Record Construction Spending Littlenoticed Here Builders Say
Written by Samantha Joseph on June 3, 2004
By Samantha Joseph
A record for construction spending nationwide may not be as evident in South Florida, where activity has been strong for three years, local builders say.
The US Department of Commerce reported Tuesday that nationwide construction spending in April was more than $970 billion, the best monthly performance on record.
Spending rose 2.4% from the previous month, the department said, indicating economic recovery.
South Florida builders say the upswing is not as significant locally, where the construction industry has recorded consistently strong performances.
"We’ve been busy for the past three years," said John C. Siegle, executive vice president of the Fort Lauderdale-based Construction Association of South Florida. "Florida doesn’t seem to be affected by these kinds of trends."
Mr. Siegle said about 800 people move to Florida each day, creating a strong demand for housing and public construction projects to support the state’s expanding population. "We build all year-round," he said.
The emergence of several urban infill projects point to steady demand, said real estate analyst Michael Cannon.
"Never before in the history of South Florida have we seen such mammoth development at one time," said Mr. Cannon, managing director of Integra Realty Resources.
Florida’s appeal to South American investors makes it easy to understand the state’s unswerving performance, said construction industry executive Pepe Cancio. Steady appreciation in the value of real estate, good weather and a stout economy with low unemployment appeal to Latin Americans seeking a sound market for their investment capital, Mr. Cancio said.
Favorable currency-exchange rates are attracting European investors to US markets, he said, and developers here benefit from the additional business.
"Every good factor is in place here," Mr. Cancio said. "South Florida is attractive to many people."
Despite its positive cues about the US economy, the Commerce Department’s report comes amid industry complaints of rising building costs and a shortage of cement, a key ingredient in concrete. "It does not surprise me," said Mr. Cannon. "This record construction is probably the reason for the shortages and price increases."
A cement shortage has slowed South Florida construction projects about 15% since March and led to rationing by local suppliers, according to industry reports.
China will consume 40% of the global cement supply this year, suppliers in Florida told their clients earlier this year. China’s voracious demand not only has drained the US cement supply but has driven up shipping costs and contributed to a 50% increase in costs for all construction material, they said.
Mr. Cannon said he doubts the accepted theory that an economic boom in China has created the problem.
"I believe it has nothing to do the China connection," he said. "I doubt seriously that our mining companies are shipping concrete around the world to China and causing prices to go up. I think the question is whether we are having a supply cartel going on here in South Florida."
Bernardo Dias, executive vice president of concrete supplier Supermix, said increases in cement prices would have little effect on construction profits. Concrete accounts for about 5% of the total costs of most developments, he said.