Construction Starts Lag Amid Pandemic

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A new survey by the National Multifamily Housing Council (NMHC) finds that most apartment developers are facing construction delays as COVID-19 continues to impact permitting and the supply of materials and labor. The percentage of companies reporting construction delays inched up to 56 percent, compared to 55 percent in NMHC’s previous survey two weeks earlier, while among that group, the proportion seeing delays in construction starts jumped 11 percentage points to 70 percent.

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The survey collected responses from 84 leading multifamily construction firms from April 9 to April 14, following up on an initial survey that concluded on April 1. The fresh data on construction starts suggests that the virus and its ripple effects could worsen the country’s affordable housing crunch, which already posed huge challenges heading into the pandemic in markets from California to New York City.

A minority of respondents—28 percent—said that a lack of materials was affecting their construction operations, up from 24 percent at the end of March. Forty-four percent noted that labor constraints related to the outbreak were weighing on operations, rising from 41 percent in the last survey.

Permit hurdles

Approvals remain a problem, with more than three-quarters of the companies facing construction roadblocks reporting delays in permitting. Construction is ongoing in states that have deemed it an “essential” service, but some jurisdictions have tightened their definitions of essential projects. In New York State, Governor Andrew Cuomo halted most residential and commercial construction at the end of March, carving out exemptions for crucial projects including affordable housing.

Of the 56 percent of companies that saw construction delays, 40 percent reported delays in building due to a construction moratorium—down from 62 percent in the previous survey. Labor availability issues affected 44 percent of those surveyed, while 28 percent faced a lack of materials, but few saw any increase in prices of materials.

On a more positive note, three-quarters of respondents indicated that they had adopted new strategies to deal with the current challenges. Popular measures included the use of technology to replace in-person transactions, staggering shifts to reduce on-site exposure, and sourcing materials from alternative locations.