Construction: Virginia’s Quiet, Strong Man

Scene from Micron’s $3 billion construction project in Manassas. Photo credit: Inside NoVa

By Peter Galuszka

For all the complaints about the COVID-19 pandemic in Virginia – the shut-down restaurants and (temporarily) closed beaches – one industry has been working steadily and quietly all along – the state’s construction sector.

Builders haven’t missed much of a beat since the “state at home” orders started going out a couple of months ago.

In Pentagon City, works still progresses on the two, 22-story towers for Amazon’s new eastern headquarters. In suburban Chesterfield County near Richmond, workers toil adding new drain pipes and four-laning once- rural roads. Four-story apartments overlooking Swift Creek Reservoir are taking shape for the over-55 crowd.

At a loud and garish protest next to the State Capitol against Gov. Ralph Norham’s work-stoppage plans last month, Mark Carter, a contractor from Hanover County, made his views known. “We‘re still working,” he told me. “I’m not for Trump and I’m not a Democrat. People need to work.”

In Virginia, some are. After all, New York state and Boston stopped construction work due to the pandemic.

As The Washington Post reports: “While shuttering many businesses to try to slow the virus’s spread, officials in the District, Maryland and Virginia have designated construction as “essential,” along with hospitals, grocery stores, banks and a handful of other businesses. All three jurisdictions have also allowed private construction, including home building and commercial developments, to continue.”

That bit of wiggle room, along with an 8.5 month-long backlog of orders at the start of the pandemic locally (according to the Richmond Times Dispatch), have kept thousands of Virginia builders on the job. Current figures aren’t available yet, but as of last year’s fourth quarter, there were more than 248,000 people involved in construction, according to Richmond-based Chmura Economics & Analytics.

Such activity hasn’t broken much of a stride, but it still goes largely unnoticed against the devastation ravaging other economic sectors such as hospitality and tourism.

There are other shining examples as well, such as logistics which are busy shipping on-line orders since stores will open only in a few days. At the same time, the food processing industry shouldered primarily by minority workers, have taken huge hits in the Shenandoah Valley and the Eastern Shore.

Taken together, this is what makes the pandemic so bizarre and hard to understand. In Northern Virginia, residents actually have petitioned Clark Construction of Bethesda, Md. to quiet down the construction noise at the Amazon site in Pentagon City, according to WTOP radio.

Construction workers are supposed to use hand cleaner and follow ordinary social distancing rules, but not always, apparently. The LiUNAI, a trade union with 3,000 members in the greater DC, area has received complaints that safety rules aren’t being followed, according to the DCist.

How long will the busy times last? Who knows? Obviously the workers will be charging through their back orders. Mark Hourigan, owner of a Richmond construction, recently had 35 work sites from Hampton Roads to Charlottesville, according to the Times-Dispatch. That should be enough for a while.

One building sector that is at work today and might create even more jobs is renewable energy. According to Charlottesville Tomorrow, the newly-passed Virginia Clean Economy Act, which calls for much more renewable power, could soon be creating 13,000 new jobs a year.

“While it is too early to say exactly how COVID-19 will impact our industry, it’s safe to say we are in a much stronger position than we would be without the VCEA,” added Cat Strumlauf, a spokesperson for Apex Energy. Strumlauf also sits on Charlottesville Tomorrow’s Board of Directors. “This landmark legislation provides much-needed certainty for the industry in what is increasingly an uncertain time,” she says.

Why haven’t we heard much about this? We could blame the Mainstream News Media, but (HOT FLASH!), it’s already been in the MSM.

It could be that wait staff and bar owners have – correctly – shouted out their dire plight. Perhaps critics of Donald Trump, and I enthusiastically include myself, want to draw attention to his utter incompetence.

It could also be that the Right Wing Echo chamber wants to dump on Gov. Northam for his successful progressive legislative reforms, such as the VCAE, ratifying the Equal Rights Amendment and freeing up voting procedures. They have been trying to paint him as some kind of crypto-fascist beach-closer who is forcing us to wear masks.

Take your pick. Meanwhile, if you want a construction industry thrill, mark your calendars for May 30. On that day, Dominion Energy is going to blow up and demolish its old downtown headquarters building on Cary Street in downtown Richmond.

The utility asks that you don’t get too close.

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18 responses to “Construction: Virginia’s Quiet, Strong Man

  1. Yep. We had a long punch list on this 14 year old “new” place, and have had lots of estimators and installers coming through. Another job starts tomorrow. That was a good decision. My son in law the renovation contractor has stayed busy, and the big problem early on was government inspectors were afraid to come to job sites.

    And thank you Governor for rejecting Mayor Stoney’s silly request to further confuse everybody with a dumb Phase O.5 relaxation only for Richmond. (His building inspectors were the most obstructive.)

  2. James Wyatt Whitehead V

    I can support your claim about the construction industry Mr. Peter. My mother has a very successful business in Fredericksburg. March and April were the two best months in the 33 year history of Commonwealth Lighting. In particular residential housing construction are very robust. The industry leaders such K Hovanian, Van Metre, and Pulte are not only building homes they are selling. They seem to have developed effective rules to keep the job sites safe too and are strict about enforcement. Industry leaders are already attempting to anticipate what comes next with ideas such as reduced square footage and green homes. Another interesting side effect are the lighting manufacturers. Most of this is done in China. Wuhan too. Not anymore. Those factories are being located to other nations such as India, Mexico, and believe it or not the USA. As for the comments on Donald John and the right wing echo chamber…I am going to steer clear.

    PS: I can hook you up with a deal on that new kitchen ceiling fan you always wanted. I will even hang the fixture for you free of charge.

  3. You’re making my point. We were never in a lockdown. If you want to know what a lockdown looks like revisit the Chinese policies in Wuhan. What we had in Virginia was pretty typical. The big companies that make the big campaign contributions stayed open while the Mom and Pops who don’t make such contributions were shuttered. So much for so-called progressive politics.

    My problem with Northam is that he is a more than willing liar. One early whopper was his claim that he never knew his plantation owning forefathers were slave owners. You can’t live on the Eastern Shore of Virginia or Maryland and fail to see the disgraceful residue of slavery. There are still standing slave quarters. This is the home of Fredrick Douglass and the Underground Railroad. How did Northam think his ancestors’ fields were tended? By drone?

    From there he went into his infanticide tailspin, his lying about the blackface / klan robes / Coonman story. And now the dog ate his mask and forgot what 6 feet meant. Pathological.

    The man is a typical member of the plantation elite who sees two sets of rules – one for him and other members of the elite and another for the “little people”.

    The dishonesty runs deep with Northam. He pushes legislation that has Dominion charging one set of customers more so they can charge another set of customers less. The alternative of a transparent tax and wealth transfer payment apparently did not appeal to Coonman the Con Man. Why be honest when you can hide new taxes. Pathological.

    The Republicans in Virginia are no better. Anybody who thinks Tommy Norment can be trusted needs to have their vision tested and their head examined. Meanwhile Democrats like Chap Petersen offer some hope for honesty and true reform.

    The key for Virginia is to stop electing members of the old guard who slither around the back rooms of Richmond lining their pockets and treating the citizens like children to be fleeced and conned. In other words, stop electing people like Ralph Northam.

    • “What we had in Virginia was pretty typical. The big companies that make the big campaign contributions stayed open while the Mom and Pops who don’t make such contributions were shuttered. So much for so-called progressive politics.”

      This is a most important point, and its just as I predicted way back in March. We have succeeded brilliantly in severely wounding much of the livelihood and independence of America’s heretofore successful main street middle class. This includes those who own, operate, and work on America’s main streets and local businesses serving their communities, said to employ upwards of 5o% of all Americans. These businesses keep the fabric our communities together and prosperous places worth living in as healthy, vibrant, independent, and stand alone communities. The ripple affects of this intentional and/or mindless destruction has already profoundly wounded America, and the damage done and yet to be done, will haunt us and our fellow citizens for generations. It will also further concentrate power and wealth in the elite. Meanwhile many politicians by their actions appear not to give a thought to what they wreaking on their citizens. Or there is method in their maddness.

  4. Construction in the Fredericksburg region does not appear to have missed a beat – and sales of homes still are good but new construction runs on load money and they pay it back once they get the houses built and sell them and that’s when we’ll know how damaged the economy really is – at least in our area.

    We have about 50-60k of NoVa commuters…A good number are working remotely but quite a few are still headed north in the morning though I’m sure Transurban is taking a hit on tolls.

    Trivia – CO2 is now in short supply which means BEER and SODA might have shortages ALL because of the slow-down in driving… read all about it:

    https://www.fooddive.com/news/carbon-dioxide-shortage-could-threaten-beer-soda-and-seltzers/576468/

  5. Funny but last week I was at my dentist having work done for a crown. In the middle of that he was told that out of staters wanted to give the asking price his house that day. He’s retiring. In Richmond, the problem is that there is very little inventory for houses. I should have put that in the story but I was going through one of my Trump rages and forgot

  6. This is good article.

    Regarding ongoing construction –

    To stop ongoing commercial office building construction midway is akin to stopping an open heart operation. The patient then is sure to die on the operating table. Construction loans without construction ongoing hemorrhage money until the patient dies, simply because there is no way to get the patient off the table alive.

    Now here, in today’s case, the question remains, can the new tenant, and or design built owner, pay the tenants rent or the owner’s carry cost post construction. This now is a very pregnant question.

    Amazon’s construction loan likely today is the most secure in world history. Indeed, at rate we’re going, that company likely now has better credit than the US government.

    So Amazon is amazing exception to normal rules that apply to others in today’s Topsy – turvy world.

    So what does the future hold for most other unfinished commercial buildings on completion? This is huge question today. An even bigger question is how and when new projects will start?

    Remember that many already built and leased commercial office buildings are surely right now headed into an highly speculative future. Many are, or will be, sucking wind without sufficient income revenue sufficient to pay existing debt.

    Look for many defaults, and major restructuring. Many, even most, tenants likely want big rent abatement, downsizing of space, or out leases altogether, under act of God escape clauses. Plus market demand for new and newly vacant commercial office spaces for now has evaporated. Who wants to bail out these folks in these times?

    Vultures are circling.

    In commercial office space, many are way out now into Indian Country, beyond all points of return. Check out Custer’s Last Stand to the tune of the Eagle’s Hotel California, in many formerly hot markets. Rural Virginia, here we come, big time.

    PS – Green Energy is dead for the foreseeable future unless we want to stamp, seal, and deliver our own suicide, which apparently many of us do.

    • Now, we know too why money, including debt money, has been intentionally made so cheap. The current Federal Administration’s handling of today’s financial challenge triggered by this nationwide lock-down of the American economy is nothing short of brilliant. And it is hardly mentioned, given the gross ignorance and bias of the main stream media. We can thank American higher education for that widespread ignorance.

  7. Reed. I do not get your point. Money’s been cheap for years. Will it tighten soon? When?

    • 30 year fixed residential mortgage fell to lowest rate ever as I recall, some 2.75% or less a few days back, thought inched up since, given flood of defaults, and lenders forced to give payment holidays.

      Remember late 1970s, it hit some 21% in that recession, into early 1980s even. You recall those days, Peter, Of Wine and Roses?

  8. Thanks! Is the commercial real estate rate following? I am sure these projects had been the pipeline for some time and the key is what the pandemic does to future financing

  9. Peter says: “I am sure these projects had been the pipeline for some time and the key is what the pandemic does to future financing.”

    Financing is only part of it, a part that depends on many other things as well. So, for example, there are projects in Virginia that have been in the pipeline for 30 years, and never yet built, including one that was poised to be built, buy now might not anytime soon, due to covid 19.

    In a nut shell, the viability of a construction start for a large commercial RE depends on:

    1/ Market, and
    2. Permitting, and
    3. Financing.

    These three critical elements in turn depend on Confluence of Developer timing, strength and skill. Remember too all real estate is unique in itself. This magnifies holistic nature of bringing all these disparate elements, all speculative, together with confluence.

    And some real estate is more unique than other real estate. This holds particularly true in the Northern Virginia cases you mentioned, as to particularities there that might not apply anywhere else. Hence, the blessed nature of Amazon deal, and its deal makers, just in time for ensuing plague. Well Done, ladies & gentlemen!

  10. Thanks, Reed. One of my best high school friends is a commercial real estate lawyer in Maryland and I think he’d have the same view

  11. Now, Microsoft is coming to town… coincidence?

  12. James Wyatt Whitehead V

    My mother’s lighting business is preparing for new residential construction to crater in late August. She has a schedule for deliveries to new home job sites on a large calendar. This sort of thing is usually projected months in advance. There are no new deliveries on the calendar after August 8th. Normally that is full and packed by now all the way to Christmas. 47 people work there. Half will be gone by Labor Day. They don’t even know it is coming yet. Economic numbers are not looking good in the present. Just wait until the second half of 2020.

    • Housing developments where a tract of land is being developed by one or more developer entities – get their loans first – then build as much as they have approved loans for.

      In theory, they start paying the loan back when the houses are occupied and the buyer gets their own loan.

      So far, down Fredericksburg way – construction is continuing not stopping and the paper reports that new home sales are good.

      But the question is – is new investment money going to be available for developers to start more projects?

      It’s not that money is not there – there’s a bunch of it waiting in the wings and loans are dirt cheap. It’s a question of whether or not the folks who have that money believe if they loan it for future projects that they get it back – with interest!

      Someone knows or thinks they do…. 😉

  13. Oh but I can READ like you !

    😉

    want me to give a crap-load of links like you do?

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