A Moody’s Analytics REIS analysis reports construction project delays could worsen as a result of COVID-19, according to www.constructiondive.com.
The report shows 82% of the multifamily projects that started construction between 2002 and 2019 were completed (secured a certificate of occupancy and started leasing) at least one month behind schedule. During that same period, the average completion date for multifamily developments was a little more than four months late, with only 18% finishing early (15%) or on time (3%).
Industrial projects finished an average of almost four months behind schedule; office projects finished an average of almost three months late; and retail projects finished an average of almost two months behind. More industrial projects (40%) than any other project type were completed on time, with office (11%) and retail (6%) projects a distant third and fourth.
The delays are attributed to various factors, such as weather issues; supply chain disruptions; strict regulations and building codes; inadequate supply of skilled workers; disagreements between the project team about design, specifications, materials and costs; and the Great Recession.
The latest factor that significantly has affected the construction industry is COVID-19, which not only has damaged the U.S. economy but also has affected the global economy, disrupting supply chains and other business processes. And there is fear there will be a second wave of COVID-19 cases later this year or at the start of 2021. Until there are better treatment options and a vaccine, contractors and other employers must follow new safety protocols, which could delay projects because of the time it takes to implement the protocols and because social distancing will lower capacity and productivity in some areas.
In general, Moody’s said unless there are significant supply chain interruptions, areas of the U.S. that were not subject to stay-at-home orders halting construction, such as Texas, should have fewer construction delays than areas experiencing shutdowns. The longer the period between stopping and restarting projects in areas that experienced shutdowns, such as New York, the more likely there will be delays. If there is a resurgence of COVID-19 cases, the construction industry should prepare for more delays.
