New York City’s Residential Construction Industry Braces for Next COVID Wave
After the city’s mandatory construction shutdown in March, some city contractors reported labor shortages and less work, while others saw unexpected growth.
As COVID-19 cases fell and the city reopened early this summer, New York City’s residential construction industry slowly got back to work. But, the rapid rise in COVID-19 cases might soon mean more restrictions, including a return to only “essential” construction. In fact, on Nov. 19, New York City Mayor Bill de Blasio said closure of the city’s non-essential businesses was no longer a question of “if, but when.”
Following the issuance of New York Gov. Andrew Cuomo’s Executive Order on March 27, halting all non-essential construction activity across New York State, the majority of the approximately 40,000 active construction sites across New York City were ordered to shut down. Already, the New York Building Congress, a 99-year-old membership association for the city’s contractors, forecasts that the non-essential construction shutdown from March to June will have a “reverberating effect” on the market for years to come.
Because thousands of the city’s residential construction projects — namely state and federally funded affordable housing and public housing projects — were able to continue through the non-essential construction shutdown, residential contractors lagged behind their commercial counterparts in feeling the effects of COVID-19. Now, however, residential contractors are experiencing labor shortages and the pinch of decreased construction spending. Indeed, a second lockdown would be detrimental for New York’s construction industry — one of the city’s largest sectors — that has already experienced “millions of dollars in lost wages,” according to the New York Building Congress 2020–2022 New York City Construction Outlook.
While some residential contractors like Martin Barazoda, founder of JC. Martin & Sons Renovation, have lost workers to the pandemic, others like Hans Ingram and Joe Meringolo, co-founders of Rockline Corp., have not. And while some contractors, like Rockline Corp., continue to field calls for new projects, others, like Anthony Fowler, founder of ABF Construction Management, have responded to lower project demand by shifting focus from projects they’ve specialized in for decades to those that qualify as essential — namely, repairs and maintenance necessary to protect the health and safety of building occupants.
“It’s hard for contractors,” Barazoda told prox. “Very, very hard.”
When the pandemic first hit, Barazoda said he had jobs that were put on hold, clients who were not responsive, and projects he was bidding on cancelled. “Suddenly, everything was nothing. Everything was shut down and we had no power over it,” Barazoda told prox. “There was nothing I could do. I had to let people go.”
Barazoda also told prox. about one subcontractor, who he called “one of my good guys,” who went to work for another company after Barazoda had no work for him. “The next thing I knew, through word of mouth, was all the guys, they got sick in the building,” he said, adding, “As far as I know, he’s gone.”
The New York Building Congress forecasts the total number of city construction jobs to drop from over 160,000 in 2019 to 128,000 in 2020. This compounds a problem the construction industry has been battling for years: an aging workforce and a lack of new entrants. “You already had that decline happening,” John Robbins, managing director of U.S. operations for Turner & Townsend, a construction services firm, told prox. Robbins added that workers of near-retirement age have seen the pandemic as an opportunity to exit the workforce early.
When New York City’s Phase 1 reopening occurred on June 8, more than 33,500 non-essential construction sites resumed activity. Barazoda told prox. that while work began to pick up for him in mid-September, compared to last year, it’s still down between 50 and 60%.
The city’s residential construction spending statistics are stark.
The New York Building Congress forecasts a decrease in city residential construction spending from $19.7 billion in 2019 to $12.5 billion in 2022.
Commenting on these projections, Robbins told prox., “I do think some of those statistics are going to come to bear.” Robbins predicts a further decline in new project starts in 2021, and, because of a construction project’s life cycle, a continuing downturn in 2022. “There’s just going to be less project work out there,” Robbins told prox., adding that, with the pandemic, “many clients are taking well into 2021 to decide what they want to do.” Despite his hope that a quick vaccine roll-out could make for a stronger 2022, Robbins said, “If there was a second wave, a second lock down…all bets are off.”
Some city contractors are anticipating shifts in the type of projects they will take on for years to come. Fowler, of ABF Construction Management, told prox. that while he didn’t feel the effects of the industry’s labor shortage, the pandemic did cause him to shift his business focus by changing the type of work he looked for and the kinds of projects he and his crew took on.
When COVID-19 caused all but essential construction to shut down, Fowler knew he could downsize and that ABF Management would survive. Fowler, who is in the brownstone renovation business, explained that he is able to quickly adjust the size of his workforce. “If the amount of jobs that I am working on are small, then I can easily contract to a smaller entity. If I have larger projects, then I have the capacity to expand,” he told prox.
Once COVID-19 hit, Fowler knew he’d have to shift his project focus immediately. “I looked at it and said, this is a time for work on just essential things: roof repair, plumbing repair, electrical repairs, issues in buildings that just need to be rectified to remain stable,” Fowler said. “I’m not saying I got a lot of work, but I was able to function.”
Despite the challenges facing residential city contractors, the founders of Rockline Corp. say they’ve seen growth.
Hans Ingram and Joe Meringolo, who founded Rockline Corp. just before COVID-19 hit, told prox., “In the midst of growing our client base, in the midst of growing our portfolio and building our projects, COVID hit.” But, with a combined 50 years of experience in the residential construction sector, the two weren’t starting from zero. “Our clients were still calling, which is surprising,” Meringolo said. “So, we just continued. We knew we had work once [the city] opened up.”
Still, Rockline Corp. had to adapt to the city’s new construction guidelines, which included strict rules about how many workers could occupy a job site, by downsizing and localizing crews to reduce their footprint.
On June 10, when Rockline Corp. crews began to work again, Meringolo told prox., “That was a really, really big shift for us: to figure out how long a job was going to go with a quarter of the staff.” Another shift was figuring out how to limit their crews’ travel and subway time. “That was a big one for our guys,” Meringolo said. They also had to strategize with clients — now working from home — to build a day-by-day construction plan that worked with their client’s needs. Ingram told prox., “It’s creating a space that they can work in, keeping the noise down…a whole transition everyday from one room to the next. So it’s a lot more work, and again, it’s with less people.”
So far, Meringolo said, Rockline Corp. has not had a single COVID-19 case among its workers.
Still, a lot could change for NYC’s residential contractors during a second wave. Fowler told prox., “If they decide to shut down, then, obviously there’s no way we’ll be able to challenge that.”
Bio: Ourania “Nia” Yancopoulos is a dual-degree graduate student pursuing an M.S at the Columbia Journalism School and a J.D. at the Columbia Law School, where she is the Co-President of the Columbia Law Women’s Association. She covers the money beat for prox., focusing mainly on how COVID-19 has impacted business, industry in New York City. A native New Yorker, and 2016 graduate of Columbia College, Nia is a soon to be triple lion. Hear her roar!
