Construction industry observers here are anticipating another busy year in 2007, although theyre again approaching the new year with some trepidation.


The city of Spokane saw continued building growth in 2006, with permitted construction valued at $447.6 million in the first 11 months of 2006, up a healthy 14 percent from the year-earlier period.


Those strong numbers could carry over into 2007, with anticipated permits from the first phase of the Kendall Yards urban village project overlooking the Spokane River, which could be valued at $200 million in that phase alone, says John Pilcher, the citys director of economic development.


Other projects already in the citys queue for the approval process are valued at $50 million, Pilcher says. They include a lab preliminarily valued at around $10 million at Sacred Heart, several million dollars worth of apartment buildings and low-income housing, and two or three big-box retail developments that could be valued at around $10 million each if they are approved.


The $59 million Shadle Park High School modernization is another big construction job slated to begin this year.


Adding in activity in Spokane Valley and unincorporated Spokane County, valuation of new permits overall grew 2.66 percent in the first 11 months of 2006, to a record $888.45 million, compared with $866.3 million in the year-earlier period.


For the most part, contractors were able to stay local and not have to travel all over for jobs, says Wayne Brokaw, executive director of Inland Northwest Associated General Contractors.


That saved overhead costs of moving materials and equipment, and it kept more money in the community, he says.


Some of the biggest industry roadblocks may be in highway construction. Brokaw says the cost of construction materials has doubled since 2004.


With costs of materials rising so fast, some projects that were put out to bid have been withdrawn, Brokaw says. Contractors in Eastern Washington have seen contracts pulled back, and money they expected to have did not materialize.


He doesnt foresee any significant letup in rising construction materials costs. The world market demand for materials is still great, Brokaw says.


He says the biggest local highway issue is maintaining the states financial commitment to the north-south freeway.


In 2007, the state Legislature is going to need to readdress the highway funding package, Brokaw says, adding, Anytime you have to reevaluate, you are always in jeopardy of coming back with less than you had yesterday.


Kate McCaslin, president and CEO of the Inland Pacific chapter of Associated Building Contractors Inc., also says commercial construction should hold up well into 2007.


Theres a lot of work on the boards, McCaslin says. I anticipate a strong year.


Joel White, Spokane Home Builders Association executive officer, says housing construction was strong in 2006, although it started to wane in the second half of the year.


I think its still stronger than the national trend, he says.


Spokane, Spokane Valley, and the unincorporated county issued 2,116 building permits for new single-family homes in the first 11 months of 2006, down 12.7 percent from the year-earlier period. The valuation of permits in the same period of 2006 was $316.1 million, down 5 percent from the year-earlier period.


White predicts a slight slowing and a soft landing for home building in 2007.


We cant have records every single year, he says. Its still a healthy market in Spokane, and home prices are appreciating on an annual basis. The builders Ive talked to are optimistic.


Corey Condron, vice president of Condron Construction Inc. of Spokane, says late-summer decline in demand for new housing was fueled more by publicity about the national real estate sales decline than by regional market conditions.


Demand for newly built homes in the Spokane area appears to be picking up toward normal market levels for November and December, he says.


With interest rates as low as they are, we should slide into 2007 at a good steady pace in the new-housing market, he says.


He doesnt expect boom or bust demand in the new year. Average is healthy, Condron says.