The Construction Dive Outlook on 2021

Here's some perspective to ring in the new year: “2020 bad, 2021 good.”

That’s the takeaway from construction observers looking ahead at the turn of the year, even as the bleakness of the pandemic surge and record deaths in the U.S. continue to weigh on their minds.

“My expectation is that the U.S. economy will shrink between 4% and 5% in 2020,” said Anirban Basu, chief economist at the Associated Builders and Contractors during a year-end webinar, where he also made the good-bad prognostication quoted above. “But we’re going to come back hard in 2021.”

There are reasons for hope, such as a second coronavirus vaccine being authorized for emergency use and shipped in recent weeks and the $900 billion relief package recently signed by President Trump. But the drivers of optimism among those who track construction are also more specific to the space, while encompassing fundamental shifts in markets and processes that will lead to more broad-based development activity in 2021.

Just listen to Tom Stringer, managing director for site selection and business incentives at professional services firm BDO, whose job is to find suitable development sites for corporate clients who want to build new facilities and offices.

“Site selection tends to be a leading indicator in the economy that businesses are starting to think about capital investments, and our phones have been ringing,” Stringer said. “So if your readers are the folks on the contracting side, well, they’re about to get busy, too.”

Stringer isn’t alone. According to a post-election survey of engineering and construction executives conducted by Deloitte, 68% of respondents characterized the business outlook for the industry as somewhat or very positive.

“We do see pent-up demand sitting out there as we end out 2020 and come into 2021,” said Michelle Meisels, Deloitte’s engineering and construction practice leader.  

That widespread optimism among construction executives is grounded in the reality of several factors – some positive, some less so – that are poised to shape construction in 2021. Here are six of the top factors that will influence the industry in the new year:

Subs on the skids

The coming months and beyond could be particularly hard on subcontractors, and the contractors who will need them once projects pick up again.

“The market is just getting much more competitive for subcontractors, and therefore, sadly, some will go out of business, especially the smaller guys,” Meisels said. “General contractors may need to self-perform a lot of work they would normally sub out, and build those capabilities in house.”

That’s the road Michael Bordes, president of New York City general contractor AA Jedson Company, is already on.

He said during the pandemic, he’s had to pivot from the restaurants and gyms he built previously to focus on affordable housing projects that were still considered essential. But he’s also flipping the script and limiting his risk from subs by handling more work in house.

“We’re self-performing most of the construction tasks ourselves because the subcontractors that are out there are having a very hard time,” said Bordes, noting that affording insurance is one issue subs are struggling with. “The people we’re dealing with may not be transparent about saying we're having trouble with assurances or we're short on labor. If you keep it on your payroll, you at least have 95% control.”

Staying safe

Meanwhile, Bordes said he’s focused on keeping his workers safe and healthy by combating complacency and continually reinforcing mitigation strategies, which has become more challenging as the pandemic has worn on. And while he hopes his workers will sign up to get the vaccine, he says he’s not planning to force them to do so if they have reservations about taking it. 

“We know masks work. We know sanitizing on a regular basis, washing your hands and not touching your face works to not get this disease,” Bordes said. “But while we would suggest to employees that it’s important to get the vaccine, we don’t feel we can force them. Some are still cautious about what the side effects might be in the future.”

While the Equal Opportunity Employment Commission, as well as a panel of construction lawyers, recently determined that employers could require workers to be vaccinated with certain exceptions, the implications of forcing workers who object to get inoculated over potential safety concerns is sure to be a challenge for contractors in 2021. 

Hiring for the surge to come

With subs being squeezed, contractors will also surely be challenged to hire enough workers, even in house, when the pent-up demand of mothballed projects are put back into the marketplace once the pandemic is brought under control. At the same time, observers say companies aren’t doing so yet, since many new projects still aren’t coming to market, given the explosion of coronavirus cases going into 2021.

"The story there is that projects are still getting pushed to the right, so companies are not hiring unless they have a job to put someone on,” said Patrick Jones, who leads the architecture, engineering and construction division at Raleigh, North Carolina-based recruiting firm Orion Talent. “They’re not just out there building bench strength.”

He says while experienced superintendents and estimators are still in high demand, companies don’t necessarily want to hire individuals they would have to train and invest in while jobs are still scarce. “We see that hiring for what I would call the entry level roles has slowed,” Jones said.

At the same time, nonresidential construction has only regained 58% of the jobs it lost since the beginning of the pandemic, according to Ken Simonson, chief economist for the Associated General Contractors of America. In November, he noted, the industry’s unemployment rate was 7.3%, not seasonally adjusted, with 732,000 former construction workers idled. 

On its surface, that may indicate contractors will have an easier time hiring coming out of the pandemic. But that’s still not likely to be the case, according to Basu.

During his economic forecast in December, Basu asked his audience of more than 1,000 participants how many intended to increase staffing in the coming year, with more than half responding affirmatively. That’s in line with the ABC’s Construction Confidence Index from November, which indicated a majority of firms intended to increase staffing in the next six months.

Given the demand for projects, along with many firms trying to hire workers whenever jobs are finally released in 2021, contractors may experience labor challenges all over again.

“I would predict that many of you will continue to suffer difficulty finding truly motivated and skilled workers,” Basu told his contractor audience. “One thing that has happened in past recessions is that many construction workers who lost their jobs left the construction industry altogether.”

Infrastructure on the agenda

On the bright side, there should be some increased infrastructure and building projects on the horizon.

This is especially true with President-elect Joe Biden pushing his Build Back Better initiative, which is envisioned as a broad spending program that could benefit contractors on multiple fronts.

"He's looking for a multitrillion-dollar infrastructure bill that includes a broad definition of infrastructure, whether it's surface transportation, aviation, waterfront, Army Corps, civil works, flood control mitigation projects, clean drinking water, renewable energy projects, K-12 public school construction or broadband," said Jimmy Christianson, vice president of government relations at AGC. "There's a lot in there."

Meisels also sees opportunity for contractors under that kind of program in 2021.

“Infrastructure and public utility projects could possibly see a sharp rebound,” Meisels said. “If the administration comes through and directs funds toward that, you’d see projects that are driven by this government spending.”

Office, manufacturing, distribution projects ahead

Part of that jump-start may already be happening on the private side. Take the activity Stringer, the site selection executive, has been seeing lately.

His clients are calling and expressing interest in expanding offices in tertiary markets away from where their headquarters are in densely populated cities. But they’re also looking to build manufacturing and distribution facilities, to help alleviate some of the vulnerabilities the pandemic brought to light in the just-in-time supply chain. 

“The supply chain issues that were rampant during the start of the crisis really presented significant business opportunities for the unsexy old ways of things like inventory and building warehouses,” Stringer said. “Hopefully, we’ll never be without toilet paper again.”

Indeed, the explosion of e-commerce has caused a boom in the sector. “The most obvious change of the year has been robust development of warehouse and distribution facilities to meet the sudden rise in e-commerce,” said Robert Smietana, CEO at Chicago-based industrial developer and consultant HSA Commercial Real Estate.

For example, CRG, the real estate development and investment arm of Chicago-based Clayco, plans to identify industrial development and acquisition opportunities in cities such as Atlanta, Chicago, Philadelphia, St. Louis and Columbus, Ohio. 

“It’s no secret that e-commerce has been a tailwind to industrial real estate over the last cycle,” said Kevin Scott, vice president of investments and developments for CRG. “But e-commerce users still represent just a fragment of the overall industrial user base. Specialized uses such as cold storage and data centers continue to grow, and we are excited about opportunities there.”

Renewed focus on the environment

Data center construction is one of two top-growth industries for Jones, the construction recruiter, to find specialty contractors. The other? Utility-scale solar.

“Big players in utility-scale solar have been on a growth pattern, and are really kind of hitting their stride in this next year,” Jones said.  “Obviously, the new administration would be beneficial to that as well.”

For example, Fort Lauderdale, Florida-based Moss Construction highlights several of the utility-scale solar installations it has worked on in recent years in its portfolio, and promotes on its website that it is "helping our nation move towards a cleaner energy future."

That growth has come as renewable energy is becoming cheaper than any new electricity capacity based on fossil fuels, according to sister publication Utility Dive. 

But that opportunity for contractors also illustrates the widening awareness of a broader range of companies focusing on the environment.

For example, contractor giants AECOM and Fluor said on recent conference calls they were experiencing increased interest in their environmental services practices from clients, while Jacobs announced it achieved its net zero carbon goal for its operations and business travel in 2020, with aspirations to be carbon negative by 2030. Balfour Beatty and Lendlease also recently announced carbon-cutting initiatives. 

“The construction industry is under tremendous pressure to improve their energy use,” said Meisels. “But I also think that construction companies that build capabilities to support green building standards and sustainable efforts by their clients are going to be positioned to thrive. You can't not address this if you want to be a leader in this space.”

Last year saw some construction projects stalled because of stay-at-home orders related to the novel coronavirus or just general uncertainty about what the long-term impact of the global pandemic would be on the economy.

However, U.S. contractors like Mortenson, AECOM Hunt and Clark Construction are finding pockets of higher-than-usual activity in some cities. Here are five metro areas, each in a different region of the country, where upcoming construction activity this year will be worth a watch.

Miami

The sunshine and friendly business environment have always attracted newcomers to the Miami area, and the pandemic doesn’t seem to have slowed that down. In fact, according to Peter Tuffo, president of Suffolk’s South region, the company's Miami business is brisk.

When one takes the financial advantages of living in Miami into consideration — no personal state income tax and relatively low property taxes — and then throws in a climate that allows year-round outdoor activity, he said, the region continues to be a draw.

“The quality of life Miami offers,” Tuffo said, “has really been a big factor in the fact that construction has stayed steady, if not exceeded our expectations.”

The type of projects Suffolk has going on right now in the Miami-Dade region runs the gamut. High-end condominiums like those at the 52-story Ritz-Carlton Residences in Sunny Isles Beach, Florida, is an example of the luxury accommodations that transplants from the Northeast are scooping up, but Suffolk also has its share of market-rate rental apartment projects as well. And with those new residents come K-12 school projects, Tuffo said.

Live-play-work projects appeal to those moving in from more urban areas, he said, but Suffolk also has found opportunity in tourism-related construction like a new Virgin Voyages cruise terminal at the Port of Miami and two new downtown Miami CitizenM hotels.

And as far as the pandemic is concerned, Tuffo said, the approach officials in Florida have taken has played an important role in the market’s resiliency.

“I think the local jurisdictions, as well as the state government, have done a very good job of allowing things to continue in a safe manner,” he said.

Buffalo, New York

Buffalo, New York, might not be the first city one thinks of when it comes to construction activity and cities to watch. Major metros like New York City usually grab most of the attention, and no matter which way economic winds are blowing, there’s usually something going on there, said Richard Cavallaro, executive vice president at Gilbane Building Co.

However, more people and businesses are discovering that cities like Buffalo have a lot to offer, and that’s driving construction. Buffalo has everything a great city needs, Cavallaro said, like an airport, excellent healthcare options, public transportation, a reasonable cost of living and a robust cultural scene.

Businesses also have access to an educated workforce coming out of area schools like the University at Buffalo.

“When you have all those kinds of elements,” he said, “[they create] a boiled-down version of the big city.”

In fact, Cavallaro said, Gilbane has added staff in Buffalo in order to better take advantage of the opportunities there.

The types of projects Giilbane has going on in Buffalo are wide-ranging and include the 50,000-square-foot Albright-Knox Art Gallery expansion, a major renovation at the Erie County Medical Center and recently completed projects that make up the Northland Workforce Training Center.

Cavallaro said he’s also seeing investments in affordable housing in Buffalo, as well as in the life sciences due to the city’s proximity to major universities.

Despite what many people think, the Buffalo weather is not an impediment to growth in the area.

“They handle snow so well, it’s a way of life there,” he said.

Chicago

The COVID-19 pandemic that has many Americans working remotely has put pressure on the country's data center capacity and Chicago is primed to accommodate new arrivals in the data center sector. Chicago, in fact, is already one of the top U.S. locations for data centers, according to RE Journals.

The city is centrally located in the U.S., has a ready talent pool thanks to the numerous nearby colleges and universities, is relatively free from the threat of natural disasters and has access to a competitively priced supply of electricity. The state also offers data center developers tax benefits for building there.

Even with the pandemic, the number of megawatts under construction in the Windy City doubled in 2020, said Andy Stapleton, vice president and general manager at Mortenson's Chicago office. Megawatts, a measure of electric power, are seen as even more important than square footage when it comes to data center development. 

One of Mortenson’s clients, QTS, has built hundreds of thousands of square feet of data center space in Chicago, but with so many businesses turning to online work, there’s more than just the demand for data driving construction. Chicago has also become a hub for distribution centers for online purchases, including cold storage facilities for food and beverages, thanks to its transportation infrastructure.

In addition, faced with the problems wrought by the novel coronavirus, Stapleton said, the city came together and worked out a commonsense COVID-19 recovery plan against a backdrop of extreme lockdown policies in some areas of the country. Chicago has also been No. 1 for corporate relocations and expansions for the past seven years.

“I think of Chicago as being the most affordable big city with a global reach,” he said. “When you compare it to the coasts, you can really do a lot in Chicago.”

Austin, Texas

Austin, Texas, has not been affected as much as other U.S. cities during the pandemic, said Monte Thurmond, division head for the Texas and South regions at AECOM Hunt.

This is mostly because there was so much activity going into the pandemic and, since then, some companies have announced that they were headed to Austin as well as to other areas of the Lone Star State to take advantage of relatively low taxes and a business-friendly environment. Austin also offers plenty in the way of entertainment, as well as social and recreational opportunities, which are a big draw.

An example of this is the University of Texas' $338 million Moody Center Arena, which AECOM Hunt broke ground on at the end of 2019. The privately funded 15,000-seat venue is a partnership between the university, concert promoters Live Nation and Austin-based C3 Presents and facility developer Oak View Group. 

“I won't say that there haven't been projects affected in Austin because there certainly have been,” Thurmond said. “There were projects that were either paused or simply just decided not to get built because the developer or the ownership groups didn't think that particular project made sense anymore. However, there are still other projects that are still finding their own legs for their proformas to work in Austin.”

Certainly, office and hotel projects have taken a hit in the Austin market, he said, as they have all over the country. But even those projects are moving forward if they are part of larger mixed-use projects.

Residential is definitely driving those projects, he said, and AECOM Hunt has seen continuing demand for both high-rise and mid-rise for-sale and for-rent units.

Seattle

Seattle, said Eric Olson, vice president of Clark Construction’s Western region, is in a unique position to ride out whatever the pandemic brings, given that the city is home to either headquarters or major operations for corporate powerhouses like Boeing, Weyerhaeuser, Microsoft, Amazon, T-Mobile, Facebook and Google.

Construction spending has been negatively impacted this year, he said, and the general consensus is that 2021 will bring much of the same, although it’s hard to predict if activity will decline or hold steady before the growth that is expected in 2022.

“We’re planning our business around that, and I’m hoping for the best while we’re managing our business to respond to the current market,” Olson said.

One of Clark’s projects, the Washington State Convention Center, is about $300 million short of financing, reportedly from a pandemic-related decrease in the lodging tax.

Reasons for optimism about the Seattle market, however, include recovering education and residential sectors, as well as high demand for the products generated out of the Seattle area, he said. In addition, there are not many metros that offer such ready access to so many outdoor recreational opportunities.

Then again, the need for new office space was one of the major drivers of commercial construction in Seattle. Will that ever come back given that so many are working from home?

Not everyone will be able to or will want to work from home when the pandemic is over, Olson said, and there will be opportunities in how those spaces operate in the future, whether that’s changing a layout to accommodate more flexible work schedules, creating more private work areas or converting them to another use altogether.

“Renewal comes in all shapes and sizes,” he said, “so these office spaces are not just going to sit empty. They’ll be revitalized.”

Dive Brief:

• Contractors expect 13 of 16 construction categories to shrink in 2021, with only alternative healthcare facilities, warehouses and water and sewer facilities eking out small gains.
• They also don’t anticipate the business environment to return to pre-pandemic levels at least until the second half of the year, according to the Associated General Contractors of America’s 2021 Construction Hiring and Business Outlook.
• On a webinar covering the results of the survey last week, which canvassed 1,300 construction firms in November and December, contractors lamented the difficulty of finding new projects and the challenges of keeping the ones they already have on track due to COVID-19 mitigation and productivity losses.

Dive Insight:

The results of AGC’s survey underscored how much work remains before contractors will see any return to “normal” in construction. 

“2021 looks to be a difficult year for many construction firms,” said Stephen Sandherr, AGC’s CEO, during the webinar. “The pandemic is prompting many projects to be postponed or canceled, forcing contractors to take longer to build projects and increasing the cost of construction."

Contractors on the call noted the challenges they had in 2020, and the increased struggles they see ahead in 2021.

Michael Kennedy, CEO of St. Louis, Missouri-based design-build contractor KAI Enterprises, said that while existing bond programs had allowed his firm to continue to land jobs, he expected 2021 to display a stark delineation among contractors. 

“We're going to see the haves and have-nots,” Kennedy said. “Are you on those big jobs? Are they already pregnant and moving? That’s the haves. The have-nots are the people who are still waiting for some developer to close on something, and unsure about the job.”

Bob Schafer, president of West Palm Beach, Fla.-based road builder Ranger Construction Industries, said that even though unemployment in many sectors is high, he still has challenges hiring skilled workers in Florida, where much of his business remained on track throughout 2020 as people from the Northeast flocked to the state.

“Someone suggested to me that now that all these people now are unemployed, I should have no problem finding folks,” Schafer said. “But you can't put a bartender or a waitress on a motor grader.”

He also noted increased costs on the materials side, including steel, cement, liquid asphalt and aggregates.

Rosana Privitera Biondo, president of Kansas City, Missouri-based Mark One Electric Company, said the unanticipated cost of dealing with COVID-19 had significantly impacted contractors’ bottom lines.

“I might have 40 or 50 different general contractors who have a different protocol and requirement,” Biondo said. “We’ve spent a fortune on that, and it’s money that we’ll never see again, that comes right out of the bottom line. You’re talking about hundreds of thousands of dollars.”

Ken Simonson, chief economist for AGC, said the net reading of most construction categories — the percentage of contractors who expected the dollar value of projects to shrink versus expand — was overwhelmingly negative.

Simonson said that 44% of firms reported they had projects canceled in 2020 that had not been rescheduled, and that companies anticipate a continued bloodletting in 2021.

“Even for this first half of 2021, 18% of firms report that projects scheduled to start between January and June have been delayed, and 8% report projects scheduled to start in the first half of this year have been canceled,” Simonson said. “As a result, few firms expect the industry will recover to pre-pandemic levels any time soon.”

At the same time, while the tone of the call was starkly pessimistic, Biondo and others said they would get through 2021 by streamlining operations, cutting costs to conserve cash and finding jobs wherever they can.

“We’re going to have a challenging year,” Biondo told participants. “But I’m a contractor who’s been in business a long time, and you can find work. It’s your job to find work. It’s my job to make sure I work my team. So we dig in deep.”

With a new year comes a new round of project completions, or at least the meeting of project milestones. From factories to mass timber buildings, the focus in 2021 will encompass a wide variety of construction undertakings as contractors fight to overcome the economic uncertainties brought on by the coronavirus pandemic.

Here are a few of the projects that Construction Dive editors will be closely watching in 2021:

Tesla Cybertruck factory

Austin, Texas

In the summer of 2020, electric car and battery manufacturer Tesla started construction on a new $1.1 billion facility outside Austin, Texas, where it will build its new Cybertruck vehicle and also produce electric batteries. The 2,000-acre property, which was previously slated to be the site of a massive, mixed-use project with 12,000 residential units, is located near Austin-Bergstrom International Airport and could be complete as early as May.

According to other media reports, drone flyovers have revealed that construction on multiple buildings within the Tesla complex seems to be occurring simultaneously, which differs from the phased approach the company took with its gigafactory project in Nevada.

The Tesla project is part of a wave of businesses relocating to Texas, Austin in particular. A friendly business environment and low taxes paved the way for approximately 30 new business relocations in 2020 alone, according to the Austin Chamber of Commerce. In fact, the steel supplier that Tesla plans to use for the manufacturing of its Cybertruck is also building a new $1.7 billion plant in Sinton, Texas, about 180 miles away.

Central Subway Chinatown Station

San Francisco

The Central Subway project is a 1.7-mile-long downtown extension of the San Francisco Municipal Transportation Agency's (SFMTA) Metro T Third Line that is expected to improve transportation between some of the city's densest areas. The Chinatown station, which should be complete late this year, is one of four new stations being built along the extension's route.

The station, which will be named for political activist Rose Pak, won a 2020 International Tunneling and Underground Space Association (ITA) award for its successful engineering and design through an area that is not only historically sensitive but one with narrow streets, several utilities and poor ground conditions. Tutor Perini is the general contractor, with Frontier-Kemper Constructors Inc. providing excavation and support services.

Enbridge Line 3 Pipeline Replacement Project

Minnesota, Wisconsin and North Dakota

Enbridge's Line 3 pipeline runs almost 1,100 miles from Edmonton, Alberta, in Canada to Superior, Wisconsin. The energy giant now wants to replace the 1960s-era pipeline with a $2.9 billion new one that mostly follows along the original route, including 364 miles in the U.S. — 337 miles in Minnesota, 14 miles in Wisconsin and 13 miles in North Dakota. The company maintains that the replacement is necessary to restore maximum operational ability, reduce future maintenance, reduce environmental and other disruptions along the route and to maintain high safety standards.

The Wisconsin segment of the project was completed in 2017, permits have been secured for North Dakota and the U.S. Army Corps of Engineers issued a construction permit for the Minnesota portion of the project in late November. However, groups opposed to the project have filed suit in federal court to stop construction alleging that the Army Corps did not consider all environmental issues when it approved a water quality permit. 

While at least the Minnesota portion of the Line 3 replacement project will live or die on its own merits, Enbridge is likely looking at the $8 billion Atlantic Coast Pipeline project as an example of the worst-case scenario. After years of pressure and legal action by activists, Duke Energy and Dominion Energy canceled the Atlantic Coast project earlier this year.

T3 Bayside

Toronto

Slated to include the tallest office building in North America made of cross-laminated timber, which in and of itself provides its own cachet in the design and development world, the T3 Bayside project in Toronto will measure almost 138 feet high when completed this year.  The project consists of two buildings, both featuring exposed timber and open floor plates, that will offer flexible office, co-working and event space, as well as ground-floor retail and public space.  Developer and owner Hines said each building will also have a LEED-Gold certification.

Hines has six other T3 (timber, transit and technology) buildings in its portfolio — one in Minneapolis, one in Atlanta, one in Denver, two in Australia and another in Toronto. All of them feature mass timber construction, which is considered a sustainable building option when compared to steel and concrete. Rather than generate carbon emissions during the production of steel and concrete, carbon is sequestered in the CLT panels instead. 

Purple Line Light Rail

Maryland

The $5.8 billion, 16-mile light-rail project that aims to connect the Washington, D.C., suburbs of Maryland survived multiple lawsuits intent on stopping construction, but the costs resulting from the related delays and the subsequent withdrawal of lead contractor Fluor finally ground activity to a halt in September. 

However, 2021 will likely see major progress on the Purple Line after all. The Maryland Board of Public Works approved a $250 settlement that will be paid to contractors in response to change order claims. Major construction will resume, according to The Baltimore Sun, once the project finds a replacement design-build contractor to replace Fluor. In the meantime, the Maryland DOT and the Maryland Transit Administration will oversee and move forward on some aspects of construction.

Pensacola Bay Bridge

Pensacola, Florida

The new year will likely see a continuation of the rush to repair and reopen the recently completed Pensacola Bay Bridge in Pensacola, Florida, after unsecured barges smashed into it during a hurricane this past summer. In its latest update, the Florida DOT said it expects the bridge to open to traffic in March. In December, another barge broke loose, becoming lodged between private docks near the bridge. How the barge escaped its moorings is under investigation.

This year could also see a resolution to the legal disputes over the economic damage the bridge's closure allegedly did to small businesses in the area. As of Dec. 15, approximately 70 businesses had filed suit against general contractor Skanska USA Civil Southeastern but Skanska has asked a federal court to limit its liability in accordance with maritime law.

200 Amsterdam

New York City

A New York Supreme Court judge is expected to either uphold or overturn a lower court's ruling that the developers of the 52-story luxury condo building at 200 Amsterdam in Manhattan must shave 20 stories from the building's height in order to comply with local building codes. Local neighborhood groups were successful in arguing that the city's building department should not have used full and partial tax lots in determining the building's allowable height.

If the judge rules that the building must lose 20 stories, it's possible that other buildings permitted using the same method of determining maximum allowable height will suffer the same fate.

Denver International Airport Great Hall

Denver, Colorado

Denver International Airport took over construction of the $770 million Great Hall project in November 2019 after it scuttled the $1.8 billion public-private partnership with a Ferrovial-led consortium. Disagreements over costs, management and project details led to the airport's decision to terminate the contract for convenience and instead use the services of general contractor Hensel Phelps.

Since then, the airport has issued several construction updates, the latest of which pegs the completion of Phase 1 in late 2021 and the start of Phase 2 this coming summer. The work that will be complete this year includes new airline ticket counters, widening of balconies and upgrades to mechanical, electrical and plumbing infrastructure.

As the U.S. enters the mass vaccination phase of the novel coronavirus pandemic, the physical threat of COVID-19 could soon be behind us. Those in the construction industry, however, will likely see reminders of the virus in their daily work for years to come through design and new building features meant to maintain social distance and create safer living and working environments.

Some of the biggest changes will be seen in spaces where people are most likely to congregate, including offices, hotels and multifamily spaces. Here, Construction Dive breaks down how each type of structure is likely to change due to COVID-19 miitgation strategies and what contractors need to know:

Offices: An emphasis on collaboration

After years of using an open plan design for new offices and conversions, said architect Brad Simmons, managing partner at KAI Enterprises, many office building owners could revert back to closed offices and cubicles but with an eye toward flexibility to accommodate potential temporary or permanent reductions in an on-site workforce.

But architect Lesley Braxton, principal at the Atlanta office of architectural and design firm Perkins+Will, doesn’t anticipate a major move away from collaboration-centered design just yet.

“I think everybody is thinking of the home as the private office,” Braxton said, “and then the office as the place you go for collaboration.

“So, I don’t think it’s going to get more compartmentalized. I actually think it’s going to get less compartmentalized.”

A $26 million Chicago office building that opened this summer is one of the first in the country to contain features designed to address COVID-19 safety concerns. The 90,000-square-foot Fulton East (shown above), which was under construction when the outbreak hit, has been engineered for maximum social distancing, touch-free operation and air and surface sanitization.

Bob Wislow, CEO of Fulton East developer Parkside Realty said that when it comes to office design, he foresees a move away from large floor-plate buildings filled with multiple companies on each floor sharing bathrooms, corridors and public areas. High-rise buildings with crowded lobbies and long waits for elevators will become less desirable as well, he said.

Each floor of Fulton East has only three columns, enabling flexibility in office design to easily accommodate social distancing guidelines, including two distinct wet column areas providing the opportunity for two separated cafes and kitchens. Corridors and restrooms are not shared among tenants and each restroom has one fixture more than Chicago city code mandates. 

Other health, safety and wellness enhancements include nonshared 9-by-27-foot private outdoor balconies on each floor, a hands-free elevator system and an airPHX air and surface sanitization system that the company claims reduces viruses, bacteria and mold on surfaces and in the air.

Hotels: The switch to self-serve

Hotel work, said My-Nga Lam, design principal at Lucien Lagrange Studio in Chicago, has slowed down because of COVID-19, but some developers have indicated that they want to move forward with their projects as residential buildings that can be used as Airbnb properties and then converted into extended-stay hotels in the future.

Even before the pandemic, brands like Marriott’s Moxy Hotels were moving away from traditional food services, such as cooked-to-order breakfast or self-serve meals on an open buffet, toward secure pantry offerings — with grab-and-go sealed food items — doing away with the need for dedicated food prep spaces or kitchens, said Joan Sizemore, interior design director at BKV Group.

Designing common areas for flexibility and multiple uses, she said, will also be important, as will ways to reduce and arrange seating areas to control how close guests can get to each other if necessary.

Architecture firm Leo A Daly's recent white paper says that as with offices, hotel owners and developers will put a greater emphasis on health-related features such as high-performance ventilation systems and antimicrobial finishes to heighten guests' wellbeing and safety. 

This shift to health and wellness offerings will generate an influx of new and retrofit work for U.S. contractors in the near future, co-author Mark Pratt, vice president and global hospitality practice leader at Leo A Daly, told Construction Dive.

“Contractors can expect a lot of retrofitting work needed immediately,” said the architect. “For example, a full-service Marriott or Hyatt with carpet in rooms will need solid flooring that feels and looks cleaner. Getting rid of shower curtains and going to glass doors is another consistent change."

He suggested that hospitality contractors put together "coronavirus retrofit packages" for various levels of hotels. Those retrofit packages might also cover flooring in hallways and public spaces, replacing countertops and built-ins with antimicrobial and antibacterial finishes, along with adding high-tech filters to HVAC systems. Materials typically used mostly in health are facilities and commercial kitchens — stainless steel, porcelain, solid surfaces, glass — will become common in hotels, so Pratt cautions construction companies to source vendors of those types of materials now.

Indoor/outdoor dining or gathering spaces with air curtains to moderate climates for guests will also take on a new importance, he said, even in colder places like the Northeast. 

“Brands have been guiding this change of blurring the lines between inside and out,” Pratt said. “But we see the definition of even more public spaces including a curtain wall that opens them up to the outdoors and brings more fresh air inside. In general, there will be increased air movement and exchanges in all spaces bringing more outdoor air inside."

Multifamily: More space

For the multifamily projects that Lagrange has on the books, more people working from home doesn’t necessarily translate to a change in design as much as it does a continuation of a shift that had already started before the pandemic, Lam said.

“The kind of features within residential buildings that have gained traction in the past before COVID are now much more of a priority,” she said.

This includes home office space and private outdoor areas for each unit, Lam said. The extra space added back into units does not mean owners are doing away with shared building amenities but are creating flexibility should COVID-19 or some other event require tenants to spend more time at home.

What Lam said Lagrange designers are also seeing is less density — fewer units — in residential buildings, both for-rent and for-sale, but that trend isn’t necessarily driven by the coronavirus. It’s also a result of many properties becoming “more gracious” in their design, she said.

With a decrease in density, that extra space, she said, can flow through the building and provide more room for waiting areas and vestibules. That doesn’t mean, however, that large projects with shared amenities like basketball courts and daycare centers are going anywhere anytime soon.

“I think it’s going to, maybe, be thought about differently,” Lam said.

As with office space, there will be a flexibility component, she said, so that large, open indoor and outdoor spaces, for example, can be subdivided with partitions or with modular furniture.

Other considerations

It's obvious that no matter the building type, there are certain elements that will likely change in all types of buildings, such as products like touchless entries and sensors, Simmons said, that allow people to safely navigate through building lobbies, doorways, bathrooms and other internal and external spaces without coming into contact with too many surfaces.

This means that designers, said Braxton, will likely rethink the texture of the materials they choose as well and lean toward those that are easily cleaned. In fact, the industry could be in store for a copper shortage because of its natural antimicrobial properties.

Building owners are already rethinking how they approach their new and existing air handling systems as well, Simmons said, and the Leo A Daly study predicts that air handling will be a main focus of pandemic-era spaces. It says that several types of air containment and sanitization systems used in hospitals will become more mainstream in sectors such as hospitality, including:

• Negative-pressure air handlers.
• High-performance ventilation.
• Antimicrobial, antibacterial and/or UV light sanitization. 
• Outdoor air exchangers. 

Finally, Simmons said, COVID-19 could impact building regulations and industry guidance, just as the Americans with Disabilities Act forced changes in the 1990s.

The International Code Council has already formed a task force to evaluate whether current building codes and regulations help prepare occupants and communities for disease-related threats. The task force, which includes the National Environmental Health Association, will then offer up recommendations for changes that reduce the risks presented by pandemics.

“The truly smart designers in the world are looking at [the pandemic] as a place to pivot and challenge our norms,” Braxton said. “And I think in the next five years, we'll see more startups than we've ever seen. They're going to focus on health, well-being and changing what it means to be in the workforce.”

With a new year comes a new round of project completions, or at least project milestones. From airports to office buildings, the focus in 2021 will encompass a wide variety of construction undertakings as contractors fight to overcome the economic uncertainties brought on by the coronavirus pandemic.

While many large American projects are on the radar, some contractors that work in the U.S. also have major jobs underway in other countries. Here are a few international projects that the Construction Dive staff will be closely watching:

Hong Kong International Airport expansion

Contractor: Balfour Beatty

Location: Hong Kong, China

Cost: $1.6 billion

In August, Balfour Beatty announced that its joint venture, Gammon, was awarded a four-year, roughly $1.6 billion contract to expand Terminal 2 at Hong Kong International Airport, by the Airport Authority Hong Kong.

Gammon will be responsible for work on the main Terminal 2 building and construction of interconnecting bridges, mechanical and electrical works and associated roads. 

The expansion of Terminal 2 forms part of the three-runway system project at the airport, which, upon completion, will allow for arrivals and departures from one terminal and increase overall passenger capacity. No completion date has been announced.

Victoria Cross Tower

Contractor: Lendlease

Location: Sydney, Australia

Cost: $1.2 billion

In July, Lendlease secured final development approval for a major transit-oriented commercial building in downtown Sydney, Australia. The 42-story tower will have room for up to 7,000 office workers inside approximately 600,000 square feet of premium office and retail space. 

Beneath the tower, the retail space will connect with the Sydney Metro network, making it the biggest public transport project in Australia. The metro will be incorporated heavily in the tower’s design and development, according to the press release.

The project is on a three-year construction timeline, beginning early this year.

Al-Zour Mega Refinery

Contractor: Fluor

Location: Al-Zour, Kuwait

Cost: $16 billion

Fluor is leading the joint venture with Daewoo Engineering and Construction and Hyundai Heavy Industries that is working to deliver two engineering, procurement, fabrication and construction packages for the highly complex Al-Zour Refinery project in Kuwait. When finished, the refinery is expected to be one of the largest in the world and process 615,000 barrels of oil per day, more than doubling the nation’s processing capacity.

The JV was awarded the contract in 2015, and the first 14 of 188 prefabricated modules for the project arrived in Kuwait in June 2018. As of September, the JV had completed and handed over many facilities to the project owner.

Red Sea International Airport Expansion

Contractor: AECOM

Location: Saudi Arabia

Cost: Not disclosed

In December, Los Angeles-based AECOM signed with the Red Sea Development Co. to oversee work on the Red Sea International Airport Expansion project, Global Construction Review reported. U.K. architect Foster + Partners designed the expansion.

Announced in 2017, the Red Sea Development tourism project will cover 13,100 square miles on the Red Sea coast, and include attractions like coral reefs and dormant volcanoes across an archipelago of 90 islands. TRSDC hoped to award $2.7 billion in construction contracts by the end of 2020, Bloomberg reported.

Work will begin this month and is scheduled for completion in 2022, as part of plans to expand the airport by 2030, according to Global Construction Review. 

P180 Office Building

Contractor: Skanska

Location: Warsaw, Poland

Cost: $94 million

In Warsaw, near metro stations and bus stops, Skanska is constructing the P180 office building. When finished, the building will comprise 15 floors and offer about 344,000 square feet of leasable space. 

The building will be constructed in accordance with the WELL certification guidelines, which means the building will meet a number of strict criteria related to health, well-being and comfort at work, according to a release. It also will apply for LEED certification and the Building Without Barriers certificate.

Construction started in Q3 2020 and is scheduled for completion in Q3 2022.

The following is a guest post from attorney Jeffrey Kozek, principal at Marlton, New Jersey-based construction-focused consulting firm Resolution Management Consultants, and professional engineer E. Mitchell Swann, managing director at Resolution Management Consultants.

2021 will certainly be an interesting year in commercial construction as trends that had been on the horizon meet the impact of the pandemic.

That also means it will be even more important for architects, contractors, engineers and owners to frequently revisit plans as the industry adapts to ongoing changes so that they can better reduce their likelihood of facing litigation.

The following trends and topics are some that we believe will have the greatest impact on commercial construction in 2021:

COVID-19 safety measures on site: Construction work has continued during the pandemic based on the requirement that work will adhere to health and safety precautions being implemented to help limit the spread of COVID-19. Although the execution of parameters like distancing, staggering shifts and providing proper (personal protective equipment) are likely to impact projects’ cost and schedule, these measures are critical for the protection of all workers on site, and ignoring them could result in fines, shutdowns or even litigation. 

More payment disputes and bankruptcies: Not only will on-site work see the effects of the pandemic, but supply chain delays, pricing increases on materials and project funding shortfalls, to name a few, are likely to lead to claim and payment disputes. Further, many small businesses have had to declare bankruptcy during this period, complicating payments and project completions for many owners and contractors whose work has been disrupted. 

Court closures: Another impact of the coronavirus has been court closures, with many state and federal facilities shutting down for weeks, if not months, beginning in March. This not only delayed the progress of numerous cases and projects, but created a backlog that has only slowly been addressed throughout the year. 

With parties on all sides looking to recoup the lost time and/or cost from the pandemic as well as their case, some will opt to settle to more quickly resolve these matters.

Designing structures for air handling: In facing an airborne virus, strong evidence shows the importance of ventilation air system effectiveness in reducing the transmission rate of infection in sort of a “dilution as a solution to pollution” approach with a finite indoor biological point source. Yet, increased ventilation needs will also increase equipment sizes and operating energy costs for heating and cooling. 

This should increase the attention to, and consideration of, dedicated outdoor air systems and demand-controlled ventilation so that the quantity of ventilation air supplied is responsive to the population being served.   

Focus on green building: Green buildings often focus on indoor air quality and the health of occupants. In the COVID-19 context, that focus area is a natural fit for reducing potential paths of transmission. Verification of performance such as through the U.S. Green Building Council's LEED program will take on an even more significant presence on the green building stage. 

Wider adoption of technology: The construction industry has often been slow to adopt technology, but one of the more impactful ways American companies are beginning to change their approach to projects is with Building Information Modeling. Properly developed and implemented BIM strategies can enhance team communication, coordination and “what if” collaboration during design and construction. 

BIM tools can also greatly help an owner with on-going maintenance and operations – both of which will have a heightened profile in the post-COVID world.

More modular building: Already, more ... contractors report using prefabricated or modular construction techniques and assemblies on projects, and those numbers only stand to increase. As the technology advances, these techniques can greatly improve efficiency and quality control, reduced construction safety risk and, in the age of COVID, better control over workforce virus exposure due to ‘social distancing’ and related transmission risk.

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