Regional building activity off to a slow start

Building activity in the Fort Smith area doesn’t yet support expectations and/or hopes that 2010 will be better than 2009.

The value of permits issued by Fort Smith during January and February total $16.803 million, down 12.9% from the same period in 2009. Greenwood permits in February totaled $2.562 million, down 13.7% compared to February 2009.

For February, the city of Fort Smith issued 145 permits valued at $7.808 million, down 34.8% from February 2009. Most of that decline comes from the $4 million permit issued in February 2009 for the Best Western hotel on Rogers Avenue. Also in February 2009 the city issued a permit for $2 million for continued construction of the Mars Petcare plant at Chaffee Crossing.

Mars Petcare announced November 2007 it would build the $80 million pet food plant at Chaffee Crossing and employ 200 full-time workers. At the time of the announcement, the city of Fort Smith estimated the plant would result in an annual payroll of $7.07 million, with the average annual salary around $35,300. The plant, which opened in September 2009, produces higher-end pet foods, including the Cesar brand of wet dog food.

Residential construction is holding up. Fort Smith issued 30 new residential permits with a total value of $3.98 million, considerably higher than the 10 permits for $1.145 million in value in February 2009. However, the home construction market in early 2009 was still active with repairs from wind and hail storms of 2008. In February 2009, Fort Smith issued 177 residential repair permits with a total value of $1.311 million. The city issued this February just 54 residential repair permits with a total value of $406,331.

Analysts with Fitch Ratings, a leading market analysis company, have predicted the national housing market will improve in 2010 because “statistical and anecdotal information generally support the premise that a bottom has been reached in the housing market.” Fitch’s projections of a 14% increase in housing starts, 21% increase in new home sales and a 7.5% increase in existing home sales are increases “off a very low base” in 2009.

“Any recovery is expected to be muted reflecting substantial foreclosures and rising unemployment, although the extension of the national first-time buyer credit will provide impetus to home sales,” Fitch noted.

Also, The Compass Report — the only Fort Smith regional economic analysis — recently noted that the housing sector was one of the “bright spots in the regional economy” during the fourth quarter of 2009. The total value of permits issued in the fourth quarter (measured in a three-month rolling average) was higher than those in the fourth quarter of 2008.