What Profession Should New Entrepreneurs Choose – Construction?
The other day, I was at Starbucks I was talking to someone from a mid western state who was now out here in California putting together a group of investors for a construction project. Now you might think this is a silly time to construct anything, or attempt to build anything, and to that I might agree. However, as we got to talking it seems there are a couple of categories that still make sense. He had been involved in converting office towers into apartment buildings previously, and now with all the foreclosures, more people are renting, and it’s working out nicely for him.
Rather than build any more of those, because he doesn’t want to press his luck, he was putting together investors for apartment housing for college students, and two-story medical buildings adjacent hospitals. Indeed, he has a number of investors, and has sailed through the planning process because the cities want the sewer hookup fees and the jobs in their towns. They are making all sorts of concessions, and making it easy for him. That’s a switch, and anyone who was building during the construction housing bubble surely knows what a 180-degree turn for some of these municipalities, and county governments.
The Wall Street Journal published an article on March 22, 2012 titled; “More Entrepreneurs Turn to Construction” by Sarah E. Needleman which stated that; “One usually thinks of start-ups as cutting edge. But it turns out the hottest growth area for new businesses – isn’t so sexy. It’s construction.” In fact it’s up over 8% since the economic crash, yes it was hammered to hell, brought there in the proverbial hand basket, but being down so far means there is a lot of upside now.
So, the question is; how much upside is there really – and will the real estate prices be back up in places like California, Florida, Nevada, and Arizona where they were hit hardest in the next 5 to 6 years? We don’t know that for sure, but judging from past experience, the answer would be yes. Is this the time to get in on construction, and real estate development?
There is still a lot of inventory, so perhaps single-family dwelling housing wouldn’t be so great except in a few spots in our country, but for commercial real estate in the right category it certainly could be the right time to get in at the bottom, and ride up the next business cycle in the industry. Indeed I hope you will please consider all this and think on it.