By Barry Waldman
If you think there has never been a year like 2020, you might be right. But Charleston Southern University President Dondi Costin points out that our nation has seen elements of this year in the past. We started the year like 1974 with an impeachment, morphed into 1918 with a pandemic, experienced an economic crash like 1929 and then fell into 1968 with social unrest.
“I had been under the impression that 2020 meant clarity of vision,” he said. “2020 has been anything but clear vision.”
The pandemic and its economic reverberations have been disruptive to every business in every sector. As the bellwether for the rest of the economy, the construction and commercial real estate industries provide a window into the region’s future as it re-emerges, slowly and gingerly, from the COVID-19 shutdown.
The Business Journal livestreamed its Power Breakfast on Wednesday with panelists Steve Dudash of Thomas & Hutton Engineering; Chris Fraser of Avison Young commercial real estate; and Chappy McKay of Trident Construction addressing the challenges and opportunities facing business.
First, the bad news, from McKay: There will be future COVIDs, with different year numbers attached, because coronaviruses are out there. The good news: We will be much more prepared for it in the future. We have learned so much, he said, not only about handling a pandemic but about diversifying the supply chain, adjusting employee schedules, equipping staff for remote work and maintaining corporate culture in a teleconference world.
All three panelists reported that the worst effects of the shutdown had been averted at their companies. Trident Construction planned in March for a 30% decline in business, but the impact has not been that severe. Avison Young has abated and deferred rent payments but, as a nationwide company, has more runway to outlast a downturn.
The economic collapse has mostly served to accelerate already existing trends, Fraser said. “J.C. Penney was going to go broke anyway,” he noted. “We just ripped the Band-Aid off and did it in 90 days.”
Businesses that react quickly will exploit new opportunities, he said. “Restaurateurs who have pivoted to provide a more robust takeout option ... will be successful. There will be winners and losers and things will change.”
Dudash said some companies are working more efficiently with fewer employees using better technology and a smaller footprint, “So are they really going to go back to trying to be what they were before?”
The way staff is deployed has changed permanently for almost every industry. All three panelists described offices with fewer people on-site, more telecommuting and more intentional internal communication.
Inside their offices, all three panelists say the phones are starting to ring again with prospective clients. That bodes well for the Charleston-area economy generally, though some sectors, like hospitality, may continue to lag.
Industry is ramping back up and companies based in the besieged Northeast continue to look at the Charleston market, with its port and distribution channels, as an alternative, they said.
The shortage of skilled labor continues to be an issue, the panelists said, even as organizations like the Charleston Metro Chamber of Commerce, Charleston Regional Development Alliance and Trident Technical College work to train local residents for the jobs that are here.
The supply chain, challenged in March and April, has rebounded, McKay said. With some planning, procurement of needed materials is no longer a sticking point in the construction industry.
While the future of office space remains to be seen, reports of its demise are greatly exaggerated, Fraser said. “People in the office sector are going to take some time to evaluate how their workforce will engage in their property,” he said, but Charleston remains a vibrant market and demand for office space will bounce back.
One consideration that won’t hold back recovery is access to capital, the panelists said.
Unlike the last economic downturn, banks today are flush with cash and interest rates remain low. Once lenders turn their attention away from funneling funds from the Coronavirus Aid, Relief, and Economic Security Act, the panelists said, money will again flow.
The big change going forward may well be how people are deployed. “There will be no more ‘hurrication,’” McKay said. “Everyone is equipped to work remotely.”