago.

“Builders are noting an increased sense of urgency among potential buyers as a result of thinning inventories of homes for sale, continuing affordable mortgage rates and strengthening local economies,” Rick Judson, chairman of the national builders group, said in a news release.

On the commercial side, the nationally watched Dodge Momentum Index grew 5.2 percent in April. That index is a monthly measure of nonresidential building projects in the planning stage, generally considered a leading indicator of construction spending.

McGraw Hill Construction, a division of McGraw Hill Financial, publishes the monthly index, which has now posted gains in each of this year's first four months. With April's gains, the index is now at its highest level in nearly four years.

“That's always a good indicator,” Cullen said of the national index. “We look at all of those, and some of them are retrospective.

“For us looking forward, we pay close attention to what's going on in the design community, because when those guys get busy, it's a good indicator that we will, too, usually six months to a year later.”

With its Architecture Billings Index, the American Institute of Architects reported last month a steady upturn in design activity.

In southern Wisconsin, Cullen has survived recent lean times because it is a lead contractor on the massive construction project for Epic Systems, a leading designer of medical records software.

The sprawling Verona headquarters now houses 6,000 employees, and the 120-year-old Janesville contractor is wrapping up a third campus and an 11,000-seat auditorium.

Plans are on the table at Verona's City Hall for two more campuses.

While still going strong at Epic, Cullen said his company is seeing a bigger, more diverse portfolio of work, and that's resulted in recent employment gains.

“A lot of it is driven by Epic, but we've seen some other increases as well,” Cullen said.

The pending state budget includes possibilities for even more work, particularly on UW System campuses, Cullen said.

That, he noted, is now up in the air while Gov. Scott Walker and the Legislature decide how they will respond to large surpluses uncovered in the system's accounts.

“We'll have to see how that settles out and what the effect will be on capital construction projects,” Cullen said.

Cullen said his company has picked up work from private developers, as well as local school districts that recently passed building referendums.

In Rock County, the company is building the Parker YMCA in Milton and will construct a new facility for Agrace HospiceCare in Janesville. Construction also is on tap in the Beloit School District.

“We've also got several things that aren't as visible, what we call our industrial projects,” he said, noting a project for a food processor in Beloit.

“The private sector is starting to loosen up and spend some of its profits rather than keeping it on the sidelines,” Cullen said. “Things are slowly getting better, and while no one can tell for certain, I hope we can sustain it.”

Last updated: 10:33 am Tuesday, July 2, 2013

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