February 4, 2004 — Propelled by strong single-family construction activity and unexpected growth in nonresidential construction, the value of permit-authorized construction in Utah during 2003 reached a record $4.56 billion. The University of Utah’s Bureau of Economic and Business Research (BEBR) at the David Eccles School of Business revealed the record figure in a new study published this week. For detailed tables and the complete study, visit the bureau’s web site at http://www.business.utah.edu/bebr/.
The record total permit-authorized construction value for 2003 of $4.56 billion marks an increase of 20.6 percent over the same period in 2002 and far surpasses the previous high of $3.97 billion posted in 1999.
The 16,515 new single-family homes receiving permits during the year is second only to 1978, when 17,424 permits were issued for single-family homes in the state. New apartments and condominiums added 5,555 new units, an increase of 33.9 percent over 2002. The total value of residential construction soared to $3.0 billion, a 22.3 percent increase over last year.
Single-family home construction was especially strong in Salt Lake County during 2003, with 4,909 new homes receiving permits. Utah County (3,375), Davis County (2,608), Washington County (1,811), and Weber County (1,074) also recorded significant numbers of new single-family homes. These five counties accounted for more than eight of ten single-family home permits issued in Utah during 2003.
Over 80 percent of new apartment and condominium construction was concentrated in just three counties: Salt Lake County (2,407 units), Utah County (1,272 units) and Washington County (846 units).
BEBR researcher Diane Gillam and author of the study says she’s optimistic the trend will continue. “With mortgage rates expected to remain below 6.5 percent, and an improving economy, the single-family home sector should continue to buoy the construction industry well into 2004. More new residents moving into the state, along with strong sales of existing homes add to the rosy outlook for the single-family market in the near future”, said Gillam.
Faring surprisingly well was the nonresidential construction sector, which recorded $1.0 billion in valuation, an increase of 13.4 percent over year-ago levels. Two large projects late in the year reversed the decline in nonresidential construction activity: a $200 million gas-fired power plant in Juab County and a new $55.0 million Wal-Mart distribution center in Grantsville. These two projects accounted for one-quarter of new nonresidential construction value in 2003. The retail sector received a significant boost from eight new Wal-Mart Supercenters, which began construction during the year and added $74.0 million to nonresidential construction value.
Nonresidential construction should receive a lift in 2004 from the new Intermountain Health Care hospital in Murray, which should finally begin construction. Also on the horizon is the redevelopment of commercial space, along with new higher education facilities planned by the Church of Jesus Christ of Latter-day Saints for downtown Salt Lake City. An oversupply of office and industrial space will likely dampen demand for new space in those sectors.
The additions, alterations and repairs sector also rebounded nicely, recording a 26.5 percent increase over 2002 levels, with just under $500 million in valuation. Significantly, nonresidential additions, alterations and repairs rose 50.5 percent over 2002, accounting for $354.3 million of the sector total. Additions, alterations and repairs to residential buildings declined 9.4 percent from year-ago levels.