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Q&A: Healthy construction market still on upswing

COURTESY OF MKSD ARCHITECTS Rendering of the $14 million Valley Wellness Center that Serfass Construction is building on Airport Road in Hanover Township, Northampton County.

Businesses have built up their cash reserves and are ready to spend more on capital improvements.

That’s the construction landscape from Kevin Serfass, vice president of Serfass Construction in North Whitehall Township, a prominent firm in the Greater Lehigh Valley.

“From what I have seen, business leaders have definitely gained some confidence over the past couple of years – maybe taking on less debt this go-around,” Serfass told Lehigh Valley Business. “… The local commercial construction market is very healthy right now.”

He maintains and implements business, financial and operation initiatives at Serfass, which has among its ongoing construction projects Tower 6, a $45 million 12-story office building in downtown Allentown, and Valley Wellness Center, a $14 million facility in Hanover Township, Northampton County.

He also focuses on new methods, technology and contract structures to integrate into his company’s traditional building practices.

“Technology is making us a lot more productive and increasing quality,” he said.

Serfass, who has a bachelor’s degree in construction management from Drexel, has worked at some of the nation’s most prestigious construction management firms. In his interview, he also talked about the skilled workforce shortage and connecting with the business community, among other issues.

In general, how is the area economy?

I have a lot confidence in the local economy. The election is out of the way, interest rates are still low and small businesses are more optimistic than they have been in years.

I think this is going to translate into more local spending on capex [capital expenditures], R&D [research and development] and expansion. All of this will generate even more job growth.

I am very optimistic not just for my industry, but across the board.

Are businesspeople confident? Why or why not?

From what I have seen, business leaders have definitely gained some confidence over the past couple of years. They have stabilized, built up their cash reserves and are ready to spend again – maybe taking on less debt this go-around.

Larger outside market players like Duke Realty and FedEx/Rockefeller Group have taken notice to what the Lehigh Valley has to offer and are investing in our economy. These big investments are only going to drive more demand in the surrounding areas.

If you are a small manufacturer or an online store, you are going to want to be next to one of the largest distribution facilities in the U.S.

How is commercial construction in the region, and what is the forecast for the remainder of 2017?

The local commercial construction market is very healthy right now. Subcontractors and suppliers are extremely busy. It means good contractors can be a little picky about the type of jobs they take again.

It also means that fees and rates may start to creep up for the first time since the recession. If people are thinking about building, now is the time while fees and interest rates are still low.

What types of construction projects now are most popular?

We are lucky in the Lehigh Valley that we have a really broad market of industry.

Big box, of course, is going to continue, especially off [Interstate] 78 and [Route] 33. Health care continues to grow, light industrial is strong, more and more multifamily projects are being proposed and the NIZ [Neighborhood Improvement Zone in Allentown] is driving the corporate office market.

The good thing is we are seeing a lot of larger projects proposed. Some may be long shots on actually moving forward, but eventually one or two will break and really change the landscape.

 In what ways is technology affecting the construction industry?

We are a progressive firm with young leaders that likes to stay steps ahead of our competition, and technology is helping us do that. Technology is making us a lot more productive and increasing quality.

BIM – building information modeling – wasn’t fully understood by contractors a couple of years ago, now it’s a must on our projects to detect clashes and discrepancies before they are realized in the field. That saves time and real money.

Superintendents with iPads are a must. They can access all the drawings from the cloud while standing in the field viewing the condition in question.

I even just read some national firms are exploring VR [virtual reality] technology so a worker can literally walk through the BIM model on-site and know exactly what elevation duct work should be installed, or where walls should be laid out.

It’s pretty incredible that even an industry so driven by manual labor is being disrupted by technology.

Do you see more people seeking jobs in construction? Is there a shortage of workers?

There is an incredible shortage of skilled labor. We see it locally, and it’s an enormous problem nationally. The workforce is getting older and there are not enough young people to fill the openings.

I would love to see more young people in trade schools. You can make a very good living as a carpenter, electrician, etc., and I know there are many companies out there that are looking to hire right now.

Construction management studies are a lot more common in colleges than 10 years ago, so we are seeing more qualified, young project managers. However, there still are not enough project managers to meet the demand.

How does a company connect with the business community?

I am very lucky to be in the industry that I am in. We cater to very successful companies, companies that are growing; therefore, I get to work with world class organizations and meet some of the most successful people in the nation.

This exposes me to many different outlooks and provides inside information into what is going on in the business community.

 

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