Data demonstrates 2020’s brutal construction slump

The Real Estate Board of New York (REBNY) confirmed this week that construction activity on New York City’s Manhattan Island had – predictably – slumped in 2020, to almost its lowest level in a decade.

The World Property Journal detailed the findings of REBNY’s Q4 2020 New Building Construction Pipeline Report, highlighting that “new building filings in 2020 represented a proposed 42.67 million construction square feet, which is an approximately 28% decline compared to proposed construction square footage in 2019”. This was, the report said, the lowest total since 2012.

Residential units proposed for construction in 2020 declined by roughly 17% compared to 2019, the report found.

Promising plans

The study, however, is not all ‘doom and gloom’, stating: While this new analysis highlights the ongoing challenges faced by the construction industry due to the devastating impacts of the Covid-19 pandemic, it also follows some promising recent infrastructure and construction plans being put forth.

Global effects

These sectors are important job creators around the world, and many states and countries are still counting the costs of the ongoing pandemic:

• A new report by the Associated General Contractors of America shows that Texas had the sharpest construction jobs loss decline in the US shedding 33,600 building industry jobs in December, compared to the same period the year before, according to Dallas News.
• In Northern Ireland, says the Irish Times, data indicates “firms reporting a deterioration in profit margins outnumbered those reporting an improvement by 11 to one”.
• London’s Southwalk Council is calling on construction workers to participate in their rapid testing project, as the UK government begins rolling out vaccines to those that cannot work from home.
• And ConstructionCanada.net is reporting that both construction jobs and the economic recovery of Ontario is at risk if their government doesn’t bed down the post-pandemic “restart” agreement and plans for financial assistance. This comes from the Residential and Civil Construction Alliance of Ontario who say municipalities will have to scrap repair projects if funds aren’t forthcoming.

“The ramifications are ongoing,” says Jay Olshonsky, President and CEO of NAI Global, “A set-back like this is painful, but if we’re looking for silver-linings it does give the industry pause to consider how it can return stronger, in sustainable and greener ways.

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CRE trend: Home is where the work is

“Work from home” is the first major trend highlighted in the Emerging Trends in Real Estate 2021 – produced by the Urban Land Institute (ULI) and professional services network, PwC.

This “trends and forecast publication” is now in its 42nd edition and is highly regarded in real estate and commercial real estate (CRE) spaces. The latest edition provides “an outlook on real estate investment and development trends, real estate finance and capital markets, property sectors, metropolitan areas, and other real estate issues”, focusing on the United States and Canada.

Go home

The trends in the report are not necessarily ranked, but “working from home” (WFH) opens the first chapter of the report, titled Dealing with Certain Uncertainties, which attempts “to start the process of discerning the trends that Covid-19 has instigated and their long-term potential”.

It continues: “One of the most oft-mentioned themes that we heard [during research for the report] was that Covid-19 did not create new trends but accelerated those that were already underway”.

And stay there

The report goes on to say that this trend’s sticking power was boosted by its early successes. “The WFH experiment has gone better than most managers and employees had expected, since new teleconference tools and advanced information technology systems have allowed for effective communication and collaboration (so far),” it reads.

Looking to the future, the report says that over 90% of the Emerging Trends survey respondents agreed that even after the Covid-19 crisis has abated “more companies will choose to allow employees to work remotely at least part of the time.”

This experience of WFH has also spurred experimentation in work models from companies, with several announcing either a permanent move to remote work or increased flexibility for their workers.

“History suggests that offices will remain the dominant location for most white-collar employment, but the pandemic has taught us that there is a definite new variation now in the mix,” it concludes.