COVID-19 Building Construction

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COVID-19 Impact: Commercial Real Estate

Labor shortages, material delays, and project cancellations due to COVID-19 are impacting the commercial real estate construction industry in the U.S.

Labor Shortages

  • In cities where stay-at-home orders have not been issued, most construction projects are still moving forward, but 70% of construction companies report that COVID-19 has caused anxiety among workers.
  • In cities were stay-at-home orders have been issued, commercial construction is not always considered an essential business, so projects have halted entirely.
  • A recent survey found that 18% of contractors report shortages of craftworkers and 16% report shortages of "government workers needed for inspections, permits and other actions."
  • About 13% of contractors said their projects were delayed due to a potentially infected person visiting the job site.
  • However, for construction projects that are considered essential, a lack of specialty contractors could cause completion delays.
  • As construction attorney Steve Lesser stated, "If you have a subcontractor whose work force becomes unavailable, who is going to pick up the slack to perform that work? That’s a real problem especially here in Florida and elsewhere where they have specific licensing requirements associated with the performance of specialty trades such as roofing, electrical and swimming pools."
  • Michael Keester, a shareholder/partner at the national law firm Hall Estill, agrees, saying, "As workers become infected, sick and quarantined, labor shortages could very well arise."
  • The concern behind labor shortages is the delay in projects, which can affect the cost of those projects. Keester stated, "Construction projects always have a ‘time for completion’ component and many contractual provisions may certainly come into play in any construction project which is affected by labor shortages from the coronavirus."
  • There will likely be many arguments over contract language about what is and isn't permissible in terms of delivering an overdue project.

Material Delays

  • Commercial builders who obtain their supplies from Chinese manufacturers are likely experiencing delays in shipments because many Chinese factories have been shut down due to COVID-19.
  • Joe Natarelli, national construction industry leader at accounting services firm Marcum, stated that "U.S. builders look to China for everything from steel and stone to millwork and plumbing fixtures," so any delay in manufacturing causes delays in the U.S.
  • Construction Dive estimates that 30% of all U.S. building imports come from China, but some construction companies rely on China for as much as 80% of their supplies.
  • A survey conducted by the Associated General Contractors of America found that 23% of contractors are reporting "shortages of material, parts and equipment, including vital personal protective equipment for workers such as respirators."
  • Advisors are telling their construction company clients to "aggressively seek out alternative suppliers in the U.S. or in countries that haven’t been negatively impacted by major supply chain interruptions," but they warn that this could result in higher material prices.

Canceled Projects

  • A late March survey conducted by the Associated General Contractors of America found that 39% of contractors have reported that "project owners have halted or canceled current construction projects amid deteriorating economic conditions."
  • These project cancellations could result in massive job losses unless Congress passes a relief package for the construction industry.
  • The spread of COVID-19 has caused an abrupt drop in economic activity, which is affecting owners' decisions to continue their projects.
  • About 18% of contractors report that their project cancellations came from elected officials.
  • The drop in demand is in contrast to the strong employment levels that the construction industry was experiencing in February.
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COVID-19 Impact: Hospitals

Hospitals in the United States are advancing construction plans, repurposing facilities, re-opening closed hospitals, and using non-hospital locations for temporary hospitals to cope with the influx of COVID-19 patients. Below are examples of how specific hospitals are responding to capacity issues.

Penn Medicine Speeds Up Construction

  • In an effort to find more hospital space for COVID-19 patients, Penn Medicine in Philadelphia, Pennsylvania is rushing to complete the construction of a new hospital tower that was not expected to open until 2021.
  • According to a Penn Medicine spokesman, "Crews are working around the clock to complete this project at an incredible pace — these rooms are expected to be ready by mid-April, 15 months ahead of the facility’s planned opening."
  • Construction companies are not considered essential businesses during the COVID-19 crisis, but because this project could result in 119 additional hospital beds, Governor Tom Wolf is allowing this construction to continue at least temporarily.

CoxHealth Makes Plans to Build New Hospital

  • In Springfield, Missouri, CoxHealth announced plans to build a new hospital in Cox South specifically for COVID-19 patients.
  • When Cox South was renovated in 2015, several floors of the new building were left empty so they could be developed as needed.
  • Since this hospital ward will be built to accommodate COVID-19 patients and "patients suffering from the respiratory illness requiring ventilator support," it will have a large open spaces rather than individual rooms. This change will also allow for caregivers to better preserve personal protective equipment.
  • The construction is expected to be completed by April 9, 2020.

Massachusetts Reopens Decommissioned Hospital

  • In Boston, Massachusetts, Newton Pavilion, which was decommissioned in 2018, will be temporarily reopened to increase capacity for COVID-19 patients and others who need hospitalization.
  • Currently, construction is underway to ready the hospital to accommodate 250 beds.
  • The facility will focus on supporting Boston's homeless population and will be "operated by a consortium of providers including Boston Medical Center, Boston Healthcare for the Homeless, various shelters in the city and the city’s COVID-19 response team."
  • The completion date for this project has not been announced.

Bethesda Hospital Repurposed

  • Prior to the COVID-19 pandemic, Bethesda Hospital in St. Paul, Minnesota was a long-term acute care hospital, but during the outbreak, it was repurposed as a "specialty center for the most severe COVID-19 cases."
  • Approximately 45 long-term acute care patients were moved to other facilities to allow construction companies to transform the hospital a 90-bed hospital for COVID-19 patients.
  • After construction, there are 35 ICU patient rooms, all of which have ventilators and industrial-type fans added negative airflow to the ICU rooms so that patient air does not circulate around the rest of the hospital.
  • Additionally, in the basement of Bethesda Hospital, a gym was transformed into a radiology room to help further care for COVID-19 patients.

Baystate Medical Center Constructs Triage Center

  • In Springfield, Massachusetts, Baystate Medical Center constructed a rapid response triage center to "deal with an anticipated surge in patients with the COVID-19 disease."
  • The facility was completed in 10 days with the purpose of allowing the medical center the ability to expand their screening services.
  • Inside the triage center, there will be between 30 and 40 chairs, each spaced six feet apart, where patients will wait to be assessed.

New York Constructs Temporary Hospital

  • In New York, a temporary hospital was constructed at the Jacob K. Javits Convention Center, which added 1,000 hospital beds for the state's COVID-19 patients.
  • Additionally, Governor Andrew M. Cuomo has announced that the state and Army Corp of Engineers have identified four additional sites for other temporary hospitals that are going to be constructed in the coming days, pending President Donald Trump's approval.
  • The Brooklyn Cruise Terminal, the Aqueduct Racetrack facility in Queens, CUNY Staten Island, and the New York Expo Center in the Bronx are all sites where temporary hospital facilities will be built, adding 4,000 more hospital beds to the state's capacity.
  • The goal is to have all temporary locations open to patients by mid-April.
  • Governor Cuomo also noted that college dormitories, hotels, and nursing homes may need to be used for patient care as well.

Alhambra High School Becomes Temporary Hospital

  • Alhambra High School, located in Contra Costa County, California, has been designated a temporary hospital to treat patients if the nearby hospitals reach capacity with COVID-19 patients.
  • The high school's gym and kitchen common areas will be used to help provide sick people with a safe place to receive care.
  • As the Bay Area has been hit hard by the COVID-19 virus, there is a need to double the current hospital capacity.

Riverside County Opens Two Federal Medical Stations

  • To alleviate stress on local hospitals, Riverside County, California opened a federal medical station at the county fairgrounds in Indio, and has plans to open another, which will treat less-severe COVID-19 patients and other patients who require a lower level of care.
  • The National Guard has been responsible for setting up the medical stations by moving in 125 beds per station, bed sheets, protective gear, and other necessary equipment.
  • There will be approximately 30-40 employees at each station, including physicians, pharmacists, and county workers.

Dallas County Plans Mobile Hospital

Miami-Dade County Builds Temporary Field Hospital

  • Employees of Miami-Dade County, Florida are building a temporary field hospital under a tent in anticipation that the area's hospitals may be overrun with COVID-19 patients.
  • This hospital is not open yet and will not open unless there is an overflow of patients with the COVID-19 virus.

Kentucky May Use Hotels as Temporary Hospitals

  • Kentucky Governor Andy Beshear says the state may use hotels as temporary hospitals if the spread of COVID-19 causes hospitals to fill to capacity.
  • Beshear stated that these unlicensed hospitals would only be used for "patients who are not critically ill and not in need of intensive care unit beds."

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