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Coronavirus halts some Michigan homebuilding as big projects continue

Louis Aguilar
The Detroit News

Homebuilders are starting to see work canceled due to the coronavirus, said the CEO of Home Builders Association of Michigan. Meanwhile, work continues at commercial construction sites such as the Hudson's project in downtown Detroit and the demolition of Joe Louis Arena, according to developers, contractors and trade associations.

But as for every industry, the situation is unfolding as the pandemic spreads. There are ongoing talks among various developers, building contractors, unions and trade associations about whether work should be slowed or halted. 

Spread of coronavirus is interrupting some luxury homebuilding, even as most major commercial projects in Detroit for now remain on schedule.

For homebuilders, canceled and delayed projects began "several days ago" when the stock market nosedived, Bob Filka, CEO of the Home Builders Association of Michigan said in an interview Tuesday. The group represents builders, remodelers, property owners, developers and suppliers to the single-family and multifamily residential construction industry.

"A lot of our members have customers who are using equity and stocks to pay for projects. They started to call us and say 'Hey, the value of my portfolio is way down'," Filka said. That's when projects began to slow down or stop.

At this point, the impact has been minimal and it's too soon to provide any kind of numbers, Filka said. 

Builders for both residential and commercial projects may face major hurdles. One is a greater demand for N95 face masks — a staple in the construction industry — from people outside the industry. The masks are used to protect workers from respiratory hazards on job sites.

The masks are popular with health care workers battling on the front lines of the pandemic. There also is greater demand for the masks by the general public. On Tuesday, Vice President Mike Pence asked the construction industry to donate N95 masks to healthcare workers. 

Another challenge is the potential slowdown in getting necessary building permits and zoning as municipalities close. The home builders association wants local offices that deal with permits and zoning to be declared essential government services that need to stay open, Filka said. 

As for the commercial developments, contractors are "still trying to continue working," said Kevin Koehler, president of the Construction Association of Michigan. The group represents more than 2,000 general contractors, subcontractors, equipment and material suppliers, engineers and service firms.

One major building contractor, Barton Malow Co., said "very, very few" of its clients have asked to delay or halt work, said company spokeswoman Dana Lancour. The Southfield-based firm has more than 1,000 tradespeople at a wide range of sites nationwide. Some of the big projects Barton Malow is working on locally include the former Hudson's site in downtown Detroit and work for the University of Michigan. The firm also works at various General Motors Co., Ford Motor Co. and Fiat Chrysler Automobiles NV facilities.

Street-level view of the Hudson Tower construction site Tuesday, March 17, 2020. Bedrock Detroit broke ground on the project in December 2017.

As of Tuesday, only one commercial project in the state has told Barton Malow that work is going to be momentarily stopped. The contractor says it didn't have permission to give more details about the suspended project.

In Detroit, the demolition of Joe Louis Arena continues along with other multiple other projects being paid for by the city government. "To our knowledge, no work has stopped," said Tracey Lynn Pearson, a city of Detroit spokeswoman.

Two major downtown developers said its multiple projects are moving forward and that they continue to monitor the situation.

"We have not experienced work stoppages at any of our active construction sites," said Ed Saenz, spokesman for Olympia Development of Michigan, the development arm of the Ilitch Holdings Co. The group is working on such projects as the Detroit Medical Center Sports Medicine Institute, an estimated $70 million facility being built between Little Caesars Arena and the Wayne State University Mike Ilitch School of Business. Other major projects include renovations of the former Eddystone building next to Little Caesars Arena; the former Detroit Women's City Club, 2110 Park Ave., near the Fox Theatre; and the former United Artists building, 150 Bagley.

"We will continue to closely monitor many aspects of the COVID-19 situation and follow guidelines from the CDC, including social distancing," Saenz said. "We remain flexible and will adapt to changing situations, taking direction from our construction partners on their ability to staff projects as we move through this public health concern together."

Work at Bedrock's multiple projects continues, said company spokeswoman Gabrielle Poshadlo. Earlier this week, the company said it's preparing for a March 31 meeting at the city's Board of Zoning Appeals regarding its massive development at the former J. L. Hudson's department store on Woodward Avenue.  The development will include more than 1 million square feet of retail, office, residential units and public space. The development includes a 680-foot-tall building, which would make it the second-tallest in Michigan. 

laguilar@detroitnews.com

Twitter: @LouisAguilar_DN