Construction employment is down across the state, according to the latest report from the Associated General Contractors of America.
Construction employment fell 10 percent in California compared to 5.9 percent nationwide from June 2007 to June 2008, however, many suspect employment fell even sharper in San Diego.
Sherm Harmer, president of the Building Industry Association of San Diego, estimated San Diego County has lost 5,000 to 7,000 construction jobs and 15 major homebuilders in the past 18 months.
Harmer, a principal with Urban Housing Partners, said as long as building permits are down, construction employment will also be down.
Permits for commercial and industrial projects are also down, according to reports.
“With the banking industry suffering so much there is not a lot of new construction for offices or retail or industrial space,” said Harmer.
He said as construction costs continue to go up and financing becomes more difficult to obtain, many commercial projects do not make sense right.
He added that work on government, schools, affordable housing, apartments and senior housing remains steady.
Hit Hard In San Diego
Adrienne Turley, with Southern California-based Meyers Builders Advisors, estimated the construction job decline in San Diego is slightly higher than the state loss of 10 percent because of the slowdown in residential home sales coupled with a high number of unsold homes on the market.
“There is still a good amount of supply out there that was built or is under construction already,” said Turley. “So I think the number of construction jobs will be declining even further.”
With a 68 percent reduction in number of attached home sales from the first half of 2007 to the first half of 2008 and a 47 percent decrease in sales of detached new home sales for the same period, the total speculative inventory has increased to more than a year. San Diego has enough new home inventory to sell for the next 14.5 months, according to Meyers research compared to just 4 months in Orange County, 5.9 months in Ventura, 7.1 months in San Bernardino and 25.7 months in Los Angeles.
“In areas like Los Angeles and San Diego that have that higher inventory, construction jobs will not be added for quite some time,” said Turley.
She estimated a slow recovery in number of construction jobs in one to two years.
With residential builders and contractors out of work, many are looking for commercial work, according to one local general contractor.
“We used to go bid against three maybe four commercial general contractors on public works or private jobs, now there are 25 or 30 general contractors in the room,” said Allan Royster, president and CEO of Royster Group Construction in San Diego.
The Royster Group Construction is currently working on the Pacific Beach Christian Church, Oceanside Marina resort and Comfort Inn in National City.
Royster said most on average commercial project bids come in within 10 percent of each other, yet with residential general contractors turn commercial contractors bids come in 40 percent below the average bid quote.
“This has caused a downturn in the amount of work we are doing and have been doing for the past 18 months,” said Royster. “Our revenue has dropped significantly and with that drop has come a reduction in employees.”
Royster estimates he is down 25 percent in number of workers from five years ago.
“Unfortunately people that you really would like to keep because they know your business and they are good workers and good people, we can’t afford them,” he said.
