Duluth's construction industry surged in 2019
City's building boom draws more people into the trades
This past year will go down in the record books as one of the busiest ever for Duluth's builders. The city witnessed nearly $253 million in construction — the second-greatest amount of work ever documented in Duluth.
Only 2010 was busier, when new schools and a massive airport terminal overhaul pushed the local construction industry into overdrive.
Some of the large projects that kept workers bustling this past year included new facilities for the downtown medical campuses of Essentia Health and St. Luke's; apartment buildings such as CityView Flats, Garfield Square and Zvago; a new hotel, Tru by Hilton; and an expansion at Moline Machinery.
The coming year promises more of the same, with Craig Olson, president of the Duluth Building and Construction Trades Council, predicting demand for services that will be "very comparable" to 2019.
"Last year, we had a fantastic amount of work, and the good news is that a lot of it is still under construction," Olson said.
In addition to substantial work to complete at Essentia and St. Luke's, a number of other labor-intensive projects are on tap for 2020, including a 15-story apartment building called Lakeview Tower, the 193-unit Vue at Bluestone and new student housing proposed next door to Lake Superior College.
"We have lots of things in the pipeline," said Adam Fulton, deputy director of Duluth's planning and economic development division.
Olson pointed out that many projects have continued straight through winter.
"In January, they were busy pouring concrete all over Duluth. Projects are still coming out of the ground, and not too many years ago, they didn't pour concrete in the middle of January. But now there are some tight schedules, and some new technology that's making that happen," he said.
Smaller-scale construction also was plentiful in 2019. Fulton noted that 56 single-family homes were built in Duluth last year and said: "That's a really high number for Duluth. We haven't seen that before."
Fulton expects to see residential construction continue at a more rapid speed this year. He pointed to a program called Rebuild Duluth that is intended to promote infill development as one of the drivers. He also said: "We've got a couple plats coming forward that will likely be under construction at least partially this year. So the strength there is really encouraging."
Apartment properties also have been going up, with 454 housing units added in 2019.
"We've seen some encouraging things related to the use of Opportunity Zones by developers, and I think you're going to continue to see some new projects in Lincoln Park and downtown, where that Opportunity Zone financing allows for some deferred taxation, and that is going to help drive access to financing," Fulton said.
"We've seen strong market demand and absorption for new apartments coming on line. So, as long there's still market demand for these units, developers are going to be interested in proceeding with projects," he said.
Duluth's hot construction market has created certain pressures, however.
"We continue to have a tight labor market. So, we're excited that our partners, like the Duluth Workforce Development department, are thinking about things like worker training and helping our local contractors to make sure that they've got a good level of interest in people joining their teams," Fulton said.
Elena Foshay, director of that department, said: "Locally, we are looking at a lot of different things. The Workforce Board has a construction working group, which is comprised of contractors, union representatives and then some community organizations. We are kind of putting our minds together to think about what we can do to expand the construction workforce pipeline."
Those efforts include exposing high school students to opportunities in the trades, and also helping underrepresented groups, such as women and minorities, into the industry. Olson said such programs are already beginning to pay off.
"We've got more than 700 new first-year apprentices in the Duluth trades. That in itself speaks to what's going on. We are recruiting, and there are a lot of new jobs coming our way," said Olson, who can't remember ever seeing such an influx of new workers.
That fresh blood is good news, said Olson, noting that about 30% of the region's workers in the skilled trades are expected to retire in the next several years, as baby boomers age out of the work force.
In addition to projects within the city of Duluth, the region's construction industry likely will be stretched by other large projects on the horizon, including the reconstruction of the Husky refinery in Superior, Enbridge's proposed Line 3 pipeline, the expansion of Lake View Hospital in Two Harbors, and the construction of a new Essentia clinic in Cloquet.
Olson expects those projects will pull in additional tradespeople from outside the Northland. "We'll need travelers, absolutely," he said, noting that the local economy will benefit from the activity even if it is performed by itinerant workers.