Construction in New York Surprisingly Resilient

David Goldsmith

All Powerful Moderator
Staff member
In a recent interview Gary Barnett of Extell made it sound like no one is going to build anything in New York City for the next 5 years.
But according to this article in TheRealDeal it appears the construction industry made it through the pandemic with lest than expected damage and is projecting plenty of work through the recovery.

Some of this is because general contractors lowered their margins in order to keep their tradespeople busy, which I predicted would be one of the results of the Housing Stability and Tenant Protection Act of 2019.

Construction industry at ‘inflection point’​

Ranking the general contractors that kept building up while the city was locked down​

With global supply chains, an inherent need for on-site workers and a client base that depends on optimism, construction firms faced challenges on several fronts when the pandemic shook the world economy last spring.
Suppliers scrambled to secure materials, rapidly shifting regulations shut down projects for months, and economic uncertainty led to a plunge in new starts as many developers opted to wait things out.
But a year on from the initial shock, general contractors are getting a handle on the new normal.
“I feel that the construction industry as a whole handled the pandemic extremely well,” said Lance Franklin, co-CEO of New York-based Triton Construction, which made the top 10 in The Real Deal’s annual ranking of the city’s biggest general contractors. “We all adjusted to it quite quickly in terms of mask-wearing, in terms of taking everyone’s temperature as they entered the sites and in terms of doing contract tracing if there was an exposure.”
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A handful of workers on Triton’s projects in the city were exposed to the virus, Franklin said, and some projects faced delays early on in the pandemic. But the firm is still moving forward.

In March, Triton broke ground on the 950,000-square-foot residential complex at 101 Lincoln Avenue, the second phase of Brookfield Properties’ Bankside megaproject on the Bronx waterfront.
Even as the industry looks forward to a post-pandemic recovery, general contractors will still have to grapple with many of the same challenges they were facing before the crisis, like rising material costs and a chronic shortage of skilled workers. But at the same time, the Biden administration’s ambitious infrastructure plan has raised hopes of a construction boom in the coming years.

“It’s really a very important inflection point for the construction industry,” said construction lawyer Barry LePatner, founder of LePatner & Associates, which represents the Related Companies and Starwood Hotels and Resorts.

By the numbers

After peaking in 2016, construction activity in the five boroughs has been on the decline for four straight years, according to an analysis by the Real Estate Board of New York.

In 2020, just 1,760 new building plans were filed with the city’s Department of Buildings, the lowest tally since 2012 and almost a 10 percent drop from 2019. The total square footage of new filings fell 28 percent to 42.67 million square feet, while the number of residential units dropped 18 percent to 27,402.
TRD examined all new and renewed building permits issued across the city between April 1, 2020, and March 31, 2021, to rank the firms that have managed to stay the busiest, taking into account changes in the DOB’s reporting as it transitions from its DOB BIS database to the new DOB Now system.

According to TRD’s analysis, AECOM Tishman was the most active general contractor in the city in terms of ground-up new construction, with more than 11 million square feet in active projects. Lendlease, New Line Structures & Development, Lettire Construction and Gilbane Building rounded out the top five.
For alteration work, TRD tallied companies on the basis of initial estimated project costs. By that measure, Turner Construction was the busiest firm by far, with active projects totaling more than $2 billion — more than twice as much as the second-ranked firm, Structure Tone, whose figures also include its Pavarini McGovern subsidiary. Other big players in the alteration space included J.T. Magen & Company and AECOM Tishman.

“One of our biggest challenges in 2021 will be adapting to new ways of delivering projects safely, and possibly being able to ramp down and ramp back up quickly depending on other events,” said Jay Badame, president of AECOM Tishman, which made headlines last year for its completion of SL Green’s One Vanderbilt, the 1.7 million-square-foot office tower beside Grand Central Terminal.

“Covid has forced us to rethink the entire construction process in significant and lasting ways,” Badame said.

Labor lurch

As construction projects ramp up across the city, a lack of workers in specialized trades continues to bottleneck the industry.
In the early days of the pandemic, the unemployment rate in the U.S. construction industry spiked to 16.6 percent in April before falling back to less than 10 percent, according to U.S. Bureau of Labor Statistics. But before then, the sector’s unemployment had fallen to 3.2 percent in late 2019 — the lowest point this century.

Not only have fewer young people entered the construction field in recent years, more experienced workers have been going elsewhere.
“We witnessed subcontractor labor choosing early retirement and relocating out of the tri-state area, resulting in a decline of local skilled labor,” said Maurice Regan, CEO of J.T. Magen & Company, which has won several new interior projects, including Facebook’s new offices at the Farley Building, BlackRock’s space at 50 Hudson Yards and TikTok’s headquarters at One Five One (formerly 4 Times Square) in Midtown.

Many subcontractors under financial stress let workers go in the past year, exacerbating the problem, said Regan, whose firm placed third in the alteration-work ranking.
At the same time, contractors’ efforts to keep workers busy through the lean times last year could have negative consequences in the long term, according to LePatner.
“Contractors large and small are bidding lower than they would ordinarily, just to keep their manpower going until normal times come around,” he said. “That’s a risky strategy because there’s minimal to no profit, and in some cases losses.”

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Onshoring

Construction costs continued to rise during the pandemic, and New York City is still one of the most expensive cities in the world to build in.

Trump-era trade wars had already caused problems, but the Covid crisis wrought even greater disruptions in the global network of construction suppliers, driving up costs still further.
Several firms said that they continue to see spikes in the prices of various commodities more than a year into the pandemic — from lumber and steel to gypsum, copper and concrete — as well as delays in fabrication and delivery.

“We will continue to see this rise until facilities can get back to normal production schedules,” said Dan Fine, general manager at Turner Construction, whose projects include Tishman Speyer’s Spiral at Hudson Yards, which topped out last year.
Going forward, LePatner said, more companies may seek to shorten their supply chains and move sourcing back to the U.S. — in part as a response to vulnerabilities revealed by the pandemic, and in part due to incentives provided by the Biden administration to bring back manufacturing jobs.

“It’s going to make our domestic supply chain more reliable, although we’re going to see product costs in many situations rise at least 20 percent,” he said. “But that may be the price to pay.”

The infrastructure decade

While sectors like hospitality and retail have taken a serious beating, others are well positioned to keep growing, and construction firms are eager for the work.

“We expect the residential market to continue to grow, especially in the outer boroughs, with more focus on the environment, amenities and work-live-play complexes,” said Lisa Hickerson, manager of business development at Turner. The markets for life sciences, industrial facilities and data centers also accelerated in the past year, she added.Many firms say they are also paying close attention to the Biden administration’s infrastructure plan, as well as the billions in federal stimulus dollars slated for New York City.

“Investing in schools and hospitals and libraries and transit locally creates thousands of good-paying jobs,” AECOM Tishman’s Badame said.
A trillion-dollar overhaul of the nation’s aging infrastructure would mean “well-paying jobs for tens of thousands of specialty trades, such as certified welders, concrete strength test technicians, highway construction managers, all of whom will need the proper backup and support,” said LePatner.

And while much of the nation’s population growth and new construction in the coming decades will be in the Sun Belt, plenty of work needs to be done in New York as well — for the renovation of aging buildings, as well as retrofits to meet looming emissions caps.
“We’re going to see New York have its own building boom,” LePatner said, “because so many of our buildings are 40, 80 and 150 years old.”
 

David Goldsmith

All Powerful Moderator
Staff member

Sky-high lumber prices are starting to impact apartment construction​

Softwood lumber costs jumped 83 percent from a year ago​

Multifamily developers are starting to feel the pain of sky-high lumber costs.
The price of softwood lumber jumped 83 percent from a year ago, the Wall Street Journal reported, citing data from CoStar Advisory Services. That jump has led to an increase in prices for single-family homes, and now it’s trickling down to developers of apartment buildings, too.

The costs of materials used in multifamily construction — including lumber, fuel, copper and steel — have increased 25 to 30 percent over the past year, the publication reported. That is the biggest increase since 1988.

Analysts say these costs could cause profit margins to narrow, especially if rents remain unchanged. It could also lead to a slowdown in construction.
Apartment buildings are largely made of glass, steel and concrete, but wood is often used for floors, as well as decorative elements like cabinets. But the high cost of limber is not expected to have an will have an impact on new luxury high-rises in places like New York and Miami that use technologies that do not require wood.
 

David Goldsmith

All Powerful Moderator
Staff member

City Council pitches crackdown on construction “body shops”​

Bill comes at behest of Local 79, battling nonunion firms for market share​

Construction unions may be nearing a victory in their war on “body shops.”
A new City Council bill would impose licensing and disclosure mandates on companies competing with union labor at construction sites.
The bill, expected to be introduced by Council member Diana Ayala on Thursday, would require labor brokers to obtain a license from the city and report their workers’ demographics, wages and benefits twice a year.
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The measure has been sought by the construction laborers union, Local 79, which wants the city to crack down on nonunion companies that supply low-wage laborers to general contractors. The union accuses them of exploiting women and the formerly incarcerated in particular.
“Construction body shops provide developers with a cheap labor pool, made up of black and brown justice-affected nonunion workers,” Ayala said in a statement. “Body shops take advantage of the scarcity of employment opportunities for re-entry workers, and effectively force these workers into dangerous jobs, with no training, for low pay. They prey on the fears of resentencing.”

But the nonunion firms say their jobs are a lifeline to people leaving prison, providing them with pay and skills that help them get back on their feet. Union construction jobs are much harder to get, they say, and involve navigating a system that is confusing and arcane for many New Yorkers.
Under the proposed legislation, companies applying for a license must provide proof of insurance, disclose their ownership structure and certify that they comply with the law. The city can deny a license if the company — or an affiliated predecessor — has outstanding legal penalties or if the Department of Consumer Affairs and Worker Protection deems that it “lacks good moral character.”

Companies that operate without the license would face $200-a-day fines. General contractors, subcontractors and licensed employment agencies/organizations would be exempt. A separate City Council bill is seeking to require general contractors to obtain a license.
Over the past decade, unions have lost ground to nonunion general labor firms, especially in the affordable housing market. Local 79, however, has negotiated with developers, agreeing to wage concessions to win work.

Last month the City Council’s Committee on Consumer Affairs, which is chaired by Ayala, held a hearing on employment agencies and other labor-placing businesses. The meeting largely focused on body shops, as the union calls them.
At the time, the Real Estate Board of New York proposed alternatives to address allegations of exploitation, including increasing funding to the Department of Consumer Affairs “to better protect justice-involved and other vulnerable workers from wage theft and other unsafe or illegal practices.” The organization also pitched requiring that workers on publicly funded construction jobs be paid more than minimum wage, plus benefits.

Such a measure, according to the group, could include local hiring and reporting requirements to increase transparency. The group also urged the City Council to find ways to “grow the construction industry as an avenue for a more just and equitable workforce” and partner with nonprofits that work with both union and nonunion workers.
“REBNY recognizes that private-sector union construction is essential to the development of New York City, and our members account for most of the union construction contracts,” the organization stated in written testimony. “However, it is not practicable to contract union work for the entirety of all jobs.”

During the hearing, Local 79 members recounted their experiences working for companies they identified as “body shops.” Workers described low pay and poor working conditions — and bosses who took advantage of the fact that losing the job could mean reincarceration.
“While we are coming out of a pandemic, there is a pandemic of exploitation that is happening in the industry,” said Mike Hellstrom, president of the Mason Tenders’ District Council. “These labor service providers are profiteering off the back of labor.”
 

David Goldsmith

All Powerful Moderator
Staff member
Even with construction doing OK another Softbank investment heads South.

Troubled construction startup Katerra will shut down: report​

SoftBank-backed company struggled with delays, cost overruns​

Another SoftBank-backed startup has imploded.
The construction startup Katerra, which aimed to transform the $12 trillion global construction industry, told employees this week that it is shutting down, The Information reported, citing sources familiar with the matter.
According to the publication, the company plans to cut thousands of jobs — potentially without paying out severance packages or unused time off — and may end up walking away from construction jobs it was contracted to build.

Katerra was founded in 2015, and had received more than $1 billion in funding from SoftBank, which had also poured money into WeWork. At one point, it was valued at $4 billion.
The Information’s report says that a company executive cited the Covid-19 pandemic, along with soaring labor and construction costs as reasons for its latest financial difficulties.

But Katerra had issues prior to the pandemic. Its record of delivering on its projects was patchy, and the company struggled with delays and cost overruns. Though it had previously employed around 8,000 people, it laid off hundreds of employees last year.

The company also faced an investigation into its accounting practices by the Securities and Exchange Commission and by its board of directors, according to The Information.
Last year, the company was reportedly exploring the possibility of Chapter 11 bankruptcy proceedings, until it was bailed out by a $200 million cash infusion from SoftBank. That round of funding gave another SoftBank-backed company, Greensill Capital, a 5 percent stake in the company in exchange for erasing more than $400 million in debt. Greensill also collapsed earlier this year.

Katerra’s founder Michael Marks and CEO left the company last May. Paal Kibsgaard, the company’s most recent chief executive, departed last month.
The company has 2,434 employees, according to its LinkedIn page. A spokesperson for Katerra did not immediately respond to a request for comment. SoftBank also did not return a request for comment.
 

David Goldsmith

All Powerful Moderator
Staff member

Construction wage theft bill passes state Senate​

Measure, which would be a win for unions, heads to governor’s desk​

In a win for construction unions, a bill that shifts more liability to contractors is heading to the governor’s desk.
The state Senate on Wednesday voted in favor of the measure, which forces construction managers to assume responsibility for unpaid wages, benefits and attorney fees on their projects.
Typically, a worker will file a lawsuit against their direct employer, a subcontractor, to recoup wages. The bill, sponsored by Sen. Jessica Ramos and Assembly member Latoya Joyner, aims to ensure that construction managers are liable for the actions of those they hire and to incentivize “the construction industry to better self-police itself,” according to a legislative memo.

“No New Yorker can or should work for free,” Ramos tweeted soon after the bill’s passage.
An earlier version of the bill passed in the Assembly in January, but the measure was amended and re-passed by that chamber on Tuesday.
The latest iteration provides a few exceptions to the liability requirements, allowing construction managers to withhold wages in cases where subcontractors fail to provide certain payroll information. It also creates the option for a collective bargaining agreement to waive the bill’s requirements. And liability is limited in cases where legal action has been taken. In such instances, construction managers are responsible for wage theft that occurred no more than three years prior to when the claim was filed in court.

The bill would also allow the subcontractor to authorize any “person, organization or collective bargaining agent” to file a complaint on its behalf. The measure, backed by the city’s construction trades, faced some opposition from nonunion construction groups, which argued that wage theft should be handled by the Department of Labor, the state attorney general and local district attorneys, rather than third parties.

Gary LaBarbera, president of the state and city chapters of the Building and Construction Trades Council, said the bill is an important tool to combat wage theft for all workers on privately funded projects.
“From day-one, this legislation was all about putting the interests of working people ahead of those of unscrupulous contractors in the construction industry,” he said in a statement.

LaBarbera made the bill a priority for this legislative session, which ends next week.
 

David Goldsmith

All Powerful Moderator
Staff member
"Hirings in real estate and rental and leasing slowed from April. The construction industry lost 20,000 jobs as employment in non-residential building declined. The rising demand for new homes reflected in spiking prices has outpaced the growth in hiring, with residential construction hirings up only slightly in May."
 

David Goldsmith

All Powerful Moderator
Staff member
Even with construction doing OK another Softbank investment heads South.

Troubled construction startup Katerra will shut down: report​

SoftBank-backed company struggled with delays, cost overruns​

Another SoftBank-backed startup has imploded.
The construction startup Katerra, which aimed to transform the $12 trillion global construction industry, told employees this week that it is shutting down, The Information reported, citing sources familiar with the matter.
According to the publication, the company plans to cut thousands of jobs — potentially without paying out severance packages or unused time off — and may end up walking away from construction jobs it was contracted to build.

Katerra was founded in 2015, and had received more than $1 billion in funding from SoftBank, which had also poured money into WeWork. At one point, it was valued at $4 billion.
The Information’s report says that a company executive cited the Covid-19 pandemic, along with soaring labor and construction costs as reasons for its latest financial difficulties.

But Katerra had issues prior to the pandemic. Its record of delivering on its projects was patchy, and the company struggled with delays and cost overruns. Though it had previously employed around 8,000 people, it laid off hundreds of employees last year.

The company also faced an investigation into its accounting practices by the Securities and Exchange Commission and by its board of directors, according to The Information.
Last year, the company was reportedly exploring the possibility of Chapter 11 bankruptcy proceedings, until it was bailed out by a $200 million cash infusion from SoftBank. That round of funding gave another SoftBank-backed company, Greensill Capital, a 5 percent stake in the company in exchange for erasing more than $400 million in debt. Greensill also collapsed earlier this year.

Katerra’s founder Michael Marks and CEO left the company last May. Paal Kibsgaard, the company’s most recent chief executive, departed last month.
The company has 2,434 employees, according to its LinkedIn page. A spokesperson for Katerra did not immediately respond to a request for comment. SoftBank also did not return a request for comment.
Another one bites the dust.
 

David Goldsmith

All Powerful Moderator
Staff member

Contract killers: Construction disputes spell disaster for projects​

What happens when developers and construction firms turn on each other​

Days before the opening of New York City’s second-tallest building, workers in Navillus T-shirts scurried around the construction site.
Their presence at SL Green’s trophy project, One Vanderbilt, raised eyebrows: Two months earlier, the concrete contractor’s CEO had been arrested on fraud charges. And before that, SL Green had fired Navillus, fearing it was going bankrupt. But the insurer of Navillus’ work had rehired the firm.
 

David Goldsmith

All Powerful Moderator
Staff member
And another one gone and another one gone...

Social Construct falls as pandemic turns world anti-social​

Construction-tech startup Social Construct calls it quits
“Startups are fragile beasts,” according to Ben Huh, CEO of Social Construct, which just became the latest real estate casualty of the pandemic.
The proptech startup, which launched in 2017 with the aim of streamlining building planning and assembly with software and automation, will officially wind down operations in the fourth quarter. The pandemic undercut the startup’s early successes and threw a ratchet in its plan for a Series B raise in April 2020.
“It was almost impossible to get investors to come for a hardhat tour while people were fleeing the city and rents crashed,” Huh told The Real Deal.
Huh, who previously was the founder and CEO of Cheezburger, does not currently have plans for another project.
 

David Goldsmith

All Powerful Moderator
Staff member

4 Bed, 3 Bath, No Garage Door: The Unlikely Woes Holding Up Home Building​

Supply-chain complications are giving the industry and buyers fits
A single house under construction in America today faces all kinds of problems, starting with a run on lumber, then bricklayers in demand, subcontractors with Covid, appliances on back order and plumbing fixtures out at sea.
Get through all of that, and then comes one more hitch with what should be a straightforward finishing touch.
“Garage doors are a nightmare,” said Rick Palacios Jr., the director of research at John Burns Real Estate Consulting. If you had to rank the headaches homebuilders face, he said, “garage doors are the worst right now.”
The home-building industry is having the most difficult time in decades meeting demand, the sum of many pandemic complications. But this moment reaches peak absurdity with garage doors.

Few people had a problem getting them before. Now everyone seems to have that problem. Prices have doubled or tripled in the last year. Lead times have stretched from weeks to months. Homebuilders who would once order garage doors several weeks before finishing a house are now ordering them before the foundation is poured.
“It used to take us 20 weeks to build a house,” said Adrian Foley, the president and C.E.O. of the Brookfield Properties development group, which develops thousands of single-family homes annually in North America. “And now it takes us 20 weeks to get a set of garage doors.”
Many frustrations that builders face today aren’t entirely novel. Tariffs and natural disasters have rattled supply chains before. Skilled labor has been an issue for years. Zoning rules have long stymied construction. Rather, what is unique, with an American twist, is a problem like this: Homebuilders are struggling to complete new homes amid a housing shortage because they must first complete the thing designed to house our cars.
In most parts of the country, a builder can’t pass final inspection for a home that is otherwise perfectly complete — but that is missing its garage door. That means builders don’t get paid and home buyers can’t move in.

Delays are also contributing to the slow pace of home building. Before the pandemic, a typical single-family home might have taken seven months to construct. Today it can take up to a year.

Nine in 10 new single-family homes in America were built with a garage in 2020, and they’re nearly universal in the Midwest and on the West Coast. So just about every new house needs a garage door.

Builders across the country are struggling to finish houses because of pandemic-related shortages of supplies like garage doors.
“If anything, the pandemic has even furthered that” demand, said Jeff Schroeder, a senior vice president for Ponderosa Homes in California. As home prices have soared during the pandemic, families in places like the Bay Area are pushed toward cheaper housing farther into the exurbs. “To do that,” Mr. Schroeder said, “they need a car.”

These last two years, the garage has also become the answer to all kinds of pandemic problems. It’s the remote office, the home gym, the one-room schoolhouse and the makeshift bedroom for doubled-up family. The pandemic has effectively completed the decades-long evolution of the garage from a detached carriage house to a connected car annex to a space inseparable from the home itself.
Along the way, the garage door became, for many, the real front door. And so it can be surreal to see brand-new homes with their garages sealed in plywood, or to hear homebuilders talk of installing temporary ones. Welcome to your dream home! The real garage door will be coming later.
Mr. Schroeder’s company has been putting cheap, plain garage doors on homes selling in the $600,000s. “They’re just place-holders,” he said, awaiting permanent replacements.
Mr. Foley’s company has delayed closings rather than come up with temporary fixes.
“The garage door is aesthetically a part of the home’s finish,” he said. To deliver a home without one — “it’s akin to delivering a new car without a front grille.”

In Sacramento, the national homebuilder Lennar asked the city’s building department for a reprieve from garage door requirements.
“This is probably the first time I’ve ever been involved with a supply-chain issue,” said Winfred DeLeon, Sacramento’s chief building official. The department came up with a provisional agreement — to be signed by the bank and the home buyer — allowing a home to be occupied with painted plywood sealing the garage.
The issue for the final inspection isn’t the door itself. Rather, inspectors test the mechanism required by federal law to automatically halt the doors in case anything, or anyone, gets stuck underneath.
No one has used the agreement yet, Mr. DeLeon said. But it’s ready for the next home, or the next home component shortage. “We think it’s not just going to be garage doors,” he said. “It’s going to be something else next.”

The safety mechanism inside a garage door is one small part of a complex product — or, more important, a product with a complex supply chain. According to an index created by John Burns Real Estate Consulting, garage doors have a more complex supply chain than windows, HVAC systems and plumbing fixtures. They present more possibilities for something to go awry than just about everything other than appliances and lighting fixtures.

A Supply Chain Complexity Index​

In this measure, developed by John Burns Real Estate Consulting, building products with larger values rely more on intermediate industries and imported parts.​

Light fixtures9.6
Home appliances7.6
Garage doors7.4
Insulation7.2
Stone products7.2
Cabinets and counters7.2
Gypsum6.2
Paint6.1
Windows and doors6.0
HVAC systems5.8
Plumbing products4.9
Decorative metal4.9
Millwork4.8
Concrete blocks4.5
Engineered wood products4.5
Flooring3.6
Roofing2.9
Sawmills2.4
Forestry and logging2.2
Source: John Burns Real Estate Consulting analysis of Bureau of Economic Analysis data
That index was developed early in the pandemic. Then Todd Tomalak, who leads the John Burns building products group, put an addition on his Green Bay, Wis., house with a new master suite and a roomier garage for his woodworking tools. It was “100 percent done, done, done” in early December, save for two things — the bathtub and the garage door.

“The irony is just too much,” Mr. Tomalak said.
Yes, the guy who tries to forecast supply-chain problems with garage doors can’t get a garage door either.

Take apart one of these doors and it has a couple of hundred individual subcomponents: panels, tracks, brackets, hinges, springs. The models come in all kinds, too: garage doors to make your home look like a fortress, a barn, a carriage house, a Renzo Piano museum.

How the Supply Chain Crisis Unfolded​


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The pandemic sparked the problem. The highly intricate and interconnected global supply chain is in upheaval. Much of the crisis can be traced to the outbreak of Covid-19, which triggered an economic slowdown, mass layoffs and a halt to production. Here’s what happened next:
A reduction in shipping. With fewer goods being made and fewer people with paychecks to spend at the start of the pandemic, manufacturers and shipping companies assumed that demand would drop sharply. But that proved to be a mistake, as demand for some items would surge.
Demand for protective gear spiked. In early 2020, the entire planet suddenly needed surgical masks and gowns. Most of these goods were made in China. As Chinese factories ramped up production, cargo vessels began delivering gear around the globe.
Then, a shipping container shortage. Shipping containers piled up in many parts of the world after they were emptied. The result was a shortage of containers in the one country that needed them the most: China, where factories would begin pumping out goods in record volumes
Demand for durable goods increased. The pandemic shifted Americans’ spending from eating out and attending events to office furniture, electronics and kitchen appliances – mostly purchased online. The spending was also encouraged by government stimulus programs.
Strained supply chains. Factory goods swiftly overwhelmed U.S. ports. Swelling orders further outstripped the availability of shipping containers, and the cost of shipping a container from Shanghai to Los Angeles skyrocketed tenfold.
Labor shortages. Businesses across the economy, meanwhile, struggled to hire workers, including the truck drivers needed to haul cargo to warehouses. Even as employers resorted to lifting wages, labor shortages persisted, worsening the scarcity of goods.
Component shortages. Shortages of one thing turned into shortages of others. A dearth of computer chips, for example, forced major automakers to slash production, while even delaying the manufacture of medical devices.
A lasting problem. Businesses and consumers reacted to shortages by ordering earlier and extra, especially ahead of the holidays, but that has placed more strain on the system. These issues are a key factor in rising inflation and are likely to last through 2022 — if not longer.

(Mr. Tomalak chose the Sonoma Ranch style from American Overhead Door in Mission Oak with Stockton II windows — “not a Ferrari” as garage doors go, he said; maybe “a 3-series BMW.”)
To understand the industry’s manufacturing, consider an airplane, said Dave Monsour, a longtime engineer who is now the technical director of the Door and Access Systems Manufacturers Association. An airplane has thousands of parts. But every time manufacturers build another one, they use essentially the same parts as in the last airplane. No one’s customizing the exterior material or the width of the wing.

“It used to take us 20 weeks to build a house,” a C.E.O. of a development group said. “And now it takes us 20 weeks to get a set of garage doors.”

“With our business — garage doors — it just explodes,” Mr. Monsour said of the variety. “You can get any size you want, any color you want, any wind-load rating you want.”
Garage doors come measured not in one- or two-car sizes, but in three- or six-inch increments. Want windows? How about insulation? The answers affect just how much it weighs. And now you need a different spring to counterbalance it.

Amid all this variety, a few problems have been acute lately. Many doors contain spray-foam insulation, which has been in short supply since the plants in Texas that manufacture its chemical components were disrupted in last year’s winter freeze. (If you make garage doors, you’re also competing for polyurethane or polyvinyl chloride with window frames, vinyl siding, caulking — and the aerospace, cruise ship and automotive industries.)
Many other garage door components are made from steel, which has also been in short supply. And even companies that manufacture the finished doors domestically typically source parts from China that have been snarled in global shipping.

In the Raleigh-Durham area, Wes Carroll’s custom home building company, Upright Builders, primarily constructs homes with three-car garages, split into a two-car side entry and one-car front entry. (“We build as few houses as possible with only a two-car garage, if that doesn’t sound crazy,” he said; local buyers expect three, especially on pricier homes.)
For that setup, he used to pay about $3,200. Now the cost is running about $6,000. He has one week to lock in the price. Then he’s waiting two to three months for delivery.
The unpredictability of rising costs and long lead times, the problem at the heart of home building today, has upended his business model. It used to be that you’d presell a home and then start construction, because home building is less risky when you know there’s a buyer. But all the risk is reversed right now.
“The way I’m putting it — and garage doors would fall into this category — we don’t know something is not going to be available until it’s not available,” he said.

And the latest word on the availability of Mr. Tomalak’s garage door, ordered on July 27 of last year?
“All we know,” he said, “is April or May.”
 

David Goldsmith

All Powerful Moderator
Staff member

Construction pipeline soars 69%: REBNY​

New projects are on the rise YoY, but sf down from previous quarter​

New York City construction is booming in the third year of the pandemic — just not at the rate it was a quarter ago, by some measures.
The city counted 689 new building filings during the first quarter, an increase of 69.3 percent from a year ago and 3.6 percent from the previous quarter, according to a new building construction pipeline report from the Real Estate Board of New York. The number of filings also represented the highest volume for a quarter since 2014.

Other parts of the construction pipeline are also on the rise from the same time last year. The amount of square footage in those project filings, roughly 23.3 million square feet, is more than 300 percent higher than the first quarter of 2021. The amount of residential units, slightly more than 20,000, is up more than 500 percent year-over-year.
Despite the increases, those numbers aren’t as promising when compared to the most recent quarter. The planned square footage is down about 25.6 percent from the fourth quarter and planned residential units planned were down by more than 4,000 units, although the fourth quarter’s total was a record.

The report points towards a lack of very large filings — defined as more than 300,000 square feet — as a reason for the square footage drop. There were only 16 very large filings last quarter, down from 26 the previous quarter; the 16 filings account for 6.4 million square feet, more than 25 percent of the quarterly total.
Brooklyn leads the multifamily sector with more than 10,000 planned units in the first quarter filings, the second most for any borough since 2008. Queens has an influx of more than 5,700 units and set a borough record with 84 projects planned in a single quarter; it also had the most number of new projects overall, 227.

The biggest filing of the quarter was in Queens, where a 23-story, 500-unit mixed-use building is being developed at 94-15 Sutphin Boulevard.
Among the boroughs, Manhattan was at the other end of the project filings, seeing only 20 in the first quarter.
Despite the downturn from the fourth quarter, executives are seeing the positivity in the construction rebound from a year ago.
“There is no question New York is not only recovering, but beginning to thrive again, as always,” Carlo A. Scissura, president and CEO of the New York Building Congress, said in a statement.
The optimism may not last long for the industry, though. The multifamily tax break Affordable New York, better known as 421a, is set to expire on June 15. Developers have warned few apartment projects will start in the city without the break as financing for apartment projects has ground to a stop amid the impending expiration.
 
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