Thank you for sharing!

Your article was successfully shared with the contacts you provided.

CHICAGO-The construction pipeline remained largely stopped through mid-year. While some work still remains available, mainly in terms of build-to-suits, tenant build-outs and building upgrades, overall construction levels are expected to remain extremely low, with spec development almost nonexistent, through at least the next year. As a result, competition for jobs within the construction market has reached an extreme high.

“It’s gotten increasingly competitive throughout the year and I see a lot of contractors that were in one market that are starting to go after projects in other markets,” Bill Birck, president of Chicago-based full-service general contractor Reed Construction, tells GlobeSt.com. “Margins are very tight right now and it’s very competitive between general contractors in terms of general conditions and overhead and profit, and subcontractors as well. From our perspective, the amount of work has increased over the last two months and we’ve seen a pick-up in activity in the 3rd quarter, but I don’t expect it to increase dramatically again from this point forward for probably at least a year.”

This decreased activity is demonstrated in Chicago’s industrial market, where 1.3 million square feet is under development now as compared to more than 10 million square feet under construction just a year ago, according to Transwestern’s mid-year report. The largest project underway now is a 587,000-square-foot build-to-suit in Kenosha, WI for Gordon Foods. While dearth in construction opportunities doesn’t bode well for contractors, the associated competition for jobs presents opportunities for building owners.

“It’s a very advantageous time for owners to go ahead and do work, particularly in building upgrades, especially for them to hang onto tenants,” Birck says. “It’s a very competitive market for building owners to hold onto tenants and one of the ways they do that is through amenity upgrades, such as fitness centers, lobbies and corridors. Building owners are getting a good buy by doing the work now when construction’s not busy.”

Birck says another silver lining to the down economy is the opportunities it creates in terms of personnel. “We look at what kind of positives come out of markets like this and we’ve been able to pick up a project manager and a senior project manager that wouldn’t have been available a year or two ago,” Birck says. “People are the most important asset and being able to pick up people because of this downturn is an upside of the economy. What companies need the most is having those good people behind them to help them grow when the economy comes back.”

The blow the economy has dealt to employment in the country will have an associated impact on the construction market. Jobs and construction go hand-in-hand, Birck says, and a recovery for the construction market in contingent on a boost in employment numbers in the country.

“We’re down millions of jobs in the country and unemployment is high,” he says. “When I look forward to business dramatically increasing to get back to where it was before, we need to have those jobs come back. I don’t see those coming back immediately and it’s going to take some time, possibly a couple of years. That being said, we’ve seen activity picking back up and there is work out there.”

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?


Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.