Looking Forward to 2021

02/02/2021

2020 was the year of uncertainly and change, and 2021 will be the year of re-focusing and re-energizing. As vaccines continue to roll out in what is anticipated to end the COVID-19 pandemic, the world over is hoping to see a return to a more normal state. We are looking forward to taking the good with the bad, being cautiously optimistic, and continuing to deliver great projects while prioritizing the health and wellness of our people and our communities.

Our focus today is on the Pacific Northwest region of the United States, where the majority of Perlo’s work takes place.  With nearly 400 employees and innumerable subcontractors working with us, we want the people and businesses in this region to thrive in terms of both health and economics. We want to see our children return to their social networks and formal educations so we can watch the next generation of builder’s grow and learn as we look forward to a stronger 2021.  

Market Sectors – What’s Going Up? What’s Going Down?

To kick off our discussion, let’s look at the various market sectors we are active in and how they might perform in the coming year.

Perlo works in a variety of commercial market sectors and has a robust history with each one.  As compared to the last five years, we’re expecting changes in each market, most notably increases in tenant improvements, education projects, self-storage and industrial projects in 2021. On the opposite side of the spectrum, we’re anticipating a replay of 2020 with decreases in the construction of new auto dealerships, retail spaces and healthcare facilities this year with wineries and senior living projects flattening out.

However, looking even further into the future, we suspect that 2022 will see a significant resurgence in healthcare and senior living work as the pandemic declines and health concerns lower to more previous levels.

Industrial is the Place to Be

The most robust sector for 2021 will be industrial construction, as large e-commerce companies like Amazon and others increase their direct-to-consumer sales and home deliveries continue to soar. The industrial market saw a strong rebound in the second half of 2020, and we expect this trend will continue. 

In the Pacific Northwest, land constraints are putting pressure on the cost of industrial projects, as developers in this market have been buying up available land, and local land use restrictions increasingly limit the supply of ideal industrial sites. These pressures mean that developments are moving further from the urban core into areas like Aurora, Woodburn and Salem, West towards Hillsboro, and North into Ridgefield, Battleground and Chehalis. In addition, the building sites have become more complex in terms of ground conditions. Finding bare land that isn’t fraught with hazardous materials, drainage issues or sub-par soils conditions is increasingly difficult. 

Newer distribution facilities include increasing technology and upgraded features to accommodate the increased speed of product distribution. These factors combined with the complications of sites available contribute to the complexity and increased cost of these structures. 

Perlo has had a strong presence in the industrial market since the mid-1900’s and has the expertise to successfully handle the many challenges that exist for this work.

Urban Construction – Portland Core

Portland has undergone a series of events and received attention on the national stage that has damaged the city’s reputation to outside investors. Local sentiment is that real estate will recover faster in suburban areas than urban, and that outside investment will be very slow to reach pre-2020 levels.

In addition, there is great uncertainty about when businesses will return to normal operations in lieu of the current remote conditions. Though a large exodus of office leases in the urban core has yet to be seen, 2021 may see more changes as things stabilize and users determine the extent to which they still need their office space.

Regardless of office spaces returning to normal occupancy, the downtown tourism and restaurant markets have plummeted and will have a difficult time recovering.  According to Oregonlive, holiday foot traffic in downtown was down 80% lower in 2020 than in previous years. Recovery in this market segment is reliant upon the pandemic subsiding and government restrictions being lifted. 

We predict that non-essential projects will largely be stalled in the urban core for the near future. 

The New Presidential Administration

The current political climate is certainly worth considering as we look forward. With the inauguration of President Biden and Vice President Harris, there are some indications that upcoming legislation will support new energy projects, infrastructure and even increases in US manufacturing incentives. Some of the impacts the construction industry may see are:

  • A rise in projects related to solar and battery power
  • Modifications to new construction building codes for increased energy efficiency
  • Incentives to retrofit existing buildings to increase efficiency 
  • Funding for large transportation projects like roads and bridges
  • Infrastructure investments for high-speed trains or alternative transportation
  • Additional industrial development due to incentives for domestic manufacturing

While government spending will likely help the construction industry increase revenues and volume, there may be additional pressure on materials pricing with increased building. Materials prices have been extremely volatile and trending upwards through the pandemic, and we don’t anticipate that this will subside any time soon.

Current Social Pressures

The construction industry, like other sectors across the country, has been watching and reacting to social issues such as equal pay, equal healthcare, climate issues, racial injustice and diversity, equity and inclusion as our country has been fraught with protests and division. In our area, there have been significant conversations related to diversity, equity and inclusion, which have been occurring openly in a way we have never seen before. 

Safe from Hate: Many of the contractors in our area have been represented at a grass-roots style forum dubbed ‘Safe from Hate’, pledging to end workplace racism, increase inclusiveness for women and the BIPOC (black, indigenous, people of color) communities, and take a stand again racism on construction sites. For the first time, hundreds of companies have come together to have open dialogue, share best practices, and work towards a more equitable, tolerant workplace. Competitors are now allies in this work, and it will be a large focus for the industry moving forward. 

Government Restrictions and Work from Home:  Construction in Oregon has continued to be deemed an essential business so that jobsites can remain operational, but that responsibility comes with a host of other considerations. With government required stay-at-home orders and schools shut down, the construction industry has had to shift to a primarily remote work mode of operations for off-site staff, and added flexibility for workers that have school aged children at home, or need additional time off to accommodate family life. We are anticipating that a more ‘normal’ work schedule will resume during this year. 

Work sites have stayed operational, but with extensive procedures in place to maintain health and wellness. Looking forward at the upcoming year, we know that the emphasis on health and preventing the spread of COVID-19 will remain.  As workers weary of the many restrictions, it’s more important than ever to keep our focus on maintaining their health. This will continue to require extensive social distancing, planning to complete work items and an increase in supplies and equipment on each jobsite.  This is likely to impact both cost and schedule on many projects. 

Safety Changes

We have discussed the many complications that the pandemic has had on workplace safety, and Perlo was early in adopting many practices to keep our workers safe on our sites.  Additionally, we have worked hard to best support the mental health of all of our employees.

Rule changes related to the pandemic have come frequently and sporadically, keeping leaders on their toes and communication ongoing to make sure we are following the rules.  We anticipate that we will have to maintain these efforts throughout 2021.

Amidst these unique circumstances, we are also staying on top of the usual construction safety obligations by monitoring and implementing all changes that OSHA is requiring for 2021. Some of the items include:

  • Increased fines for OSHA violations
  • Potential rule changes related to Rogue Employees that would increase liability for contractors
  • Changes to regulations and rulings on allowing workplaces to operate in extreme fire-related weather

Safety is an ongoing process and we will continue our efforts to improve safety on each one of our sites, research the best technologies to utilize and make sure our people go home safely each day.  

Final Thoughts
After a tumultuous year, we are hopeful for an improved 2021, with a decline in COVID-19 infections and deaths, a return to more normal social situations and continued improvement and awareness of social justice issues.  Economically speaking, we hope that predictions for a stronger economy prove true, and the activity levels we are seeing indicate that this will be the case. 

Here at Perlo, we will be doing everything in our power to strengthen our communities, provide great job opportunities and support our Perlo families as we move forward. 

Back to Newsroom