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Originally Posted by the urban politician
For the biggest cities that have specially been spanked hard by the pandemic (NYC, Chicago, perhaps SF) and have effectively had their central cores "stunned" by the economic downturn, I'm thinking that this is the BEST time to start a new highrise project.
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Let's be clear. SF is NOT and never has been a COVID "hotspot". The city has had about 6 deaths per 100,000 population so far (51/850,000) compared to NYC with about 27/100,000. To the degree the city has been "spanked hard" by the pandemic, it's because it was shut down hard and early, and never actually reopened. This accounts for both the economic distress and the low number of cases.
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Hell, start building in the sector that got hit the hardest (hotel, perhaps office?).
People are avoiding transit. Office vacancies are rising. Hotels might as well have roving man-eating zombies in them, they're so empty. Shops and restaurants are gone belly up.
The construction supply line goes dry and then--pop--by next year or perhaps a bit later, there will be a huge amount of pent up demand for all of these sectors. Given the typical 2 year or so timeline on most big projects, now would be a great time to kick off a new project in these types of cities, if you can land financing.
In a sense, banks are really picking the winners and losers here. If they give you a huge loan, you will win the jackpot in about 2 years.
Thoughts?
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Construction, including of hotels, seems to be proceeding apace in SF in spite of the economic conditions you described. I'm not aware of a major project that has been halted or slowed by COVID (there is one very major project that seems to be being slow-walked for other reasons--Oceanwide center).
But in terms of your general point, since I believe COVID will be well in hand by next summer--certainly long before any project begun now could be open for occupancy--I agree with you that COVID is no reason to hold up anything and, if building costs have declined, maybe a reason to get going.