2024 Forecast Event Showcases Challenges, Corrections, Successes

by | Feb 2, 2024 | Recent Events | 0 comments

By Roland Murphy for AZBEX

Every year, this turns out to be one of the hardest columns to write. It’s the classic conundrum of having too many good things to say about too many topics while still balancing priorities.

When you’re a proud data geek reporting on the event that serves as the showcase for a year’s worth of work from your fellow proud data geeks, you want to repeat every nugget, but you also want to not bog down your busy readers with a 14-page data dump or shortchange your client base who paid good money to attend the event in person.

So, with all that in mind…

The BEX 2024 Construction Activity Forecast Event was, once again, held in two sessions a week apart, falling this year on Jan. 24 and 31 and, as we did last year, taking over the Arizona Heritage Center auditorium in Tempe. The two-hour sessions wrapped up the year’s worth of work from the BEX Research staff detailing what happened in the Arizona construction market across the sectors we cover.

For those who have never attended a forecast event, BEX Founder and President Rebekah Morris and key members of the Research team give updates on the three primary market sectors (Public Infrastructure, Housing and Private Development) we track across the 11 main markets (Education [K-12 & Higher Ed.], Public Spaces, Transportation & Parks, Utilities, Single-family, Multifamily, Build-to-Rent, Industrial, Healthcare, Hospitality, and Office & Retail).

The presentations are the forest-level view that results from the thousands of individual projects the team identifies, researches, inputs and updates in the DATABEX project database over the course of a year. While it takes an extraordinary amount of work to distill all those individual projects into comprehensive market overviews, it gives attendees a clear look at what the market was expected to do, what it did, and what the data indicate it will do over the next 12 months.

It also gives the staff the ability to process and really acquire an aggregated understanding of what all those individual projects mean to the Arizona construction and development communities as a comprehensive economic force.

State of the Market

Sticking to the formula that’s proven most useful over time, Morris started her market summary by noting the major economic factors that drive Arizona construction: Population Growth, Employment, and Inflation and Interest Rates.

Arizona’s population growth continues to hold at approximately 1.5%/year. 2022 nudged up to 1.7% as pandemic relocations peaked, while 2023 returned to a more standard 1.56%.

Overall employment continues to rise, reaching a total of 3.189 million jobs in 2023, a more than 19% increase over the previous peak in 2007. At 204,300 jobs, construction employment is still 15% below the prior peak of 240,300 in 2006.

Overall, the data show we were a bit overly optimistic when we gave our predictions for 2023 at last year’s event. We had initially projected 2023 total construction activity to hit $30B. We subsequently revised that downward to $28.8B. When the dust settled, the market ended the year at $26.9B.

There were a few factors that went into tinting our glasses more rose-colored than the clear light of day eventually showed. In particular, Morris said, we thought:

  • Industrial lease-ups would continue at their previous rate,
  • Multifamily rent increases would overcome higher capital costs and increasing construction costs,
  • Public owners were able to absorb cost increases and push projects forward, and
  • Perhaps the difficulties and delays in project approvals at the city level might improve.

In terms of sector distribution, the data continue to show that the once standard breakdown of 1/3 Private, 1/3 Public and 1/3 Housing is long gone, perhaps never to return. For 2023, the activity levels came in at 53.7% for Private, 27.1% for Housing and 19.2% for Public.

After recapping the state’s Top 10 capital improvement programs, Morris then dove directly into the project breakdown, covering the Public sector. Given the massive percentages Housing holds in the overall matrix and the disproportionate volume Industrial has in the Private category, those sections this year were presented by their respective dedicated BEXperts: BEX Researchers Andrea Howard and Aaliyah Koelzer. The remaining Private sectors were presented, as usual, by Database Manager Lya Parrish before Morris resumed the stage to summarize the past year and give our predictions for this year and the next two to come.

The Market Sectors

Here is where that need for balance comes into play. While each segment presentation offered extensive insights into 2023 activity levels—including what we thought would happen versus what actually happened and, in the cases where those failed to mesh, why we were off—in the interests of conciseness and benefit to those who bought tickets, we will only list the top performers in each category and our prediction for the year to come.

It should be noted that, due to overlap, not all sectors will contain all five points of information.

Public Spaces

  • Top Project: Sky Harbor Terminal 3, North 2 Concourse ($325.8M);
  • Top Owner: City of Phoenix;
  • Top Design Firm: Arrington Watkins Architects;
  • Top GC: McCarthy Building Companies;
  • Projected 2024 Construction Volume: $1.19B.

Transportation & Parks

  • Top Project: I-10, SR 202L (Santan) to SR 387 ($410M);
  • Top Owner: ADOT (Arizona Department of Transportation);
  • Top Design Firm: ADOT (in-house design);
  • Top GC: Kiewit Corporation;
  • Projected 2024 Construction Volume: $2.7B.

Utilities

  • Top Project: SunZia SW Transmission Project ($1.5B);
  • Top Owner: Pattern Energy;
  • Top Design Firm: Burns & McDonnell;
  • Top GC: Kiewit Corporation | MMR Constructors, Inc.;
  • Projected 2024 Construction Volume: $2.3B.

Multifamily (Apartments/Condos)

  • Top Project: The Astra Phoenix ($417M);
  • Top Owner: The Empire Group;
  • Top Design Firm: Todd & Associates;
  • Top GC: Clayco Inc..

Build-to-Rent

  • Top Owner: The Empire Group;
  • Top Design Firm: Felten Group;
  • Top GC: Hancock Builders;
  • Projected 2024 Combined Multifamily Construction Volume: $8.8B.

Industrial (Warehouse & Manufacturing)

  • Top Project: TSMC ($13B – adjusted for equipment & machinery);
  • Top Owner: TSMC;
  • Top Design Firm: CTCI;
  • Top GC: Okland Construction.

Data Centers

  • Top Owner: Prime Data Centers;
  • Top Design Firm: Corgan;
  • Top GC: Holder Construction;
  • Combined Industrial and Data Center Construction Volume: $11.3B.

Healthcare

  • Top Project: Banner Scottsdale Medical Center Phase 1 ($400M);
  • Top Owner: Banner Health;
  • Top Design Firm: SmithGroup;
  • Top GC: Okland Construction;
  • Projected 2024 Construction Volume: $767M.

Hospitality

  • Top Project: VAI Resort ($760M);
  • Top Owner: VAI Resort;
  • Top Design Firm: JCJ Architecture;
  • Top GC: Fisher Industries;
  • Projected 2024 Construction Volume: $1.24B.

Office & Retail

  • Top Project: Discount Tire Headquarters, Phase 1 ($198M);
  • Top Owner: Discount Tire;
  • Top Design Firm: Nelsen Partners;
  • Top GC: Okland Construction;
  • Projected 2024 Construction Volume: $846M.

Conclusions

After an extended and fast-paced data dump covering so many different segments of the Arizona construction market, it’s useful to take a short step back and look at what all those pieces mean overall. After the BEXperts finished their individual presentations, Morris took the stage again to thank the team and offer BEX’s conclusions for the year to come.

In short:

  • Local project reviews and approvals will not get faster;
  • Local opposition to projects will be an ongoing (and likely increasing) challenge;
  • Prices will not come down fast enough, and
  • Traditional project capital will not rush back into the market anytime soon.

New This Year!

If you couldn’t attend this year’s Forecast, a White Paper containing all the slides and write-ups of each portion of the presentation will be available for purchase. Keep watching here, at AZBEX.com and your inbox for updates and pricing.

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STEVE BOSCHEN
ASSISTANT DIRECTOR - INFRASTRUCTURE DELIVERY & OPERATIONS
ADOT

 

Steve Boschen currently serves as an assistant director of ADOT overseeing the Infrastructure Delivery and Operations (IDO) Division, which oversees all statewide construction project delivery, including ADOT and Local Public Agency projects, and statewide operations and maintenance. Steve is responsible for Project Management, Operations, Project Delivery, Contracts and Local Public Agency areas of ADOT, which include a total of 20 groups and districts. This includes the development, construction, maintenance and operation of more than 28,000 lane miles of interstate and state highways in Arizona. He rejoined ADOT in October 2012 as a deputy state engineer for Project Delivery after a 20-year stint in the engineering consulting industry. Steve has a bachelor’s degree in civil engineering from the University of Arizona and is a registered professional engineer in the state of Arizona.

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WENDY COHEN
PRESIDENT & CEO
KITCHELL

 

As President & CEO, Wendy leads Kitchell Corporation with a collaborative spirit. Kitchell Corporation includes four diverse operating companies, Kitchell Contractors Inc., Kitchell Capital Expenditure Managers Inc., Kitchell Development Company Inc., and American Refrigeration Supplies. Wendy is passionate about developing a strategy and culture that allows for innovation and change in the construction industry. With 30 years of experience, Wendy's journey in the building industry has been marked by significant roles as a general contractor, construction manager, consultant, and owner, culminating in her current leadership at Kitchell. Wendy is a proven leader and trusted advisor and is committed to developing future leaders and implementing innovative ideas to improve the built environment. Her experience leading high-performance teams paved the way for her current role at Kitchell, which is consistently ranked among the top Construction Management, Program Management and General Contracting firms both regionally and nationally. Beyond her corporate achievements, she is active in the community and industry. She serves on the boards of the Greater Sacramento Economic Council, Greater Phoenix Economic Council, and Greater Phoenix Leadership. In 2024, Wendy and Kitchell were accepted into the Global Design Allowance as the newest Board of Director and joined the American Contractors Insurance Group (ACIG) as its Executive Member.

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ERIC FROBERG
CITY ENGINEER
CITY OF PHOENIX

 

Eric has served as City Engineer for the City of Phoenix since January 2019, which included a 6 month assignment as Interim Director of Water Services, a 5 month assignment as Interim Director of Public Works, and a 1 month assignment of Street Transportation. Eric possesses over a quarter century of relevant public works and land development engineering experience. Prior to joining the City of Phoenix, most recently Eric was the New Mexico Operations Manager for TYLIN International and prior to that was a Senior Project Manager for RBF Consulting. After spending two decades working as a private consultant, Eric desired to utilize his engineering and management expertise in a way that more directly benefited the public. As the City Engineer for the nation’s 5th largest City, Eric is responsible for overseeing the selection of architects, engineers & contractors and the execution the City's 5-year, $11 billion Capital Improvement Program, including serving as the program manager for the current $500M General Obligation Bond program. Eric holds a bachelor’s degree in Civil Engineering from the University of Arizona and is a Registered Professional Engineer in Arizona, California, and New Mexico. Eric is currently a member of the Alumni Industry Council for the University of Arizona, previously held the position of State Director for ACEC-NM.

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REBEKAH MORRIS
PRESIDENT & FOUNDER
ARIZONA BUILDER'S EXCHANGE

 

Rebekah started the twice-weekly AZBEX publication in February 2010, and has since grown the service into a multi-faceted resource for local Commercial Real Estate & A/E/C firms to find leads on upcoming projects, industry news, trends, and market insights. In 2015, AZBEX started producing events and now features four annual half-day conferences and six breakfast panels known as the Leading Market Series. In 2016, the AZBEX Database or DATABEX was launched. Both the events and database are engineered to bring opportunities to clients – whether it’s the contacts made at a half-day conference or bi-monthly breakfast program or the early stage notice of a project in the database, every service of AZBEX is focused on bringing opportunity to clients. Rebekah’s background as a large General Contractor enabled her to spot the opportunity to start BEX, but it is her grit, determination and eternal curiosity for the industry that has kept it going and growing each year.

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SUSANNA STRUBLE
TOWN ENGINEER - CIP MANAGER
TOWN OF GILBERT

 

Susanna Struble is the Town of Gilbert’s Assistant Town Engineer/ CIP Manager, with more than 35 years of related private consulting and municipal engineering experience. She currently manages a team of 12 CIP project managers in the development, design and construction of a $3.5B 10 year Capital Improvement Program. Prior to joining Gilbert, Susanna served as Public Works Director/City Engineer for Coolidge, Arizona; various engineering positions with Willdan Engineering which included serving as the regional manager for the Phoenix operation for over 10 years; City Engineer in Show Low Arizona and Assistant County Engineer in Eagle County, Colorado. Ms. Struble is a Registered Professional Civil Engineer in the State of Arizona; she received her Bachelor’s Degree in Civil Engineering from University of Wyoming.

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ALISON TYMKIW
CITY ENGINEER
CITY OF SCOTTSDALE

 

Alison Tymkiw is currently serving as the City Engineer for the City of Scottsdale, Arizona. Alison is responsible for administering the City’s Capital Improvement Program and she manages the Capital Project Management Division which is responsible for the planning, design and construction of infrastructure improvement around the city. Alison has worked for the City of Scottsdale since 1998 and has previously held the positions of Civil Engineer, Project Manager and Senior Project Manager prior to promotion to her current role as City Engineer. Prior to joining the City of Scottsdale, Alison worked for engineering design and consulting firms, first in Connecticut and then in the local Phoenix area. Alison holds a Bachelor of Science degree in Civil Engineering from Lehigh University, and she is a Registered Professional Engineer in the State of Arizona.

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AALIYAH KOELZER
DATABEX RESEARCHER
BEX

 

Aaliyah is a DATABEX Researcher specializing in Arizona’s Commercial Real Estate Market. Starting his construction career in the field, Aaliyah gained hands on skills working as a stonemason in the northern state of Montana. After obtaining a Bachelor’s degree in Economics and Mathematics, he moved to the Grand Canyon State to gain further experience in Real Estate Development and Construction Management.

Currently Aaliyah manages and maintains the entirety of DATABEX’s active Industrial, Hospitality, Healthcare, Office and Retail projects in
Arizona.

Three interesting facts about Aaliyah:
- He is an avid angler and bowhunter
- He enjoys playing the guitar in his free time
- He played soccer for the Montana State University Men’s Soccer Club

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ANDREA HOWARD
MARKET RESEARCHER
BEX

 

Andrea is a market researcher for BEX. She specializes in scouring permit sites, council meetings, and any other sources she can find to provide the most up to date information for the multifamily sector. Since joining the company in 2021 she has learned to spot construction trends to not only supply updates to DATABEX, but to gain insight into the shifting market.

Fun facts about Andrea
- She is originally from Texas
- She has a Bachelor’s degree in Japanese Language
- She was an Arabic linguist in the Air Force

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REBEKAH MORRIS
FOUNDER & PRESIDENT
BEX

 

Rebekah started the twice-weekly AZBEX publication in February 2010, and has since grown
the service into a multi-faceted resource for local Commercial Real Estate and A/E/C firms to find leads on upcoming projects, industry news, trends, and market insights. In 2015, AZBEX started producing events and now features four annual half-day conferences and six breakfast panels known as the Leading Market Series.

In 2016, the AZBEX Database or DATABEX was launched. Both the events and database are engineered to bring opportunities to clients – whether it’s the contacts made at a half-day conference or bi-monthly breakfast program or the early stage notice of a project in the database, every service of AZBEX is focused on bringing opportunity to clients.

Rebekah’s background as a large General Contractor enabled her to spot the opportunity to start BEX, but it is her grit, determination and eternal curiosity for the industry that has kept it going and growing each year.

Three fun facts about Rebekah:
- Hobbies include running, cooking, reading and hanging out with her husband and kids
- She has a degree in construction engineering
- She cannot whistle

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LYA PARRISH
DATABEX MANAGER
BEX

 

Lya Parrish is the DATABEX Manager for BEX, Arizona’s leading Construction Market Research company. Lya holds a Bachelor’s degree in Political Science and a Master’s degree in Policy and Applied Social Research. She has been actively studying the Arizona Construction market since 2015.

She leads a team of six full-time Market Researchers and is responsible for training and development of staff, market analytics, and development of the technical aspects of DATABEX.

Three fun facts about Lya:
- She is a Sci-Fi/Fantasy, LEGO, and cross-stitch fanatic
- She has two nearly identical cats
- Her childhood home is roughly 1,000 yards from the BEX Office in Central Phoenix

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