DULUTH — Folks in the local construction industry certainly haven’t been hurting for work lately.
Duluth saw an unprecedented amount of construction in 2021. Permits were issued for more than $560 million worth of work, besting the previous high set the prior year by 43%.
About half that permit value can be attributed to a single worksite — Essentia Health’s Vision Northland project — but 2021 would have been a standout year even without it, said Adam Fulton, deputy director of Duluth’s planning and economic development division.
“We definitely feel the success of the construction industry right now,” said Craig Olson, president of the Duluth Building and Construction Trades Council.
“Membership’s growing, and we also have a lot of travelers in town,” he said, explaining that tradespeople from other markets have been needed to help handle the workload. Many of those migrant workers have been offered per diem benefits to cover the cost of food and lodging away from home.
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Because of the high level of demand and supply chain issues, Fulton said: “Construction costs have been significantly higher in our region. And that has had an impact on projects moving forward. There are things being delayed because construction costs have remained really high.”
As Essentia’s project nears completion and building material prices begin to stabilize, Fulton expects work on many of those temporarily sidelined projects to move forward.
Other notably large projects that contributed to Duluth’s construction activity in 2021 include the new Costco store and several new apartment buildings, such as the Bluestone Vue, Decker Dwellings and Birchwood properties.
At times, city staff have had to scramble to keep pace with these projects and others, said Wendy Rannenberg, manager of Duluth’s construction services and inspections division.
“We’ve had to do some pretty careful planning, and it’s been a challenge to keep up and turn around plans. But we’ve been able to manage it fairly well,” she said.
Olson pointed to another quite large project under way in Superior that has further strained demand for construction resources — the rebuilding of the Husky Oil Refinery. While work there has slowed for the winter, that project has required 1,200 to 1,300 workers to be on site during periods of peak activity.
While commercial projects were plentiful in 2021, residential construction proceeded at a more measured tempo. Duluth built 141 new units of housing last year, and the city saw 33 units of existing housing demolished for a net gain of 108 units.
Fulton said those numbers are not where he would like to see them at a time when Duluth estimates it needs nearly 4,000 additional units of housing.
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“So, we’re not adding to that housing inventory at an adequately rapid pace,” he said.
But Fulton noted that new housing has been well-received when it hit the market.
“The level of market absorption for new projects that have come online has reflected the strong demand for new housing,” he said, voicing his hopes that the warm reception will give developers confidence to move forward with additional projects in Duluth.
Looking forward, Rannenberg acknowledged 2021 likely will be difficult to match.
“I think that it was a bit of an anomaly. But I do think that 2022 will still be higher than most previous years, because we know of a lot of projects that are coming through,” she said.
Rannenberg noted that work at Essentia continues, as the city reviews plans to redevelop the historic old Central High School building into apartments. Other projects in the works include the Brewery Creek apartment building; the conversion of the old St. Louis County Jail into apartments; a couple of new buildings for the Duluth Public Schools District; and the conversion of the old Shopko building into an At Home furniture and decor store.
Fulton also pointed to efforts to develop 37 acres of land at the Lester Park Golf Course into housing and federal American Rescue Plan funds that are earmarked to help build more units of affordable housing in the city as a couple of more factors that could fuel construction in the next few years.
As she looks ahead, Rannenberg said there will need to be a strong and continued local push to draw more young people into the building trades.
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“We’re feeling the pressure, and it’s a good thing,” Olson said, describing the drive to recruit new talent, especially as some trade members age out of the work force.
“I call it the 'silver tsunami.' I’ve been told for years that it was coming. But now it’s hitting us, as baby boomers are retiring,” he said.
