Remodeling - Residential and Commercial Heats Up
|Danny and Chip Burks, Burks Brothers Contracting. FTM file.|
“We are seeing the bright shoots of growth in Northern Kentucky, primarily in commercial activity and residential remodeling but we haven’t seen much of a rebound in new single family housing,” said Brian Miller, executive vice president of the Home Builders Association of Northern Kentucky. Overall residential production fell 5.46% in 2016.
“Northern Kentucky is simply not pacing with the U.S. in terms of any sort of rebound from the Great Recession for the residential market as a whole. In terms of overall activity for all construction sectors a growing disparity is trending between counties. Campbell County is increasing in activity on whole, while Kenton is stagnating. Boone County continues to be the bellwether of growth in practically all segments of the construction sector.
When you dive deep into the data the largest three builders command over 65% of the market. Our small to mid-sized builders are still suffering. They are doing better than during the recession but in some cases not much. Access to available lots, financing, local land use policy and the apprehension of small to mid-sized builders to build a new home without a contract are really holding our local market back in general. The big builders are having one of their best years on record in our market but for small to mid-sized builders sidelined the recovery is extremely imbalanced,” Miller surmised.
2016 Permits 2015 Permits % Change
Boone 412 436 -5.5%
Kenton 189 209 -9.57%
Campbell 157 154 1.95%
TOTAL 758 799 -5.13%
Residential Remodeling activity in Northern Kentucky continues to increase at a rapid pace. “The amount of residential remodeling in our area is impressive and outperforms our recent forecasts. The trend mimics the U.S. residential home improvements numbers. Residential remodeling is now at an all-time high in terms of volume of permits issued. In like fashion, the value of these projects has matched our high of record at $40,000 per permit,” said Miller.
While the commercial construction industry took a small step back in 2015 the overall capital investment in the Tri-County area continues at a high level. “The investment of capital in commercial retrofits continues to impress at a historic level. Since the recession our commercial market has changed. We are predominantly a reinvestment market rather than a new commercial investment market. Lack of available large tracts of land, regulations that have created barriers to business and a restrictive local land use policy have created a situation where the reinvestment of capital has gained momentum while the investment of new commercial structures in Northern Kentucky has lost pace.
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We did not keep pace with the Nation’s commercial investment until 2015. 2016 matched the nationwide level.
We believe that laws recently enacted by the legislature such as “Right to Work” and the repeal of prevailing wage will be a catalyst for growth for our Commonwealth. However, we must address local land use policy, infrastructure planning and how Kentucky will deal with barriers to business created by the Federal government these last eight years to attract companies who will call Northern Kentucky their home.
Changes such as these are essential for new commercial investment in our region and will allow us to change the course we have seen since 2010. Nothing happens without new roads and new sewers. These issues must be addressed. The results will be more well-paying jobs in our area and thus we can ‘grow the pie’. That will result in benefits across the spectrum for our industry. More new capital investment begets more jobs and results in more homes built in Norther Kentucky,” Miller concluded.