Coronavirus: Will the pandemic derail Dayton region development projects?

Local officials hope that Dayton-area construction, renovation and development projects do not become the next casualty of the coronavirus pandemic that has caused massive job losses, stock market woes and other economic disruption and misery.

Developers, contractors and economic development leaders say they expect COVID-19 and the shelter-at-home measures taken to slow its spread could result in some delays, postponed or cancelled projects, and workforce and supply chain issues.

“Like any natural disaster, the COVID-19 pandemic will be disruptive and there are very real concerns about the economic impact,” said Richard Osgood, director of the Miami County Department of Development.

However, officials, industry groups and companies say construction demand and development activities were very strong leading up to outbreak and hopefully should remain that way and will rebound quickly when it is over.

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A survey released Friday by the Associated General Contractors of America, a leading advocacy group for the construction industry, found that nearly 40% of contractors reported that project owners stopped or cancelled current projects because of the coronavirus and deteriorating economic conditions.

The sudden and sharp decline comes after Ohio and other states ordered nonessential businesses to shut down and residents to shelter at home unless absolutely necessary.

Ohio, however, deemed critical trades as essential businesses, including building and construction trades workers, though there are questions about what projects are and are not essential.

Construction has continued on the new GM DMAX plant in Brookville, because it is incomplete and needed work includes roofing, siding, concrete floor, ventilation, utilities and water drainage management, said Bill Mortimer, GM SW project manager.

“Building completion in these key infrastructure areas is critical to maintain the building integrity for future use in transportation manufacturing,” he said.

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Construction work last week continued at sites around the Dayton region, including in the Fire Blocks District and around downtown Dayton.

Woodard Development, one of the developers of the Water Street District in downtown, is constructing a new, two-story office building at East Monument Avenue and is renovating a pair of buildings on East Third Street.

Jason Woodard, principal of Woodard Development, said work has continued on projects but undoubtedly there will be some delays and this unique time period calls for a more “measured pace.”

“It is too early to tell what the impact will be to our projects, right now we are trying to stay the course and listen to our tenants, lenders and subcontractors so we can make good, informed decisions,” Woodard said.

Woodard said he is optimistic that demand will recover after the coronavirus pandemic is over, but the overall impact on the economy is unknown.

The “stimulus package appears that it will help as a bridge but certainly doesn’t replace a bustling economy,” he said.

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The coronavirus crisis is just starting to impact supply chains that potentially could affect prices, schedules and demand, said Bill Struever, principal, managing partner and CEO of Cross Street Partners, the lead developer of the Dayton Arcade.

The pandemic likely will take some sort of toll on the rehab of the Dayton Arcade, and some workers have been staying home to support their families and for personal reasons, he said.

“The reduction has an effect, but we are pushing ahead as best we can during this uncertain time,” Struever said.

Economic uncertainty, combined with the shut down of significant parts of the economy and Ohio’s stay-at-home order, is hurting services companies like Pinnacle Architects Inc., said Michael Taylor, vice president of the Miamisburg-based company.

Some general contractors involved in ongoing construction jobs have ceased work, though others continue to build, he said.

“I am sure we will weather the storm and even though we will be hurting for the next several months, I have confidence that the local market will come back quickly once we are cleared to come back to work,” he said.

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Montgomery County’s Chief Building Official Maury Wyckoff said he’s heard anecdotally that some architects are having projects postponed or cancelled.

He said likely there will be a slowdown in projects being started and some project time lines will shift. But his office was very busy in January and February, and many projects were already in the pipeline.

Wyckoff said he believes the economic conditions caused by the coronavirus won’t affect major and bigger-ticket projects as severely as smaller ones. He said he believes smaller renovation and building work might be put on hold until the economy and financial markets are more stable.

Montgomery County’s building department staff is still reviewing plans, doing inspections and issuing permits. Some inspection activities are being done using video and virtual technology.

It's still very early, but businesses are going to have to evaluate projects on a case-by-case basis to decide if they are comfortable making investments in an uncertain economic environment, said Erik Collins, Montgomery County's director of community and economic development.

With this unprecedented pandemic, the economy came to a screeching halt in a way not seen in previous crises, like during the Great Recession, so the economic fallout is unpredictable, Collins said.

“It is definitely going to have an impact on every aspect of the economy,” he said.

Some private construction projects statewide have been shut down or postponed, and others could be slowed down for reasons related to the coronavirus, like workers needing to take time off, said Richard Hobbs, executive vice president of the Associated General Contractors of Ohio, which is a trade association for commercial and industrial construction.

But Hobbs said many projects remain ongoing and many workers remain on the job and construction demand is still high.

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He said this is a temporary public health emergency that is causing economic problems, instead of being a financial emergency that reflects deep problems with the economy.

This unique and never-seen-before situation makes it impossible to know exactly what to expect , Hobbs said, but he predicts many contractors will remain busy and the rebound at the end of the crisis will be robust.

“The demand is still going to be there,” he said.

Business expansions, site selection opportunities, foreign direct investment and other traditional avenues for job creation and economic expansion will likely experience a significant decline in investment activity, said Osgood, with Miami County’s development department.

Economic and community development strategic priorities will need to be re-evaluated , Osgood said, possibly like shifting the focus from job creation to job retention.

A successful recovery will take good planning and strategies involving a diverse group of countywide and regional stakeholders and partners, he said.

“It is imperative to plan now for the economic recovery and to communicate that plan to all stakeholders,” he said. “Special attention will likely need to be directed to small businesses, entrepreneurs, business incubation, and to all our hometown communities.”

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