Orlando Report: Staying Busy

Amidst State Downturn, Central Florida Construction Market is Diversified, Dynamic

By Debra Wood

Orlando is faring better than many Florida cities during this economic downturn, thanks in part to large public initiatives and an emphasis on building a bioscience enclave sparked by mostly public dollars.

“We see Orlando as being one of the best markets in Florida,” says Scott Skidelsky, vice president and general manager of Turner Construction Co. of Orlando. Turner serves as program manager for the new $380 million Orlando Events Center, one of the largest projects in the city.

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Cliff Brewis, senior director of editorial for McGraw-Hill Construction, echoed that sentiment in his Outlook 2008 Executive Conference presentation in Orlando.

“Of all the markets within Florida, Orlando probably has the greatest strength,” Brewis said. “There are some fairly good fundamentals when you compare it to Miami and other areas. Most of the state is in recessionary conditions.”

Overall, commercial activity remains relatively strong, agrees Mark Wylie, president and chief executive officer of the Central Florida Chapter of Associated Builders and Contractors in Winter Park.

Skidelsky says competition is much fiercer than in years past and is driving down labor costs.

“Normally, we might have 150 or 160 [subcontractors] bid, and we now have 250,” Skidelsky says.

Wylie says other contractors report similar competitiveness.

“It’s a cyclical business,” he adds. “We were on an unsustainable curve in 2004-2005. It was insanity. People wanted something built but couldn’t build it at any price at the quality level they wanted because of the lack of people, management or skilled craftsmen. We need to take a breather. The economy will come back and so will the industry.”

What’s happening downtown

The city of Orlando cleaned up the downtown parcel west of Interstate 4 where the Orlando Events Center, future home of the National Basketball Association’s Orlando Magic, will begin construction in August.

The events center, designed by HOK Sport of Kansas City, Mo., is one of three venue projects moving forward as part of a $1 billion civic improvement campaign. The other components are a performing arts center now in design and renovation of the Citrus Bowl stadium.

Skanska/JCB, a joint venture between Skanska USA Building in Orlando and JCB Construction of Orlando, topped out the new Orlando Utilities Commission headquarters. The $40 million, 10-story, 110,000-sq-ft building features raised floors, solar panels that will generate electricity and a cistern to capture and reuse rainwater. The municipal utility aims for gold-level LEED certification.

After a couple years of robust condominium growth in the central business district, new starts on condominium projects have dried up.

“The condo business dropped off, and it will take awhile to absorb that space,” Wylie says.

Brewis adds that the downtown Orlando condo marketplace is overbuilt, but there is real demand for low-maintenance, high-convenience living. He expects it will take two years to turn around.

Those projects under way are continuing. They include the $136.2 million, 32-story, 55 West on the Esplanade and the $101 million, 16-story Paramount on Lake Eola. PCL Construction Services of Orlando broke ground on 55 West, a post-tensioned concrete structure, designed as a condominium tower with ground-floor retail, in March 2006. It topped out and turned over some lower levels to the owner in April and expects to complete the project by October.

Euro American Advisors of Tampa was the original developer. SNS Property Finance of the Netherlands has begun foreclosure proceedings due to lack of payment on the note. The foreclosure remains in the court system.

Roland Hand, a consultant with Construction Consultants Collaborative and Grosse Point Development of Fort Myers, Fla., which is managing the property for SNS, says the owner is seriously considering converting about half of the space to a high-end hotel property and similarly branding the remaining residences. He adds that if that occurs, it will require some demolition and reconstruction. “55 West will see some of the business model change,” Wylie says. “I think they have plans for a hotel as well as more office space. It will change with the market because they cannot sell as condos.”

Hardin Construction of Orlando began work in April 2006 on the $101 million Art Deco-style Paramount on Lake Eola for ZOM Development of Orlando. The project will introduce a grocery store to downtown set to open this fall.

School projects

Brewis forecasts that 2008 educational funding would remain about the same as in 2007, about $230 million, but he said it could go either way, depending on state funding.

Orange County Public Schools has about a dozen schools under construction and a half-dozen in design. It recently announced plans to accelerate design and construction of at least 15 renovation or replacement projects associated with a half-cent sales tax initiative passed by voters in 2002.

Turner received a contract to build the $25 million middle school “CC” for the School District of Osceola County, south of Orlando.

In the higher-education market, the University of Central Florida, a state school, has several projects under way. PPI Construction Management of Orlando is building a four-story physical sciences building at the main campus in Orlando. The $18.9 million, 57,917-sq-ft building will provide office and laboratory space for the physics and chemistry departments. Completion is scheduled for December.

Lake Nona Development

At the Lake Nona area in southeast Orlando, progress is taking place on the UCF Health Sciences campus and the Burnham Institute for Medical Research’s East Coast facility, which received $155 million in state incentives and money from local governments and private industry. Lake Nona is a private, mixed-use development owned by the Tavistock Group of Orlando. One component is a science and technology park, referred to as a “medical city.”

“Bioscience is a focus for the state, and we see it as an opportunity for growth locally,” says Rob Adams, vice president of marketing for Lake Nona.

Whiting-Turner Contracting Co. of Orlando continues work on the $68 million, 199,269-sq-ft UCF Burnett School of Biomedical Sciences Research Center, scheduled for a June finish. The concrete-frame building broke ground in February 2007. The team aims for standard LEED certification.

Balfour Beatty Construction of Orlando broke ground this spring on the $53.3 million, 171,021-sq-ft medical school building, for which the university seeks LEED silver certification.

BE&K Building Group of Maitland, Fla., topped out the Burnham facility in April. The reinforced-concrete structure includes a structural-steel penthouse. A steel bridge connects the main research center with the administrative building. The combination of steel and concrete presented challenges at the front-end for the mechanical, electrical and plumbing subcontractors, who had to carefully plan piping and wiring, says Chris Sadowski, senior project manager for BE&K.

Precast concrete and glass will clad the research building and stucco the administration section. The building is scheduled for a first quarter 2009 finish.

Lake Nona donated $12.5 million cash and 50 acres, valued at about $40 million, to UCF to bring the health-sciences campus to the planned development near the Orlando International Airport, Adams says. “Once UCF was here, it formed a nice anchor to attract the others that followed,” he adds.

That includes a Department of Veterans Affairs hospital, still in land negotiation, and the Nemours Children’s Hospital, in preconstruction.

“There will be perhaps $1 billion going on in that area in the next three to four years,” Wylie says. “The Lake Nona medical city will have a big impact on construction for years to come.”

Useful sources:

Orlando Events Center
http://www.nba.com/magic/orlandoeventscenter/

Orlando Performing Arts Center
http://www.orlandopac.org

University of Central Florida Current Projects
http://www.fp.ucf.edu/ActivityReport/new/

Lake Nona
http://learnlakenona.com/