In July, Madison, Wis.-based Findorff completed construction on the $78 million American Family Children’s Hospital.

The latest figures on construction starts indicate that as a region, the Midwest is experiencing the second-largest percentage gain in non-residential building, up 27.6 percent from April 2006 to April 2007, according to Reed Construction Data. Various other sources, including industry leaders in the region, indicate that much of that spending is in the healthcare and higher education segments.

Bob Barker, Executive Vice President with the Associated General Contractors of Wisconsin (AGCWI), says the most notable development trends are occurring in the healthcare and education sectors. The organization’s membership, now more than 270 strong, consists of general and specialty contractors, suppliers and several developers in the commercial, industrial and institutional segments. “We have a wide variety of members across the entire spectrum of construction,” Barker maintains.

Many AGCWI members have been involved in ongoing projects within larger owners, including the University of Wisconsin System, St. Mary’s Hospital and Meriter Hospital in Madison. “On a statewide basis, there has been significant building of clinics for healthcare providers,” Barker asserts. 

“That has been a mainstay in the construction market for the past few years and will likely continue considering the aging population and the need for quality healthcare.”

In general, Barker says, a quality labor force and reasonable land prices have been a boon to development. “We haven’t seen land costs become a barrier to development,” he says. “Wisconsin is a reasonable place to build.”

Supported by a hefty state budget, Barker says there is support for new construction in the University of Wisconsin System, one of the largest public higher education systems in the country and comprised of 13 four-year universities, 13 freshman-sophomore colleges and a statewide extension program. Barker says more than a half-billion dollars in the state budget is being considered for future projects on campuses within the system. “That’s a big part of the construction program in Wisconsin,” Barker says.

Smart Building
Madison, Wis.-based general contractor J.H. Findorff & Son Inc. is one contractor partaking in an extensive mixed-use urban redevelopment project centrally located on the University of Wisconsin-Madison campus. Designed by local architect Potter Lawson Architects, the development will include ground-level retail, student housing and office space.

Exceeding 1 million square feet, the building will house the university’s bursar’s office, financial aid office, registrar’s office, student health services and the student organization office and activities center, as well as more than 500 underground parking spaces. University Square will also feature several sustainable features such as a green roof that will serve as the site’s stormwater management system by helping prevent runoff.

The area also serves as home to a medical research giant, the University of Wisconsin Hospitals and Clinics, which continues to evolve as the medical field advances. Findorff completed two major projects in this sector this summer.

In July, the firm celebrated the grand opening of the new $78 million American Family Children’s Hospital in Madison. Designed by HDR Architecture, the facility’s accommodations include spacious inpatient rooms, a pediatric ICU and a childhood cancer unit. This 420,000-square-foot facility is a integrated health sciences complex within the UW medical community.

Also in July, Findorff completed the Meriter Heart Hospital in Madison. A 33,000-square-foot facility, it is located on the 10th and 11th floors of Meriter Hospital and was designed around the needs of patients with cardiovascular diseases. The hospital has 45-bed inpatient and 16-bed short-stay units.

A Closer Look
A market correction continues in the North-Central residential new build sector with total dollars spent on residential construction slipping 11 percent in the second quarter of 2007, compared to the second quarter of 2006, according to market research firm and Raleigh, N.C.-based FMI Corp. This figure was heavily skewed by the new single-family residential sector which slipped 18 percent in the second quarter in comparison to the same quarter last year. The total spent on new single-family residential construction during the second quarter of 2007 was just over $49 billion.  This marks the second consecutive year in which second-quarter numbers dipped from the previous year with the second quarter of 2006 posting a 7 percent decrease from the previous year’s second quarter.

Even though the new-build residential market has slipped dramatically in the previous two years, total dollars spent in new construction in the second quarter of 2007 exceeded the total spent on new single-family residential construction in  2002 and 2003.

The market correction in the residential sector did not affect the strong nonresidential building sector. The manufacturing sector held strong, gaining 8 percent when compared to the second quarter of 2006. This is the fourth consecutive year in which there was a substantial increase in monies spent on industrial. During that period, dollars spent on industrial construction in the second quarter increased by 81.5 percent.

Office construction and commercial construction also posted strong numbers in the second-quarter of 2007. Dollars spent on office construction came in at $5.89 billion, marking a 6 percent increase over the second quarter of the previous year. This also marked the second consecutive year of gains. Dollars spent on commercial developments increased for the third consecutive second quarter by rising 6 percent with approximately $6.25 billion being spent.

The real boom area in non-residential building construction over the past six years has been in the health care sector, which has posted double-digit gains since the second quarter of 2002. Compared to the second quarter of 2006, dollars spent on the construction of healthcare facilities in up 10 percent. Dollars spent on the construction of healthcare facilities is the second quarter of 2007 is up a notable 138.6 percent.

FMI forecasts that 2007 marks the year in which the residential construction market has bottomed out. FMI is forecasting a 1 percent increase in the dollars spent on single family residential construction and the overall residential market to increase by 3 percent in the second quarter of 2008.

Growing Pains
For Midwest Development & Investment Corp., an Iowa-based real estate and investment company, regional growth has, at times, slowed the approval process, says President Alan Marks.

The firm has a presence in Iowa, Illinois, Wisconsin and Missouri. Midwest Development is primarily involved in build-to-suit projects in addition to land development for multifamily subdivisions.

“In the Chicagoland area, [dealing with municipalities] has been very challenging,” Marks says. “We had one project for a standard commercial building take two years to get approval.”

 Marks believes that a strong correlation exists between economic growth and stricter control over the regulations surrounding a project. He says the North-Central region can better foster development by providing clear directives on the expectations of commercial development.

Likewise, Marks says owners should take initiative to find out exactly what is expected in the communities where they seek to develop. “If cities want to help developers, they need clear and qualifying criteria that professionals can see and use up front,” Marks asserts.

Other pressures the company faces are unrealistic price expectations from buyers who believe the national downturn in the residential sector applies locally. 

“[The media] has created national expectations that have affected developers,” he says. “We are in a strong real estate market in certain places, but buyers say we should be giving a better deal.”