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Steve Griffin, KSL

Commercial construction in Utah at strong pace despite pandemic

By Jasen Lee, KSL | Posted - Nov. 21, 2020 at 8:07 p.m.



SALT LAKE CITY — The coronavirus outbreak's impact on the Utah economy has been varied, with major layoffs in the spring, followed by a slow but relatively steady recovery in the summer in numerous sectors, including construction.

And even with many employers allowing workers to perform their job duties remotely to avoid a COVID-19 spread, the construction industry has maintained a solid pace as building projects continue, particularly in the commercial sector.

"Certainly there are certain sectors of our economy there that are suffering more than others, (like) hospitality, hotels, airlines, restaurants, shopping malls and office can be classified in that to some extent as well," said Gary Ellis, president of Jacobsen Construction, a Utah-based firm specializing in commercial construction. "Office (construction) has definitely slowed down. People are still trying to figure out whether people will come back or not and what does that look like in the future."

Jacobsen is currently involved with several projects along the Wasatch Front, including Kensington Tower, West Quarter Tower and Liberty Sky Tower in downtown Salt Lake City, the new Primary Children's Hospital in Lehi as well as the renovation and restoration of the historic Salt Lake Temple of The Church of Jesus Christ of Latter-day Saints.

Ellis said the pandemic will likely bring about some changes in how buildings and workspaces are designed in the near-term future, with fewer high-rise projects and added spacing to avoid crowding among co-workers.

"Whereas before, people were trying to cram everyone into smaller and smaller spaces, you may see actually larger office buildings in some cases," Ellis said. "Where the floor plan is of actually larger size so that they can spread people out a little bit and give people a little bit more room."

He said that while some organizations may choose to allow employees the flexibility to work remotely more often in the future, there will eventually be a time when people come back to their collective workspaces even if it may look a different than before the pandemic struck.

Construction continues on the West Quarter, a multiuse development that will feature resident living, retail space and a hotel on Wednesday, Nov. 18, 2020. The development is located at 100 South and 300 West. (Photo: Steve Griffin, KSL)

"People are going to try and get very creative and try and provide workspaces that bring confidence back to their employees (to show) that they can provide a safe space for them to work," he said. Once a reliable vaccine is found and individuals can return to the workplace, employers will likely develop a hybrid strategy where employees can work in the office a few days and remotely as well with the aim of reestablishing a strong company culture among the workforce, he said.

Meanwhile, other industry observers also believe that rebuilding culture will be among the top priorities when the pandemic eventually subsides and people attempt to regain a sense of workplace normalcy.

"It's not going to be how it was the previous years, but in the office space I don't believe that you can could maintain a corporate culture and maintain your employees from a Zoom call on a considerable basis because you just lose that sense of of togetherness," said Jordan Wall, senior executive vice president with Colliers International, a global commercial real estate firm with offices in Salt Lake City. "What you create with people, the collaborative nature — you just lose that (working remotely).

He said companies will need to work diligently to reestablish the camaraderie that may have once existed before the outbreak occurred. As for the development of commercial office space over the next 12 months to 36 month, he said it may be quite a while before that sector regains the strength it had prior to the pandemic.

"Office is gonna have a big adjustment, in my opinion, and office is in a wait and see mode to where you're not going to see any speculative development coming forth in the foreseeable future," Wall said. "So any of the large developers that you typically see that would go in on a speculative basis are not going to do so with a few minor exceptions."

On the other hand, he said building in the industrial sector has stayed strong and continues to be robust even through the worst of the pandemic, due in large part to the development of large fulfillment centers for big online retailers. With so many people avoiding the potential for exposure to COVID-19, the need for giant fulfillment and distribution facilities has remained particularly strong and is expected to stay that way for the foreseeable future, he added.

"We're at the crossroads of the West, you can get those deliveries and we've become that hub," Wall said. "That's why the industrial sector (is so hot), today Amazon has now grown to 6 million square feet in our market and there's a number of other providers just like that are continuing to grow in our market."

He said with demand for industrial space so high, that sector will continue to grow. However, on the office side, he said the story is quite different.

"Office is going to taper off (next year) with select projects that are going to break ground, but it's not going to be of the robust nature that we saw over the last seven to eight years," Wall said.

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