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As the economy continues to improve, construction demand is slowly increasing. As a result, the demand for construction materials is also increasing and one has to assume those costs will continue to go up throughout 2011.

Recently, I was talking with one of our fabricators who supplies steel for projects throughout the nation and he told me he has seen more orders this year than in any of the past three years. He also said steel is going up nearly every day, be it because of demand or the futures market or scarcity of the product. This, of course, is impacting construction costs.

This got me to thinking about what the cost of other construction materials may look like going forward this year and into 2012. I did a little research, and here are my findings:

Cement and Concrete: The Recession had a significant impact on this industry. Because of reduced demand, 14 cement plants closed in 2009 and several others suspended planned expansions. But after a flat 2010, demand is expected to rise 1.4 percent this year and 4.0 percent next year.

Copper: Building construction accounts for nearly half of all copper consumption, and the demand today is far less than it was five years ago. Production is forecast to decline by 1.8 percent this year. But the demand should increase as the construction industry improves, which could result in copper shortfalls in 2012 and a spike in prices.

Drywall: New residential construction accounts for half of all drywall consumption, and residential demand remains low. The price for gypsum, the primary component in drywall board, rose slightly in 2010 but began 2011 heading downward.

Lumber: Prices dipped late last year, but we’re still up nearly 5 percent over 2009. Demand is not expected to increase significantly this year, however, as long as new residential construction remains flat.

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Merrill Stewart is Founder and President of the Stewart Perry Company, a commercial building contractor based in Birmingham, Ala. Contact him via email
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Lately it seems like an increasing number of folks have seen the light when it comes to the drawbacks of dark-colored pavement. Black asphalt has traditionally been the surface of choice for our nation’s roadways and parking lots, but asphalt can act as a heat sink that retains the warmth of sunlight.

The effect is called an “urban heat  island.”  Think about a city like New York in the summer, the asphalt retains the heat, causing the city to be much hotter than the suburbs.

Over the last several years, we have worked a lot of jobs that involved the use of concrete and even crushed limestone over asphalt. These pavements reflect light and heat instead of absorbing it, which has two benefits;

  • First, it cuts down on the amount of solar radiation retained by the earth during the day, which mitigates the greenhouse effect.
  • Second, it significantly reduces the amount of artificial light needed for nighttime illumination, which saves energy.

When you think about pavement that is used for our roads and parking lots, even a slight change in heat and light reduction can have a major impact. Especially when you consider that these gains take place constantly.

Every daytime minute in which less heat is retained and every nighttime moment in which more light is reflected is a small win for our sustainability efforts.  And eventually, enough small wins add up to a huge victory for all of us.

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Merrill Stewart is Founder and President of the Stewart Perry Company, a commercial building contractor based in Birmingham, Ala. Contact him via email

ASTM International (American Society for Testing and Materials) is an organization that can have a substantial impact on construction projects, yet quite a few folks are not familiar with it. ASTM was founded in 1898 for the development and delivery of voluntary consensus technical standards for a wide variety of materials, systems and services.

ASTM’s construction standards are generally recognized as the benchmark by which materials are tested. They cover basics such as wood, stone, concrete, geotechnical engineering and much more. In many projects, these standards can be the deciding factor in whether the job proceeds, so it’s important to get to know them.

Unfortunately, people do not respect the ASTM standards until it’s too late. Even though the building owner may not ultimately be responsible for low results on strength tests, he or she will be affected if a job is delayed significantly because of it.

We prefer “Design-Build” projects as we can utilize these ASTM standards and are prepared before we reach problems during a project. We work with architects directly on behalf of our client and this helps to alleviate any problems before they arise thanks to our knowledge of ASTM standards and past experiences.

Therefore, it is wise to be respectful of ASTM. These technical committees meet twice a year, so keep track of any changes in standards. It might not seem like the most interesting material to monitor, but it could be the most important.

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Merrill Stewart is Founder and President of the Stewart Perry Company, a commercial building contractor based in Birmingham, Ala. Contact him via email

As our work takes me throughout the southeast, I continue to see optimistic signs that commercial markets are on the upswing.

Increases for everyone

Retail occupancy is improving, apartment rental rates are starting to increase and we are feeling more buzz around our office. More phone calls for opportunities.  While these steps might be small, they are in the right direction.

REIS, Inc. a commercial property research firm reported that the vacancy rates at malls in the top U.S. markets have declined to 8.8 percent in the 3rd QTR; the first drop in vacancies in nearly 4 years.  Additionally, a 2.3 % gain in holiday sales has been forecasted for this year, another sign that consumer confidence and spending are beginning to increase.  Rental property is also seeing a slight increase after declines over the past 3 years.

Trends

A few days ago I was talking with the head of a multi-family REIT and he believes the market has touched bottom and the situation is gradually improving. He said he feels “…very, very bullish” about the prospects for the apartment industry over the next three years. We are trending in the right direction. While we are hoping for more positive trends and faster.

Internally we think 2011 will be a good year for many including us.

Your thoughts?

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Merrill Stewart is Founder and President of the Stewart Perry Company, a commercial building contractor based in Birmingham, Ala. Contact him via email.

This week, several of our team attended a workshop led by Matthew Offenberg, a recognized expert in the field of pervious concrete. The discussion centered on the design and function of pervious concrete pavements, new developments in the technology and some of the challenges in implementing it. I found it interesting that the workshop was held here in Birmingham, an area known for its impermeable clay soils.

Our company has experience with pervious pavements in coastal areas with sandy, drainable soils. We will install our first pervious concrete parking lot in this area this month. Apparently, we aren’t the only ones expanding our use of this sustainable method. Factors that have contributed to the spread of the pervious industry to areas not originally thought to be candidates include:

Increased land values. The growing scarcity of suitable building sites have pushed developers and planners to squeeze more out of the site, and getting rid of the detention ponds creates more space.

Availability of materials. Readily accessible and relatively inexpensive crushed stone makes the addition of a “drainable layer” under paving easier in areas similar to Birmingham.

Industry growth. We now have more qualified suppliers and contractors, training programs and continuing education programs. This provides more resources and experience to draw.

As these and other sustainable technologies become tested by time and experience, their popularity will grow. In this instance, sustainable has become practical, and we consider that a success. Here are some pros and cons regarding the implementation and use of pervious concrete:

POSITIVE

  • Allows drainage of storm water directly into sub-soils
  • Omits the need for expensive retention/detention ponds, saving valuable land space for other uses
  • Structurally self-supporting water storage units can be placed under pervious concrete for irrigation use
  • Can be placed over tree root systems allowing for limited space traffic use
  • Can be placed in run-off buffer zones expanding traffic use space
  • Omits need for extensive storm drainage pipe systems as well as curb and gutter
  • No reinforcement required

NEGATIVE

  • Periodic cleaning required to maintain porosity, but minimal maintenance otherwise
  • Relative weakness does not allow for heavy truck traffic
  • Some raveling may occur over time, especially along edges—may require regular concrete ribbon along edges
  • 6” minimum thickness for light duty traffic
  • Requires substantial porous substrate for positive drainage
  • Must be kept covered and barricaded for a minimum of seven days after initial installation
  • Freeze/thaw spalling can develop in northern climates where there are extreme cold temperatures.

For us, the pros outweigh the cons when it comes to pervious concrete in the right applications—it maybe something to consider when you’re planning your next project. It’s a good option for the environment and an overall value-add.

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Merrill Stewart is Founder and President of the Stewart Perry Company, a commercial building contractor based in Birmingham, Ala. Contact him via email.

We at Stewart Perry like where we live, and we like our neighbors. Donna Sue Groves believes you can express those feelings through her relatively newfound art—barn quilts.

“The barn quilts are public art that celebrates the place people call home. They make people feel good about themselves and where they live.” – Donna Sue Groves

We decided to give it a shot on our woodworking barn. We plan to paint several quilts over the coming year to reveal the unique diversity within our small community.

Ms. Groves originated the barn quilt project in Adams County, Ohio in 2001. Almost ten years later, this simplistic concept of painting a quilt square on an eight foot square piece of plywood and hanging it on a barn for others to enjoy is now called the National Quilt Barn Trail, spanning more than 20 states and British Columbia.

She feels this phenomenon sweeping the nation reveals something about our communities. “When we all become part of a team, we actually weave the fiber that brings people together,” she says. I agree wholeheartedly.

Our first effort could not be a better illustration of how teamwork builds a better community. Mitchell’s Place, our across the street neighbor, is a center specializing in services for children, young adults, and families affected by Autism Spectrum Disorders (ASD).  This past Saturday, several Stewart Perry and Mitchell’s Place families joined together to paint our first barn quilt. As I watched everyone, especially the children, painting the 128 triangles that would make up 64 squares to finally form one large quilt, I could not help but be reminded of how rewarding it is when everyone comes together to accomplish a common goal. Even more rewarding was the laughter of the children, the smiles from the parents and the fun had by all as we got to know our neighbors better.

The geometric design, created by our own Lynn Wilkins, symbolizes the colors representative of autism awareness. All of the pieces, painted by several and pulled together as one, reveal our individual perspectives with collective aspirations. Our hope, like Ms. Groves, is simply for all to enjoy.

The barn quilt will be hung this week end. Please let me know if you happen to drive by. We’d like to hear your thoughts.


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Merrill Stewart is Founder and President of the Stewart Perry Company, a commercial building contractor based in Birmingham, Ala. Contact him via email.

Every once in a while, our team takes a bit of time away from the busy schedules we all maintain for a get together. It’s not a big time commitment, but it gives us an opportunity to catch up with folks who may be in and out of the office a good bit. Today, we all had lunch.

It’s always encouraging to me when, after we’ve had some laughs about little league and vacation, the conversation moves toward team building. This is a particularly sharing group—if they’ve had a success, they want everyone else to know how so the success can spread. As I’ve said before, the sum of our work is far greater than the parts.

Here’s what came out of lunch today:

  • Today, retaining customers is more vital than ever.
  • We are in the service business, but we are also in the “experience business.” Conscious or not, our customers will rate their experience as good, bad or indifferent with every sale.
  • Make no mistake about it, cost is important more than ever. But if cost is the same, the experience factor is the new competitive differentiator.
  • Our customers are loyal to us when they receive value beyond the ordinary buy and sell.
  • The more extraordinary the value, the greater the loyalty.
  • It’s important to determine what the “value lever” for each of our individual customers. We’ve got customers who like a routine. Some want fast answers while others are looking for a personal touch. Most appreciate problem solving beyond the transaction. Whatever the individual value leveler, identify it and work to fulfill it.
  • Stay in touch. Communicate. Communicate in different ways: a short note, an e-mail, a phone call or a value suggestion is often appreciated. Smaller, more frequent connects will lead to longer relationships and loyalty.

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Merrill Stewart is Founder and President of the Stewart Perry Company, a commercial building contractor based in Birmingham, Ala. Contact him via email.

The short answer: To me, nobody knows.

If we compare the normal demand for commercial projects in the United States to our current climate, the market is down 30-50 percent. The laws of supply and demand tell us commodities prices should decrease in order to level things out. The opposite is happening. On average, we are paying more for materials then we were last year. But why? Some may blame globalization, but I’m not so sure I agree.

I think it has more to do with manipulation of the futures market and the operation of hedge funds. These interfere with “normal” or what used to be a matter of supply and demand. In 2004 and 2005, steel prices rose 50-60 percent after being flat for many years. It got to the point that it was embarrassing. On long-term projects, I would have to go back to the owner and tell them of increased cost for no change in scope.

Then there was the asphalt. I remember being on vacation and meeting with someone from Wall Street. He was blaming rising prices on increased oil use in India and China, but I think this was faulty logic. Hedge funds and various other investment vehicles were driving the price of oil up.

The increases we have seen in the last two or three quarters are far less dramatic, but they do spike. It makes it really tough on our customers. During the last 12 months, average reduction in commercial construction has been in the 35 percent range. However, construction material prices rose almost 3 percent in February. Lumber went up nearly 8 percent in January and was almost 18 percent over the year before. All commodities including steel, copper and brass have increased while demand is decreasing substantially.

Now people are blaming China again. There are many myths about China and I am not sure what to believe. Their gross domestic product has increased while their energy consumption decreased. I’m just not sure how that can happen.

I will say over the last several weeks of bids, the prices have remained relatively benign, which is a good thing. Maybe we are getting back to core factors of supply and demand. I hope so, at least for a while—for our business, but more so for our customers.

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Merrill Stewart is Founder and President of the Stewart Perry Company, a commercial building contractor based in Birmingham, Ala. Contact him via email.