Developers proposing fewer projects during pandemic
New starts have slowed, but work continues on construction already underway
The coronavirus pandemic hasn’t stopped construction in Los Angeles County, but it has made it harder to find financing for new projects.
Around 39.5 million square feet of commercial and multifamily properties are under construction, according to the L.A. Business Journal. Another 127 million square feet of projects have been proposed by developers.
Jason Rich, president of the construction firm Snyder Langston, said all of the firm’s projects that were under construction before the pandemic are still underway, but there are fewer new projects than normal.
“All (existing) construction has been going still, but the new starts haven’t,” he told the Business Journal. “There’s a gap in the pipeline.”
The L.A. Department of Buildings and Safety issued 45 percent fewer permits in the second quarter than it did in the same period a year ago.
Some lenders have pulled back from the market. Those that are willing to lend on new development are getting more calls.
Parkview Financial CEO Paul Rahimian said the “flurry of activity” his firm is experiencing could be because other lenders aren’t handing out construction loans.
“We’re seeing more of a demand now than we did pre-Covid,” he said, adding that developers with new projects aren’t concerned about the pandemic because their projects won’t come to market for another two years or so.
Some developers may reconsider new projects. The pandemic has lengthened the preconstruction process, including the permitting process, meaning higher costs.
The vast majority of new projects and those under construction — 135 million square feet of 166.5 million square feet — are multifamily buildings. That’s because of high demand and a shortage of housing in the county. [LABJ] — Dennis Lynch