Minnesota builders are relying on education projects more now that construction work on new commercial real estate buildings such as offices, retail stores and warehouses has all but vanished due to the lingering effects of the financial crisis.
But just how much of a lifeline will it be? Because education construction trails developments in the private sector -- sometimes by as much as a year -- improvements in the overall economy seen in 2010 should start to trickle their way down into the K-12 and higher education markets this year, local builders predict.
Of course, that's relative to what has been a pretty poor situation. In tough times, voters are reluctant to pass referendums and to build new K-12 schools and state governments squeeze the budgets of colleges and universities seeking new on-campus facilities. That's mostly how it's been since 2008, with a few notable exceptions.
Even at those reduced levels, however, education construction work has become a "go-to" sector for builders trying to cope with the fall-off in commercial real estate, and two of the state's biggest, Kraus-Anderson Construction Co. and Mortenson Construction, say they expect it to remain a vital part of the construction picture, although the types of projects within it may change.
John Huenink, a Kraus-Anderson vice president and director of the company's education group, said he expects the number of public K-12 education projects to remain about the same as last year as the "lag effect" of the nascent recovery works its way through the education economy.
He said K-A has had 233 such projects since 2007, ranging from 53 in 2007 to 37 last year, reflecting the economic downturn.
Waiting for the recovery
"I project that the number of K-12 projects we do this year will stay about the same as in 2010," he said, but added that he expects that number to start going up as the economy recovers.
Despite the balkiness of cash-strapped voters to approve new construction, Kraus- Anderson has some new public school projects on its agenda -- some already approved, others awaiting voter OKs.
One of its big new projects is in northeast Minnesota's St. Louis County, where School District 2142 is building a pair of new schools, at around $20 million each, that will house kindergarten through grade 12. One is along Hwy. 53 north of Cook; the other is on Swan Lake Road in tiny Culver. The schools are going up after district residents approved a referendum in December 2009.
Also on K-A's construction calendar is a new elementary school in Mahtomedi, which is scheduled to get underway this spring. It is also hoping that voters in Alexandria approve a referendum for a new high school in that community.
But, Huenink said, more of the workload in K-12 construction has shifted to remodelings, renovations and additions to existing buildings. Whereas in the past, such projects may have been 65 to 70 percent of the education jobs the firm did, it's now more like 85 percent.
"I think education is on its heels coming out of the recession, but I do see more work in remodeling and deferred maintenance," he said.
For instance, the St. Louis County schools project calls for major renovations to the district's three remaining schools in addition to building the two new ones, including new science labs, installation of modern technology and security systems.
The current list of renovation and maintenance projects in the Twin Cities area is a lengthy one that includes both K-12 schools and colleges. For instance, Royal Oaks Elementary in Woodbury is undergoing a $4 million remodeling; Maplewood Middle School will get a $1.4 million renovation, and $7 million in improvements are on the agenda for public schools in Inver Grove Heights.
"I'd second the idea that renovations and upgrades are probably more prevalent than what we have traditionally seen in K-12 construction," said Ken Sorenson, a Mortenson Construction vice president and general manager of its Twin Cities operations, citing as an example his company's work at Groves Academy, a private school in St. Louis Park serving children with learning disabilities and attention disorders.
That multiphase project included a 20,000-square-foot renovation of an existing building, major mechanical upgrades, a 6,000-square-foot addition and a new library/media center, among other improvements.
"If you look at the forecasts of where construction dollars will go in 2011, they're saying the education market in general, both higher education and K-through-12, will see more money spent than any other market," Sorenson said.
Higher education projects, which are Mortenson's specialty, will get the lion's share of it, he predicted. But the firm also has snagged a big, one-time public education building project: the Minneapolis Public Schools' new headquarters building.
Not your everyday project
The $27.5 million, 173,000-square-foot effort along W. Broadway on the city's North Side is the kind of education project that only comes along once in a while but also illustrates how the sector can provide construction jobs even when the private economy is in the dumps.
"Of the work that we acquired last year, 40 percent of it was in the education market," Sorenson said. "The majority of that has been in higher education, but with K-through-12 we look at every opportunity on an individual basis."
Another education-related area that has been getting some work is day care and preschools. Work has begun, for instance, on a new Primrose School in Eagan, where Shingobee Builders is erecting an 11,280-square-foot preschool center for 181 students and 40 teachers and staff.
The project is taking up the last developable lot in the Diffley Plaza retail center, which had sat vacant since 2003, Shingobee project manager Stacy Gleason said.
"We've done three Primrose day care centers along with a KinderCare project," she said. "We've also done some remodeling work for public schools in the past, although it's not typically what we do."
She said her firm has done one day care/preschool project per year over the past four years, and so it has proven to be a good niche market, but she added that she is unsure whether it will remain so in the future.
Don Jacobson is a St. Paul-based freelance writer.
