COVID-19

COVID recession puts damper on large construction projects

Andy Uhler Nov 17, 2020
Heard on: Marketplace
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A worker directs traffic as construction takes place on a new tower in New York City in March. Eduardo Munoz Alvarez/Getty Images
COVID-19

COVID recession puts damper on large construction projects

Andy Uhler Nov 17, 2020
A worker directs traffic as construction takes place on a new tower in New York City in March. Eduardo Munoz Alvarez/Getty Images
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The trade group Associated General Contractors of America reported that more projects were canceled than were started in the last 12 months, and that construction employment declined in most metro areas.

The Houston area lost the most construction jobs of any big city over those 12 months.

Before COVID-19 hit and the economy tanked, Houston Methodist Hospital was well along in its plans to expand downtown. Centennial Tower is a $700 million-plus project to serve more patients.

“The day that I had to call the architects and the engineers and the general contractor back in March and tell him we’re gonna put this on hold, that was a hard call,” said Sid Sanders, senior vice president for design, construction and real estate at Houston Methodist.

Sanders said the tower was put on hold because the economy’s too unpredictable right now.

“Centennial is over a million square feet,” he said. “It’s going to be somewhere around 30 floors. It will probably peak out with close to 1,000 people on that job site during the peak of construction.”

Sanders said he’s hoping to get started on building the Centennial Tower in the first part of 2022 — about a year later than first planned.

Richard Branch, chief economist for Dodge Data & Analytics, said total construction spending in Houston in the first nine months of 2020 was about $15 billion.

“That sounds like a lot of money. However, that’s full 17% below where Houston was during the same period of 2019,” he said.

One of the reasons Houston is a little worse off than the U.S. as a whole is because of the slowdown in the energy sector. Patrick Jankowski, senior vice president of research at the Greater Houston Partnership, said COVID-19 is making chemical plants and refineries along the Houston Ship Channel hit pause.

“We’ve seen a lot of those projects put on hold now, as the industry is trying to assess where we are going with energy demand and where are we going with demand for chemicals and plastics,” he said.

The demand for construction workers is down, too.

“In February, just before the pandemic hit, we had 244,000 people working in the construction industry in Houston. The pandemic cost us 31,000 of those jobs. We’ve only gotten back about 3,000. We’ve gotten back less than 10% of what we lost,” Jankowski said.

Stan Marek said his Houston workforce is down 20% from last year. He’s CEO of Marek Brothers, one of the largest commercial interior contractors in Texas. He was all set to bid on the Centennial Tower project at Houston Methodist when the project got delayed.

“Now as far as the workload, yes, there have definitely been jobs stopped. But, you know, there’s work,” Marek said.

Marek said there’s still some work because of contracts secured before the pandemic. But he’s not expecting things to get much better until 2022.

COVID-19 Economy FAQs

Are states ready to roll out COVID-19 vaccines?

Claire Hannan, executive director of the nonprofit Association of Immunization Managers, which represents state health officials, said states have been making good progress in their preparations. And we could have several vaccines pretty soon. But states still need more funding, she said. Hannan doesn’t think a lack of additional funding would hold up distribution initially, but it could cause problems down the road. “It’s really worrisome that Congress may not pass funding or that there’s information circulating saying that states don’t need additional funding,” she said.

How is the service industry dealing with the return of coronavirus restrictions?

Without another round of something like the Paycheck Protection Program, which kept a lot of businesses afloat during the pandemic’s early stages, the outlook is bleak for places like restaurants. Some in the San Francisco Bay Area, for example, only got one week of indoor dining back before cases rose and restrictions went back into effect. Restaurant owners are revamping their business models in an effort to survive while waiting to see if they’ll be able to get more aid.

How are hospitals handling the nationwide surge in COVID-19 cases?

As the pandemic surges and more medical professionals themselves are coming down with COVID, nearly 1 in 5 hospitals in the country report having a critical shortage of staff, according to data from the Department of Health and Human Services. One of the knock-on effects of staff shortages is that people who have other medical needs are being asked to wait.

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