On Construction Post-COVID, Win the Future or Get Swallowed by the Past
The coronavirus has created a crisis where most real estate, design and construction firms have been primarily focused on short-term efforts to keep their businesses alive. But to fully prepare for the months and years ahead, firms need to position their organizations for a time when the crisis has passed, when the U.S. will be embarking on a 30-year, $35 trillion construction boom.
The nature and extent of the COVID-19 crisis will offer significant opportunities to reinvent your business and grow in ways that previously weren’t possible. The question is: Will you be positioned to take advantage of them, or will your organization cling to outdated mechanisms of operation that, by the end of the pandemic, will no longer exist?
As with the aftermath of the 2008 recession, all firms in the real estate and construction community will experience decreases in revenues and profitability. But a few firms will recover faster than most. Those that do will have fully committed to intelligent planning; charting of avoidable, identifiable risks; and hiring a new breed of digitally oriented talent that will garner increasing levels of profitability, while others tread water for years, or even go out of business.
Owners will demand that future project teams use a single platform for not only the construction, but the operations and maintenance, of their facilities. Just as brick-and-mortar stores have been dramatically disrupted by online commerce, so, too, will the preparation of plans and specifications in 2D form, which will finally give way to the use of Building Information Modeling (BIM). This 3D technology enables owners to deploy a complete and coordinated set of construction documents to secure a true fixed price for development of construction budgets.
Workplaces will be designed to account for more flexible workforces and, in the short-term, at least, with smaller footprints, with companies relying increasingly on communications tech to directly couple staff with clients, suppliers and consultants. Workplace innovation will become one of the hottest areas of technology. We are also likely to see de-densification, where older workers and millennials with children depart from urban areas to seek a better quality of life in rural and new suburban areas that will arise throughout the U.S.
Once the pandemic has ended, there will be a multitude of new opportunities, particularly, in regard to infrastructure investment. To address the current economic downturn, Congress will need to agree to multitrillion-dollar legislation aimed at improving our ailing roads, bridges, electric grid, and fund new solar, electric and wind programs.
It is understandable that principals of the architecture, engineering and construction industry are currently focused on seeing their business through the current downturn. According to an IBISWorld U.S. Construction Industry Report, the construction industry worldwide is expected to decline 14.6 percent by year-end 2020 as a result of the COVID-19 pandemic. But needs related to improvements to health care facilities around the world, the redesign of hotels and airports, and large-scale projects, such as convention centers, will lead the way for billions of dollars of new construction.
In addition to the $10.8 trillion the federal government has committed to keep the economy afloat, future government funding or loans that are federally backed will spur the design and construction of projects that benefit local communities and environmental or health-related programs.
As tourism, travel, and the hospitality industry will take longer to recover (in some cases, through 2024, according to industry surveys), consumers will be seeking to populate local entertainment venues, such as public parks and waterways, located within a day’s travel of their homes.
In short, there will be inordinate opportunities for the real estate, design and construction communities to creatively stabilize their businesses, promote their next generation of leadership, and identify existing and emerging markets beginning in 2021.
Only one question remains: Is your organization ready to embrace the post-COVID-19 future, or will it get swallowed by the past? It should be made clear to all AEC principals that the “future” is no far-off idea. The future is right now.
Barry B. LePatner is the founder of LePatner & Associates LLP and the CEO of Insights+ LLC.