In the year-plus since the COVID-19 pandemic began to ravage much of New Jersey’s economy and negatively impact business, the building and construction industry has been steadily regaining its footing. After being designated essential during the early stages of the coronavirus crisis, projects continued to move forward while business owners tried to balance a drastic shift in operations with the implementation of new safety protocols. And with a major disruption to the supply chain and the subsequent skyrocketing of material costs, getting to the finish line was made that much more difficult.
And though a reduced workforce further added to the initial challenges, once things started to get back and up running a rebound happened relatively quickly. According to a report released by the New Jersey Department of Labor and Workforce Development’s Division of Economic and Demographic Research, nearly 40,000 construction jobs were lost last April. By July 2020, almost all of them had been recovered.
That turnaround is key since the industry is a large driver of economic growth, as construction makes up 4.1% of the nation’s GDP. In New Jersey, it contributes $24.1 billion which equates to 3.7% of the state’s GDP of $644.8 billion. And the latest report from the federal Bureau of Labor Statistics shows that while construction employment still lags from a year ago, this March it climbed with 110,000 jobs being added.
The Associated Construction Contractors of New Jersey (ACCNJ) and its labor partners have released a new five-year forecast that shows a positive outlook for several market segments for the remainder of this year and even more so in 2022.
“Warehousing will remain very strong, along with non-hospital health care facilities, mixed-use developments, education—even government spending,” says ACCNJ CEO Jack Kocsis Jr. “Some segments, like office buildings, were already lagging, but even they are seeing innovations and renovations to create a pandemic-driven workspace.
“On the national scene, the head of the Federal Reserve expects interest rates to stay very low and the International Monetary Fund predicts U.S. recovery to be fast and strong. We hope that helps drive a federal infrastructure program that will directly benefit communities across New Jersey.”
While many projects that were temporarily halted due to COVID-19 are back in motion, others have been indefinitely postponed or canceled. The uncertainty around state and municipal budgets has made the future outlook murkier, but the recent announcement of President Joe Biden’s American Jobs Plan has provided some glimmers of hope for critical infrastructure improvements.
“The money is not in the pockets yet, and there will be some bumps and bruises to get there, but if President Biden realizes any part of this infrastructure plan, we could be building things for quite some time,” says Greg Lalevee, business manager of the International Union of Operating Engineers Local 825. “The South Jersey light rail would be a go, the extension of the light rail in North Jersey would be a go and I can’t imagine how it would hold back the Gateway tunnel. None of this stuff is a done deal, but it’s sure feeling a lot more possible than it has recently.”
Lalevee also touts the unique position South Jersey is in with regard to becoming a logistical hub for offshore wind energy. With the Paulsboro Marine Terminal recently receiving a $250 million investment for a manufacturing plant and a wind energy port being discussed in Lower Alloways Creek in Salem County, the area could stake a large claim in the growing movement.
“There is an offshore wind opportunity that stretches almost from North Carolina up north. South Jersey is dead in the middle of this. … Wind energy is first, a lifeline. Secondly—and even better—it’s a growth opportunity,” says Lalevee.
DEALING WITH DISRUPTION
When the pandemic fist hit, B. Tait Builders was in the midst of constructing the state’s largest Planet Fitness in Vineland, working on a 175,000-square-foot distribution center in Pennsauken and other various projects both in South Jersey and southern California. Vice President Chris Tait says that because the firm keeps a diverse portfolio and also designs and develops its own work, they did not experience a monumental shift in workload through it all.
“We did notice a slowdown in the retail and restaurant sectors, but saw other areas pick up dramatically. Over the course of the pandemic our projects varied from developing food process lines, shopping centers, e-commerce, car washes, distribution warehousing, retail, fitness clubs and designing renovations and expansions,” says Tait.
Sean Angelini, president and CEO of Orbit Energy & Power, says the pandemic hasn’t slowed his business down in the least thanks to the variety of different services offered. In fact, since January of last year, the company has grown month over month, recently hiring 25 new employees in one week alone. He attributes the steady flow of work to the overriding factor of people being home and consuming more energy than normal.
“All the flat screens are on, the computers, the tablets, the Xboxes … people’s average electrical use has increased 2/3 during the pandemic. Because of this, we are getting a lot of calls from folks who want solar energy or battery storage,” Angelini says.
Geoscape Solar has seen similar spikes in interest, though CEO Michael Boches says the beginning days of the pandemic were rough as many potential customers decided to retrench and table their decisions to go solar. The company mainly stayed busy thanks to previously booked projects that dated back to 2019. Then in the fall, things began to gain momentum.
“It took until October for customers to feel comfortable that they were going to weather the pandemic and were ready,” Boches says. “Since then, we have built the biggest pipeline in our company’s history, including several projects around the one-megawatt size.”
Having worked in the construction industry since 1972, RYEBREAD’s Regan Young has “seen some recessions” during his career, but says this go around was certainly different. “Every decade or so, financing dries up, projects are put on hold and architects endure 50% unemployment. So, if in January 2020, you had told me we were on the cusp of an economic collapse where waiters, airplane pilots, entertainers, barbers and athletes wouldn’t be working, while architects were busier than ever, I would have said you were full of crap.”
In addition to the firm’s many school capital improvement projects, it has also been tasked with creating a Children’s History Center for the Burlington County Historical Society and expanding a public works facility for Evesham Township.
Robert Notley, principal with New Road Construction Management, says his firm has also been managing several large projects throughout the pandemic, most notably the construction of Medford’s new town hall and library building. Despite having to enforce new COVID-19 protocols and deal with potential material delays, the project was completed on schedule and under budget thanks to proactive planning.
“We encouraged early procurement of material and equipment as soon as the contract was awarded in December of 2019,” Notley says. “This is important for any significant construction project, but proved to be critical [in this case].”
Because of the scarcity and high costs associated with materials, an opportunity has been created for the Employing Bricklayers Association according to its executive director Amy Hennessey.
“The material supplies have been impacted greatly in the past several months. Lumber costs have increased 73% and steel scrap has increased 51%. Where with masonry and brick and stone, the materials have been consistent and are affordable and that is an opportunity for us to gain market share,” she says.
BOUNCING BACK
Now that is has been over a year, GZA GeoEnvironmental Vice President John Oberer says he thinks folks have found ways to manage around the pandemic. Like others, he feels offering different types of services that satisfy a varied group of clients has allowed them to pivot in different directions and stay ahead of the game.
“What that has enabled us to do, not only during this pandemic, but also during the economic crash of ’08 and ’09, is know that when some markets are slow, other markets pick up,” Oberer says. “We’ve been more or less on an even keel during both crisis situations. Having a diverse group of clients is a lesson we’ve known for a long time, the pandemic just reinforced it.”
Elite Heating and Air Conditioning does the overwhelming majority of its work on commercial buildings, but once folks started suddenly working remotely, there was less of a demand for service and installations in offices, according to owner Eric Levy. Nevertheless, many customers remained dedicated to maintaining their HVAC systems and in some cases upgrading filtration systems to better combat the coronavirus.
“We have seen interest in improving ventilation systems. Some customers requested that we upgrade to pleated air filters as part of their quarterly maintenance service. And with most of our preventative maintenance customers, we worked with the owners to increase fresh air flow into the buildings,” says Levy.
Likewise, Ryan Diaz, a sales engineer with DelRen HVAC, has seen a similar uptick as new technologies and design strategies have been developed over the course of the last year. In that time alone, Diaz has worked on several projects, including 10 new Amazon facilities across the region and says that HVAC contractors are truly at the forefront of helping companies get back to pre-pandemic business models.
“The reality is that schools, restaurants, entertainment venues and other businesses need to re-open to full capacity. Rightfully so, many businesses are doing whatever they can [to do so] and are willing to invest in new equipment such as room air purifiers that rid the air of nearly all virus particles,” he says.
LOOKING AHEAD
Many projections, perhaps not surprisingly, are trending toward the rest of 2021 being more favorable for the building and construction industry as a whole. With potential federal funding on the way and exciting prospects starting to come into shape, South Jersey business owners are equally enthusiastic about the future.
Eunide Alexandre, managing director of HelpFoce DBA Alexandre Contracting, was just getting her company off the ground when the pandemic arrived and threw her a curveball. The company which offers selective demolition as well as removal and hauling of construction and demolition debris has now started to see an increased demand for its services, but Alexandre says she taking a cautious approach.
“We are not expecting a dramatic change, but a gradual and steady one,” she says. “We are confidently positioning our business to embrace the times and march onward. We have in place both short- and long-term plans to handle disruptions. These are the reasons we are optimistic that 2021 will end well for our company.”
Robert Powell, vice president of business development and marketing for Vineland Construction Co., is also feeling confident about the direction the industry is headed. The real estate development, investment and management company is currently putting the finishing touches on a new Starbucks location in Vineland while also embarking on the first phase of a 135-acre redevelopment project in Lawnside near the Woodcrest PATCO station.
“I think there is good reason to be optimistic about the industry in 2021,” Powell says. “Many companies paused their real estate requirements during 2020 and those companies are now back out in the market looking for opportunities. … Now we’re seeing a demand for additional space from many of our tenants and pre-leasing across all of our new developments.”
The maintenance component of American Asphalt’s operations suffered last year as regular clients like homeowners’ associations and commercial property owners weren’t ringing the phone. But thanks to the harsh winter weather leaving roads in dire need of repair and the jolt of activity in large warehouse space due to the e-commerce boom led by Amazon’s growing presence in the area, things have been progressing rapidly.
COO Patrick Polazzo says that like his counterparts in the industry, he’s seeing much sunnier days ahead with the vaccine rollout and consumer confidence growing each day. “When we talk to the people that we work for—the general contractors, the site developers, the home builders—they have more work than they can handle,” he says. “And we are seeing exactly the same thing. We’ve got more business booked right now than we’ve seen at this point during the year in a long time.”
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Published (and copyrighted) in South Jersey Biz, Volume 11, Issue 4 (April 2021).
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