https://neo-trans.blogspot.com/2020/03/construction-cleveland-and-coronavirus.html

 

Another great article Ken. I thought this was important enough to start its own thread. I am a civil engineer in Cleveland working in sales. I work with engineers, contractors, GCs and local and state government day to day. The company I work for had a record year last year and things are still very busy today as we have transitioned to working from home. I'm curious what other on this forum are experiencing. Please share what you see and hear around you about construction and development around the state.

I work for a concrete construction company. Construction activity has halted by the Governor in Pennsylvania where I have one job that was about to start. Construction is still considered an essential business in Ohio, so jobs in Ohio are still on as originally scheduled. We have a backlog of stuff that needs to get completed, so my job is largely the same as it was, I'm just working from home now.

 

We'll see if any of that changes in the coming weeks.

In the nine days since I wrote that article, I've found that the biggest issue/delay for real estate companies, investors and support businesses (title companies, due diligence firms etc) has been from companies transitioning their workforce from the office to remote (ie: home) locations. Financial liquidity is still there. Resources are still there. But the biggest constraint at this point is that some cities (like Cleveland) have shut down their building department/planning commission review boards. You can still get building permits submitted, reviewed and approved, and some building commissioners have some pretty wide latitude to approve permits. Some building projects depend on getting permits approved in order to secure some layers in their capital stack, so getting permits reviewed/approved isn't a small thing. So the liquidity could be put on hold or be redirected to projects in cities that have found a way to continue their review/permitting processes while still conforming to sunshine laws.

Permit departments are still open in Cincinnati, but they want you to submit digitally only and I am not sure how they will conduct Appeals Board meetings or Historic Conservation Board hearings. 

 

I work in Public Works. I know as of last Thursday Cleveland was canceling all public meetings. The Ohio Senate just passed a bill officially allowing electronic public meetings so hopefully that will clear things up.

 

The State has been moving forward with all construction and has no intention of ordering a stop. There have been grumblings of supplier disruptions but nothing widespread as far as I've heard.

1 hour ago, Jimmy Skinner said:

Permit departments are still open in Cincinnati, but they want you to submit digitally only and I am not sure how they will conduct Appeals Board meetings or Historic Conservation Board hearings. 

 

 

All board meetings outside of City Council were suspended from meeting for 30 days. I expect this will be continued depending on how long this lasts.

I suppose this could go here....

 

 

How about city inspection staff? What are you guys hearing about the local municipalities? I've heard Cuyahoga County is letting inspection staff take trucks home and use their discretion if they would like to work, and that inspection could be contracted out. ODOT is full steam ahead, like Enginerd stated. I would assume building inspections could stall projects.  I think most suppliers are primed and ready to go still. I've heard of a few companies issuing cards that have been approved by Homeland Security that employees are being asked to carry that state they are "Essential Critical Infrastructure Workers". 

City of Cincinnati and Hamilton County Building Departments continue to send inspectors to construction sites.  The inspectors go straight from home to job sites and enter their reports remotely.  

Since oil is a huge component of construction materials and construction costs, this might be a good thing for construction projects. A friend from Canada shared this....

 

Canada is days away from running out of storage and you can't just shut down in-situ oilsands extraction which depends on a steady flow of steam to keep the deposit from locking back up... we may even see a negative "please take this away" price for Canadian oil for a short time. Is anybody ready to move away from having one of our largest provinces dependent on this one industry yet?

 

Oil price may fall to $10 a barrel as world runs out of storage space

Facilities thought to be 75% full with Saudi Arabia due to ramp up output as demand falters amid coronavirus shutdowns

https://www.theguardian.com/business/2020/mar/25/oil-price-may-fall-to-10-a-barrel-as-world-runs-out-of-storage-space

That is wild. Would they ship excess via rail East?  I’m sure it would be pointless getting it to Louisiana or Houston. If shale is slowing down around here, there might be openings in refineries in the Midwest and East, if they can handle that type of oil. 
  The other aspect of this, not to get too crazy off topic, is that the corn and ethanol prices are near historic lows as well.  Sounds like we should be under a buck a gallon for Summer. 

2 hours ago, sabotage619 said:

How about city inspection staff? What are you guys hearing about the local municipalities? I've heard Cuyahoga County is letting inspection staff take trucks home and use their discretion if they would like to work, and that inspection could be contracted out. ODOT is full steam ahead, like Enginerd stated. I would assume building inspections could stall projects.  I think most suppliers are primed and ready to go still. I've heard of a few companies issuing cards that have been approved by Homeland Security that employees are being asked to carry that state they are "Essential Critical Infrastructure Workers". 

 

I work in the South Euclid (Cleveland suburb) Housing/Building Departments. We are still sending inspectors out. We have staggered shifts right now with only one building and one housing inspector in the office on a given day. We've suspended interior inspections on rentals, and are only doing our vacant building inspections (like POS but only required on vacant homes) if there is a lockbox. We won't meet with anyone at the property. Permit inspections for interior items like hot water tanks and furnaces have the option of having a video/facetime inspection, which the state is now allowing. We are still taking permits and payments online, and thru a drop box (City Hall closed to the public). I wouldn't say business has declined much, if at all. I know there are other municipalities who have cancelled all inspections at this time, and wonder how they are handling things. I imagine its like the wild west out there. We are at least still patrolling the streets and taking complaints.

https://www.cleveland.com/business/2020/03/construction-in-ohio-deemed-essential-but-coronavirus-prompts-rising-worker-absenteeism-anxiety.html

I walked around Downtown Cincinnati yesterday and there was road construction and utility work everywhere. Construction crews had a lot of 4 to 5 lane wide streets coned down to 1 lane because there was so little traffic, it didn't really matter. I'm not sure if any of this work was accelerated to take advantage of the lack of traffic, or if that's just a coincidence.

2 hours ago, taestell said:

I walked around Downtown Cincinnati yesterday and there was road construction and utility work everywhere. Construction crews had a lot of 4 to 5 lane wide streets coned down to 1 lane because there was so little traffic, it didn't really matter. I'm not sure if any of this work was accelerated to take advantage of the lack of traffic, or if that's just a coincidence.

Traffic across the state has decreased 30-40%. I know that has led to some places being more lenient with traffic control than they normally would be.

ODOT has started to delay projects already...I assume gas tax receipts are expected to drop dramatically (as are all tax incomes).

As a side note, I have noticed that while traffic volumes are down dramatically, a higher percentage of people who are still out there on the streets seem to be idiot drivers who are taking advantage of this and speeding like crazy.

 

FYI...Cross-posted in the Random Cleveland Developments thread in the NE Ohio construction section...

 

 

19 hours ago, taestell said:

As a side note, I have noticed that while traffic volumes are down dramatically, a higher percentage of people who are still out there on the streets seem to be idiot drivers who are taking advantage of this and speeding like crazy.

 

Our local cops keyed in on this almost immediately and stepped up speed limit enforcement. 

I have a VPN that was set up a while ago when I had ankle surgery. So I can work from home with no issues - unlike many others at Euclid City Hall. I'm "lucky" enough because we had at the time a dedicated IT person on staff who was able to set this up easily. Currently this is contracted out. 

 

Regardless, I am still able to crank out my permits, zoning reviews, etc.

 

While this month's Architectural Review Board and Planning and Zoning Commission meetings were cancelled, we are looking at various means to be able to have cases move forward without delay to the applicants projects. 

Edited March 27, 20205 yr by musky

Commercial realty keeps up the pace

 

Nathan Kelly, president and managing director of Cushman & Wakefield Cresco of Independence, said the brokerage has not seen a deal dropped, though it has seen some deals delayed. Most, particularly in the industrial sector, continue working.

 

"The bigger the deal, the more momentum it has," Kelly said. "Most of them are saying they are looking beyond the current COVID-19 downturn. And there will be a tomorrow."

 

Kelly characterized the firm's pace of transactions as normal.

 

MORE:

https://www.crainscleveland.com/real-estate/commercial-realty-keeps-pace

I hope Michelle turns this thread into an article...

 

 

All great that the construction industry is still going. However, commercial lenders have stopped all loan processes and lending at the moment. There are large amounts of architects, engineers, and designers about to be laid off. A number of individuals have seen overnight projects go into hold or cancel automatically. Its only a matter of time before the design professionals start receiving pink slips. This is in Cincinnati, curious if design professionals are seeing this in Columbus and Cleveland? 

I've heard of job sites in Chicago where half the crew is staying home to avoid contracting the disease. If job sites aren't shut down, they may still be getting negatively impacted by workers refusing to show up. I think this is likely a bigger issue in bigger cities, but it's still an interesting angle I hadn't considered.

7 hours ago, savadams13 said:

All great that the construction industry is still going. However, commercial lenders have stopped all loan processes and lending at the moment.

 

No way are banks and syndicates going to sign off on grounbreakings - let alone future phases of u/c projects for unneeded buildings like hotels and condos.  This is going to be a repeat of 08-09 with poured foundations and tower cranes sitting idle, although hopefully for shorter spans of time. 

21 minutes ago, jmecklenborg said:

 

No way are banks and syndicates going to sign off on grounbreakings - let alone future phases of u/c projects for unneeded buildings like hotels and condos.  This is going to be a repeat of 08-09 with poured foundations and tower cranes sitting idle, although hopefully for shorter spans of time. 

 

No it's not a repeat of 2008-09. Every developer I talk to says capital liquidity is free flowing (BTW conventional bank loans are a small part of their capital stacks). Money is cheap thanks to low interest rates. And oil is cheap (unlike 12 years ago), lowering construction costs. The biggest disruption at this point is in supply sources and chains.

12 minutes ago, KJP said:

 

Every developer I talk to says capital liquidity is free flowing (BTW conventional bank loans are a small part of their capital stacks).

 

People are absolutely slamming on the brakes.  Any projections made for tenants earlier this year, be they residential or commercial, are in the paper shredder. 

 

The collapse of Airbnb is going to drop residential rents, especially in the higher-priced cities, as short-term rentals become long-term rentals.  Nobody knows if the colleges are going to have classes this fall, which is damaging student rentals.  Nobody has any travel plans, and nobody knows when travel will return to projected summer 2020, let alone exceed it, so new-start hotels and hotel conversions (such as the planned new convention hotel in Cincinnati) are in trouble.  Malls and strip malls that were teetering will now collapse for good. 

Not among real estate developers and construction firms they haven't. And apparently the bond market hasn't gotten the doom-and-gloom message yet either.....

 

 

Slightly off topic of Construction and Development, but I have been told that waste water treatment plant (WWTP) staff have implemented already in some cities or are considering shifts staying at the plants for 2 weeks, sleeping in trailers. When their 2 weeks are up the next crew comes in. There are limited staff qualified to operate WWTP, so if COVID were to infect a shift it would (hopefully) be contained. 

Some state incentives for Cleveland Sherwin-Williams HQ project put on hold amid coronavirus crisis
 

https://www.cleveland.com/open/2020/04/state-incentives-for-cleveland-sherwin-williams-hq-project-put-on-hold-amid-coronavirus-crisis.html

Yes, but only if cities can actually review/approve new projects.....

 

 

MORE

 

 

Edited April 2, 20205 yr by KJP

How is it that hard to set up virtual meetings?

I've been doing construction management for 25 yrs now.  I've been doing inter-office updates to our leadership & sales teams on what we're seeing in the construction.

 

For most part it's moving forward with a few exceptions, already noted

1.  Some trades are starting to stay home out of concern or need to be with kids at home.   Finding new carpenters/painters etc when your main crew isn't available is not always easy

 

2.  The plan reviews & building inspectors are not as readily available as they were a month ago.  For most, it's still moving and not completely shut down yet but it's definitely slowing down

 

3.  Certain materials like mechanical units, light fixtures, other specialty items like countertop materials, etc are becoming harder.  I have several truck loads of furniture that are hung up in a warehouse in Dallas which is on lockdown.  Crews can't sort & retrieve & load it.  That's holding up all occupancy....  as borders are closing and international productions are halting, this will become a larger issue.

^ I have been hearing rumors (from commercial real estate lenders and others in the industry) that a halt on construction activity may be mandated by DeWine soon.  

9 minutes ago, freefourur said:

^ I have been hearing rumors (from commercial real estate lenders and others in the industry) that a halt on construction activity may be mandated by DeWine soon.  

 

it's certainly possible but somehow, I'm not sure its entirely warranted.  You see alot of construction workers wearing gloves, staying 6' apart anyhow.  Yes someone sick could infect a jobsite at the break area, portajon, etc, handling tools & materials...   I think there's still a host of other activities that could be halted ahead of construction but what do I know

a state mandated work stoppage would relieve companies who are struggling to staff job sites, but don't want to end work because of their contracts. DeWine should at least start by ordering nonessential construction that hasn't yet begun to delay

My neighborhood has a ton of renovations going on. Most are done by small developers. I'm worried that a work stoppage would be a death blow to their bottom line and their projects might never get done. So far they've all been going on as planned.

It's a tough call to make. It furthers the spread of the disease, but also, allowing these projects to go forward keeps businesses alive and lowers the reliance on state unemployment payments. The federal government needs to step up big time to continue relief efforts

17 hours ago, ryanlammi said:

 The federal government needs to step up big time to continue relief efforts

$2.2 trillion isn't big time?

19 hours ago, ryanlammi said:

a state mandated work stoppage would relieve companies who are struggling to staff job sites, but don't want to end work because of their contracts. DeWine should at least start by ordering nonessential construction that hasn't yet begun to delay

 

It would also lead to A LOT of litigation, in my opinion, over the issue of when the contractual deadline is tolled. 

24 minutes ago, gottaplan said:

$2.2 trillion isn't big time?

 

In most cases, yes. But in this case, no.

29 minutes ago, gottaplan said:

$2.2 trillion isn't big time?

it's a lot of money, and a lot of that money does a lot of good. Is it enough, though? I don't think this one act of Congress tied with the two smaller bills is enough. A lot more will need to be done on the federal level.

On ‎4‎/‎2‎/‎2020 at 3:31 PM, DEPACincy said:

My neighborhood has a ton of renovations going on. Most are done by small developers. I'm worried that a work stoppage would be a death blow to their bottom line and their projects might never get done. So far they've all been going on as planned.

 

Right, most of them are toast.  That's why you don't borrow money for kitchen and bathroom remodels, i.e. the 2008 HELOC meltdown.  

 

Pay cash for toys.  A remodeled kitchen and bathroom are as much a toy as a backyard pool.  

But the old kitchen and bath are DATED

 

FRIDAY, APRIL 3, 2020

Lack of city hall tech risks making construction sector sick

 

....But the same cannot be said for nearly all local municipal governments. Their meetings of city councils, planning commissions, boards of zoning appeals (BZA) and other scheduled public gatherings remain canceled for the foreseeable future. That has stalled proposed real estate developments big and small and their resultant job creation, several developers said.

While city officials in many communities say the meeting cancellations are necessary to comply with Sunshine Laws, technology is making that contention questionable.

 

MORE:

https://neo-trans.blogspot.com/2020/04/lack-of-city-hall-tech-risks-making.html

^Thanks for bringing this to light.  Hopefully this will get some things moving at city hall.

6 hours ago, GCrites80s said:

But the old kitchen and bath are DATED

 

There was no concept of a "dated" interior when I grew up.  Sure, grandma and great-grandma had hilariously old furniture that you often weren't allowed to sit on (I recall that all of my great-grandmother's furniture was covered in sheets), but the interior of the house was physically unchanged from the time it was built. 

 

The only major home modifications I can recall were screened-in porches, finished basements, and the occasional finished attic.  There were also storm doors and storm windows.  The Ikea-looking minimalist interior was impossible before modern insulated windows.  Previously, drapes served the very important purpose of insulating drafty old windows. 

 

Moving a house from coal heat to a gas furnace was a huge expense.  In fact it still is - the difference is that you get 0% 60-month financing now to replace your 15 year-old gas furnace.  I wouldn't doubt that back in the 50s and 60s you were paying 8% in 24 months, and only with a letter of recommendation from your employer. 

On 3/26/2020 at 11:44 AM, taestell said:

I walked around Downtown Cincinnati yesterday and there was road construction and utility work everywhere. Construction crews had a lot of 4 to 5 lane wide streets coned down to 1 lane because there was so little traffic, it didn't really matter. I'm not sure if any of this work was accelerated to take advantage of the lack of traffic, or if that's just a coincidence.

 

It turns out, it wasn't just my imagination:

 

7 minutes ago, shawk said:

Looks like you were dead-on: https://www.cincinnati-oh.gov/noncms/cmgr/memo/index.cfm?action=public.viewpdf&name=40931.pdf 

 

Quote

I have directed the Department of Transportation and Engineering (DOTE) to work with City departments and utility companies to advance street rehabilitation and utility work in the Central Business District and Over-theRhine (OTR). Moving up the timeline for these projects enables us to take advantage of the light vehicle and pedestrian traffic caused by the “stay-at-home” order issued by Governor DeWine. This move will allow us to lessen some of the construction-related annoyances experienced by downtown residents, commuters and businesses once the order is lifted.

 

 

On 4/3/2020 at 5:54 PM, GCrites80s said:

But the old kitchen and bath are DATED

 

Look at this house in Chillicothe in 1993.  This is what the world looked like before HGTV & the Property Brothers. 

 

I actually despise houses like this. So much of that stuff was built in towns like Chillicothe, Lancaster, Portsmouth, Gallipolis and even Columbus between 1895 and 1928 that's they're throwaway. I call it "'20s Crap". They may have been built well initially, but their plumbing, electrical, plaster and roofs were so ignored for so long that they're garbage. They spent decades as rentals so they have paint one inch think and often smell like dog so bad that you don't even want to deal with them. Trim is jagged as hell by now and nearly 100% made of white paint. They have no interior architectural flair, are often bent, have dirt basements, windows suck, furnaces are are cash vacuums, the floors creak horribly and they are so oversupplied that they aren't worth anything. Additions are trash, they don't have garages and if they do they are leaky, have no electric and on the border of collapse. They have those stupid "driveways" made of two 10" strips of concrete. Most of them aren't even close to businesses; they lie in residential-only neighborhoods. They are they trash sprawl of 100 years ago.

 

And how did so many Appalachian males key into the Phil Anselmo look that quickly in 1993?