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Commercial projects create Rogue Valley construction mini boom

Throughout the Rogue Valley, the roar of bulldozers, clanking of metal braces and staccato rhythm of nail guns are filling the air.

They are welcome sounds in a region staggered by recession, yet there is no accompanying euphoria or sense that commercial construction will soar to the heights of the past two decades.

In Medford alone, a 192,903-square-foot Walmart Superstore is springing up on the old Miles Field site on the south end of town, Lithia Motors' four-story headquarters, The Commons, is reshaping the downtown skyline, and the rechristened Northgate Marketplace retail center is poised to go in at the north end.

There has been more than $75 million worth of commercial construction (including public sector) this year in Medford, with more than a dozen projects costing at least $1 million. To top it off, the Building Department expects a permit application any day for the Northgate Marketplace, which will feature Trader Joe's and REI.

Those projects have provided jobs for hundreds of workers, many of whom were idled or saw their hours greatly reduced during the recession years.

"We're seeing contractors and subcontractors moving from survival to recovery mode," said Mark VonHolle, Southern Oregon Regional Economic Development Inc. board president and vice president of S&B James Construction Management.

"Hopefully, the construction we're seeing now is a preview of coming attractions and will create a ripple effect of confidence. We are likely at the bottom of the market to where people are maximizing the value of their dollars and can get better value than any time in the future. There's been so much uncertainty about tomorrow — let alone next year — that a lot of folks haven't made the investments they need."

Much of the new activity was planned years ago when the economy was expanding, but is only now coming to fruition.

"When you look at Lithia, that's been waiting forever," said Reid Murphy of R.A. Murphy Construction. "Walmart, forever; Northgate, forever; and St. Mary's (school gym), forever. All those jobs were (announced) years ago, they just had to wait for zoning clearance or when funding was available."

Many contractors now have work on their books well into 2012, something that hasn't necessarily been the case since 2007.

"We're all thankful for some work during the winter, that's for sure," Murphy said.

Ashland's Adroit Construction is following up on its $13 million Commons job with a $30 million campus housing project at Southern Oregon University.

"It's nothing like it was, but it has rebounded," said Bob Mayers, the chief executive officer at Adroit Construction. "We're seeing more private work out there, which is a good thing."

Adroit is performing another construction job for Lithia Motors in Redding, Calif., and might be involved in a third project in Bend.

"We're fortunate, because Lithia likes to use local contractors," Mayers said.

Adroit has 18 people assigned to carpentry, concrete and oversight on The Commons. Mayers said several hundred workers affiliated with subcontractors are on the project.

During the boom times, construction couldn't get done fast enough. General contractors working multiple sites had to wait for subcontractors to finish other jobs. In the past five years, however, Adroit, Batzer Inc., R.A. Murphy and S&B James have all downsized. That has meant some skilled workers were let go.

Mayers likens his staff as a bench in an athletic contest with A, B and C players.

"In good times there are not enough good A and B players," he said. "So you put C on the bench and we've been able to clear (the C players) off. Right now there's a good choice out there. We recently hired 30 people in the field. We were acquiring A and B players sitting home because the economy was slow. The good thing is that we've been able to pick up people out there."

It's been a tough market and promises to be challenging for the foreseeable future, Mayers said.

"There's not a lot of confidence, but you've got two choices," he said. "You can stick your head in the sand or get out, go to work and give it your best shot. We choose to give it our best shot every day and things have been improving slightly."

Subcontractors — plumbers, electricians, cement workers, masons, floorers, landscapers — may have smaller payrolls than general contractors, but together they carve a large part of the financial pie.

"Where we might have five to 15 people on a job, there will be 12 to 15 subcontractors that might bring in three to four people each," said Russ Batzer, president of Batzer Construction.

"The typical rule of thumb for a million-dollar project is that electrical work is 10 to 15 percent of the budget," said Travis Snyder, partner and general manager at Precision Electric.

Medford Builders Exchange on East Jackson Street long has been a clearinghouse for subcontractors. Its membership of 385 is surprisingly close to what it was in 2006.

"Luckily, it's remained steady," said Rachael Fullenwider, MBE's planner manager. "We'd lose one or two and then gain one or two when people were trying to find another source of work. When there were so many buildings going up, they didn't have to have this outlet; they were just handed jobs."

Fullenwider described recent weeks as "wavy," with subcontractors ranging from the highly optimistic to those who can't land a job.

"One week, it's been super, super busy with people bidding projects, and then the next there's nothing to bid on," Fullenwider said. "We are hearing a lot of architects and designers are saying it's getting slightly busier."

Still, inability to get financing or a company's collapse can put construction on hold even after a building is designed or a remodel planned.

"We had two contracts for LibertyBank and we know they eventually went belly up," Snyder said. "When the economy took that unexpected turn it put the kibosh to a lot of projects, or they were put on hold."

That created a long-term downward spiral in the construction industry.

Specialty trades subcontractors have failed at a frightening pace nationwide. Between 2007 and 2009, nearly 32 percent of the more than 1.4 million specialty-trade contractors went out of business. Here, it's been closer to 25 percent, according to the state Construction Contractors Board. This year's growth should allow surviving firms to continue.

"The general commercial work available right now has brought jobs to those people," said Carlos Reichenshammer, chief executive officer for the Home Builders Association of Jackson County Inc. "Carpenters and electricians are working on those jobs."

Many of those jobs are at the mammoth Walmart Supercenter in the South Gateway area. It joins the grand-sized Walmarts in Eagle Point and Grants Pass.

First broached before the Eagle Point store opened four years ago, the store was delayed by a series of traffic studies and zoning challenges.

Walmart revised its plans in 2008, incorporating a facade design representative of Medford's distinct architecture and community character, said Walmart spokeswoman Jennifer Spall. Construction typically lasts for 12 to 15 months, which points to a late fall 2012 opening. The retailer said it will have a permanent staff of about 300, plus seasonal jobs.

"A great effort has gone into creating an ideal store for Medford, and we're very pleased with the results," Spall said. "Thousands of Medford residents have expressed support for the store."

Batzer Construction had a payroll of 110 to 120 a few years ago and now has 70 employees. Its biggest projects in Medford this year are expansions at St. Mary's School and Papé Kenworth. Even though interest rates are low, land prices are down and materials are affordable, discretion is advised, said Russ Batzer.

"For the next year, it looks good, but beyond that I haven't got a clue."

Reach reporter Greg Stiles at 541-776-4463 or email business@mailtribune.com.

Correction: The list of projects has been updated to show the correct hospital on Crater Lake Avenue.

The Commons, Lithia Motors' new headquarters at Riverside Avenue and Sixth Street, is among the more than $75 million worth of construction projects in the works in Medford this year. - Mail Tribune / Bob Pennell