Construction Moves Forward in 2020: 4 Reasons Why
2020 will be remembered as the year everything paused from an unexpected and unprecedented pandemic.
As a result, industries all over the world faced massive challenges – commercial real estate included. From intensifying consumer demands to economic hardships, it’s been a tough ride for CRE sectors such as office, retail, and restaurants.
Lasting Implications on Commercial Real Estate
After facing overwhelming disruptions for over 10 weeks, business isn’t what it once was.
Leases are falling through as tenants cannot pay their bills, pending transactions came to a screeching halt whenever in-person interactions were restricted, and many commercial real estate players simply called it quits.
Domestic markets that had new development projects lined up are surely feeling the heat of the moment, but construction is resilient nonetheless.
Unlike other aspects of the commercial real estate template, construction projects are still marching forward. Maybe the details are different, but the construction industry is trudging ahead – and in times like this, any progress marks a huge win.
Let’s take a deeper look at why construction, although slow, isn’t necessarily stopping in 2020:
Data Shows Slowed Pace
Extended timelines are an inevitable part of the post-COVID atmosphere. Everything is slow-moving as the industry is treading lightly and trying to pivot accordingly.
At the end of March, the Associated General Contractors of America surveyed construction firms about their business flows.
28% of respondents reported delays in their current projects or those 30 days out, while 11% reported delays on projects over one month away. These are great numbers, considering that most industries are seeing interruptions on their majority.
The cause of these delays were delivery issues, shortages of workers, and delays in permits, inspections, and other required approvals.
Implications to Supply and Demand
The global supply chain took a hard hit during COVD.
The availability of construction materials paired with the increase in building costs is making it difficult to stick to the original project deadlines. It’s a tricky situation to navigate, but persistence and patience go a long way.
Each development team needs to be prepared to adapt, replan, and re-strategize to attain success.
Smarter and Safer Projects
Don’t think that construction teams are taking any risks in staying active. When you drive by an active construction site, it is not the scene you’re used to seeing. It’s been reconfigured by the pandemic – just like everything else.
Construction team members are being screened with contactless thermometers before stepping on the site. Personal protective equipment is worn by everyone. Developers are making sure that their teams are safe and healthy by taking every precaution needed.
Navigating Unknown Terrain
Slowly but surely, construction projects across the board are moving forward.
There’s no clear forecast that can outline exactly what will happen and when, but as of now, commercial real estate construction is seeing positive momentum. The experts are expecting that most of the paused projects will hit the ground running as soon as they can.
Even in these turbulent times, commercial construction is still bringing the hustle. Keep up with the NAI Global Newslink for more.