Construction Sites Fight To Stay Open As Coronavirus Ravages New York

Construction is still considered essential work in New York City, but with the state on lockdown as its number of coronavirus cases and deaths skyrockets, it is getting increasingly difficult for developers and contractors to keep the projects running.

The Durst Organization halted development of its residential skyscraper on Queens Plaza North in Long Island City this morning because of a shortage of workers showing up, a company spokesperson said. Other projects have shut down because of outbreaks of the virus.

In his daily briefing Thursday, Gov. Andrew Cuomo said he is reassessing if all construction really does meet the “essential work” criteria. 

It makes for a shifting and challenging environment for the city’s developers and builders. Right now, all construction is threatened by potential frozen supply chains, outbreaks of the diseases on-site and a diminishing workforce. But sources say ramped-up safety measures as a precaution against an outbreak and new rules to keep workers safe are crucial. Most are predicting extra effort in keeping projects running, but say any form of slowdown will cause major pain to the city well beyond the virus's impact. 

“The stakes are high for everyone, and it’s a balance … but construction is an industry that can be done and there is a public benefit to keep it going,” said Joy Construction principal Eli Weiss, who has six housing development sites in the city, most of which are affordable.

All of those sites are still up and running as of Thursday afternoon, he said.

“The question is, ‘Do we want to wake up in a year from now with a tremendous shortage of affordable housing?’" Weiss said. "It’s very hard to catch up once production slows down.” 

The State Of Affairs

Cuomo deemed construction essential in an executive order last week, exempting the industry from restrictions imposed on most of the workforce. The move forced many employers to send home all of their in-person workforce as the number of New Yorkers to test positive for COVID-19 increased rapidly. But, this essential status could change.

Cuomo said today he would consider limiting the type of construction that is exempt, after safety concerns on sites were reported throughout the week. 

“As the law is presently, construction, in a general manner, should continue unabated for the time being,” Herrick Feinstein LLP partner Brendan Schmitt, a construction law expert, said Wednesday. ”With the fluidity of the situation, what we’re seeing today, we could wake up tomorrow in a different universe. There is the potential for large-scale changes in a rapid period of time.” 

Some in City Hall said last week they disagree that all construction should be considered essential. Two City Council members called for a moratorium on construction in a tweet and de Blasio said some construction, such as luxury condominiums projects, should pause amid the public health crisis. De Blasio said he would ultimately defer to the governor’s order. 

Manhattan Borough President Gail Brewer penned a letter to Cuomo Thursday asking him to reconsider the industry’s exemption, citing safety concerns and noises impeding those working from home. 

“The construction and real estate industries, together with building trade groups, will surely continue to fight for the exemption, but the foregoing political developments certainly warrant consideration,” Schmitt said.  

Lawyers, developers and contractors within the industry concluded that the governor’s order applied to all construction, from public works to luxury condominium development, and have continued under that assumption. 

But projects began to face supply and labor shortages as the week began, several sources told Bisnow in interviews throughout the week. 

Construction workers began ringing alarms about conditions on some sites, including a worker on a luxury condominium construction project who rode 50 floors in a packed elevator to get to his work site, The City reported. 

At least two major sites have been suspended after workers tested positive for COVID-19, including two Skanska sites at Moynihan Train Hall and LaGuardia Airport. New York Buildings Congress CEO Carlo Scissura said "more and more" sites are shutting down. 

"Many interior contractors are shutting down for two weeks, we’re hearing growing number of these shutdowns," he said. "Workers' safety continues to be the top priority here, so some sites have closed as a precaution to protect workers."

New World Order 

Some builders are still pushing hard to keep operations running, reworking safety measures as they go.

At Silverback Development’s three operational construction sites in New York City — including the $150M condominium project at 359 Second Ave. — work is still going. Company founder Josh Schuster said they now no longer allow more than three people in an elevator or in any one unit, everyone has to keep a minimum of 6 feet from each other and gloves and masks have to be worn at all times. 

“A lot of these people need these paychecks, as long as the environment is controlled and safe,” Schuster said.

One carpentry company has already told 400 people to stay home as a precaution, Schuster said, and he expects there could be more disciplines that won't be able to supply workers because of cash flow or safety reasons.

“I think this is setting a new precedent, moving forward, if an employee is sick we need to find out why," he said. "But New York is very resilient and I am confident we can get through this.” 

The Real Estate Board of New York has issued guidelines that it established with the Building and Construction Trades Council for construction sites that suggest crew sizes should be reduced and interaction should be limited. The guidelines include not taking “adverse action” against anyone who refuses to show up to a site if they reasonably fear contracting COVID-19. If a site is shut down because of the virus, the employer can temporarily lay off workers, however. 

“Nobody has any interest in anyone forcing anyone to go to work and potentially give their friends' wives the virus,” Skanska spokesperson John Schiumo said. “Even if there is a procedure in place, people are going to use common sense to protect their friends and their friends' families.” 

Weiss said Joy Construction's sites already have strict safety measures in place, which made implementing increased measures an easier lift.

“The infrastructure for safety on sites was there, and in some ways easier than in other industries," he said. "But now it’s everything from mandatory masks, gloves, taking people's temperatures at the site. The [subcontractors] know that anyone who is sick doesn’t come to the site. 

"We are doing everything to keep people from congregating, we are trying to keep everything outdoors and doing rigorous cleaning.” 

A slowdown in construction, industry sources said, could jeopardize the city's access to housing, put more people out of work and further slow down supply chains dependent on consistent demand.

“If there is a complete shutdown, [it will affect] the supply chain,” Associated General Contractors of New York State President Mike Elmendorf said. “You don’t flick a switch. It’s a lot more complicated than that.” 

A full stop of construction would lead to issues in rolling out affordable housing, said Christopher Edwards, director of design and construction at Jonathan Rose Cos., an affordable housing developer. 

“I think the number of housing units in any given year would definitely dip, and I think it may also create difficulties for contractors and affordable housing owners to systematically and effectively roll onto the next round, because of some of the strain on resources and things like that," he said Thursday afternoon.

Edwards later said conditions had rapidly progressed throughout the day, and sent this statement:

“In light of the outbreak of COVID-19, protecting the health and well-being of our residents, staff, partners, vendors, and contractors is more important than ever. We are working each day with industry partners to prepare and respond to the evolving situation with that as our guiding principle.”

Like most of the world, developers are trying to follow a set of rules that seems to shift by the hour. In the near-term, they are focusing on keeping projects operating — or shutting down if they no longer can, in the case of the Durst Organization.

But further out are questions swirling around about how lenders will view delays, what insurance companies will pay for, and if the critical hit to the economy will shut some sites down for good. 

“I am hearing from developers that banks are getting aggressive, decreasing lines of credit, they are worried about a reset of the underwriting requirements,” FullStack Modular President Roger Krulak said. “Projects have slowed down … There is a difference between a pause and a reset.”