On July 27, 2020, Illinois announced 1,231 new confirmed cases of COVID-19, delivering the Prairie State its sixth day straight with more than 1,200 new cases. This brings the state to over 172,000 confirmed cases and 7,400 deaths. As shown in the drop of two major indicators of the Q2 2020 USG + U.S. Chamber of Commerce Commercial Construction Index, revenue expectations and confidence in new businesses, the construction industry is already severely impacted by the pandemic. Amid project delays, supply chain disruptions, and mandatory shutdowns, some construction firms are struggling just to keep their jobsites open and running.
However, despite these obstacles, the construction industry is poised for recovery in the coming months. Contractors are taking heed of government officials’ warnings and making the necessary adjustments to work processes, safety procedures, and salaries. For example, in Chicago, in spite of the pandemic, industrial construction has reached record highs. In this article, we’ll review this finding, what it means for the construction industry, and how you can position your business for success in the coming months. For construction-related legal services, including service areas of bid protest, contract drafting and review, license defense, and more, reach out to a Chicago construction law firm.
Construction Starts, Speculative Projects, and Leases
Before we discuss the implications of this research in greater detail, let’s review where this development activity is actually taking place. First and foremost, new construction starts broke a record in the second quarter of 2020, with 15 new construction projects totaling a massive 12.8 million square feet. As this brings the total under construction to 27.2 million square feet, this shatters the record for the most amount of space being built at one time in the history of Chicago’s industrial market. It’s worth noting that 70 percent of these projects are built-to-suit compared to the 30 percent built on a speculative basis, which is somewhat of a drastic change compared to when speculative construction overran the construction industry just years prior.
While we’re on the page on speculative construction, it’s worth mentioning that 13 speculative projects were completed during this quarter. This brings the total speculative space to 76.2 million square feet in the current development cycle, despite being outpaced by the demand for industrial space. Regarding leases, a number of submarkets, including the 1-80/Joliet Corridor and I-55 Corridor submarkets, are better leased and have seen significant speculative development. For example, the Central DuPage submarket is 86 percent leased and the I-290 North submarket sits at 85 percent leased. These numbers are expected to increase in the near future as well.
What Do These Findings Mean for the Industry?
What’s next for the Windy City’s industrial market, as well as our nation’s construction industry as a whole, will ultimately depend on whether or not our economy is able to recover from the COVID-19 pandemic. Construction professionals like contractors, subcontractors, architects, and more simply can’t account for whether or not businesses will continue to reopen or be forced to close their doors permanently. However, these findings are indicative of an improving situation.
For example, more and more companies are opting to reshore their manufacturing operations to the United States. Chicago has historically catered to manufacturing activity and will be prepared to accept the benefits of this activity in no time. Additionally, Chicago’s massive population is expected to attract new consumers and retain current consumers for e-commerce and logistics companies, food and beverage companies, and healthcare-related industries. So long as development activity proceeds as it has been, the construction industry should be on track to recovery. For an experienced legal professional who will defend your business against a number of claims, including delay, defect, and acceleration claims, contact a Chicago contractor attorney.
How Can You Position Your Construction Business for Success?
At this point, it’s time for you to address the immediate challenges that the COVID-19 pandemic has presented to your workforce and jobsite and create a detailed plan to gradually return to a new normal as the situation evolves. More than ever, construction businesses must focus on redesigning their strategies and generating resiliency to improve their odds of success in the near future. If there are vulnerabilities in your supply chains, it’s time to look into identifying backup channels and recruiting direct labor.
For collaboration, it’s crucial to look into accelerating the adoption of technology on your jobsite. Remote collaboration will most likely take over as the means of handling contracts with customers, performing inspections, and conducting sales. And finally, above all else, you need to be investing in the creation of a culture of safety. Nothing is more important than protecting against the spread of a virus amongst your workforce. For a construction law firm that will provide your business with the legal expertise it needs to remain lawful and protected in times of uncertainty, contact one of our Chicago construction lawyers.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.