BY BILL O'BRIEN
TRAVERSE CITY -- Robert Meyer just retired as Leelanau County's top building official, but he's been in slow-down mode for months.
Meyer didn't plan to ease into retirement, but the region's battered construction sector left him little choice. New construction plunged 43 percent last year on the Leelanau Peninsula, and prompted county officials to lay off the building inspection staff and rely on contracted help to monitor a trickle of projects.
"It was like somebody dropped a boat anchor," said Meyer, who spent 44 years in the construction business, including the last 21/2 years atop the county's Inspections Department. "We had a great year in '08."
Leelanau's struggles aren't unique. New building in Grand Traverse County dipped to its lowest level of the decade in 2009.
And Antrim, Benzie and Kalkaska counties also reported significant building slowdowns, as the slumping economy shriveled the region's once-thriving building sector to a fraction of record-busting totals just a few years ago.
New residential development spurred the bulk of Leelanau's new building growth over the past decade, but that well largely dried as the recession pummelled the state and nation.
"Residential is hit quicker and harder than most," Meyer he said.
That fall-off is reflected in local construction trade job numbers. Employment statistics from the Northwest Michigan Council of Governments show the 5-county area shed almost 2,200 construction jobs since 2005, the largest reduction in 19 employment sectors the agency tracks.
Almost 1,200 jobs vanished in Grand Traverse County, more than 370 in Antrim and about 310 in Leelanau.
Less credit, higher prices hurt
Matt McCauley, NMCOG's regional planner, said a consumer spending retreat isn't the lone reason for construction sector woes. Lenders scaled back on credit, hurting builders who use that cash to keep them afloat during seasonal downturns or other slow periods.
"The credit squeeze we're seeing nationally has significant local impacts," McCauley said.
Rising costs for building materials, fuel and other supplies also affects the industry.
"The more we're spending on materials, the less there is available to grow employment," he said.
New building in Grand Traverse County plummeted to just over $77 million in 2009, a sliver of the record $220.4 million in new building totals recorded just four years earlier.
Garfield Township served as a fitting symbol for 2009 construction troubles. Commercial and residential building exploded in Garfield during the 1990s and early in this decade, including a record $74 million in 2002 during Great Wolf Lodge construction.
Last year's new construction in Garfield barely exceeded $10 million, about half the total from 2008 and the lowest figure in at least 15 years. New building also fell off in the bedroom communities surrounding Traverse City, including East Bay, Long Lake and Green Lake townships, in stark contrast to surging residential development in those locales early in the decade.
Traverse City a bright spot
Traverse City bucked the regional construction downturn last year. New building surged 13 percent in the city amid a two-year upswing.
City residential development increased 21 percent last year to more than $4.4 million. Commercial construction jumped 32 percent to $19 million, thanks in part to a new 5-story mixed use building rising at Front and Park streets downtown.
The numbers reflect a national trend in which both young professionals and older, "empty nest" couples are seeking out urban centers to be closer to cultural and social activities, and their jobs.
"For five decades, we were searching for the dream properties outside of the cities," Traverse City planner Russ Soyring said. "Now I think people are starting to appreciate a lifestyle that doesn't require being in a car so much."
McCauley agreed.
"There's a trend to go to urban places," McCauley said. "In our area, Traverse City is the most urban place to be."
Soyring said he's encouraged by aspects of the city's development trends. They include compact housing in projects like Midtown along the Boardman River, and smaller scale housing in Morgan Farms, a development on the city's west edge. It gives the city a wider variety of housing at different prices and provides more options for potential home buyers.
"If (builders) want to stay busy and make a profit, they need to change the way they're building homes," Soyring said.
Some builders cut profit margins and gave home buyers more for their money last year, strategies they employed to stay busy.
Gary Jurkovich of Pathway Homes in Traverse City said his company is at work on several new homes in the Lone Tree Subdivision near Traverse City West High School, and has buyers lined up for most.
"We're not making as much money on it, but we're keeping our people working," he said.
Jurkovich's company is focused on homes in the $165,000 to $190,000 range, primarily for consumers looking to step up to a new home. He's also offering buyers more value by adding custom cabinets, granite counters, hardwood floors -- upgrades typically associated with pricier digs.
"We're giving people more for their money," he said. "
Scaling back
Building officials said other economic factors depressed the local construction sector. Leelanau County's Meyer said builders reduced "spec" construction -- projects built without a buyer that busy work crews and make housing stock readily available in a stronger market.
"Developers aren't going to step out and do anything speculative," Meyer said.
Steve Haugen, Benzie County's building official, said consumers also are scaling back in the tough economy.
"You're not seeing the higher-end houses like you used to; you're seeing more moderate projects," Haugen said. "Instead of 4,000-square foot homes, we're seeing 2,500- to 3,500-square feet."
Residential and commercial additions and remodels also slipped last year. Commercial additions and alterations dropped 12 percent in Grand Traverse County in '09, while residential remodels fell 17 percent.
Still, Haugen said he was surprised to learn Benzie's new building total was off just 14 percent last year. More than 50 new homes were built in Benzie last year.
"To me, that's a significant amount considering the way the economy has been," Haugen said.
Observers don't expect a significant rebound in 2010.
"My personal belief is that 2010 will be a mirror copy of 2009, unfortunately," Meyer said.
Haugen anticipates much the same in Benzie County.
"We've got some projects going, and some things shaking out," Haugen said. "But I don't see where we're going to see much of a comeback in 2010."
2009 new construction totals in Grand Traverse County
Location Total projects Est. value =/- from 2008
Acme30$2,124,309- 0.4%
Blair 81$5,110,891- 32%
East Bay95$5,879,385- 44%
Fife Lake13$1,015,364- 65%
Garfield 149 $10,036,292- 49%
Grant12 $346,401 - 41%
Green Lake47$3,043,329- 66%
Long Lake 88$4,946,235- 58%
Mayfield 19 $778,870- 58%
Paradise25 $884,644- 77%
Peninsula 86 $4,762,620- 24%
Union 7$275,597+ 17%
Whitewater 31 $2,880,398- 28.7%
Traverse City172$34,964,520+ 13%
TOTALS706$77,048,855- 28%
Construction totals
New construction totals for Grand Traverse County
YearEstimated value
(in millions)
2009$77.05
2008$107.4
2007$152.6
2006$185.4
2005$220.4
2004$196.5
2003$166.4
2002$197.6
2001$154.9
2000$162.6
