Hurricane Dorian spared South Florida but will still cost developers and contractors

Miami beach (Credit: iStock)

Miami Beach (Credit: iStock)

Most general contractors are back to work in South Florida, after securing and shutting down their job sites last week in anticipation of Hurricane Dorian’s arrival. While South Florida escaped the storm’s wrath, developers and contractors saw their costs rise as the days ticked by.

The once-Category 5 storm, now a Category 2, devastated the northern Bahamas in recent days, but its core stayed offshore of the United States, bypassing much of the tri-county area. At least five people died in the Bahamas, although that number is expected to rise.

In South Florida, after developers and builders worked to lock down their construction sites, in some cases bringing down cranes late last week, they began returning to normal on Tuesday. The slow-moving storm paralyzed cities and towns in its path.

Henry Torres, the president and CEO of Astor Companies who recently completed the condo project Merrick Manor in Coral Gables, said preparing and securing a large construction site such as The Plaza, a mixed-use project in Coral Gables, could be very expensive.

“To prep and prepare a project like the Plaza, it could spend a million dollars preparing (for a hurricane),” said Torres.

Sean Murphy, co-president of Coastal Construction, said his construction sites in Miami-Dade County, with the exception of Sunny Isles Beach, re-opened on Tuesday. The company’s Palm Beach office remained closed. The city of Sunny Isles kept construction sites shut down on Tuesday, Murphy said.

The Coastal projects that reopened include Aston Martin Residences in downtown Miami, the Plaza in Coral Gables and the University Bridge Residences project near Florida International University. The Aston Martin Residences construction site had been shut down for three days, according to a spokesperson.

Some sites began preparing for the hurricane on Tuesday of last week, which means that work was halted for nearly a week in some cases. After Thursday, Coastal’s workforce became depleted, Murphy said. And on Tuesday, construction workers were slow to return to their jobs. Murphy expects 75 percent of his workforce will be back by Wednesday.

Shahab Karmely of KAR Properties, who is developing 2000 Ocean, a luxury condo building in Hallandale Beach, said delays from hurricane preparation set the company back about five days in its construction timeline. Karmely also said the company is planning to resume construction within the next two days.

Before a project site can reopen, a project superintendent will assess the site and report any damage. Projects will be re-secured for construction, which means that fences and wind screens will go back up, dumpsters will be moved back onto the sites and more.

In some cases, builders had to lower tower cranes before the storm, which adds to the delays. Whether the general contractor or developer takes on the cost depends on how the contract is structured.

Peggy Marker, president of Marker Construction, said the delays for Hurricane Dorian, which created little to no damage, pushed projects back three to five days. In the tri-county area, Marker Construction has up to 20 projects under construction, including hotels, car dealerships, multifamily, marina and restaurant developments.

For contracts with liquidated damages, Marker Construction will apply for an extension, which means that the company will not get charged for additional days of work but it will have to eat additional costs.

Josh Atlas, an attorney at Saul Ewing Arnstein & Lehr, who is part of the firm’s construction and commercial litigation practices, said the main costs from the missed hurricane are the time and energy spent preparing for a direct hit.

He added, however, there can be indirect costs if the storm makes landfall somewhere else, increasing labor prices and material prices “as resources get spread thin.”

Marcelo Kingston, managing partner of Multiplan Real Estate Asset Management, said the 57 Ocean construction site in Miami Beach will go back to operating normally on Wednesday. Because Moss Construction and its workers are still in the foundation stage of construction, Kingston doesn’t expect the hurricane will have created any delay in completing the luxury condo building at 5775 Collins Avenue.

“Everyone in this town at that level has gone through so many hurricanes. That‘s what makes Florida different,” Kingston said.

If anything, the hurricane impacted sales during the holiday weekend. Multiplan shut the sales gallery down on Friday and expects to reopen it on Thursday.

Edgardo Defortuna of Fortune International Group, a co-developer of the Ritz-Carlton Residences, Sunny Isles Beach, said shutting down that construction site was “a lot less painful” because the Ritz-Carlton is about four to five months from being completed.

“The potential for damage is a lot less when you’re at the stage of construction that we’re at,” he said.

Defortuna said it’s difficult to estimate the cost that the delays will bring because construction workers could make up the lost time before the planned delivery date. Suffolk Construction is the general contractor for the 52-story luxury condo tower at 15701 Collins Avenue. Fortune is co-developing the project with the Château Group.

“If indeed it turns out we’re delayed one week in delivering units, we have a $150 million loan outstanding, so it could be hundreds of thousands of dollars in interest,” he said. “Everything, as little as it seems, does create delays.”

Prefab home builder Connect Homes closes $11M funding round

LA-based Connect Homes said its Series A funding will help expand its patented technology

Jared Levy (L) and Gordon Stott (R) and a prefab home in Culver City

Jared Levy (L) and Gordon Stott (R) and a prefab home in Culver City (Credit: Connect Homes)

UPDATED, May 14, 11:32 a.m.: A startup that aims to streamline the process of developing modern, eco-friendly prefabricated homes closed its first round of financing.

Connect Homes secured $10.8 million in a Series A funding round, the company said. The money will be used to build and expand on what it calls its patented modular technology.

Brick & Mortar Ventures and Virgo Investments led the round. MetaProp — the New York-based venture capital fund and startup accelerator — Almubader Growth Fund and Wells Fargo Strategic Capital also invested.

In September, Amazon’s Alexa Fund was one of the investors in a Series A funding round for another startup, Plant Prefab. That company, which manufactures custom single- and multifamily homes, raised $6.7 million in that round.

Downtown Los Angeles-based Connect Homes was founded in 2013 by architects Jared Levy and Gordon Stott, who previously worked at Marmol Radziner Prefab.

Connect Homes has 10 models of prefab homes that start at around $182,000 for a 460-square-foot home. They can range up to $900,000 for a 3,200-square-foot home. The estimated project budget includes design, production, installation, sales tax and on-site work.

The company completes about 90 percent of the home modules in its San Bernardino factory. It also manufactures accessory dwelling units — so-called granny flats — which have gained popularity as a stop-gap solution to the region’s housing crisis.

Los Angeles officials have also encouraged modular housing as a way to build more affordable housing. In New York, the city Department of Housing Preservation and Development issued a request for proposals for modular construction last year, asking for projects that are “100 percent affordable.”

Construction starts in South Florida drop in October

Construction cranes
Construction starts in South Florida fell 23 percent in October to $1.37 billion, according to a new Dodge Data & Analytics report.
Commercial building continues to outpace residential, due in large part to South Florida’s condo market slowdown. Last month, new commercial starts increased 36 percent to about $720 million, while residential starts declined 47 percent to $653 million, compared to October 2016.
Year-to-date, construction spending fell 9 percent in October to $9.47 billion from $10.4 billion the previous year, according to the report. Commercial starts increased 30 percent to $5 billion, while residential starts fell 32 percent to $4.4 billion.
Despite the consecutive decline in residential building nationwide, home sales in the U.S. rose 6.2 percent month-to-month in October, marking the biggest uptick seen in a decade.
While the condo market may be hurting, commercial sectors, including multifamily and industrial, are thriving as some of the region’s biggest general contractors shift their focus to building properties like warehouses, seaport and airport facilities, and apartment buildings. – Amanda Rabines

Source: The Real Deal Miami