Construction is deemed 'essential’ but is still slowing in D-FW and U.S.
Contractors report new projects are being delayed or canceled.
Construction projects are considered essential business activities in the current coronavirus shutdowns.
But even though residential and commercial builders are pushing ahead with jobs already underway, the flow of new building business is slowing.
Almost 40% of contractors around the country are reporting that project owners have halted or canceled current construction projects because of the crashing economy.
“The abrupt plunge in economic activity is taking a swift and severe toll on construction,” Ken Simonson, chief economist with the Associated General Contractors of America, said in a just-released report. “The sudden drop in demand stands in sharp contrast to the strong employment levels this industry was experiencing just a few weeks ago.”
The contractors association surveyed members nationwide this week. Only 18% said they have been ordered to halt work by elected officials.
But other obstacles to construction are growing.
More than a third of contractors said they had been notified by suppliers that some deliveries would be delayed or canceled. And 18% reported shortages of skilled workers.
The front end of business is also slowing, with bidding getting held up for proposed projects.
Industry information firm ConstructionConnect is keeping tabs on project bidding around the country that’s been delayed or canceled.
More than two dozen North Texas projects — everything from roadwork to schools and retail building — have been delayed for months or indefinitely.
Meloni Raney, president and CEO of Texo, the North Texas contractors association, said the local industry is trying to balance health safety with business demands.
“Monitoring the ever-changing landscape of COVID-19 has kept our construction industry very busy, and in order to balance everything, some bids may need to be pushed a bit,” Raney said. “The important emphasis has to be on practicing safe health standards in the field, and that’s what our industry continues to do.”
Construction company executives say they are trying to keep building moving forward.
“Our clients have a positive outlook about the future, as does our team,” said Corbett Nichter, executive vice president and chief operating officer of Adolfson & Peterson. “In our experience, the bidding process is running about a month behind as a result of many in the industry working remotely.
“We have ramped up our communications process with clients and subcontractor partners, along with implementing best practices while monitoring the pandemic closely.”
Construction starts in the Dallas-Fort Worth area are already slowing.
In February, starts of both residential and commercial building projects in the D-FW area fell 19% from a year ago, according to the latest construction reports from Dodge Data & Analytics.
February’s building activity decline was enough to push start totals for the entire year into negative territory.
With more than $1.5 billion in construction starts, D-FW ranked behind New York City, Phoenix and Houston for February building activity, according to Dodge Data.
Construction firm execs are hoping the delays are temporary.
“We have recently seen slight delays in bidding since the work paradigm has shifted from in-office to off-site,” said Shane Deville, president of TriArc Construction. “In essence, target dates are not being met as many organizations are struggling to continue effective operations with various key personnel quarantined and/or working remotely.
“That said, there has been no significant reduction in the number of weekly projects listed via common project notification publications, with the exception of small retail renovations - we have noted an increase in spec developers backing out of deals, likely due to the fear that deal close times will be increasing,” Deville said. “Additionally, developers we have been in contact with are telling us that deals and opportunities continue.”