Alaska construction industry still holds strong: about $6 billion was spent on construction in 2005, and that figure is expected to rise by 5 percent to 8 percent in 2006.

• Author: West, Gail
• Position: BUILDING ALASKA

Alaska's construction industry is coming off a good year in 2005, and facing another--perhaps even better--in 2006. The University of Alaska Anchorage's Institute of Social and Economic Research, in a report created for the Associated General Contractors of Alaska in January 2005, predicted total construction spending in 2005 to approach nearly $6 billion. Nearly $4 billion of that would come from private funds, and the remainder from public sources.

According to AGC's Executive Director Richard "Dick" Cattanach, next year's construction spending may be up 5 percent to 8 percent from what was spent in 2005.

"Oil and gas will still be the primary contributor," Cattanach said. "While we may not see actual construction in 2006, we may see surveying, establishing a route for the gas pipeline. There's a big 'if' there, but ignoring the mega projects and with oil at 60-some dollars a barrel, there's interest in exploration. I expect a good year in 2006."

The mining industry should begin building infrastructure and continue exploring mining potential in Alaska next year, Cattanach predicted. He added that hospitals are another significant contributor to the construction industry right now, as are airports and ports. One concourse at the Ted Stevens Anchorage International Airport is nearly complete with renovations, and another was recently finished, and the Fairbanks International Airport is undergoing a major renovation. Runway maintenance at airports around the state will continue, and the major expansion of the Anchorage port will continue into 2006.

"Providence hospital is undergoing major expansions through 2006," Cattanach said. "We should see the hospital at Fort Wainwright completed this year, as well as the hospital in Palmer. Kenai's hospital should be nearly finished next year. Then, I expect that this section of the economy should slow up."

The Defense budget has been running at $600 million in Alaska, and Cattanach expects that to continue. He also anticipates spending on highway projects to increase now that the highway reauthorization bill has passed.

"We may see significant activity on one or both of the major bridges (Knik and Gravina Island) in that bill, too," he added. "The real question right now, though, is whether the two major bridges are in or outside the allocation."

Another sector in which Cattanach said he sees an increase in construction spending is education. As a result of Juneau's funding this year, money allocated by the Legislature is in the hundreds of millions. It's dedicated for renovation and construction to bring schools statewide up to code and to deal with deferred maintenance--a significant increase over previous years' school funding.

"The one area we're concerned about in the aggregate," Cattanach said, "and we would expect it may be flat or even down a bit, is residential construction. As interest rates go up and land becomes scarcer, people will postpone their decision to move out of rental property or to increase the size of their homes. We may not see an expansion in the residential market."

In 2005, however, residential construction and renovation projects looked good. The...