Driven by a strong economy, the building industry on the Cape is booming. Demand for housing is up as contractors in the region work overtime on additions, remodels and deferred maintenance. A look at the industry also reveals a preference for innovative designs and materials, strong demand for smaller homes, and a shortage of skilled labor that the industry is taking steps to address. Driven by a strong economy “This year compared to last year is substantially busier,” says Peter Kimball, President of the Board of Directors of the Home Builders and Remodelers Association of Cape Cod, a professional trade association with more than 300 company members in the home building industry. “Our business will probably be close to double what it was last year,” Kimball says of his own company, A.P. Kimball Construction of Yarmouth Port, which specializes in kitchens, bathrooms, additions, and remodels. “It’s across the board, everyone’s flat out.” “Building is definitely booming on the Cape. Most of our builders are extremely busy, there’s a lot of remodeling going on,” agrees Diane Pratt, executive officer of the Association. John Bologna, CEO and President at Coastal Engineering, a firm that provides civil, structural and marine engineering design for environmentally sensitive areas, also sees strength in the industry. “We’re seeing a healthy surge in work across most market sectors. Private development is quite healthy, both commercial and residential. Public sector work in particular is on the rise,” he says. That’s supported by building permit statistics. Comparing June 2018 to June 2017, the number of permits issued for new single-family By Douglas Karlson Cape Cod’s construction industry grows and evolves State Representative Timothy Whelan visits Mid-Cape Home Centers on Northeastern Retail Lumber Association Legislative Yard Tour. Whelan discussed recent shingle tariffs while standing in front of SBC Cedar Shingles. Pictured left to right: Patrick Huntington, Rich Grout, Jack Stevenson, and Timothy Whelan. 34 Cape & Plymouth Business | August 2018 | capeplymouthbusiness.com Cover Story homes is up sharply, from 20 to 29. The total value of those permits increased from $8.4 million to $29.2 million, according to data provided by the HBRACC. The number of permits issued for single family home remodels in June 2018 also increased compared to June 2017, jumping from 259 to 326. The total value of those permits increased from $13.4 million to $15.5 million. Homeowners who are looking to have work done are advised to begin planning as early as possible. On the Cape in particular, the superheated construction industry means customers are forced to wait. Kimball says it’s a challenge to meet the needs of his clients, who often wait for three months for jobs to begin. If contractors are busy, that means designers and engineers are too. “Those people are also backed up,” observes Kimball, adding that for the most part, “customers understand the situation and are willing to wait.” According to Kimball, now that the economy has strengthened, contractors are in demand to perform deferred maintenance, such as replacing shingles and siding. “People feel they can spend money on that now,” he says. Kimball also reports that some contractors are still catching up on repairing storm damage from last winter. “Some say they’ll be lucky to get finished by winter.” Premium products and technology Those companies that supply building materials to busy contractors are also having a banner year. Jack Stevenson, President of Mid-Cape Home Centers, describes business as “robust – and crazy!” “Traditionally on Cape Cod everyone works like a madman to get houses ready by Memorial Day and the Fourth of July. Then there’s a lull,” observes Stevenson. This year, however, “we have not had a lull.” Stevenson says he sees more contractors in the lumber yards than he normally would during the hot days of summer. “Usually they look for a breather after the Fourth of July, but they’re not getting it now. Demand is so great, work’s going on all around.” Everything you need to run your business. And nothing that you don’t. As a business owner, you know what you need to keep things running smoothly. And—equally important—you know what you don’t need. At The Cooperative Bank of Cape Cod, we have business products that use the latest technology. Like scanners that let you deposit checks right from your office. Online and Mobile Banking services that let you bank anytime, anywhere. Merchant and Payroll services. ACH and Wire Transfer services. At The Coop, we have what you need to get the job done: products designed to make your business banking easier. Let’s talk about how The Coop team can help you. mycapecodbank.com 508.568.3400 Banking products essential for getting the job done. 36 Cape & Plymouth Business | August 2018 | capeplymouthbusiness.com Cover Story He attributes that to two things: a good economy and excessive damage caused by winter storms. “The last two to three years have been very good for us,” says Stevenson. After purchasing the company from the Nickerson Family in 2012, the new owner, Jeff Plank, has invested in new equipment and facilities, expanded its Martha’s Vineyard and Middleboro locations and renewed focus on its builder customers. The company serves a mix of new construction and remodeling, though on the Cape the line between the two is often blurred, says Stevenson, with very little remaining of an old house that is “remodeled.” “The remodeling business is probably as Self-adhered Henry Blueskin VP100 Housewrap being used on a project to combat coastal conditions. 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The sculpture was designed specifically for the new MSPCA Adoption Center. Biz Note strong as ever,” he reports. The building products homeowners are interested in are high quality and high tech. “Technology leads the way, as it has for the past number of years,” reports Bologna. That means smart devices and internet technology to intelligently control systems from offsite. “Improvements in building systems, energy conservation and design that are more sensitive to the environment are now more the rule rather than the exception. New building products, such as cross laminated timber (CLT), energy efficient heating and cooling systems and the use of built-in solar cells and electric recharging systems are now commonly available,” says Bologna. “Demand for quality is stronger than ever,” says Stevenson, something that he attributes to the affluence of the seasonal customer base. “They’re very demanding and they want the best.” Stevenson says it’s not uncommon for Mid-Cape to sell a homeowner a window package costing more than $100,000. The best means premium products like western spruce framing lumber. People also pay 38 Cape & Plymouth Business | August 2018 | capeplymouthbusiness.com Cover Story a premium for items such as Alaskan yellow cedar shingles, which turn a weathered gray faster than traditional shingles. Another high-end product that has become very popular because of the Cape’s proximity to the coast is Henry Blueskin, which is a house wrap that Stevenson describes as “a tremendous product that lets water out of a house, not in the house.” Stevenson says it’s also been a banner year for sales of white cedar shingles due to repairs from winter storms. Mid-Cape is also a leading seller of white cedar shingles from SBC in Quebec, a premium product. “We sell more of that product than anyone.” Kimball estimates that the cost of materials has increased by five to ten percent, driven by inflation, the increased cost of transportation, and steel and lumber tariffs. But so far, increased costs do not appear to have affected demand for construction work. “Rising interest rates don’t seem to have affected the luxury market one bit,” adds Stevenson. “But at the lower and middle levels, it is a bit of a factor.” Demand for smaller houses One major trend that will likely influence the construction industry on the Cape in the years to come is increased demand for smaller housing, according to Nate Kelly, Principal Planner at Horsley Witten Group, which provides environmental design and engineering for building projects. “Demand for smaller housing seems to be insatiable,” he observes. Such housing includes accessory dwelling units, cottage communities, townhouses, “tiny houses,” and multi-family buildings. “When they do get built, they get filled almost immediately,” he says. The demand for such housing is more pronounced on Cape Cod where housing prices are out of reach for many and the houses that are available are almost all single-family detached dwelling, says Kelly. Despite the strong demand, developers have not yet figured out how to create the supply. One obstacle, says Kelley, is what he describes as outdated zoning laws. There’s a push to change those laws. The Home Builders and Remodeler Association of Cape Cod is working with state lawmakers toward that end. But it’s a challenge to get zoning changes passed at Town Meetings. Another trend is the increased use of alternative solutions to storm water run-off, so-called green infrastructure. These approaches used to be considered unconventional, but have become the norm. “That’s because it’s effective,” says Kelley. Members of Mid-Cape’s Leadership team pictured in their Middleboro Lumberyard: Dale Simmons, Pam DiVenuti, Jack Stevenson, and Jeff Plank. capeplymouthbusiness.com | August 2018 | Cape & Plymouth Business 39 Cover Story LEARN. NETWORK. SUCCEED. IN PERSON. Scaling your business for greater profi tability and greater business value This event is ideal for, small business owners, sole proprietors, entrepreneurs and family businesses who want to understand how to operate their businesses in a way that actually builds its value. Typically, business owners are fulfi lling a lifetime passion and operating as a “life-style” business providing a stable weekly income. Too often, owners are overly focused on day-to-day operations. This event will discuss building business value and positioning your business to achieve your personal, fi nancial, and business-related goals. When: September 12, 2018 Where: Cape Codder Resort & Spa, Hyannis MA Time: 1:30 – 5:30 p.m. Cost: $60 Register:capeplymouthbusiness.com Sponsored By: Produced By: SAVE THE DATE Master of Ceremonies Dr. Cynthia Adams-Harrison The Power of Personal Planning Mark J. Anderson, Managing Director, Wilmington Trust Building Your Business Value Terry Shepherd, Managing Partner, ROCG Consulting Panel Discussion Business Owners Who Have Gone Through the Process Panelists: Eric Clark, President, South Shore Generator Craig Bovaird, President, Built-Rite Tool & Die Inc. Moderator: Terry Shepherd, Managing Partner, ROCG Consulting Green infrastructure replaces traditional catch basins and drains with bio-retention facilities or rain gardens. Such measures help prevent pollutants from reaching the Cape’s fragile embayments. Horsley Witten is now extremely busy, in part due to their background in green infrastructure, which put the firm ahead of the curve. “We now have a competitive edge in that market,” says Kelly. A shortage of skilled labor As always, the availability of skilled employees is a challenge for Cape contractors. Kimball notes that sub-contractors, such as plumbers and electricians, as well as skilled carpenters, are almost always seeking to hire qualified staff. Landscaping laborers are “almost non-existent,” he says. “Some of the bigger landscape companies are busing people in. That’s always the case but it’s more acute now,” he observes. Stevenson attributes the acute shortage of skilled labor to the recession that began in 2008. It affected the Cape and Islands construction industry by driving away many young people from entering the industry. “In the downturn, we lost a good portion of a generation of house builders,” he says. That’s one reason Mid-Cape is dedicated to the educational needs of builders. It offers training sessions on subjects ranging from how to properly install windows to how to manage your business. Mid-Cape also reaches out to schools and homebuilders associations to raise awareness about opportunities for entering the building trades. The Home Builders and Remodelers Association of Cape Cod is spreading the same message. They’re hosting a Residential Construction Career Day on October 18 at the Cape Cod Fairgrounds in East Falmouth. Kimball says now is a good time for young people to enter the building trades, and he and his association are working to promote the industry. As part of its mission, the association is focused on workforce development, and on helping young people understand that there are good career opportunities in the construction industry. That includes all facets, from actual building trades to sales and planning. Bologna agrees. “This is an exciting time for the building construction industry. Consumer demand for housing is up, unemployment levels are low and interest rates are reasonable, even with the relatively modest rate increase predicted over the next year. NAHB anticipates net hiring to increase as single-family construction projects rise. They do note that labor remains a primary challenge in the industry, with a demand for skilled professionals at an all-time high. Technology is filling in the gaps in some areas, with automation, artificial intelligence and IT systems providing the tools necessary to do more in less time.”