ABB Plans for $30 Million Expansion in Memphis Echo Construction Growth Trend

The announcement this week that ABB would invest $30 million in a new factory and an expansion of its customer experience center in Memphis, Tenn., home to its Thomas & Betts business, is the latest example of a surge in nonresidential construction that has touched many regions of the United States. ABB said in a press release that its investment in the Memphis area will initially create more than 200 jobs, and eventually add 100 additional jobs in its Low Voltage Products business unit.

“The new facility will be located in the Memphis area and will represent more than 120,000 square feet. Products from across the ABB low voltage product portfolio will be assembled here, including the world’s first integrated breaker and power manager, Emax2, alongside other breakers, switches; power distribution systems; modular enclosure and DIN rail products; and control products including our new soft starter solution,” the press release said.

Memphis is also home to another sizable construction project that broke ground in January, the $200 million Crosstown redevelopment that will convert a 1.4 million-square-foot Sears building into new “vertical urban village,” according to an article in the Memphis Flyer.

These two Memphis projects are just a small sampling of the new construction projects that are planned or recently broke ground, according to Electrical Marketing research. Over the past month alone, EM’s editors found more than 40 reports on construction projects valued at $100 million or more  that were anywhere from the earliest of planning stages to actual groundbreaking (see chart above). These projects included billion-dollar petrochemical plants, urban mixed-used redevelopment projects, hospitals, data centers, wind farms, solar fields, office towers and multi-family projects.

New York, Houston, and San Francisco are three cities now seeing substantial construction activity. An article in the Houston Business Journal said Colliers International data shows six medical office buildings totaling 371,797 square feet are currently underway in Houston and that nine medical buildings totaling more than 353,000 square feet were completed there in the second half of 2014.

In the San Francisco Bay Area and Silicon Valley, office construction is booming led by demand for new space by tech companies like Sales Force, Twitter, Google and Uber. Sales Force has an tower underway;  Google and Uber both announced plans for major office complexes and Twitter purchased all of the space in a new 300,000-square-foot building now under construction, according to the San Francisco Business Journal.

Across the country, the Big Apple is also seeing a surge in construction activity.  Construction activity rose 31% to $26.1 billion in 2014 in New York, according to an analysis of data from Dodge Data & Analytics and the New York Building Congress, with multi-family projects accounting for eight of the 10 largest projects when measured by contract value.

Mega-projects sometimes dominate the monthly numbers measuring nonresidential construction starts and overshadow the steady growth of other smaller projects, said Robert Murray, chief economist for Dodge Data & Analytics, in a press release. “During 2014 and now early 2015, the month-to-month pattern for construction starts has often reflected the presence or absence of exceptionally large projects. For much of 2014, a substantial share of this work was petrochemical-related, such as a $3 billion Exxon petrochemical plant expansion in Texas. Toward the end of 2014, a pickup in liquefied natural gas-related facilities emerged, led by the start of the $3.6 billion Dominion Cove Point Liquefaction Project in Maryland, and January included $6 billion estimated for the start of two segments of a huge LNG export facility in Texas.”

Dodge Data & Analytics said that overall the value of new construction starts climbed 9% in January to a seasonally adjusted annual rate of $621 billion. On an unadjusted basis, total construction starts in January were reported at $43.2 billion, up 18% from the same month a year ago.

The January statistics raised the Dodge Index to 131 (2000=100), compared to 120 for December although still short of the most recent high of 143 reached in November. For the full year 2014, the Dodge Index averaged 122.