Construction provided a solid foundation for job growth in Colorado last year, directly accounting for one of every five new nonfarm jobs.
That’s nearly three times the sector’s 7 percent share of the state’s payroll jobs. It’s also above the 12 percent contribution that construction made last year to job growth nationally.
But with higher interest rates threatening to chill the housing market and big transportation projects a ways off, can construction continue to drive Colorado’s job growth?
“Construction is going to do reasonably well this year,” predicts construction economist Penn Pfiffner, but the growth will come from different segments.
Mega-infrastructure projects like the $1.7 billion T-REX expansion of Interstate 25 or robust homebuilding in the Denver suburbs won’t drive spending and hiring, said Pfiffner, a principal with Construction Economics in Lakewood. Rather, a backlog of business and government construction projects, a segment called “nonresidential” building, is where the action will be.
That segment includes things like Xcel Energy’s $1.3 billion expansion of its Comanche Power Plant in Pueblo, the massive renovation underway in the Vail Valley, continued building at Fitzsimons medical campus in Aurora and other health care properties, and several hotels scheduled to go up.
“Some of the things that have been on the back burner are coming forward,” said Dennis Jakubowski, director of government affairs with the Associated General Contractors of Colorado. “Our members are getting busy.”
Anna Garcia, president of Anko Metal Services Inc., expects commercial projects to fill the gap until FasTracks, the metro area’s voter-approved, $4.7 billion light-rail initiative, gets rolling.
“Broadly, I think construction is going to pick up this year,” she said. “Businesses are ready to spend.”
FasTracks won’t hit a peak until between 2011 to 2014, when it is expected to generate 4,000 construction jobs and 6,298 supplemental jobs, said Pauletta Tonilas, a spokeswoman for the project.
Some businesses aren’t waiting.
Lisa Goodbee, whose utilities-relocating firm Goodbee Associates counted itself among the more fortunate contractors who worked on the T-REX project, already is gearing up to win early work on FasTracks, the $4.7 billion mass transit project.
Her focus is on getting relocation work on FasTracks’ first major project, a tunnel dig near Union Station that goes out to bid this fall.
A forecast from the University of Colorado at Boulder calls for 9,500 additional construction jobs next year, bringing the sector to 168,600 workers, but that forecast counts on homebuilding permits holding above 40,000 for the third year in a row, a streak some economists consider unlikely.
The residential real estate market took a turn for the worse in August and continues to weaken, said Tucker Hart Adams, a regional economist with U.S. Bank. Adams predicts the economy will soften this year as higher interest rates and fuel costs make consumers cautious.
“Houses are staying on the market longer; contracts are getting canceled,” Adams said, and normally optimistic real estate brokers are getting the jitters.
Even Pfiffner agrees that builders have pulled far more single-family home permits in recent years than what population growth and migration to the state would justify.
If the Colorado economy slows significantly this year, then the construction sector could take it on the chin as it has in other downturns.
Layoffs in the oil and gas industry were blamed for the downturn in the late 1980s, but the construction industry lost significantly more jobs, Adams said.
Likewise, when the state shed 31,500 jobs in 2003 following the downturn in technology and telecommunications, 10,500 construction jobs vaporized, accounting for one out of three jobs lost.
Staff writer Aldo Svaldi can be reached at 303-820-1410 or asvaldi@denverpost.com.
