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2014 Commercial Construction Industry Trends and Predictions

2014 Commercial Construction Trends and Predictions

Englewood Construction recently completed a Season’s 52 on Chicago’s Magnificent Mile. Upscale restaurants will be a growing trend in 2014.

We are coming into the final stretch of 2013, a year that has been rather good for the commercial construction industry. Activity was up for retail and restaurant construction and once-stalled commercial construction projects are finding themselves back on 2014 bid sheets for the best commercial general contractors.

At Englewood Construction, we were fortunate to bring on several new employees to manage the increased 2013 commercial construction activity and we are currently gearing up to have a very active general construction bidding cycle to close out the year. This year, I thought I’d take a look at our lengthy, active bid sheet in making 2014 commercial construction industry trends and predictions in the coming year.

Big is back

Small scale projects and commercial construction renovation jobs have sustained the industry in recent years, but as the economy continues to improve, we are starting to see some large, ground-up new commercial construction projects that were sidelined come back into the fray.

This commercial construction activity is not being spearheaded by the usual suspects of the past, such as new retail power centers and the like, but rather, large, impressive mixed-use new construction projects that have a considerable amount of retail.

In our own backyard, numerous Chicago mixed-use construction projects will be going up next year. The long-anticipated project at the former Children’s Memorial Hospital site in Chicago’s Lincoln Park neighborhood is set to break ground in the summer. This new mixed-use construction project will include multifamily and 161,000 square feet of retail. Also in Chicago, the New City Development at Halstead Street and Clybourn Avenue will break ground with 366,954 square feet of retail. The former Purple Hotel site in Lincolnwood, Ill. is currently being repositioned as “The Shoppes at Lincoln Pointe,” a $130 million mixed-use project. In Glenview, Ill., construction has begun on the $30 million, 102,876-square-foot Glen Gate retail and restaurant project. A 450,000-square-foot outlet mall in Country Club Hills that was sidelined by the economic downturn is breaking ground next year. And in the Milwaukee area, the 270,000-square-foot Mayfair Collection, a retail project, has broken ground in Wauwatosa, Wis.

We know that there are more large-scale 2014 commercial construction projects in the pipeline as well. Stay tuned for some upcoming commercial construction news from Englewood on this subject.

Upscale restaurants move forward

Protected from on-line competition, restaurants still deliver a prime experience that consumers want and we expect new restaurant construction to continue its robust expansion in 2014.

Last year, we touted the rise of fast-causal restaurants. That prediction came to fruition and we expect steady new restaurant construction projects to continue into 2014. However, it won’t be just in the form of the fast casual concept. Fine dining, white-tablecloth establishments are making a big push as the restaurant industry is performing remarkably well.

As one of Chicago’s best restaurant contractors, Englewood completed a new Season’s 52 on Chicago’s Magnificent Mile as well as renovations and expansions on several high-end steak houses in downtown Chicago. Several of these restaurants, such as David Burke’s PrimeHouse and Ruth’s Chris Steak House, were named on Chicago Magazine’s 20 Best Steak Houses.

2014 Hotel developers check in

The downturn pretty much put a halt on new hospitality construction projects in recent years, but as tourism numbers boost back up and hotel occupancy continues to climb, we expect new national hotel development to ramp up as hoteliers are planning on expansion. Today, active hotel owners have access to pretty much any flag they want; it’s just a matter of finding the right deal and margin.

According to Smith Travel Research, downtown Chicago hotel occupancy rose to 75.5 percent in the first nine months of 2013—the highest point since the recession. Numbers like this are encouraging Chicago hotel developers and national hotel chains to initiate new hospitality construction projects on land they have been sitting on for years. We predict that many developers will get off the sidelines and 2014 hospitality construction will become a significant portion of the 2014 commercial construction market. 

Bill Di Santo
President
Tel: 847-233-9200 x710

Questions? Comments?
You can reach me at bill.disanto@englewoodconstruction.com
www.englewoodconstruction.com
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Retail Construction Trends: Shopping Center Construction Enters Renaissance with Renovation Work

Brazos Mall in Lake Jackson, Texas

Englewood Construction recently began renovation work on the Brazos Mall in Lake Jackson, Texas.

It’s taken some time, but shopping mall commercial construction activity is back in a big way, as owners and operators have initiated only what can be described as a renovation renaissance.

Almost everywhere we look, it seems an older, out-dated shopping mall is undergoing a substantial commercial construction renovation. In the Chicago area alone, there are probably close to a dozen local and regional shopping malls in the middle of a shopping center renovation project, or, slated to begin one in the very near future. Some have been staples in the market for decades, such as Oak Brook Center, Yorktown Center in Lombard, Ill. and Water Tower Place in Chicago, while others have fallen by the wayside and need to make a play to stay relevant, such as the Charlestown Mall in St. Charles; the Hawthorn Mall in Vernon Hills, which is beginning a $40 million expansion and renovation; and the old Ford City Mall in Chicago, which is undergoing a $35 million shopping mall renovation.

However, this is not just a Chicago trend. As a national general commercial contractor, Englewood is working with a savvy investor that is purchasing underperforming regional shopping malls and renovating and re-tenanting them, thus, bringing value back. Right now, Englewood has shopping center construction projects underway at the Shawnee Mall in Shawnee, Okla. and the Brazos Mall in Lake Jackson, Texas.

All of this commercial construction activity is taking place because smart owners and retail investors realize they need to refresh, rebrand and reimage the shopping experience to be competitive in the future. Lifestyle centers and power centers may have been the big play in the last major round of retail construction, but as ground-up shopping center construction projects are still seen as a risky endeavor, the surviving traditional shopping centers are capitalizing on the improving retail market to initiate these commercial construction renovations to make them vital once again.

Of course, all of this commercial construction activity has been a boon to the industry. Architects, engineers and commercial construction general contractors are all receiving a boost from these national shopping center renovation projects.

There are a lot of reasons for this shopping center construction renaissance, but the main catalyst is national retailers that survived the downturn are beginning to flex their muscles a little more today and find well-located retail space at favorable rents. This has emboldened them to not only take on new long-term leases, but also expand the footprint of their traditional retail space.

To meet this demand, owners of older shopping malls often have to reconfigure their current space and commit to updating their product to try and best competitors.

Retailers such as Forever 21, Uniqlo and H&M are making aggressive plays into new shopping center construction space and sometimes taking up to as much as 40,000 square feet, a substantial increase from past store sizes. Mainstays, such as Gap and Limited, are also always looking to reposition in new shopping center construction space and may migrate to recently upgraded shopping malls.

Location is playing a major role in this process as well. Most of the new commercial construction we saw in the last decade was in outer-ring suburbs and even exurban areas. Land was cheaper and national retailers were chasing rooftops in the housing boom. As many of those markets never quite materialized, retailers and investors are now looking back to established regional shopping malls in major urban locations and older suburbs. With strong area population demographics, national retailers are intrigued, but it’s not a matter of simply being in a location and open for business. Many of these locations have had high-vacancy rates or have been dark for years. As this new wave of commercial retail construction takes place, those that neglect new shopping center construction and updating will likely stay obsolete. Owners are finding out they need remodeled shopping mall space, or they will fall by the wayside.

It’s an exciting time and the retail construction industry is poised to help breath new life into existing shopping malls with new shopping center construction projects. Look for some exciting retail news from Englewood coming soon in the Chicago area as we gear up for some substantial work. We’ll be sure to keep you posted.

Bill Di Santo
President
Tel: 847-233-9200 x710

Questions? Comments?
You can reach me at bill.disanto@englewoodconstruction.com
www.englewoodconstruction.com
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National Commercial Contractors Bring Success to Nation’s New Boom Towns

Commercial construction is making a slow-and-steady comeback in most markets nationwide, but if you are looking for a good old-fashioned commercial construction boom, there is really only one place to look in the country right now—North Dakota.

That’s right, the sparsely populated state on the Great Plains has seen a ton of commercial construction activity in the past few years thanks to a modern day gold rush in the form of shale oil. It’s easy to argue that oil is our nation’s most important commodity, and, according to some, North Dakota could hold up to 45 billion barrels of recoverable oil in the Bakken fields. That’s more than any single country in the Middle East.

With possibilities like this, it’s no surprise energy companies are flocking to the state, flooding towns with young, skilled workers, and setting up makeshift “man camps” to house them. It really is like an old-fashioned Wild West boom town environment.

The Williston Brewery

The Williston Brewery will open in mid-September in Williston, ND.

Of course, with this influx of people and industry comes a ton of opportunities for commercial construction developers, landlords, and upscale, full service tenants. Englewood is fortunate enough to have just finished a significant restaurant construction project in Williston, ND, where one of the biggest concentrations of industry has formed.

The 12,000-square-foot Williston Brewing Co. opened in mid- September and will serve as an oasis for oil field workers looking for an upscale restaurant establishment for dining and entertainment. It sounds like a logical thing to have a high-end restaurant construction project open where there is a need, but because of the fast-growing nature of these communities in North Dakota, there are several hurdles to making them a reality.

This is a paradox of these boom towns—while there are plenty of commercial construction opportunities for smart landlords and owners, there is only a fraction of the commercial construction labor available to make them work. Most of the transient labor in North Dakota is dedicated to working in the oil fields and supports functions of the oil industry since the local commercial contractors are all back-loaded with work for two to three years.

Wild West theme of North Dakota

To go with the Wild West theme of North Dakota, Englewood used old rifles as door handles for the restaurant.

Savvy commercial construction developers know to use the best national commercial construction companies to accomplish their goals in labor challenging markets like this. The commercial construction owners we worked with to deliver the Williston Brewing Co. had the past experience of working with national commercial general contractors while developing the Kona Grill concept across the country, so it was natural for them to turn to us for this project to make it happen.

With a subcontractor base of 20,000 nationwide, Englewood was able to assess the situation and pull in the proper construction labor force from surrounding states to work on the restaurant construction project. We located contractors from Chicago, a millwork vendor from Indiana and mechanical contractors from Minnesota, Colorado and Utah to complete the commercial construction project. Given the fact that hotels and lodging is almost non-existent, for our onsite manager we brought in one of our traveling construction superintendents who has the ability to work out of his RV. He parked right on our commercial construction site and lived and worked there throughout the project.  Some of these commercial subcontractors had to travel more than 1,000 miles to do the work, but with such a commercial construction labor shortage in places like North Dakota, that is what it takes to get the job done.

North Dakota is a vibrant market showing no signs of slowing down and our presence there has helped us initiate several more projects. Englewood is excited about the current and future commercial construction opportunities that exist as the energy industry matures in this part of the country. Yet developers and owners should remember that partnering with the best national commercial contractors is the only way right now to achieve success in this fast-growing market.

Because I find this trend interesting, I’ll leave you with a few more fun facts about Williston and the North Dakota market.

  • The ratio of men to women in Williston is 45 to 1
  • Williston grew 28 percent from 2000 to 2011 according to U.S. Census data
  • Oil Companies have booked rooms in all of the Williston hotels for in excess of three years.  Hotels are reporting occupancy rates in excess of 100 percent as the oil companies are allowing the hotels to occupy rooms that have been reserved, paid for but unused.  Williston Brewing Company is occupying the ground floor of a Williston hotel that is realizing 113 percent occupancy rates.
  • Williston boasts the following No.1 selling stores and restaurants in the country: Appleby’s – McDonalds – Walmart – NAPA Auto Parts

Related links

Restaurant Commercial Construction Trends: Why Restaurant Construction is Booming
How to Create a Successful Restaurant Construction Schedule

Chuck Taylor
Director of Operations
Tel: 847-233-9200 x712

Questions? Comments?
You can reach me at chuck.taylor@englewoodconstruction.com
www.EnglewoodConstruction.com
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