Skanska USA has been active in a handful of cities and wants to go further afield. It’s been evaluating other mar- kets over the past couple of years and now, CEO Rob
Ward says, the firm may have found a candidate: Los Angeles.
The sprawling metropolitan area checks all of the develop-
er’s boxes, including the fact that the area is in a different part
of the cycle than the cities in which it’s already active. Not that
Skanska wouldn’t love to expand further into the areas in which
it already has a presence. In Seattle and Boston, for example,
“we would be happy to take on more sites if we could,” Ward
says. “It can be highly competitive to find the best locations. The
pricing expectation for new sites is very high.”
Companies are approaching the challenge of finding the
right opportunity that can accommodate these costs in various
ways. Some, like Skanska, are looking in entirely new markets.
Others are redeveloping existing assets—especially shopping
centers—into mixed-use projects that hold greater appeal and
provide better numbers. Some companies are grabbing air
rights when they can to give themselves as much flexibility as
possible. And some are finding that no matter what the costs
are, demand is so strong that development must go forward,
even on a speculative basis.
Despite these issues, developers are enthusiastic about the
remainder of this cycle. A recent survey by Wells Fargo
Equipment Finance shows that construction executives are
more optimistic about nonresidential construction activity. At
133, the survey’s Optimism Quotient is a ten-point increase over
2017 and its highest level in 20 years. According to John Crum,
SVP and national sales manager of Wells Fargo Equipment
Finance’s construction group, many industry participants feel
that 2018 could be one of their best years ever.
“Right now the US economy is very good,” says Arthur
Falcone, CEO and Chairman of Falcone Group. “We have a
clear view for at least the next 18 months.”
Yet not all companies are finding completely satisfactory
solutions to the problem of rising costs. “Land remains one of
BY ERIKA MORPHY
The time has never been better to be a developer—
that is, those who aren’t sensitive to rising land and
The 780,000-sf Capital Tower is described by developer
Skanska USA as a game-changer for Downtown Houston.