Like virtually every other construction contractor, The Boldt Co. has felt the impact of the COVID-19 pandemic and was tasked with adjusting the way it works in the office and on the job site.
Dave Kievet, chief operating officer of The Boldt Co., said the company is fortunate it’s only looking at a 20% hit to its forecasted revenue for the year due to the coronavirus. Many of its projects are considered essential work and have continued despite social distancing orders during the pandemic. Boldt works in sectors such as health care, higher education and industrial.
“We do know some contractors out there that have basically shut their whole businesses down,” Kievet said. “So, in that respect, being only 20% off our mark, I think that we were really lucky and we did well with that.”
But there could be some good coming out of the health crisis. Kievet said construction sites have become safer as a result of the pandemic, not only from spread of infection but of any workplace hazard.
Stu Wangard, chairman and chief executive officer of Wauwatosa-based Wangard Partners Inc., noted a renewed focus on teamwork and cooperation among developers, contractors and municipal officials.
“You’re seeing a much stronger sense of community and working together,” he said.
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Industry impacts
Construction has fared better than other industries during the pandemic. It was deemed essential in Wisconsin and many other states, meaning most projects were able to continue during social distancing mandates, including Gov. Tony Evers’ “Safer at Home” order.
Even so, there’s plenty of evidence showing the coronavirus has harmed the industry.
A recent Associated General Contractors of Wisconsin survey found that more than 60% of construction firms reported having a project shut down in March or April and 89% saw projects delayed or canceled as a result of the pandemic.
What’s more, 44% of contractors surveyed said they laid off field workers and 22% said they furloughed or laid off administrative staff or project managers.
Another survey of local commercial real estate professionals shows some projects are seeing significant delays of 90 days or more. A majority (65%) of respondents said that at least a portion of the projects they’re involved with were being delayed.
While 54% said at least 90% of their projects were proceeding without delay, 29% of respondents said less than 70% of projects remained on time and nearly 16% said fewer than half of their projects were on track. The poll was conducted in April. It was conducted through a collaboration of six local industry groups.
There’s evidence suggesting there will be fewer construction projects to come in the near future. Architectural billings are considered a canary in the coal mine for the industry. The American Institute of Architects each month puts out the Architectural Billings Index, which the group says is an economic indicator for nonresidential construction activity with a lead time of about nine to 12 months.
In March, the ABI recorded a record decline. The score of 33.3 for March reflects a decrease in services provided by U.S. architecture firms. Any score below 50 indicates a decrease in billings. The Midwest fared better than the U.S. average, with a score of 44.2.
William Babcock, executive director of AIA Wisconsin, said Wisconsin firms are certainly feeling the pandemic’s impacts.
“Every architect in Wisconsin has been impacted by this health crisis and the resulting adverse effect on economic activity,” Babcock said.
Industry employment has also taken a hit. The Associated General Contractors of America said the industry lost 975,000 jobs in April. This constituted nearly 13% of the industry’s employment and was by far the worst one-month decline ever, said Ken Simonson, AGC of America chief economist.
“Without new federal help, it is hard to see a scenario where the construction industry will be able to recover any time soon,” he said.
The group also found in a survey of its members that 38% of contractors in the Midwest reduced their headcount. This was actually better than other regions of the U.S. except the south, at 29%.
Dan Bukiewicz, president of the Milwaukee Building and Construction Trades Council union group, said hours have been lost on routine service work, power-plant projects, and work related to major events, including Summerfest and the Democratic National Convention.
“There’s been some fallout, that is for sure,” he said.
But it appears Wisconsin’s construction industry has fared better than other states recently. According to data from construction technology firm Procore, the worker hours logged in Wisconsin for the week of April 26 rose 6% from the hours logged the week of March 6.
By this metric, Wisconsin was performing better than its neighbors. Worker hours were down 2% in Iowa, 3% in both Illinois and Minnesota, and down 69% in Michigan.
The data is based on the transactions logged via the company’s software by tens of thousands of construction firms across the country.
Some industry sectors have been hit harder than others. AGC of Wisconsin said health care and industrial projects experienced the largest number of shutdowns.
Bob Barker, executive vice president of AGC of Wisconsin, said he has heard from members that some non-critical manufacturing and health care projects have been delayed. And, as expected, the retail sector has slowed down.
“We have heard of increasingly more companies being cautious about capital investment in this current economic situation,” Barker said.
Business will also slow significantly in the coming months for home builders, said David Belman, president of Waukesha-based Belman Homes.
“We’re expecting not only a very down quarter, but the next six months are going to be pretty light for our industry,” he said.
Education projects, including work from universities and K-12 school districts, have been busier due to the closure of school buildings statewide.
“We heard that schools were actually asking contractors to speed up their work while the students weren’t in there,” Barker said. “There’s a lot of variation by sector on how this has impacted the industry.”
Continuing construction
The construction industry has adopted safety practices in order to keep job sites safer from the COVID-19 outbreak.
Contractors and labor groups got together to adopt a set of best practices early on, said Bukiewicz. At the forefront of those changes was getting personal protective equipment to job sites, he said. Other measures include installing handwashing stations, regularly cleaning the sites and adopting social-distancing practices.
Workers have also been trained to recognize communicable diseases and how to take proper precautions, he said. This is done through specific certification training.
There is also a policy in place to treat potential disease exposure. A worker with a fever is sent home for three days and retested after that. If a worker is found to have the coronavirus, the job site is immediately shut down, disinfected and evacuated for 72 hours, Bukiewicz said.
“It’s been a real challenge for a lot of people and a lot of responsibility, but people have really stepped up and it’s made a lot of difference in how we’ve been able to continue work and not have an outbreak on projects,” Barker said.
At least one construction project in the area has had to respond to workers contracting the virus: the recently-completed BMO Tower in downtown Milwaukee. Two workers on the job site were diagnosed with the disease in late March. In response, general contractor Chicago-based Pepper Construction temporarily closed the site for a thorough cleaning, but work ultimately continued and the 25-story glass office tower opened to tenants in April.
Pete Klosterman, vice president of field resources of Miron Construction Co. Inc., said the firm formed a task force responsible for creating COVID-19 related strategies and communications to its 1,600-plus employees. On job sites, it has added more break room space, directional routes, more toilets and more handwashing and sanitizing stations.
Miron is based in Neenah, and has an office in Wauwatosa. It is in the process of moving its local office to downtown Milwaukee.
“The most challenging situations involved the perception and emotions of our skilled craftworkers, as there were few facts and many unknown circumstances for them to personally navigate on top of continuing to be productive in their professional careers,” Klosterman said in an email.
Belman Homes has the policy that a worker is sent home if they’ve come in contact with someone diagnosed with COVID-19, and can only return with a doctor’s evaluation and clearance, said Belman.
But adopting these new, more stringent measures does not come without impacts of their own.
In the AGC of Wisconsin survey, 62% of contractors said social-distancing and other safety measures have negatively impacted productivity on job sites.
Kievet said a major challenge for Boldt has been figuring out how to sequence its work to adhere to its new requirements. One example is hanging drywall. Whereas two people would previously work close to one another to hang drywall sheets 12 feet in length or longer, a single worker is now instead hanging eight-foot-long sheets.
“We’re having to rethink everything we’re doing in order to get the work done,” Kievet said.
Many projects have been able to continue under the more stringent safety protocols. Some have even seen little to no disruptions due to the pandemic.
Milwaukee-based Cobalt Partners LLC is continuing construction activity at its Allis Yards mixed-use development in West Allis as well as its redevelopment of the former Ernie von Schledorn auto dealership site in Menomonee Falls.
The West Allis project has only seen minor delays, which have come from added difficulties like scheduling inspections, said Scott Yauck, Cobalt Partners president and CEO.
Workers performing demolition and asbestos abatement there are already wearing appropriate protective equipment due to the nature of the work, he said.
Yauck said the hotel portion of the project will break ground within a month or so.
Cobalt Partners’ Menomonee Falls project includes construction of a 33,000-square-foot Ascension health center and small-scale hospital.
“We’re full speed ahead,” Yauck said.
One project it hasn’t broken ground on, and likely won’t for some time due to the pandemic, is The Lokal at 84South, a cluster of local restaurants that Cobalt Partners planned to add to the mixed-use development in Greenfield. Cobalt was working through the financial model for The Lokal when the pandemic hit, said Yauck.
“Small, especially local restaurants like that, it’s tough in good times,” he said. “The fact this occurred certainly has us rethinking what we’ll do there.”
Wangard Partners is also moving forward with its projects. They include the redevelopment of the Eagle Knitting Mills building in Milwaukee’s Walker’s Point neighborhood into the innovation-focused Eagleknit; the 278-unit Tivoli Green multi-family project in Mount Pleasant; and the 149-acre Highlands Business Park in Sussex.
Tivoli Green is slated for an Aug. 1 opening, possibly sooner. Wangard also expects to begin construction this summer on facilities for three companies in the Sussex business park. The firm is also working with a fourth company to relocate there, though Wangard said he wasn’t sure of the timeline for that project. A Kwik Trip store has already been announced for the business park.
The Eagleknit project is moving forward in part because a business locating there is considered essential, said Wangard, though he declined to name the firm.
One upside to the pandemic is that the reduced amount of traffic has made it easier to get materials and equipment to the Tivoli Green site and for crews to perform utility work along the highway at the Sussex industrial park.
“The amount of traffic going by is probably one-fourth of what it probably would be,” Wangard said. “We’re able to get our work done much faster, and (with) less disruption.”
Wangard said there’s been some disruptions in supply chains, particularly with materials made of quartz and granite, such as countertops. A lot of those products are made overseas, and may have to start being fabricated locally, he said. Other materials like concrete and drywall are still readily available.
Looking ahead
COVID-19 will leave its mark on the construction industry, even long after the initial outbreak subsides. Builders and developers have been thinking about how buildings will need to adapt to this new world, and what clients will now be demanding of them.
“This pandemic is going to have an influence on the design of our buildings and spaces,” Babcock said.
Cobalt Partners has been thinking of ways to market Allis Yards’ 320,500 square feet of office space to potential users in the wake of the pandemic.
In preliminary materials provided to BizTimes, the developer emphasized building features such as HVAC air filtration systems, touchless doors and elevators, generous floor areas and common spaces, remote access technologies, larger elevator lobbies and cabs, and flexible spaces that can grow, subdivide or be easily rearranged to accommodate distancing standards, among others.
Belman Homes has also been drafting home designs based on perceived changes in demand that will be brought about through the pandemic, including home-package delivery areas, decontamination rooms, cold-storage centers, dual home offices, home libraries and homeschool centers.
It may be up to the construction industry to help push the economy forward once things normalize. Bukiewicz said construction workers who have continued working through the shutdown period will be frequenting the shops and restaurants that have just begun reopening. And each new construction project commencing means that much more investment in the region.
“What we really need is the developers, the business owners to get back in the saddle and have the confidence to move forward,” he said.
Wangard said one thing he’s taken away from this health crisis and economic disruption is a heightened sense of cooperation in the industry.
“This is something you have to celebrate that when we’re going through very difficult, challenging times,” said Wangard, “that there’s certain individuals, and it’s many of the ones we’re working with every day that are saying, ‘How can I make it easier for you? How can we work on this together?’ The sense of cooperation is back. There’s a healthy respect for each other on the job site.”
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Big Milwaukee-area projects
Despite COVID-19, construction is continuing in the region. Here are some of the largest projects happening in the Milwaukee area:
- Foxconn manufacturing campus: Crews continue work on Foxconn’s massive manufacturing campus in Mount Pleasant. Buildings going up on the site include, among others, a 1 million-square-foot manufacturing facility, a 260,000-square-foot smart manufacturing center and a data center featuring a glass dome. The company said in a recent statement that construction is continuing through the pandemic, and that contractors have implemented preventative safety measures on site.
- R1VER: Brownsville-based Michels Corp. has reached a significant milestone on its R1VER mixed-use development in Milwaukee’s Harbor District. This spring, Michels “topped off” its 210,000-square-foot office building, and work is also underway on the apartment and retail portion of the project. A spokesman said that before the end of the year the office building should be ready for occupancy and construction should commence on a new hotel.
- Komatsu headquarters: Another major Harbor District Project, Komatsu Mining Corp.’s new manufacturing and office headquarters campus appears set to begin soon. The company did not provide an update, but construction permit applications have been filed recently with the city, suggesting the work could be imminent. Plans include a 430,000-square-foot manufacturing building and 176,000-square-foot office building with a 650-stall parking structure.
- Soldiers Home: Work continues on the Soldiers Home restoration project, which involves the conversion of several buildings, including the iconic Old Main, into 101 supportive-housing units for veterans. Madison-based developer The Alexander Co. said rehabilitation work continues and the team is optimistic work will finish in the first quarter of 2021.
- Huron Building: The BMO Tower just opened its doors in April, but it won’t hold claim as downtown Milwaukee’s newest office building for long. Work continues on the 11-story Huron Building. Milwaukee-based J. Jeffers & Co. officially broke ground last May on the new office building, which will be anchored by Husch Blackwell.
- St. John’s on the Lake: Work continues on St. John’s on the Lake’s new 22-story, 422,000-square-foot tower on Milwaukee’s East Side. The project replaces a three-story building that opened on the site in 1979, and includes 50 skilled-care suites, 24 assisted-living suites and 79 independent-living apartments for older adults.
- Bradley Symphony Center: Milwaukee Symphony Orchestra is transforming the former Warner Grand Theater into its new home in downtown Milwaukee. MSO recently installed a replica of the original “Warner” sign this month. The center is scheduled to open in the fall.
