![]() The national economy is performing better than popular opinion might have it, with steady growth thus far for most of this year and positive signs for the rest of 2023. That upbeat assessment is being offered in a new report, Midyear 2023 Outlook, published by financial services giant J.P. Morgan Chase & Company. The reports notes that for the first six months of this year the nation's Gross Domestic Product has increased by anywhere from 2% to 2.4%, with consumer spending remaining steady. And even as business sentiment and business investment has remained flat for most of 2023, says the report, "there are indications this is turning the corner." Similarly, "monetary policy has been restrictive for several months now, and we think the hiking cycle is nearing its end." Noting the Federal Reserve's ongoing increase in interest rates over the last year, the study predicts: "We expect the Fed to be on hold through the middle of next year, provided inflation continues on its downward glide path." In fact, the inflation trend line has been moving in "the right direction," although the J.P. Morgan analysts nonetheless acknowledge that it has "proven to be more persistent than expected through the first half of the year." Contributing to the decline in inflation has been a notable decrease in energy prices, while at the same time a reduction in "core services inflation" has dropped from 7.3% earlier this year to 6.1% last month. Founded by John Pierpont Morgan during the Civil War, J.P. Morgan and Company rose to become one of the largest private banking houses on Wall Street. Morgan, with an eventual personal wealth of more than $80 million, summed up his optimistic capitalism in one sentence: "Go as far as you can see; when you get there you will be able to see farther." J.P. Morgan and Company merged with Chase Manhattan in 2000 to become one of the largest banks in the world. Its regularly published outlook reports are regarded as incisive snapshots of the national economy at any given point in time. By Garry Boulard
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![]() Phoenix remains in the top ten of cities nationally building the most homes, according to a new industry survey, having completed just under 47,300 units last year. The survey, compiled by the San Diego-based data analysis company Construction Coverage, includes home building activity in Mesa and Chandler in its overall metro Phoenix profile, noting that the area heading into this year also saw a median home price of just over $446,000. Despite the strong numbers coming out of metro Phoenix, new home building nationally, says a narrative accompanying the survey, remains markedly down: "The lack of housing supply has been exacerbated by significant underinvestment in new housing since the Great Recession." And even though such activity picked up during the immediate years of the pandemic, "as of June 2023, new authorizations declined 26% after peaking in December 2021." The narrative adds that a combination of inflated construction costs and elevated mortgage interest rates, "produced 12 straight monthly declines in builder confidence during 2022." The latest total number of new units for metro Phoenix represents an increase over 2020, when the figures stood at 35,400. The area's home asking price, representing the ever-increasing popularity of moving to and living in southern Arizona, is also significantly up over 2020 when that average stood just below $278,000. Arizona in general, meanwhile, according to the survey, is among the top 15 states in terms of new home building, a pattern typical of industry trends in the West. Such "fast-growing states," notes the narrative, "are moving faster than others in authorizing new construction." "At the local level," the narrative continues, "major metros in these fast-growing states are also among those leading in new home construction." Not only are the largest metro areas in the West in the forefront of new home construction, but such construction in the West's mid-sized cities has also set a national pace, with Greeley, Colorado; Orem, Utah; and Boise City, Idaho; among the top ten locations nationally. By Garry Boulard Phoenix Sky Harbor International Airport Gets Funding for Neighborhood Infrastructure Project8/17/2023 ![]() Work could begin later this year on what is being called a Cultural Corridor running adjacent to the Phoenix Sky Harbor International Airport. The airport has been awarded up to $10 million in federal funding to build a connection between what are described as "disadvantaged and underserved communities" near the airport with larger downtown Phoenix. The funding is coming through a Rebuilding American Infrastructure with Sustainability and Equity grant which dovetails with an ongoing effort on the part of the airport to build out and upgrade nearby neighborhood infrastructure. The project is expected to see the installation of new street lighting and protected bike lanes, while making sidewalks in the neighborhoods Americans with Disabilities Act compliant. Additional facets of the project are expected to include new bus shelters, the re-establishment of utility connections, and historic building and site markers. The Cultural Corridor project area includes the historic El Campito, Cuatro Milpas, Green Valley, and San Juan Batista neighborhoods. In a statement, Congressman Greg Stanton noted that through the years the expansion of the Sky Harbor Airport has separated residents in the nearby vicinity "from their neighbors and economic opportunity." The Cultural Corridor project, Stanton continued, will "reconnect and revitalize these communities, while honoring their history." By Garry Boulard ![]() A final rule issued earlier this month by the Department of Labor that updates the historic Davis-Bacon Act has not been enthusiastically received by the nation's construction industry. The original legislation, passed in 1931, put in place a requirement that local prevailing wages must be paid on public works projects for builders and laborers. Signed into law by President Herbert Hoover, partly as a measure combating the economics of the Great Depression, the act has been repeatedly updated and expanded through the decades. While the legislation has not been without its supporters, a study done in 2016 by the Congressional Budget Office underlined the primary reason why Davis-Bason has been unpopular in the construction industry, increasing the cost of wages in federal projects by an average of around $1.4 billion a year. The latest update of the legislation, according to the Department of Labor, is designed to ensure that "prevailing wages keep up with actual wages," while also "issuing supplemental rates for key job classifications when no survey data exists." The updating of the legislation, said Acting Secretary of Labor Julie Su, is designed to make sure that "workers get the fair wages and benefits they deserve on federally funded construction projects across the nation." Su added that the update will "create pathways to the middle class for more families and help level the playing field for high-road employers because companies who exploit their workers, or don't pay workers fairly, should never have a competitive advantage." Criticism of the new final rule has been issued by the Associated Builders and Contractors, which said that the one likelihood of the Labor Department determination is to add on to the "regulatory burden on small businesses, new industries, and public works projects." In a statement, Ben Brubek, vice-president of regulatory, labor, and state affairs with ABC, said the new rule will increase the probability that the Department of Labor will now "adopt union wage scales at the prevailing wage at a greater frequency than in current practice, which already adopts union wage scales at improbable rates, considering that just 11.7% of the construction industry is unionized." Similarly, the Associated General Contractors of America has issued a statement saying that while Davis-Bacon final rule "makes some improvements," it nevertheless misses an opportunity to improve the wage determination process and "further burdens over-regulated construction contractors building and upgrading the nation's infrastructure." Liz Shuler, president of the AFL-CIO, meanwhile, has issued a statement hailing the final rule, saying it will "guarantee that workers in new and existing jobs, emerging infrastructure, and clean energy sectors are paid fairly." The Labor Department's final Davis-Bacon rule came about after months of public input from construction and labor union officials, economists, and activists, among others. By Garry Boulard ![]() A plan to build an apartment complex in Denver geared for seniors who are homeless has received a significant boost with city approval and financial support of the multi-million project. Members of the Denver City Council have now voted in favor of providing $2.7 million in city funds to get the project built, along with another $1.4 million that will go for support services at the complex. The project belongs to the St. Francis Center, a non-profit organization that for the last four decades has provided shelter, food, and support services to homeless individuals in the Mile High City. Set to go up at 221 N. Federal Boulevard on a site owned by the City of Denver, the project will be three stories in height. As planned, more than half of the units in the complex will have one bedroom, with the rest topping out at two bedrooms. According to city documents, the units in the building will be cooled through a packaged air conditioner system and heated via electric baseboard heaters. Overall, the complex will be built along National Green Building Standards. The land for the shelter, roughly 3 miles to the southwest of downtown Denver, has formerly been designated as a Safe Outdoor Space populated by residents living in a series of tents and operated by an organization called the Colorado Village Collaborative. That tent city ended when the Collaborative's lease with the city expired three months ago. In remarks delivered before the city's Safety, Housing, Education & Homelessness Committee, Renee Gallegos said simply that the "solution to homelessness is housing." Gallegos, deputy director of housing with the Department of Housing Stability, added that the existence of supportive services as a part of such projects, "can be a critical piece of success for the residents that become housed in this facility." By Garry Boulard ![]() Construction is set to begin next summer on a new and long-planned 62,100-square-foot performing arts center on the main Albuquerque campus of the University of New Mexico. The project, expected to cost around $65 million to complete, will replace the existing Center for Fine Arts Building, which was built in 1963 and has in recent years been plagued with structural issues. Harris Smith, dean of the school's College of Fine Arts, has also remarked that a new facility is needed simply to accommodate a growing enrollment that sees around 1,300 students per academic year using the sometimes-cramped current facilities. The new multi-story Center for Collaborative Arts and Technology will be built on currently vacant space along Central Avenue and will prominently include a concert and performance hall, as well as classroom and gallery space. The building will additionally house offices, a student commons area, and room for the Center for Film & Digital Arts. The prominent New York-based architectural firm of Diller Scofidio + Renfro has been brought in as designer of the new center, with Benjamin Gilmartin, firm partner, remarking in a statement that the new center will comprise a "campus gateway on Route 66 and become a catalyst for the advancement of the arts in New Mexico. Funding for the project is partly being supported by some $45 million in General Obligation bonds approved last year by state voters. By Garry Boulard Self-Storage Projects Still on the Upside, According to Report, Although 2024 Looks Sketchy8/16/2023 ![]() Responding to a consistently growing demand, new self-storage construction projects have remained strong for most of this year and are expected to remain so up to the end of 2023, says a new report. In its latest Self Storage Forecast, the research analytics firm Yardi Matrix says that self-storage construction starts posted a gain in recent months with project completions heading into 2024 "expected to be higher" than earlier forecasts. At the same time, it is thought that the number of new projects for all of 2024 will eventually wane due to recessionary pressures, "dampening deliveries in 2025-2028." Evidence that the self-storage market, at least for now, is vibrant, was seen in the purchase earlier this month of the Orlando-based Simply Storage Company for $2.2 billion from the real estate investment trust, Public Storage of Glendale, California. Simply Self Storage operates nearly 130 properties in 18 states. While self-storage construction projects are up across the country, the West is proving particularly active. According to Yardi Matrix figures as of late this spring, Phoenix was seeing 19 projects in construction, representing 1.4 million square feet. Las Vegas had 14 projects equal to 1.1 million square feet, with Tucson seeing seven projects for an overall total of 600,000 square feet. Albuquerque was also placed on Yardi Matrix's top ten locations in the West, with three projects representing just under 281,000 square feet. Investment in the self-storage market, meanwhile, has cooled. According to the publication RE Journals, the decline is "partly attributable to the increased cost of debt and a lack of overall liquidity in the market." Even so, many investors continue to regard the self-storage market positively, as one "providing a favorable risk-adjusted return in the current economic climate." By Garry Boulard ![]() A massive Phoenix office building - one of the last such structures built in 2008 before the Great Recession tamped down such construction - is now on the market with an asking price of $21.7 million. Located at 1860 N. 95th Lane, some 12 miles to the west of downtown Phoenix, the West Corporate 101 Center is designated as a Class A office building and houses offices for everyone from the Arizona Department of Child Safety to the Sunflower Bank and the Gateway Mortgage company. It is currently 100% leased. The nearly $22 million price tag, while putting the facility in the upper reaches of office property in metro Phoenix, represents what the market will bear. Measuring just over 81,000 square feet, the three-story building is graced by a spacious lobby fronted by floor-to-ceiling windows. The property changed hands three years ago when it was sold for $17.5 million and was 93% leased. In 2019, it changed hands when the going price was $8.5 million and was only 53% leased. Because of the Great Recession, finding tenants for the structure proved an initial struggle. Some two years after the building was officially opened, it was still only around a third leased. The property is being listed by the Mesa-based firm Cobe Real Estate. By Garry Boulard After Much Preliminary Study, Renovation of Historic University of Colorado Building Set to Begin8/15/2023 ![]() Work is expected to launch this fall on the $105.2 million comprehensive renovation of one of the University of Colorado’s most historic and well-utilized structures: the Hellems Arts & Sciences building on the Boulder campus. That three-story brick structure, built in 1921 is distinguished by the Tuscan Vernacular style unifying so many other buildings on the school’s campus. Designed by well-known architect Charles Klauder, the building saw the addition of both an east and west wing in 1938. For years the Hellems building has housed the departments of English, History, Linguistics, and Philosophy, meaning that at any given point it has been used by the vast majority of UC’s undergrads. For that reason, there is an undeniable emotional attachment to the structure. Glen Krutz, dean of CU Boulder’s arts and sciences department, remarked in a statement earlier this spring that the Hellems building is “physically and psychologically the hub of humanities instruction on our campus.” At least 40% of the funding for the project is coming from the State of Colorado, with the rest paid for by UC itself. Work will center on deferred maintenance needs, as well as modernizing the 95,000-square-foot structure. While the university has committed itself to preserving the building historically, new student learning and collaboration spaces will be built, along with an upgrading of a heating and cooling system. Work will also include making the structure Americans with Disabilities Act compliant. Preliminary work on the project began in 2021 and included a survey showing that students mostly wanted to see easy-to-find bathrooms, refreshed interiors, and inclusive study spaces as part of the renovation. At the same time, the survey indicated that students supported maintaining the historic feel of the Hellems building, which is also visually known for its red tile roof and decorative chimneys. Conceptual design and schematic design work on the project was completed last year, with construction documents finished by this spring. The Hellems upgrading project is expected to see completion in late 2025. By Garry Boulard ![]() Lower income multifamily home construction projects implementing clean energy measures are now in line for a bonus tax credit, according to a new ruling announced by the Internal Revenue Service. In its final rules and procedure guidance, the IRS is saying that a base tax credit equal to 6% of a project's cost is available to home builders. The credit applies to homes implementing solar and wind technologies, but also includes the use of geothermal and the creation of biogas properties. According to a joint statement released by both the IRS and Department of Treasury, the goal of the bonus tax credit initiative is to "Increase clean energy facilities in low-income communities, encourage new market participants, and benefit individuals and communities that have experienced adverse health or environmental effects or lacked economic opportunities." The tax credit of 6% in some instances could be increased to 10% if the projects in question arelocated on Tribal lands or in qualifying areas with documented high poverty rates. The rate could go to an even higher 20% if the project takes place in a "qualified low-income residential building," which may include already existing Section 42 Low Income Housing Tax Credit projects. In a statement, Wally Adeyemo, Treasury Deputy Secretary, said the new tax credit will have the effect of increasing investment in "underserved communities to ensure they benefit from lower energy costs and reduced pollution and health hazards." The Low Income Communities Bonus Credit program has been a long time coming, and was included as a part of the Inflation Reduction Act, which was approved by Congress in the summer of 2022. The credit program, notes The Hill publication, is part of a larger effort on the part of the Biden administration to "boost renewables such as solar and wind in a bid to meet its ambitious emissions reductions targets." By Garry Boulard |
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