BOSTON JLL Capital Markets announced that it has arranged construction financing for two projects in the Union Square neighborhood of Somerville, Massachusetts. JLL did not disclose the amount of financing.

Sitting adjacent to the new MBTA Union Square Green Line station, the approximately 194,000-square-foot, state-of-the-art life sciences and lab facility and the adjacent 450-unit residential tower and mid-rise building mark the first phase of the Union Square Revitalization (USQ) master plan (www.discoverusq.com), which will eventually deliver nearly 2.4 million square feet of mixed uses to the neighborhood.

JLL worked on behalf of the borrower, a joint venture between affiliates of Magellan Development Group, RAS Development, Cypress Equity Investments and USAA Real Estate, to secure the development financing, being provided by Bank OZK, for both projects.

Bank OZK is delighted to provide senior-secured construction financing for the first two projects in the USQ master plan, stated Christopher Lawton, Executive Vice President of Originations at Bank OZKs Real Estate Specialties Group. The development teams vibrant life science and residential project is years in the making and a bold beginning for the Union Square revitalization. This project embodies the high standards we consistently seek in our project financings marquee real estate, strong market fundamentals and top-tier sponsorship.

Sitting less than a mile from Massachusetts Institute of Technology and Kendall Square, the epicenters of the life science industry, the projects will benefit significantly from their proximity to the worlds most innovative and recognized technology, biotechnology. The resulting ecosystem provides one of the most sought-after talent and employment bases in the country and supports companies at every stage of growth, from start-up to multinational in scale.

Union Squares revitalization is a key component of the City of Somervilles SomerVision, a plan to make Somerville a regional employment center by creating a 30,000 new high-quality jobs through new commercial development. The addition of the MBTA Green Line to Union Square, one of Somervilles oldest commercial districts and cultural centers in Somerville, will be a catalyst for USQs 2.4 million square feet of new mixed use development, including 1.4 million square feet of new biotech, lab and office, and 1,000 new housing units and retail space. Working together with the city, the borrower was selected as the master developer in 2014 to facilitate the investment and lead the transformation of the neighborhood.

This a tremendous beginning for the revitalization of Union Square A new Class A life sciences building will anchor the neighborhood and create opportunities for the next great concentration of life sciences and technology companies to flourish., said Greg Karczewski, a principal of the borrower venture. New housing, retail opportunities and open spaces next to the new MBTA Station will make this great neighborhood even better.

The JLL Capital Markets team representing the borrower was led by Senior Managing Directors Daniel Kaufman and Frederic Wittmann, and Managing Director Brett Paulsrud.

This marks a major milestone for the neighborhood, said Paulsrud. A significant amount of effort and perseverance have gone in to creating a plan and design that has remained thoughtful of the urban fabric and character that Union Square has always represented for the City. It is great to see it all come together, and will be exciting to watch this best-in-class development team execute its plan.

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Construction financing secured for two Union Square assets in Somerville - Boston Real Estate Times

WE3 at Waters Edge, a six-story, 160,000-sf creative workspace has completed construction in an area of Playa Vista colloquially referred to as Silicon Beach.

WE3 is the third and final building in a pre-existing commercial campus. SPF:architects main challenge with the project was to create a plan fully integrated with the existing conditions that would maximize the lots buildable area and maintain a compelling architectural standard. The project evolved over time to create a longer, more flexible office space that allowed more light and views on each elevation. A new public courtyard was created and an existing on grade sports field was relocated over the parking substructure.

The 400-foot-long building includes four levels of parking (two subterranean, one at grade, and one above grade) and four floors of open workspace. Each of the four levels is approximately 40,000-sf and fifteen feet floor to floor.

WE3 at Water's Edge - SPF:architects from SPF:architects on Vimeo.

Due to zoning restrictions, the buildings top floor could not be contiguous and exceed 20,000 sf. In order to maintain the desired area requirements, a gap was introduced mid-floor and a sky garden was created. The sky garden is located approximately 70 feet above natural grade and provides views toward Baldwin Hills and the Pacific Ocean. It also provides tenants with a wind-shielded terrace that can be used for impromptu meetings or casual workspaces. Additionally, all circulation and exiting is designed to be exterior.

WE3s exterior includes a floating, perforated skin that shrouds the building and dematerializes it, visually lengthening the structures significant mass while providing the glass facade cover from the full brunt of the sun. Natural light filters through the skin in all directions and is proportionally spread across the entirety of the interior surface area.

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New creative office space completes in Silicon Beach - Building Design + Construction

Serving as the central business district for a sprawling city thats home to roughly 40 percent of Alaskas population, downtown Anchorage is dense, compact, filled with attractions, and notably in need of a good shot in the arm.

With no new construction within downtown Anchorage over the past decade, there are hopes that the dramatic transformation of a nearly 50-year-old mid-rise office tower into a landmark building with a sleek, glacial form will help catalyze further new development and reinvigorate the citys increasingly sleepy urban core.

Headed by a design team from Perkins&Wills Seattle studio, the metamorphic $30 million expansion and modernization project centers around the old nine-story Key Bank Plaza building at 601 5th Avenue. Debuting as the Alaska Mutual Savings Bank in 1972, the precast concrete-panel-clad buildingalthough never the citys tallestwas a notable addition to Anchorages modest-but-growing skyline. On November 30, 2018, the aging modernist office building suffered significant damage during a 7.1-magnitude earthquake and was shuttered to undergo seismic reinforcements and structural reinforcements. The building did reopen following the quake although the last remaining tenant, Key Bank, departed nearly a year later due to safety concerns raised by the owner at which point 601 5th Avenue became the only commercial structure in Anchorage to be fully vacated due to damage sustained from the 2018 quake.

Instead of reopening the newly fortified building as-is, Anchorage-based real estate developer Peach Investments opted to treat the building to an external transformation that pays homage to Alaskas natural wonders, per a press release from Perkins&Will.

Notably, the buildings existing cladding will be completely dismantled and replaced with a 40,000-square-foot sloped glass curtain wall facade that will give it an angular, glacier-esque appearance and allow abundant natural light to flood into its previously dim interiors. In addition to the exterior overhaul, the Perkins&Will teamled by principal and design director Erik Mott with principal Brad Hinthorne, senior project designer Bill Xu, and designers Kirk Malanchuk and Louis Peiserhave envisioned the buildings revamped interior as being an innovative office environment that embraces connectivity to Alaskas natural world. A host of interior improvements are planned including new mechanical, plumbing, and electrical systems along with a new stair tower and elevators.

The expansive makeover also entails landscaping and hardscaping improvements around the building, which is in proximity to a number of downtown draws including the Alaska Center for Performing Arts and the William A. Egan Convention Center.

We are excited to breathe new life into the former Key Bank Plaza building, which was one of approximately 750 buildings damaged by the 2018 Anchorage earthquake, said Mott in a statement. The repositioning will not only provide modern amenities to future tenants but will also serve to revitalize downtown Anchorage.

Construction kicked off last fall and is expected to be completed in early 2022. The renovation of 601 5th Avenue is the first phase of a larger redevelopment scheme that Peach Investments has planned for the block.

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Perkins&Will reimagines an earthquake-battered Anchorage office building as a glacier-like landmark - The Architect's Newspaper

Only three of the top 20 metro areas post gains during the year

NEW JERSEYJanuary 26, 2021The value of commercial and multifamily construction starts in the top 20 metropolitan areas of the U.S. lost 23% in 2020, falling to $111.1 billion according to Dodge Data & Analytics. Nationally, commercial and multifamily starts tumbled 20% over the year to $193.4 billion. Commercial and multifamily construction starts in the top 10 metro areas dropped 23% during the year with only one metro area Phoenix AZ reporting an increase. In the second largest group of metro areas (those ranked 11 through 20), commercial and multifamily construction starts also lost 23%, with only Denver CO and Kansas City MO posting an increase for the year.

The New York metropolitan area continued to be the largest market for commercial and multifamily starts at $23.5 billion but suffered a stark 25% decline from 2019. The Washington DC metro area managed to maintain its second place standing despite an identical decline in 2020 lowering commercial and multifamily starts to $8.9 billion. The Los Angeles CA metro area, which fell 21% to $7.4 billion, ranked third. The remaining top 10 metropolitan areas in 2020 were Dallas TX down 20% ($6.8 billion), Chicago IL down 9% ($6.4 billion), Boston MA 27% lower ($6.3 billion), Phoenix up 32% ($5.3 billion), Miami down 37% ($5.1 billion), Austin down 17% ($4.9 billion) and Houston down 47% ($4.5 billion). In sum, the top 10 metropolitan areas accounted for 41% of all U.S. commercial and multifamily construction starts in 2020, down from a 43% share in 2019.

The second largest metro group included: Atlanta GA down 41% ($4.3 billion), Philadelphia PA down 16% ($4.0 billion), Seattle WA down 31% ($3.9 billion), Nashville TN down 3% ($3.9 billion), Denver CO up 17% ($3.3 billion), Orlando FL down 17% ($3.1 billion), Kansas City MO up 20% ($2.5 billion), San Francisco CA down 46% ($2.4 billion), Tampa FL down 19% ($2.4 billion), and Minneapolis MN down 42% ($2.4 billion). This group of metro areas accounted for 17% of total U.S. commercial and multifamily activity in 2020, the same share as in the previous year.

The commercial and multifamily total is comprised of office buildings, stores, hotels, warehouses, commercial garages, and multifamily housing. Not included in this ranking are institutional building projects (e.g., educational facilities, hospitals, convention centers, casinos, transportation terminals), manufacturing buildings, single family housing, public works, and electric utilities/gas plants. Total U.S. commercial and multifamily building starts dropped 20% in 2020 to $193.4 billion from the $240.3 billion in 2019. Commercial building starts lost 26% to $104.0 billion, while multifamily building activity slid 11% lower to $89.5 billion. Within the top 10 metro areas, commercial building starts dropped 26%, while multifamily building activity fell 21%. Within the second largest group of metropolitan areas, commercial building starts fell 30% in 2020, while multifamily building starts lost 15%.

Hear directly from Chief Economist Richard Branch his take on whats happening in these top ten locations in his Metro in a Minute updates.

The pandemic is having a significant negative impact on commercial and multifamily construction across the country, stated Richard Branch, Chief Economist for Dodge Data & Analytics. While some areas stabilized over the summer, the current wave of the virus has further hindered activity. The recently passed $900 billion stimulus plan will go a long way towards re-energizing the economy. Branch continued, The construction sector will show signs of recovery in 2021, but, the road back to full recovery will be long and difficult. The effects of the pandemic on the U.S. economy and building markets will be felt for several years.

In the New York NY metropolitan area, commercial and multifamily construction starts dropped 25% in 2020 to $23.5 billion, after increasing 6% in 2019. Multifamily construction starts in the metro area had been very robust over the past several years but posted a significant 27% decline in 2020. The largest multifamily building to break ground was the $500 million Bankside mixed-use project in the Bronx NY. Also starting in 2020 were the $500 million Pacific Park mixed-use building in Brooklyn NY and the $420 million Hunters Point South complex in Long Island City NY. Commercial building starts, meanwhile, fell 22% in 2020 a decline that would have been much more significant if not for the metro areas increase in office starts. All other commercial construction sectors fell over the year. The largest commercial buildings to break ground in 2020 were the $1.3 billion Two Manhattan West office building, the $1.3 billion One Madison Avenue office project and the $760 million Disney/ABC Headquarters building.

Commercial and multifamily building starts in Washington DC fell 25% in 2020 to $8.9 billion following a 25% gain in 2019. Multifamily building starts in the metro area gained 2% during the year. The largest multifamily project to get underway was the $200 million 300 M NE Street mixed-use project. Also breaking ground were the $160 million first phase of the Sursum Corda Cooperative Apartments and the $150 million first phase of the Sursum Corda Cooperative apartments. Commercial construction starts fell 42% in Washington DC during 2020, with all commercial sectors posting significant declines for the year. The largest commercial project to start during the year was the $306 million Aligned Energy data center in Ashburn VA. Also moving forward to groundbreaking in 2020 were Towers 1 & 2 of the Amazon HQ2 complex each valued at $240 million.

Los Angeles CAs commercial and multifamily building starts tumbled 21% in 2020 to $7.4 billion following a 22% gain the previous year. Commercial building starts in 2020 fell by 35%, although office construction starts in the metro posted a gain. All other commercial building types fell over the year. The largest commercial building to start during the year was the $355 million Fig + Pico AC Marriott/Hilton hotel. Also starting was the $330 million second phase of the Iceberg Towers and the $300 million Lumen West office project. Multifamily building starts lost 2% in Los Angeles during 2020. The largest multifamily buildings to get underway were the $275 million Figueroa Center mixed-use project, $200 million 8th and Figueroa mixed-use project, and the $167 million AVA Arts District Live/Work Complex.

Commercial and multifamily construction starts in Dallas TX fell 20% in 2020 to $6.8 billion after an 18% gain in starts the prior year. Multifamily housing starts in the metro area dropped 15% during 2020. The largest multifamily building project to get underway was the $75 million Novel Turtle Creek residential tower. Also starting were the $65 million Shannon Creek Apartments in Burleson TX and the $64 million Stevenson Oaks Senior Living Complex in Fort Worth. Commercial building starts lost 23% for the year. The decline was the result of sizeable pullbacks in office, hotel, and parking structures. Retail construction starts were flat over the year, while warehouse starts posted a sizeable gain. The largest commercial building to start in 2020 was the $135 million Epic Deep Ellum office building. Also starting was the $100 million American Airlines Flight Kitchen, a retail building, in addition to an $80 million warehouse project in Forney TX.

Chicago IL commercial and multifamily construction starts dropped 9% in 2020 to $6.4 billion, following a 2% decline the previous year. Commercial building starts in 2020 increased 40% due to gains in office and warehouse starts. The largest commercial buildings to break ground in 2020 were the $800 million Facebook data center in Dekalb Township, the $476 million BMO office tower, and the $360 million Wolf Point South Tower B office building. Chicagos multifamily building starts, by contrast, fell 54% in 2020. The largest multifamily building to break ground in 2020 was the $252 million mixed-use project at 300 N. Michigan Ave. Also starting during the year were the $150 million 354 N Union apartment tower and the $100 million Maple Street Lofts.

In Boston MA, commercial and multifamily building starts lost 27% during 2020 to $6.3 billion after falling 8% in 2019. Multifamily building starts dropped 21% in 2020. The largest multifamily building to start in the Boston metro area during 2020 was the $154 million 55 Wheeler Street building in Cambridge. Also starting were the $150 million Cambridge Crossing development in Cambridge MA and the $120 million Hanover Wellesley project in Wellesley. Commercial building starts fell 30% in the metro area during 2020. All types of commercial structures lost ground during the year except for warehouses. The largest commercial structure to get underway in 2020 was the $700 million Citizen M hotel and office building in Boston. Also starting during the year were the $450 million first phase of the South Station Office Tower and the $250 million Seaport Square office project.

Commercial and multifamily building starts in Phoenix AZ gained 32% in 2020 to $5.3 billion following a 35% gain the prior year. Phoenix was the only metro area ranked in the top 10 to post a year-over-year increase in construction starts. Commercial building starts increased 20% in 2020 due to gains in warehouses, hotels, and parking structures, while office and retails starts contracted. The largest commercial project to break ground in 2020 was the $200 million 100 Mill Ave project in Tempe. Also starting were the $143 million Gila River Wild Horse Pass hotel in Chandler and the $115 million Park 303 warehouse project in Glendale. Multifamily building starts increased 52% in Phoenix during 2020. The largest multifamily projects to get underway during the year were the $300 million Pier 202 mixed-use project in Tempe, the $125 million Adeline Residences, and the $100 million Scottsdale Entrada mixed-use project in Scottsdale.

Miami FL commercial and multifamily construction starts fell 37% in 2020 to $5.1 billion, following a 2% decline in 2019. Multifamily building starts lost 31% last year. The largest multifamily building projects in Miami to break ground last year were the $249 million Downtown 5th Luxury Apartments, the $115 million Miami Urban Village Apartments in Homestead, and the $100 million SLS Resort Residences in Hallandale Beach. Commercial construction dropped 43% over the year, with only warehouses able to post a gain. The largest commercial building to break ground was the $100 million Pier Sixty-Six Hotel in Fort Lauderdale. Also starting were an $85 million Amazon warehouse in Jupiter and a $78 million Amazon warehouse in Homestead.

In 2020 Austin TX commercial and multifamily starts slid 17% to $4.9 billion after gaining 47% in 2019. Commercial building starts lost 31% in 2020 due to large declines in offices, hotels, retail, and parking structures. Warehouse starts, however, posted a sizeable gain. The largest commercial buildings to break ground in 2020 were the $500 million Apple Corporate Campus #2, the $326 million Texas Department of Transportation office campus, and the $300 million Amazon distribution facility in Pflugerville. Multifamily building starts rose 4% in 2020, with the largest projects including the $150 million 44 East Condo Tower, the $120 million Hanover Republic Square Apartments, and the $100 million Greystar Menchaca Road Apartments.

Houston TX commercial and multifamily construction starts dropped 47% during 2020 to $4.5 billion on the heels of a 55% gain in 2019. Commercial building starts lost 47% in 2020, with all major commercial building types posting sizeable year-over-year declines. The largest commercial projects to start during the year were the $100 million Hewlett Packard Enterprises Campus at Cityplace, the $85 million Hyatt Place/Hyatt House Hotel, and an $85 million Amazon distribution center in Richmond. Multifamily building starts fell 48% in 2020. The largest multifamily projects to break ground were the $217 million Hanover Square & Bayou Apartments, the $200 million High Street Residential Apartments, and the $70 million Boone Manor Apartments.

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Pandemic Leads to Sharp Pullback in Commercial and Multifamily Construction Starts in 2020 - Construction.com

Vicky O. Misa|The Shawnee News-Star

Shawnee continues to bustle with new projects underway all over the community. Some of the latest endeavors include an urgent care clinic, a diagnostic laboratory, a car wash and residential homes.

Dirt work just started at 4220 N. Harrison for a second Xpress Wellness site in town. The planned 3,600 square-foot health care business is estimated to cost nearly $1 million, the permit filed in September reads.

According to a building permit filed in August, on the 3900 block of North Kickapoo at the north end of Bison Crossing, an office building for DLO Lab is being built.

The 2,048 square-foot office building is expected to cost approximately $70,000.

On the corner, directly north of the planned lab, Tidal Wave Express is constructing a $1.8 million car wash. The area of the proposed business at 3762 N. Kickapoo is 3,638 square feet.

Shawnee City Planner Rebecca Blaine said two single-family homes are being constructed at 1601 and 1603 N. Broadway by local contractor Greg Brown Homes. The residential projects are sandwiched between First Christian Church's parking lot and Graves Floral on a plot of land that has remained empty for decades.

Each home, yielding 2,395 square feet, is expected to cost $250,000 to build, according to the permit filed in January.

Watch for updates.

For story ideas, questions or concerns, reporter Vicky O. Misa can be reached at vicky.misa@news-star.com.

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New construction to bring clinic, lab, car wash, homes - Shawnee News Star

Dallas-Fort Worth ranked among the top U.S. cities for commercial and apartment building in 2020.

D-FW landed in fourth place, even with a 20% decline in starts from 2019 totals.

North Texas trailed New York City, Washington, D.C. and Los Angeles in the annual construction survey by Dodge Data & Analytics.

The D-FW areas commercial building and apartment start total for 2020 was the smallest in more than three years because the COVID-19 pandemic caused projects to be delayed or canceled.

Commercial building starts lost 23% in 2020, Dodge Data chief economist Richard Branch said. The decline was the result of sizable pullbacks in offices, hotels and parking structures.

The largest commercial building to get started in 2020 was the $135 million Epic Deep Ellum office building, he said. Retail construction starts were flat over the year, while warehouse starts posted a sizable gain.

Apartment builders also hit the brakes last year around North Texas.

Multifamily housing starts in the metro area dropped 15% during 2020, Branch said. The largest multifamily project to get underway was the $75 million Novel Turtle Creek residential tower.

Total U.S. commercial and multifamily building starts fell by 20% last year to the lowest level in more than three years, according to Dodge Data.

Phoenix, Denver and Kansas City were the only metro areas that saw an increase in construction. Austin ranked ninth nationally with almost $4.9 billion on construction starts. And Houston fell to 10th with a 47% drop in building activity.

Texas lost more than 30,000 construction industry jobs in 2020.

The pandemic is having a significant negative impact on commercial and multifamily construction across the country, Branch said. While some areas stabilized over the summer, the current wave of the virus has further hindered activity.

The construction sector will show signs of recovery in 2021, but, the road back to full recovery will be long and difficult, he said. The effects of the pandemic on the U.S. economy and building markets will be felt for several years.

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COVID-19 took a toll on Dallas-Fort Worths construction starts in 2020 - The Dallas Morning News

Aaron Retherford, Vice President of Business Strategy for Kadean Construction

Aaron Retherford, Vice President of Business Strategy for Kadean Construction, has been named to the 40 Under 40 Class of 2020 by Building Design + Construction, a major national publication serving the architecture, engineering and construction (AEC) industries. Retherford is recognized for his career achievements, passion for the AEC profession, involvement with industry organizations and service to his community. He joined Kadean and its executive team in September 2020 and has 13 years of construction industry experience.

Aaron has established himself as a proven young leader in our industry, and he richly deserves this national honor, said Mike Eveler, president of Kadean Construction. In his short time with us, he has already made a big impact in executing our growth and business development strategic plan and building our brand locally, regionally and nationally.

Building Design + Construction cited Retherfords success in growing annual revenues, developing a turn-key civil design-build service for site development work and establishing a permanent Omaha office for his previous employer, among many accomplishments. They also noted his role as a board member and treasurer for the Greater St. Louis Honor Flight organization, as well as committee memberships with KIDstruction and the St. Louis Council of Construction Consumers.

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Aaron Retherford Named To Building Design + Construction's 40 Under 40 Class of 2020 - Suburban Journals

The rapid pace of construction at 66 Hudson Boulevard, akaThe Spiral, finally reached the 65-story, 1,031-foot-tall pinnacle over Hudson Yards this past Tuesday. Despite a light flurry of snow showers, the dedication ceremony was successfully held with Tishman Speyer President and CEO Rob Speyer joined on by Gary LaBarbera, President of the Building and Construction Trades Council of Greater New York, Peter Davoren, President and CEO of Turner Construction Company and a group of trade partners. Designed by Bjarke Ingels Group, the steel-framed superstructure is located on a full-block parcel bound by Tenth and Eleventh Avenues and 34th and 35th Streets, and will yield 2.8 million square feet of office space.

Turner Construction Company is serving as the construction manager, Banker Steel is in charge of manufacturing the steel, and Permasteelisa is the contractor for the glass enclosure for the 66-story project, which is expected to cost $3.7 billion. Other notable companies that helped contribute to this critical milestone are Adamson Associates, WSP, Cosentini Associates, Heintges Consulting Architects & Engineers, Langan and Siteworks.

Photographs show the ceremony and steel beam signed by numerous attendees before being raised into the sky.

The Spiral. Photo by Diane Bondareff

The Spiral. Photo by Diane Bondareff

YIMBY also has new renderings of The Spiral that depict the overall appearance, the podium, the stepped and landscaped outdoor setbacks, and upper levels of the edifice. The six-story base will house a lobby that will have dual entrances on both Hudson Boulevard East and Tenth Avenue, and include ceilings heights up to 28 feet tall. 25,000 square feet of first-class retail space will also be included within.

The Spiral. Rendering by Tishman Speyer.

The Spiral. Rendering by Tishman Speyer.

The Spiral. Rendering by Tishman Speyer.

The Spiral represents the ideal collaborative workspace, now more important than ever, combining sustainable design with an elevated hospitality experience, said Rob Speyer. The continued rise of The Spiral is a testament to our vision and optimism for New York Citys future. I am grateful to Gary, Peter and their teams for partnering with us on a plan that kept their members working and construction on schedule, while also safeguarding everyones health and well-being over the past year.

The milestone reached today is a testament to the hard-working union men and women of New York City, who despite the extraordinary challenges of the past year have gone above and beyond to get the job done, said Gary LaBarbera, President of the Building and Construction Trades Council of Greater New York. With the success of this project and the value that a union workforce brings to construction projects more clear than ever, we look forward to building and expanding upon the relationship with Tishman Speyer on future projects. The topping-off of The Spiral is yet another sign that New Yorks future will always be bright.

51 percent of the building is already pre-leased with pharmaceutical giant Pfizer being the anchor tenant, who are planning to take up 746,000 square feet across 15 floors. Law firm Debevoise & Plimpton LLP is occupying 531,000 square feet across 13 floors, and AllianceBernstein is taking up 166,000 square feet across three and a half floors.

The Spiral is aiming to achieve LEED Gold Standard and is expected to be completed next year.

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1,031-Foot Tall 66 Hudson Boulevard, aka The Spiral, Tops Out Over Hudson Yards, Manhattan - New York YIMBY

Nothing about 2020 fell within the realm of business as usual. It seems like there were surprises around every corner and the best prepared business plans were quickly laid to waste as contingency plans were hastily put in place to deal with one crisis after another. While the uncertainty of the 2020 election cycle is finally settled, and there are a couple of vaccines approved to combat the continuing COVID-19 pandemic, there is still plenty of uncertainty that makes it very difficult to forecast the future. The pandemic and its aftermath are expected to continue to plague the economy through at least the first half of the year. The vaccine will take time to produce and distribute.

In the meantime, construction backlogs and the construction material supply chain have been impacted. And despite the uncertainty, you still need to make a plan to address the upcoming year. To help you sort it all out, we contacted some of the construction industrys most trusted sources about what they see for the months to come.

Q: What are likely to be the major drivers of the commercial and housing construction markets in 2021, and do you anticipate the current level of new construction to be sustained in both segments?

Fan Yu Kuo, National Association of Home Builders (NAHB): After a gradual reopening of the economy, the housing market has seen a meaningful rebound and record breaking growth, especially in recent months. With a recovering economy and renewed interest in housing, the residential sector will lead the economic rebound.

This year, we have seen a shift in housing demand preferences as a result of the COVID-19 pandemic, with home buyers and renters favoring lower density suburbs and exurbs over the core of large metropolitan areas. This suburban shift is seen in construction data, with the NAHB Home Building Geography Index (HBGI) showing that residential construction activity expanded at a more rapid pace in lower density markets. With this changing geography of housing demand, combined with record-low mortgage rates and a renewed focus on the importance of home, we expect demand will remain strong in 2021.

Supported by increased buyer interest, builder confidence remained near a data series high and sales have outpaced construction. Single-family construction is now at the highest level since the spring of 2007 and is expected to grow steadily over the next two years. However, builders continue to face challenges in terms of supply chain shortages of building materials and skilled labor as well as a lack of lots.

From a rental perspective, we expect multifamily construction to decline in 2020 and 2021 before stabilizing in 2022, although apartment construction will see strength in lower density markets.

Though home building and remodeling are relative bright spots for the overall economy, nonresidential construction will experience greater headwinds, as private nonresidential construction spending has seen a significant decline since January 2020.

Anirban Basu, chief economist, Associated Builders and Contractors (ABC): COVID-19 accelerated several pre-existing industry trends, many of which have implications for real estate, construction and the overall economy. Among the most obvious trends is e-commerce, a trend that was gaining market share even before the global health crisis began. An ongoing proliferation of fulfillment and data centers will serve this ongoing boom. However, this could translate to tougher times ahead for retailers and shopping centers, with many large American malls set to falter within the next five years.

Another trend is remote work, a pattern that gained momentum during the pandemic that could translate into less demand for traditional office space. But the work from home trend also supported a raging U.S. housing market in 2020 as people seek to acquire more space for dedicated home offices. This is also consistent with greater migration from cities to suburbs, which is already reflected in large-scale declines in apartment rents in some of Americas most expensive cities, such as San Francisco, New York City and San Jose. The multifamily market is less likely to generate as much construction activity as it did during the prior decade.

Richard Branch, chief economist, Dodge Data & Analytics (Dodge Data): The commercial construction space in 2021 will be somewhat of a mixed bag. On the upside, warehouse construction will continue to flourish as demand for e-commerce space seems to be nearly insatiable. Warehouse construction topped $30 billion in 2019, a record for the category. That record was broken in 2020 and we expect a new record to be established in 2021.

Office construction should also begin its recovery in 2021, following a steep decline in 2020. While demand for new office space will be lower than years past, renovation activity will increase as landlords and developers push to improve their facilities by providing more physical space for workers and improved environmental attributes such as better air handling and washroom spaces.

Retail and hotel construction is expected to continue to languish in 2021, and indeed, wont resume growth until there is widespread vaccine adoption. Since that is not expected until the mid-point of the year, it leaves little opportunity for growth in 2021.

Housing will be driven by strong demand for single-family construction in 2021. This is the result of the natural aging of the millennial generation as they grow their families, but also the pandemic-driven search for additional space away from dense urban areas. Increased flexibility resulting from remote working will aid this geographic shift. Multifamily construction will be weak in 2021 due to the supply overhang in large metropolitan areas.

Ken Simonson, chief economist, Associated General Contractors of America (AGC): There is huge pent-up demand for single-family housing in most parts of the country and widespread demand for moderate income multifamily housing. Most categories of nonresidential construction will be in decline in 2021. But a few niches should do well, including smaller distribution facilities, data centers and specialized healthcare-related facilities, such as clinics, screening/testing facilities and medical laboratories and manufacturing plants.

Q: What are likely to be the major drivers for public construction in 2021, and do you anticipate the current level of new construction to be sustained? In which subsets do you expect to see the greatest uptick or downturn in activity?

ABC: Countervailing forces are at work in public construction. On one hand, weakened state and local government finances suggest weaker public works spending going forward. Despite the prevalence of low interest rates, many policymakers will probably seek to avoid putting more debt on public balance sheets.

On the other hand, given the battered state of the U.S. economy and the priorities of the incoming administration in Washington, D.C., federal spending on infrastructure could increase as part of a post-inauguration stimulus package. Republicans and Democrats do not agree on much, but leaders from both parties agree that America spends too little on infrastructure.

Public spending on infrastructure could rise over the next couple of years as the federal government steps up to assist our recovering economy, but that spending could fade quickly thereafter.

Dodge Data: The public sector both building and infrastructure projects will be reasonably stable in 2021. Given the growing gaps in state and local budgets across the country, this is somewhat positive news.

Street and bridge construction will see tepid growth in 2021 as federal funding provided through the one-year extension of the FAST Act is unchanged from the previous year. We fully anticipate that by the summer, a replacement for the FAST Act will be enacted providing for improved funding the following year. It is also likely that we will see a push from the Biden administration for an infrastructure package now that the Democrats have control of both the House and Senate.

On the building side of public construction, the largest project type is education. This sector was under great pressure in 2020 as the pandemic forced students out of their classrooms and into their homes. The fiscal issues facing state and local governments also weigh heavily on this sectors ability to recover, meaning 2021 is likely to be another down year for education construction.

AGC: Any growth in public construction will depend on early passage of federal funding for infrastructure and relief for state and local governments. Unless this occurs early in the year, the impact on projects is unlikely to be felt until 2022 or later.

Highways have the greatest chance of receiving additional funding. But there will also be a push to fund transit and other passenger rail projects; alternative energy production, storage, and charging facilities; and possibly public hospitals and care facilities.

The weakest public markets are likely to be public universities and colleges and other types of public buildings such as office and judicial system buildings.

Q: What factors could play an instrumental role in raw material costs in 2021? Will the ongoing COVID-19 pandemic have any impact on the costs of raw materials or other construction inputs?

NAHB: The issues that have limited housing supply in recent years, including land and material availability and a persistent skilled labor shortage, continue to place upward pressure on construction costs.

The result of insufficient supply to meet soaring demand has caused prices of building materials, most notably lumber, to skyrocket this year. Between mid-April and mid-September, lumber prices soared more than 170% due to reduced domestic production during the pandemic. NAHB data showed spikes in softwood lumber prices earlier in 2020 caused the price of an average new single-family home to increase by $16,148. While prices fell from September to November, lumber costs are rising once again as production remains limited and housing demand is strong headed into 2021.

As tariffs contributed unprecedented price volatility leading to higher prices and harming housing affordability, the U.S. Commerce Department has recently made the decision to reduce its duties on shipments of Canadian lumber into the U.S., down to roughly 9% from more than 20%. The tariff reductions were expected to go into effect in mid-December. Lower tariffs would mitigate uncertainty and associated volatility that has plagued the marketplace, which could help ease upward pressure on lumber prices.

Beyond lumber, there are other material costs that are elevated. Additionally, appliances and materials are taking longer to deliver, extending construction times and increasing costs.

ABC: For the most part, construction materials prices have behaved, with exceptions like softwood lumber. Production capacity of this lumber has been constrained recently for several reasons. When home builders began placing large softwood lumber package orders, suppliers were not prepared for the rush and prices took off.

Once vaccines become broad-based globally... similar dynamics may become apparent for commodities such as steel, oil and copper as the global economy comes racing back after a period of slumber. That could set the stage for large-scale increases in construction input prices at some point in 2021. That is an important point to consider as people enter longer-term commitments presently.

Dodge Data: One of the key factors will be the new administrations views on tariffs on construction-related goods from China, Canada and elsewhere. Additionally, increased levels of construction activity in 2021 will put upward pressure on materials prices and wages.

AGC: Materials costs are likely to remain volatile as the U.S. and global economies expand or pause. Bottlenecks and supply chain disruptions may crop up again, depending on the severity of COVID-19 outbreaks.

Q: How has the COVID-19 pandemic impacted the continued labor shortage plaguing the construction industry? What are your projections for the labor market in 2021, particularly when it comes to skilled trades?

NAHB: Cost and availability of labor has been top issue for builders in recent years. In 2011, only 13% of builders reported cost and availability of labor as a significant problem, but the share increased to 85% in 2020. As housing demand is outpacing residential construction, the gap between housing needs and production has widened and the labor shortage continues to grow this year.

The U.S. Bureau of Labor Statistics November data shows that over the past seven months, job gains in residential construction offset 96% of the jobs lost in March and April, while there has only been a 58% job recovery in nonresidential construction. However, in any given month, there is still a shortage of 200,000 to 300,000 workers. Looking forward, the job openings rate is likely to experience choppiness in the months ahead given divergent outlooks within the construction industry.

As the construction skilled labor shortage remains a key challenge for residential and nonresidential construction firms, training and adding new workers is an important goal of the industry as we have seen an aging workforce in the skilled trades. A labor shortage will lead to higher housing costs and increased home prices, and make housing less affordable for buyers.

To help close the gap on the labor shortage, the housing industry needs to continue to invest in training to attract younger workers who may not have considered a career in construction or have been inordinately affected by the pandemic and recession. Workers trained in the building trade skills will increase productivity and further lower construction costs to consumers.

Bringing additional women into the construction labor force also represents a potential opportunity for the future. A recent NAHB study found that the number of women employed in the construction industry grew substantially in 2019, surpassing the peak pre-recession employment level.

ABC: Despite the loss of nearly 200,000 construction jobs over the course of the pandemic, shortages of skilled construction workers will persist. Many of Americas most skilled construction workers are approaching retirement age, and the next generation has still not entered the skilled trades in sufficient numbers.

History indicates that when construction workers lose jobs, they often leave the industry altogether. All of this suggests that while it may be marginally easier to recruit talent now than prior to COVID-19, structural issues remain.

Dodge Data: The construction sector will continue to be plagued by the lack of skilled and available labor in 2021. While the number of job openings in construction has fallen since the pandemic began, there are still, on average, more open positions in the industry currently than there were in 2017. The demand for workers is down, but not out, and will certainly rebound sharply in 2021 as construction picks up.

AGC: Many contractors report projects are taking longer to complete, either because fewer workers are allowed on site at one time, workers are kept home by illness (their own, a family members or the need to provide dependent care), or delays and shortages of materials. While the decline in nonresidential projects will mean fewer companies are hiring and more workers are laid off, contractors that are trying to hire are still likely to have difficulty finding willing applicants with the right skills.

More here:
2021 State of Construction Industry: A Forecast for Uncertain Times - ForConstructionPros.com

This week, workers wearing double layered suits and respirators, inside a bubble of plastic are scraping tiles from the floor and removing drywall from the main office building at the former Grand Junction Steel building to remove asbestos, as the property prepares for the future.

When a building in Colorado is undergoing a renovation, testing is done to determine if there is asbestos present that would be disturbed by the construction work. In the case of the Grand Junction Steel building, the main building did not have any asbestos. However, about 5,500 square feet of the office building, which sits at the entrance of the site off Third Street, was found to have asbestos.

Regional Asbestos, located in Grand Junction and Aurora, was brought in to mitigate the asbestos, which was found in the tile floor, mastic and drywall texture. The floor tile and mastic were both found to be greater than the 1% asbestos threshold requiring a full-regulated abatement, according to Regional Asbestos.

Regional Asbestos President Shaun Witkamp said there are many layers of protections put in place for both the workers and the general public to ensure the mitigation work is safe. The area the workers are in is contained by plastic sheeting and is kept at negative pressure to keep air from escaping.

With our negative air machine, we hold a certain negative pressure, which makes sure we are constantly pulling negative air in and cycling it out, Witkamp said. As were breaking up this asbestos, if fibers are released, theyre working their way into machines and being filtered and not back out into the public.

With the material that is removed, Witkamp said, they use a system to keep the material wet and reduce the amount of asbestos fiber that is released. The material is double bagged, with each bag being cleaned as it is moved out to specialized trucks that will take it to the landfill.

The tile remediation will take five days, Witkamp said, with the drywall mitigation taking another 20 days. A crew of seven full-time workers will be used to complete the project. Witkamp said this is a medium-sized project for his company, which works on everything from a single pipefitting to commercial properties requiring up to 40 workers.

The owner of the Grand Junction Steel property, Jim McConnell, said the remediation was part of an effort to get the building into a usable condition for a future tenant. He said the mitigation work has to be completed first.

Once we get this done, get the asbestos out of here then well start, McConnell said. Ive got some good people working on some plans.

Grand Junction Steel was founded in 1947 and McConnell bought it in the 1980s. The business provided heavy steel plate fabrication for highway and railway structural bridge projects across the country.

I bought it in 1985, McConnell said. After that we went out looking for business. We had a total of maybe 200-plus employees here for a while.

The steel from the business was used to construct bridges in projects around Denver and in Glenwood Canyon. It was used coast-to-coast from bridge construction, from earthquake repair in California to the Big Dig in Boston.

Grand Junction Steel closed in 2009 and was empty for several years. Its most recent tenant was EcoGen, a hemp and CBD producer. However, after EcoGen was sold in mid-2020, the business moved its offices off the property.

Read more:
Grand Junction Steel has asbestos remediated from offices - The Grand Junction Daily Sentinel