The value of commercial building permits issued in Mecklenburg County almost doubled during the first five months of 2012 compared with the same period last year part of an upward trend that has developers regaining some optimism.
The number of commercial permits issued is on pace to surpass last years, and May saw more permits issued than in any month since August 2008.
Ive been more positive this year than I have been in a long time, said Bo South, vice president of Myers & Chapman, a more than 60-year-old construction company. Im hopeful that its not going to get any worse. It feels to me like were still seeing stuff coming in, more so than we were.
No one expects a quick return to the boom times. Most of the growth is in renovations not new construction and the value of commercial construction last year still lagged pre-recession levels. Still, any improvement is welcome news.
Wells Fargo senior economist Mark Vitner said demand is growing because businesses have started to expand, and there hasnt been much construction in the past three years.
I think its continuing to get better, he said of the market. Were seeing the beginnings of a true recovery in both residential and commercial construction. But its likely to continue to be slow because theres not a lot of risk-taking.
This years numbers are part of an uptick that started last year. Mecklenburg County issued 6,612 commercial building permits during 2011, up 19.8 percent from the previous year.
The numbers last year demonstrate that the industry is strengthening slowly.
The value of construction projects in 2011 rose to $1.2 billion, almost twice the value in 2010. Thats still just slightly more than half the value in 2008, however.
Most permits still for renovation
Roughly two-thirds of the permits granted last year and three-fourths of those issued between January and May of this year were for renovations. Thats been the story since 2009.
Vitner said permits are mostly going to new tenants moving into existing sites. In the office sector, for example, the local vacancy rate fell slightly last quarter, though it remains near record highs.
Theres not a lot of need to build many new office buildings, he said.
Tyler 2 Construction, whose primary business is renovations, has seen more of an increase in business in the past six months than in the previous four years, said Katie Tyler, its founder and CEO.
There are more projects and ... larger projects than there have been, she said.
But she said a rise in renovations isnt necessarily a positive sign because many businesses are downsizing their spaces.
Its never going to get back to the way it was, Tyler said. Its just a tough economy, and, for the construction industry, its going to stay that way for a while.
Charlottes office market vacancy rate dropped in the first quarter, to 17.9 percent, from the annual 2011 rate of 18.4 percent, according to the latest report by research firm Karnes Research Co.
But the warehouse and industrial market vacancy rate increased slightly in the first quarter to 13.4 percent from 13.3 percent in 2011, even though new construction has been scarce in that sector since early 2010.
(The increase in permits) means there is hopefully more demand and more investment going on, said Andrew Jenkins, a managing partner with Karnes. But if theres not enough demand we will see vacancy rates increase.
The construction market is also still plagued by unemployment, with the number of jobs lagging well below 2008 numbers.
There were 6,800 people employed in construction in the Charlotte metro area in April, a number that has been fairly stable this year, according to the N.C. Employment Security Commission.
In April 2008, there were 11,500 construction jobs.
But Vitner said jobs in construction are starting to pick up.
South, of Myers & Chapman, said the company of about 40 employees recently hired five new people.
Although renovations are the dominant presence within the commercial building market, some new development is happening.
Through the end of May, $759.8 million in permits have been issued including $202.6 million for new multifamily complexes, $176.3 million for new office and retail projects and $77.6 million for institutional projects, such as churches, schools and hospitals.
Where to find new construction
Charlotte Douglas International Airport received the largest permit so far this year, $123.7 million, to build a parking garage. Queens University of Charlotte was also issued one of the largest permits $24.7 million for its proposed athletic facility, the Levine Center for Wellness and Recreation.
At least 12 permits have been issued for the Circle South Park luxury apartment complex in development, with construction costs totaling more than $38.2 million. Construction on the apartments began June 11, and they are expected to be available in summer 2013, according to a news release.
Jenkins said a large portion of permits issued for offices were projects in the Ballantyne area, which has been on a building spree.
The Bissell Cos. have done a large amount of speculative development in Ballantyne Corporate Park, going against the grain in a market that has remained cautious since the recession.
Bissells development arm currently has 800,000 square feet of Class A office space under construction, including the new headquarters for SPX Corp.
But the company is getting its share of renovation projects as well. Interior construction manager Alicia Bickett said the majority of their current interior construction jobs are expansion projects for existing tenants in the park.
I think it speaks volumes that these groups not only keep coming to Ballantyne but want to stay and grow once they are here, she said.