Executive Search for the Real Estate and Construction Industries

Hot Candidates

Senior Estimator - New York City - Highly experienced senior construction cost estimator with extensive knowledge in preparing all levels of estimates with 17 years of estimating experience. Skill includes preparing quantity take-offs for all construction trades, developing and analyzing unit prices, preparing high level conceptual budget estimates, bids for construction managers, general contractors and subcontractors. Familiarity with numerous facility types including transit, aviation, educational, hotel, medical, cultural, restaurants, retail, and commercial, sports complex projects.

Senior Construction Project Manager (Healthcare Facilities, Commercial, and Institutional) Candidate has extensive experience managing large scale building construction projects up to $300 million and background includes more than 15 years experience with an ENR top 25 Construction company. Candidate is in Chicago.

Construction Manager - 10 plus years experience with commercial building construction and development experience. Candidate is in the Boston market.

Commercial Construction Manager - 15+ years experience. Background includes experience managing both negotiated and hard bid commercial and retail building projects up to $10 million. Candidate is in Michigan and is willing to relocate.

Construction Manager - 12+ years experience. Responsible for all phases of construction projects including planning, estimating, bidding, purchasing, construction, close out, client satisfaction, and project profitability. Projects include healthcare, senior living, commercial, and institutional buildings. Candidate is willing to relocate.

For more information about one of more of these candidates, contact John Kreiss at jpkreiss@morgansullivan.com.

Despite housing slump, overall 2007 outlook is positive
By John P. Kreiss, President, MorganSullivan

This year presents some notable changes in recent trends for the real estate development and construction industries. The residential building boom of recent years appears to be over. Other sectors, however, are showing signs of strength, and some are on the rise. Unless your firm specializes in single- family home developments, 2007 is shaping up to be a good year.

The fourth quarter of 2006 turned out to be bright, according to the The American Institute of Architects’ (AIA) Architecture Billings Index (ABI). Following a six-point jump in November, the ABI increased even more in December, and finished 2006 with its highest score. The December rating was 59.5, up from 57.4 in November (any score above 50 indicates an increase in billings).

With an approximate nine-to-twelve month lag time between architecture billings and construction spending, the ABI translates into a high level of activity throughout 2007. In December, the commercial/industrial sector recorded its highest reading in the history of the survey, which originated in 1995, while scores in the institutional market also showed improvement.

“Despite a sluggish economy, there is no sign of a slowdown in non-residential construction activity in the foreseeable future,” said AIA Chief Economist Kermit Baker. “This is very positive news for the construction industry and those markets affected by it because 2006 ended on a strong rebound, after trending down for most of the first 10 months.”

The residential sector looks gloomy in comparison. “Residential construction spending shrank again in October by 1.6 percent, bringing the cumulative decline to 11 percent since peaking last March,” according to Ken Simonson, chief economist for The Associated General Contractors of America (AGC).

Simonson, like the AIA, is optimistic about other sectors, however. “There has been no letup in the torrid pace of private nonresidential spending growth,” Simonson says. “For instance, lodging construction—mainly hotels and resorts—jumped 4 percent in November and was up 71 percent from the November 2005 level.”

Reed Construction Data (RCD) reports that the value of new lodging starts averaged $1 billion a month last year through November 2006, reaching nearly $1.5 billion in October and November. RCD says the hotel boom is now peaking, measured by starts, because room completions from 2005-2006 construction are now high enough to keep occupancy rates from rising further and to restrain the rise in room rates. The number of hotel rooms in the planning stage is nearly double a year ago, but many of these will not be built, RCD says.

Several other non-residential sectors are also on the upswing. “Energy- and power-related construction, hospitals, and rental housing will all perform well,” Simonson says. However, he adds, “single-family and condo construction will sink (overall industry) totals.”

The bad news on the residential front contains a silver lining in reduced materials prices.

Prices for materials delivered to the job-site fell 0.2% in November 2006 on top of the steep 2.2% fall the previous month, according to RCD. Weakening prices are the consequence of both a weaker construction market and the pass-through effects from declines in world commodity prices, they say.

An abrupt fall in materials demand has created surplus inventory and discount pricing, RCD says. The production of construction supplies has declined for three months, but some excess inventory still remains. Meanwhile, falling demand for construction materials commodities has weakened prices. This reduction in demand for construction commodities coincided with other factors that cut world commodity demand and prices, such as reduced speculative buying of oil and metals.

We at MorganSullivan continue to see high demand for construction and development managers in many sectors. All in all, we think 2007 is shaping up to be a strong year for our industry.

What do you think? Are you optimistic about 2007? Let us know.

John P. Kreiss is President of MorganSullivan, an executive search firm serving the real estate and construction industries.