Mining exploration companies flock to parts of Alaska to explore and develop deposits.

With a business climate and economy that are as diverse as the region is affluent, the Northwest United States supports a thriving nonresidential construction industry. According to Associated General Contractors of Washington spokesperson Jerry Vanderwood, one of the major benefits Washington and the surrounding states offer contractors and developers is an “economy that is not dependent on any one sector.”

Nonresidential development is one segment that remains hot in the Northwest, as is evident by the number of tower cranes that dot skylines in major metropolitan areas such as Seattle, Vanderwood comments. “Construction is at record levels, and the number of tower cranes are indicative of the strong economy,” he says. “This area is outpacing the rest of the country with the general strength of our economy.”

Constrained by water to the west and mountains on the remaining sides, Vanderwood says, there is little room in the Puget Sound area for urban sprawl. Therefore, core urban areas and key suburbs are booming with office, retail, healthcare and multifamily development. Vulcan Development is leading one of Seattle’s largest real estate redevelopments in the South Lake Union neighborhood. This 60-acre, 10-million-square-foot project offers high-performance workplaces for environmentally savvy tenants, multifamily units for rent and sale, restaurants, hotels, galleries, waterfront boardwalks, a streetcar system, schools and museums.

The community is also attracting top companies such as Tommy Bahama, Microsoft and Group Health Cooperative. Vulcan says it has delivered nine new commercial, residential and mixed-use projects in South Lake Union totaling 1.7 million square feet. An additional 1 million square feet is currently under construction.

Commercial Stays Strong
Paul Hiller, executive director of the Boise Valley Economic Partnership, says construction in Boise, Idaho, has mirrored trends in other areas with a strong influx in nonresidential construction, which has buffered the residential slip. “Industrial and commercial is still going strong, but the housing market has slowed down substantially,” Hiller observes. “In terms of the number of new homes being sold by the builder year-to-date,
it’s down 50 percent in 2007. But we still have construction activity going on strong, and we have a lot of developments under construction.

“The perspective held by most builders and developers is that there is a normal cycle taking place, and that really they see this turning around in the next 12 months,” Hiller notes. “I think we are within about a six-month adjustment in the market.”

As one of the fastest growth metropolitan areas in the United States – Boise boasts a population of around 600,000 – Hiller says urban development is supporting downtown communities. “There has been a tremendous revitalization of the downtown area in the last 10 years, so much that people are commenting that it’s harder to find a parking spot after 5 p.m.,” Hiller claims.

Mixed-use development, retail and mid- to high-rise offices are a few of the more noticeable building trends in the region. “Our retail and commercial has also been strong,” he notes. Although land costs are climbing, Hiller says they are still considered low for the region, especially compared with California, Washington and Oregon. “Our land costs are one-third of what they are in those areas,” he says.

Leading in Renewable Energy
States in the Northwest are leading the country in implementing environmentally friendly projects, with the region’s utilities leading the charge. Early this year, Oregon lawmakers were among the first to pass a renewable energy standard requiring electric utilities to supply 25 percent of the state’s retail demand with renewable energy resources by 2025, with various targets for the years leading up to the deadline. Washington and California have similar standards in place.

As a result, utilities including Portland General Electric (PGE), PacifiCorp and the Bonneville Power Administration have ramped up efforts to either purchase capacity from local wind farms or construct wind energy facilities. PGE, for example, broke ground this year on a three-phase project to construct the 76-turbine Biglow Wind Farm in Sherman County, Ore. Situated on 25,000 acres, the $260 million farm will be PGE’s first owned and operated wind farm and is expected to produce about 125 megawatts of power after the first phase is completed – or enough to power about 34,000 homes.

Considered a favorable business climate for renewable energy development, partly due to its financial incentives for renewable energy, several manufacturers have also announced plans to locate facilities in Oregon. In June, mono-crystalline silicon manufacturer Solaicx announced it would build a new manufacturing plant in Portland. The 48-megawatt plant will support silicon manufacturing for solar photovoltaic applications. In September, XsunX Inc., a thin film photovoltaic solar module manufacturer, announced similar plans to build several 100-megawatt facilities in the state.

Exploring Development Options
Similar development is occurring in Anchorage, Alaska, and in the state’s other larger cities. AGC of Alaska President Dick Cattanach says construction in office and retail is hitting a peak, while other sectors, such as civil and residential construction, have cooled. “That’s where most of our companies are growing, so we need more growth in the service sectors,” he says.

Unlike other Northwest states, Alaska’s distinct advantage is its abundance of natural resources. For years, mining exploration companies have flocked to the region to explore and develop deposits, particularly gold, silver and copper.

A significant project now in the exploratory phases is owned by Pebble Limited Partnership, a partnership between the U.S. subsidiary of Anglo American PLC and Northern Dynasty Minerals Ltd. Located about 200 miles southwest of Anchorage, the project encompasses two adjacent deposits where copper and gold deposits have been found.  The project is at pre-feasibility and at a pre-permitting stage of development, and a development plan and permitting application is not expected to be submitted until 2008 or 2009.

A second mining project Cattanach points to is the Donlin Creek project, one of the world’s largest undeveloped, multimillion-ounce gold deposits. Owned by joint venture NovaGold Resources Inc. and Barrick Gold Corp., the 27,000-acre property is located in the Kuskokwim Gold Belt near southwestern Alaska.  According to NovaGold, Donlin could represent one of only a handful of gold mines capable of producing more than 1 million ounces of gold annually. This year, Barrick completed the project’s first pre-feasibility study.

The vast amount of land has been a detriment to development in some cases because of the high costs of building infrastructure to support construction projects, Cattanach says. “If you have to string transmission lines or build roads, the cost of infrastructure can be a huge hurdle,” he notes.

Developments like the Pebble project and Donlin Creek require the resources of larger exploration companies who align themselves with large developers. “That’s why we look only at world-class projects,” he notes. “It makes it expensive, so you need [big developers] if you are going to develop a project.”