We are almost one year into the global COVID-19 pandemic. Contractors throughout the United States have certainly experienced their share of obstacles within the past year. Projects have shut down or slowed. Crew members have had to be laid off. Construction costs have increased. As we move into 2021, we thought we’d look at a few other challenges the commercial construction industry faces as we continue on through these unprecedented times..
LABOR SHORTAGE: Even before the pandemic, the construction industry struggled with a shortage in available skilled laborers. With many projects paused or postponed indefinitely due to COVID-19 restrictions, many skilled workers were laid off in the spring of 2020. When these workers were called back to work, many refused to return to work citing virus concerns, moving into another type of employment, family responsibilities, or a preference for unemployment benefits.
Industry experts expect labor gaps to widen once we come out of this. States like New York, California, and Texas will definitely be impacted. Locations like these will be where all the work’s going to be but the cost of living in these areas is high. Particularly in this economic climate. A skilled laborer looking for work is going to have a difficult time migrating to a city or suburb in these states for short term work.
This means commercial construction contractors in these states will have persistent difficulty finding and hiring experienced, skilled, and motivated workers.
FEWER PROJECTS: Economists predict that various commercial construction sectors will continue to decline even after we recover from the impact of COVID-19. For instance, COVID-19’s stay at home orders forced more companies to set up remote access for employees to work from home. Countess businesses have continued to run smoothly with a 100% remote work force. There’s no telling what impact this may have on office construction or office tenant improvements. Many companies might opt out of renewing pricey office leases for space they no longer need with a largely remote workforce.
FALLING COMMERCIAL CONSTRUCTION BACKLOG: After a brief uptick, declines in commercial construction backlog have accelerated in practically all markets and regions. Economists view this as the early stages of spending downturn in nonresidential construction. The declines are even more pronounced in the West; particularly in the economically challenged state of California.
What all of this means is commercial construction contractors are looking at a 2021 that will likely present fewer bidding opportunities and increasingly vigorous competition for work among contractors. Combine this with the continuing economic uncertainty of a never ending pandemic that’s resulting in rising materials costs, tighter lending standards, and the diminished financial health of state and local governments and you have an industry in a state of flux.
That said, contractor confidence in the U.S. market is high with many contractors believing sufficient new business opportunities and revenue are on the horizon. They also feel they’ve turned the corner from the earliest days of the pandemic with the average amount of project delays decreasing sharply as 2020 closed out. They’re just hoping they don’t have to decline work due to a lack of skilled workers.
LOOKING FOR A DEPENDABLE COMMERCIAL CONSTRUCTION CONTRACTOR IN THE LOS ANGELES AREA?
H.W. Holmes, Inc. is a commercial construction contractor servicing Los Angeles county, Santa Barbara county, and Ventura county. If you’re needing to start any commercial construction project during this pandemic, know we have a healthy and safe crew ready to go to work for you. Contact us today to discuss your project.