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BUSINESS NEWS ANNUAL TOTAL FOR 2015 CLIMBS 8 PERCENT TO $645.5 BILLION New con- struction starts in December advanced 4 percent to a seasonally adjust- ed annual rate of $591.6 billion, according to Dodge Data & Analytics. The December gain follows a 5 percent decline in November, and brings total construction activity back close to the amount that was reported in October. December showed moderate increases for each of the three main construction sectors – nonresidential building, residential building, and nonbuilding construction (public works and electric utilities). For 2015 as a whole, total construction starts climbed 8 percent to $645.5 billion. This continues the pattern of moderate expansion for total con- struction starts registered during the previous three years – 2012, up 12 percent; 2013, up 11 percent; and 2014, up 9 percent. The December statistics produced a reading of 125 for the Dodge Index, compared to a revised 120 for November. For all of 2015, the Dodge Index averaged 137. “The construction start statistics reveal continued expansion for construction activity during 2015, although the path over the course of the year was not smooth,” stated Robert A. Murray, chief economist for Dodge Data & Analytics. “A strong first half of 2015 was followed by a 20 percent loss of momentum in the third quarter and then a slight 1 percent rebound in the fourth quarter, as the expansion began to show that it was getting back on track. Several factors contributed to the early 2015 strength – more growth for the commercial and insti- tutional segments of nonresidential building, gradual improvement for single family housing alongside the continued rise by multifamily hous- ing, and a surge of electric utility and gas plant projects that featured the start of several massive liquefied natural gas terminals in the Gulf Coast region.” “The third quarter of 2015 witnessed a steep 30 percent drop for non- residential building, as the manufacturing building category and in par- ticular energy-related projects fell sharply,” Murray continued. “In addi- tion, the commercial and institutional building segments of nonresidential building settled back, as earlier gains may have overshot their underlying growth trend while uncertainty in the economic and political environment

dampened investment in general. Residential building slipped 3 percent in the third quarter, due to flattening activity for single family housing, while nonbuilding construction plunged 32 percent as the result of a sharp reduction by the electric utility and gas plant category. On the plus side, the fourth quarter of 2015 showed the commercial and in- stitutional segments of nonresidential building beginning to pick up the pace once again, and supportive market fundamentals (occupancies and rents) should help renewed growth for these segments going into 2016. The public works portion of nonbuilding construction also began to pick up the pace towards the end of 2015, and should be aided by the December passage of fiscal 2016 federal appropriations as well as the new $305 billion five-year federal transportation act (the Fixing America’s Surface Transportation Act).”

SUCCESSION, from page 11

Green has a two-pronged approach to the problem. He has a focus on internal growth – company culture, community involvement, and a creative work environment – and the never-ending search for new talent to provide “bench depth.” Perhaps mindful of the recession and the devastation it brought to the real estate market and any- thing attached to it, Green concedes that the economy, something no architect or engineer can con- trol, is the great universal worry of CEOs throughout the design world. “We seem to be the first ones in and the last ones out due to how closely tied our industry is to the availability of capital, whether public or private,” Green says. “This approach continues to commoditize our professional services and devalues our worth as a critical asset to the design and construction process. That’s unfortunate.” Knowing that at some point there will be leaner times than 2016, he had this to say: “That will be a chal- lenge, no matter what. How do we maintain a balanced team?” During the recession, there was heavy downward pressure on design fees as developers and builders tried to control costs in a tight market. To a large extent that still exists today, and as a CEO of an estab- lished firm, Green is fighting against it. “There appears to be a shift in focus by many firms, which started in 2008, from an honest wage for a valued service to a low fee, high-volume model and philosophy,” Green says. “This approach contin- ues to commoditize our professional services and devalues our worth as a critical asset to the de- sign and construction process. That’s unfortunate.”

THE ZWEIG LETTER February 22, 2016, ISSUE 1140

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