Current State of Construction & Development
Last week our Managing Director, Derek Alley, participated in a panel for Bisnow to discuss Texas’ current state of Construction and Development. Others on the panel included Joseph Pitchford, Ari Rastigar, Poorvesh Thakkar, and moderated by Pamela Donaldson of NAWIC. As you all know, things with COVID has caused all industries to take stock of what is happening. As Derek mentioned on the panel, that even nationwide companies like VCC must take their considerations on a project by project basis and get extremely local.
The construction industry was particularly set up to handle the COVID-19 impacts because there was already a extreme focus on jobsite safety and protocol. We had to revise and follow the playbook for which there was great foundation already. Contractors came into this crisis generally with strong backlogs and solid profits. However the next 6 months will be critical in defining the next 24 months as far as projects getting released and started. Developers should remember that in times like this, pre-qualification of contractors and trade partners is more important than ever. There will likely be some cost savings coming thru this next cycle, but chasing savings should not outweigh taking risks relative to cash flow and default probability.
The panel also discussed changes in the capital markets, as well as any design changes that we believe will be on construction projects in the future. There were several good ideas by everyone on the panel. A few included bigger elevators, touchless elevators and faucets, and more filtration. Derek pointed out that spaces will need to be built that can be retrofitted. They also discussed any amenities that began during the pandemic and will remain. The consensus was safety (extra cleaning, sterilization of rooms through HVAC, etc) and outdoor spaces.
We have had several projects in Texas the last few years that included large outdoor spaces for people to socialize including RedBird Mall, Shops at Willow Bend, and Creekside Park West to name a few. We appreciate Bisnow for including Derek in the discussion!
