By Elwood Brehmer, Alaska Journal of Commerce
Building activity has been good, but not great, around the state as the construction season moves towards its peak.
So far 2015 has mostly met projections said Associated General Contractors of Alaska Executive Director John MacKinnon.
“As I look out there and see the work that’s going on I think we’re where we expected to be this year in construction,” MacKinnon said. “I fully expect things to taper off over the next couple years.”
That’s because this year’s large private projects have been in the works for some time, while civil construction work going on this summer was funded in state and federal budgets several years ago.
AGC of Alaska’s construction forecast released in January estimated $8.5 billion would be spent in the state’s industry this year, off about 3 percent from 2014.
When the lean 2016 fiscal year capital budget and the others likely to follow fully take effect in a couple years, construction work will almost certainly wane, he said.
Year-to-date building permit valuation in the Municipality of Anchorage is down 23 percent from 2014 at $233.2 million through May.
Building permit data does not track the number or value of projects actually being built — only prospective work — but it is the primary means of tracking local vertical construction activity.
The number of projects permitted so far this year in Anchorage is similar to 2014, however the value of the work is less. The 25 new commercial structure permits through May matches last year and the number of single family homes, at 107, is off just slightly from 119 a year ago. However, the number of duplex permit applications has fallen by more than half, from 48 to 22.
The last year the permit value total was similar to 2015 was $240.9 million in 2012. However, it is still significantly better than the $144.6 million through May 2010.
MacKinnon said what is happening now is the inverse of the private construction flourish after the passage of oil tax reform, Senate Bill 21, in 2013.
“I see some caution out there because of the (low) price of oil and the resulting cuts that need to be done,” he said.
MacKinnon has heard of projects being put on hold because of concern about the future of the state’s economy because of oil prices, he said.
In the City of Fairbanks, the building permit values total $36.8 million so far this year, nearly three times the $12.2 million through May 2014.
City Building Plans Examiner Stephen Anderson said much of the disparity is due to two major projects, a new school and a hospital addition.
In April, the Fairbanks North Star Borough approved a $23.8 million contract to replace Ryan Middle School and tear down the old building.
The school’s gymnasium was refurbished last year, he said.
Other than the big projects, activity in Fairbanks has been similar to most years, according to Anderson.
“It’s going to be a good, solid year, but no award-winner,” he said.
The number of $1 million to $5 million commercial projects is on par with a normal year, as is residential construction, Anderson said.
If the state Interior Energy Project succeeds in getting additional lower-cost natural gas or propane to the region in the coming years, Anderson said he would expect resurgence in the Interior’s building market.
“It’s hard for me to imagine a world that wouldn’t bloom and flourish with affordable gas coming to Fairbanks,” he said.
Finally, in Juneau, the number of permits is down, but the value is up through June 22.
The City and Borough of Juneau reported 335 commercial and residential building permits issued through June 22 at an estimated value of $77.7 million.
Last year, 395 permits valued at $40.7 million had been issued through the same date, which was in line with 2012 and 2013.
The value increase this year shows up primarily in several new and renovated commercial projects.