BUILDING ON THE RENEWED CONSTRUCTION BOOM; SUBCONTRACTORS JOINING AREA'S ECONOMIC RECOVERY.

Byline: Gregory J. Wilcox Daily News Staff Writer

Darrell Allen knows just what this summer will bring: Long hours under a hot sun and fatter paychecks.

``We've had plenty of work for the last two or three years but nothing like we see coming this summer,'' said Allen, owner of Westlake Village-based Allen Construction Inc.

``There is so much work we are turning down invitations to bid. We are being very selective about who we are working for. I think we're in for at least a two-year run,'' he said.

Looks like the area's subcontacting businesses is starting to join the region's economic recovery.

The upswing, while not as explosive as past booms for the sector, is welcome news for subcontractors that saw revenues plunge and payrolls shrink as the region worked through an economic restructuring of historic proportions.

Analysts and industry officials say the rebound might result in a possible labor shortage in some trades, bump up wages and eventually result in some higher prices to consumers for finished products like homes and remodeling jobs.

It could even prompt a run-up in lumber prices, which have been in a general decline for the past 18 months.

``You can say the old gal is dancing a pretty mean dance right about now,'' Jack Kyser, chief economist for the Los Angeles County Economic Development Corp., said of the real estate market and its impact on construction trades.

Kyser noted that while it is still time consuming and expensive to get new housing tracts approved, projects are moving forward, especially in Simi Valley and the Santa Clarita and Conejo valleys.

The industrial and office construction markets are also showing signs of life. Work on the Alameda Corridor, which will help move truck and train traffic from the ports of Los Angeles and Long Beach to rail yards near downtown Los Angeles, will also generate jobs.

``For anybody in the construction industry, this has to be one of the best places to be. We are probably taking some of the steam away from the Las Vegas and Arizona markets, which are very hot,'' Kyser said.

At Tarzana-based Terry Lumber, which operates 14 stores in the region, President Lonnie Schield said business is picking up.

``Right now it's not just a feeling, it's happened. The contractors we sell to are getting busy,'' he said.

For example, the company's Simi Valley store has its biggest backlog in sold product since 1989.

This is no doubt good news. But the sector still has a long way to go to match the boom years of the late 1980s.

John Karevoll, publisher of the Real Estate Observer, a newsletter that tracks real estate market developments, noted that the building industry is now doing about 50 percent of the business that it did in 1989.

He agrees that construction is picking up, but it is not coming close to keeping pace with sales, in part because builders are being more cautious in the way they are structuring deals compared with the late 1980s.

Consider that during the year's first quarter consumers spent $10.9 billion on residential real estate, a 28.6 percent gain over the amount spent during the like period in 1997. But it still lags the $13.46 billion spent during the 1989 first quarter.

``There is still plenty of room to move volume-wise and price-wise. The market is moving along just fine, and there is nothing on the horizon that will change that, at least not this year,'' Karevoll said. ``Nonetheless, this talk of a frenzy is nonsense.''

One housing product that has not heated up is the price of lumber.

Last week, the price of a basket of wood products used to build a home was $315 per 1,000 board feet, a drop of 27 percent from the same period in 1997, according to statistics compiled by Random Lengths Publications Inc., whose weekly newsletter tracks the lumber industry.

Editor Burrle Elmore said that's the lowest price since Oct. 27, 1995.

``Right now we are in the midst of a long downtrend in prices,'' he said.

The biggest reason is overproduction on the part of lumber companies which has outpaced a brisk demand for product by builders.

A soft Asian economy and unusually wet winter, especially in Southern California, also is having an impact.

``The production is strong in all areas of North America. Housing starts for the first quarter were at an extremely quick pace so it's still a large market for lumber,'' Elmore said. ``Lumber companies have to curtail production before prices come back up.''

Meanwhile, contractor Darrell Allen is happy to have seen his payroll grow from a low point of 25 workers during the recession to 120 today.

He's currently working on a 100-unit housing project in Burbank and expects to frame about 200 homes this year.

It should help boost revenue about 50 percent from last year's level.

``We could work anywhere we wanted to right now and we're getting a lot of work in our own back yard,'' Allen said. ``We're finally able to pick and choose (our jobs) more or less.''

CAPTION(S):

Photo, Chart

PHOTO (Color) Ray Perez, an employee of Terry Lumber in Simi Valley uses a fork lift to move around some of the yard's $4 million in inventory. The company says business is picking up.

John Lazar/Special to the Daily News

CHART: In the basement: The average prices for lumber and structural panels are among the lowest in five years