Directional Signals

Builders still view Las Vegas and Phoenix as sure bets too, despite significant inventory overhangs. 37,000 hotel rooms will be built in Vegas over the next several years, with each room projected to create one to 1.25 new jobs, says Pageantry Homes' Hoover. Phoenix added an average of 68,000 private-sector jobs each year from 2002 through 2006, according to bizjournals. That number receded to an estimated 53,000 in 2007, “but that's still good,” says Glieberman.

Job growth isn't uniform across the country, however. When the U.S. Labor Department reported that 110,000 jobs were created nationwide in September, the government also admitted that it might have overestimated job growth by 297,000 jobs in 2006 and early 2007. (In fact, Labor later recalculated its September estimate to 96,000.) The New York Times reported that job growth in the first six months of 2007 was the lowest of any similar period since 2004.

Forest City's Lautman fears that 2008 could usher in a prolonged period when America's labor force shrinks. “By 2010 or 2012, if there's an available skilled worker, there will be 10 companies competing” for him or her. Employees will have more power over where they work and live. “So builders better start figuring out what's attracting or repelling people [in] certain job markets,” says Lautman.

Sometime in the first quarter of 2008, the initial residential phase of 550 homes should get started at Mesa del Sol, a 12,900-acre mixed-use community in Albuquerque, N.M., that, when completed, is projected to house 100,000 residents in 37,500 homes. But before the first foundation for the first home gets poured, Forest City Covington, Mesa del Sol's developer, expects to have 4,000 to 5,000 jobs established within the community, which has earmarked 1,400 acres for industrial, commercial, and office space use.

“I believe we're the only community in the country producing jobs before it brings in homeowners or renters,” says Mark Lautman, Forest City's director of economic development. Forest City Covington negotiated $500 million in tax-increment financing to develop the first 3,000 acres of this project by guaranteeing that the community would create 30,000 “economy-based” jobs and another 35,000 service-related jobs. (Lautman defines “economy-based” as jobs that create products that can be shipped outside of the state.) Businesses will be asked to provide employment and wage data so Forest City Covington can show the state that it's building homes to meet demand.

Through October, Mesa del Sol had attracted two tenants: Advent Solar, a photovoltaic cell maker that operates an 87,000-square-foot plant that will eventually employ 1,000 people; and Albuquerque Studios, a film production company with 300,000 square feet of studio space. Lautman is confident that, despite New Mexico's 3.5 percent unemployment rate, Mesa del Sol can lure businesses by touting the state's pro-business governor, its annual surplus of between $500 million and $1 billion, and its proximity to Albuquerque's airport and downtown. He adds that New Mexico is an “in-migration corridor” that should produce steady population growth.

Forest City acquired this land in 2005 through a partnership with the state, the University of New Mexico, and Covington Capital, another developer, and set up a deal where the state and university own 16 percent of the community and share a portion of its profits. Mesa del Sol is three times larger than Forest City's Stapleton community in Denver and is expected to take 30 to 35 years to complete. Forest City Covington has completed “the first spine” of infrastructure and is interviewing builders for a broad spectrum of housing, including rental. If all goes as planned, “we'll be in really good shape for at least the next five or six years,” Lautman says.