Development and construction are challenging businesses even without the added complexities and uncertainties posed by the threat of COVID and its economic fallout, but with so many changes resulting from the virus — such as social distancing measures — it’s caused those in the commercial real estate world to have to adapt.
The days of meeting with city officials and community members in person to discuss a proposal are on hold, and instead, developers are turning towards Zoom, Teams, Hangouts, or the litany of other virtual conferencing systems to get their business done.
How has this change in the ability to meet with stakeholders affected new development?
Those who have been able to evolve with the changing times have found that business can not only continue more or less as normal, but can be done so without too much additional burden.
The bigger issue is dealing with reduced schedules of municipal services and the backlog that can come from these disruptions. And in some cases, it’s difficult to get important feedback during the proposal phase before taking plans before a governing body.
“The issue we’re seeing this year more than any is with municipal approvals where a developer would go into the municipal offices and sit down with the decision makers — the mayor, village manager, or whoever it was — and say this is my project, this is what I’d like to get approved,” says Adam Moore, senior regional director with First Industrial Realty Trust about the disadvantages of working with stakeholders over teleconferencing.
“What we’re seeing with COVID is that these conversations are much more difficult to have and a lot less productive on Zoom or whatever it is, so all of a sudden the developer now goes into the city council meeting on Zoom and that’s the first time they’ve gotten any meaningful feedback on their project,” Moore adds about the added barriers the pandemic has caused.
When developers and municipal decision makers are unable to iron out key details of a proposal before taking it in front of a council for approval, not only does it add a layer of complexity to the process, but it can also slow things down considerably, Moore says. If stakeholders are only seeing a plan for the first time at the time of approval, there’s a chance that it could be tabled and sent back to the drawing board.
It’s not just about inconveniencing developers: added delays can change the equation in risk, construction timelines, material costs and investor interest.
But the communities that have made a conscious effort to keep the development and construction pipeline moving forward have done an excellent job at adapting to these challenging times, says Peak Construction’s Mike Sullivan. And in some ways, his experience turned out much different than what he had initially expected.
“I’ve been amazed at how resilient the communities we’ve dealt in have been able to adapt to zoom and remote technology,” Sullivan says. “My fear was that it’d be like when I have to renew my driver’s license and you walk in and it’s a four-hour situation — but instead of a four-hour situation it’d become eight hours.”
Remote conferencing has certainly changed the way business is done, but the fundamentals of the proposal process remain more or less the same, Sullivan suggests.
“I’m not going to kid you, it’s more difficult, but I think that there’s been a hand to come out from the regulatory side that’s much more welcoming from what I was fearful of what might have occurred,” Sullivan adds. “And if you deal with politeness and diplomacy, we haven’t seen it to really have any kind of impact.”
At the same time, Sullivan believes that municipalities still have to do much more than attract new business, especially in a time of stiff competition to keep good jobs in communities. He specifically cites his experience working with the city of Elgin, which Sullivan says has not only been welcoming to new business, but is working to retain the business that’s already there.
“You have to respect and take care of the people who are already in your community, because if you don’t, they’re going to go to another community and you’re going to be hurt,” Sullivan says. “Just attracting new people and giving them deals is not a way to keep the balance that you need to have a healthy society — you want new people to come to the club, but you want people already in the club to feel like they’re being treated fairly.”