Optimism in the Tech Corridor for 20101/12/2010
Leaders cautiously optimistic about Corridor’s economy in 2010
Gigi Wood and Tim Kenyon for the Corridor Business Journal
While views differ on the national economy for 2010, there are many things happening locally.
Additional layoffs and business closings could be a reality for the Corridor in the upcoming year, but flood-recovery efforts, as well as several development projects, could help keep the region buoyant.
As in Linn County, the top projects ahead include flood recovery.
The University of Iowa expects to present plans in February to the Board of Regents for a new performing arts facility to replace the flooded Hancher Auditorium, Clapp and Voxman buildings. That plan could include a series of new buildings adjacent downtown, which could spur progress on private projects, such as construction of the high rise, Hieronymus Square, and public initiatives, such as the installation of passenger rail service nearby.
Meanwhile, in March, UI Hospitals and Clinics officials will discuss with regents a proposal to establish a new medical facility at the Iowa River Landing District, an area at the southeast corner of First Avenue and Interstate 80, which includes the Coralville Marriott.
First Avenue in Coralville will be under construction for most of the summer and fall, as the city works to improve the busy street and reduce future flooding along an important business district.
Local business leaders are optimistic that the local economy will improve at least somewhat in 2010.
“In terms of project announcements, that activity seems to be slow, we’re not getting a lot of decisions being made; that being said we’re extremely busy with providing information about the marketplace,” said Joe Raso, president of the Iowa City Area Development Group (ICAD). “In the last 12 to 18 months, I think we’ve been busier than any time in the recent past when it comes to companies coming into the marketplace. We’ve had a much higher percentage of companies visiting than companies we provide data to.”
Companies are planning for when the markets bounce back, he said.
“I think a lot of it is hurry up and wait where they can’t make the financial decision to make the capital investments, but they know at some point they need to and they need to be on the front end of the market when things turn,” he said. “So they need to make sure they’re getting as many of the pieces of the puzzle in place as possible so that when they can move, they can move quickly.”
He expects many of the companies to make those decisions this calendar year.
There is a lot of interest in locating data centers and wind energy companies in the area, he said. There is concern from existing businesses that work with government contracts, especially in education and healthcare, on the economy ahead, however.
Outlook on the local economy has generated a number of various responses from small-business owners, said Nancy Quellhorst, president and CEO of the Iowa City Area Chamber of Commerce.
“A large portion of our members provide business services and many of them are doing well because of the economy. I think that there’s an increased realization that people like financial consultants can be helpful, particularly during an economic downturn,” she said. “In retail, we’ve had people struggling a little bit. For example, modestly priced restaurants have really struggled, so I continue to hear that, to people saying they’ve had their best December ever.”
Cuts to education and health care are a concern to chamber members, as well, she said, but some business owners are seeing an increase in consumer spending.
“People are spending a little more,” she said. “By and large, people feel like we’ve weathered the storm well.”
A mixed outlook is noted among business leaders in Cedar Rapids.
Larry Helling, president of Cedar Rapids Bank & Trust, is careful about his view of the economy for 2010 because of several uncertainties that will affect business.
“I feel the local economy is better than most places but it still is not real robust,” he said. “There are some signs of life, but it’s hard to tell if it’s really improved overall.”
Construction and real-estate sectors are not performing very well, while some parts of retail are showing improvement over a year or two ago, he said.
“Loan demands are stable, but most people are being cautious about what they decide to seek,” Mr. Helling said.
The top influencer is cash flow. It is more difficult to pay back loans when having cash-flow trouble, he said.
One hopeful businessman is Gary Ficken co-owner and president of Bimm Ridder Sportswear in Cedar Rapids.
“I think we’re somewhat optimistic,” he said. “We’re looking to 2010 to be up in sales more than ’09. For professional sports and entertainment things, we’ll be fine there.”
He wondered how the economy will stand later in the year as stimulus and bailout funding fades.
“How much of that is propping up the economy? Automakers’ bailout, cash for clunkers programs, when that’s all cycled through will it have done enough?” said Mr. Ficken, a Cedar Rapids Area Chamber of Commerce Small Business Task Force member. “That’s the biggest concern for business in general.”
Meanwhile, several construction projects are under way in Linn County, mainly for flood recovery. Work is ongoing at the new Federal Courthouse, a two-block site along Eighth Avenue SE, between Second Street and the Cedar River, adjacent to the Great America Building and the Helen G. Nassif YMCA. The $160 million, 300,388-square-foot project is expected to be complete in July. Once it opens, the courthouse is tagged as an economic driver for the downtown area to draw more businesses, such as retail and office workers.
Neighboring Great America Building owners are eager to advance plans for a second building, which would mirror the original. Just down the road, work is under way for the new Human Services Campus of East Central Iowa between Seventh and Eighth Avenues SE. The $15 million project completion is expected in December.
Perhaps the grandest of plans focuses on re-energizing the U.S. Cellular Center as a new events center. The facility received $15.7 million in funding for flood recovery-related projects. The wait continues for additional federal funding.
Other private projects include the $6 million renovation of the former EconoFoods on 51st Street NE to make way for a new Theisen’s store. ITT technical Institute is building a new campus featuring a 19,000-square-foot structure for the technology-oriented school at 3735 Queen Ct. SW. The campus, visible from Highway 30, will open for classes in 2010 depending on construction progress this winter.