By Corina Vanek | Phoenix Business Journal
Before the coronavirus outbreak, the volume of construction work for Valley subcontractors was near an historic high, marking a “supercharged” market.
According to Colliers International research, there was $4.3 billion worth of projects under construction in the Phoenix area at the end of 2019. And things picked up where they left off in early 2020, with another $1.86 billion worth of projects starting construction in January and February.
“The momentum of the greater Phoenix market was so supercharged that some will defer their projects but pick them up later,” said James Murphy, CEO of Phoenix-based Willmeng Construction. “Everybody as a group needs to remember how supercharged it was, we just need to avoid overreacting and hopefully not be stalled for too long.”
In the wake of the COVID-19 pandemic gripping the nation, the Phoenix construction industry for commercial real estate is starting to slide. Murphy said some speculative projects and those backed by institutional capital have “drifted,” meaning they have not been canceled, but likely will be delayed until closures and other effects of the virus have subsided.
“Once we’re through this, more than likely they will reassess,” he said.
With workers still on many job sites around town and considered among the “essential services” outlined in late March by Arizona Gov. Doug Ducey, construction slowing may not be seen until projects underway are completed and other planned projects have been postponed.
“Typically, the ground-up construction projects take about 12 to 18 months, so they have a runway,” Murphy said. “But there will be a period of time when there’s not much new construction starting.”
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Related subscriber story:
Phoenix Saw $1.8B in 2020 Construction Starts before COVID-19 (Mar. 28, 2020)