The outbreak of the pandemic had little effect on construction in the Des Moines area in 2020 and construction managers are cautiously optimistic that if a slowdown occurs in 2021, it will be short-lived.

Construction is expected to begin in 2021 on Des Moines University’s new campus in West Des Moines, a new Iowa State University veterinary diagnostic lab in Ames and infrastructure improvements in the Market District in Des Moines’ East Village. Work is also expected to begin on one or both of Microsoft Corp.’s new data centers planned in West Des Moines.

And while there are several large projects in Central Iowa that are continuing or will begin, there is some worry that projects in the $2 million to $10 million range may be put on hold until the vaccine for COVID-19 is widely available and the economy improves.

“It’s those $2 million to $10 million projects that really keep the trades busy between large projects,” said Creighton Cox, Turner Construction Co.’s manager of business development in Iowa. “I’m not seeing a lot of that right now, and I wonder if the hesitancy has been because it was an election year or the added costs that have been added to implemented [COVID-related] safety measures.”

Others agree.

“We’re optimistic about 2021-22 but we’re also very aware of the current state of things and taking a highly strategic approach to every opportunity,” said Grant Taylor, vice president at Hansen Co. Inc. “We have some clients that recognize that this might be the best time to build because of the lower interest rates but there are also some that are opting to wait.”

Added Josh Braby, Neumann Brothers construction manager: “Some projects were put on hold after the pandemic started. I think the pause really helped people realign their focus and now they are pushing forward with the projects that were planned in 2020. We are seeing that 2021 is going to be pretty active.”

Nationally in 2020, the value of construction starts fell an estimated 14% to $738 billion, according to Dodge Data & Analytics’ 2021 construction outlook, which was released in November. Construction starts are estimated to grow by just 4% in 2021, to $771 billion, according to the outlook. Most of the growth will occur in single-family housing and warehouse construction; little to no growth is expected in retail or hotels, the report said.

The Midwest – and Iowa – will likely fare better than other parts of the country, said Vince Ward, business development director for Weitz Co. But that doesn’t necessarily mean Iowa and the Des Moines area will be immune from a slowdown, he said.

“Those curves are always a little lesser in Iowa,” Ward said. “One of our core markets is the corporate marketplace. Fortunately, we have other core markets because I believe that piece, at a minimum, is going to be looking at a period of time where you have to figure out what you’re going to do moving forward. That doesn’t happen overnight.”

Managers of businesses that have office space will need time to figure out whether expansions that were under consideration pre-COVID are going to move forward and even whether they still need the amount of space they own or lease, Ward said. “I think there’s some time there where we’re going to see a lag in that type of project.”

Other areas, though, will continue to see growth, construction managers said. Public school districts, which receive money from the local option sales tax that can be used for new construction and building remodels, will continue to have construction projects. In addition, projects related to e-commerce will continue.

Some companies that currently lease space are considering constructing new buildings, Cox said. “That’s a positive, but on the other side, who is going to come in and replace that 50,000 square feet of vacant space?”

Among the concerns looming in 2021 is the availability of some materials, including aggregate and dry concrete mix and wood.

Concrete will be used at the data centers planned in West Des Moines as well as for new cold storage and warehouse facilities, Cox said. “If we don’t have the aggregate to be able to mix, then those projects are not only going to get delayed, their costs are going to increase as well.”

Lumber prices have also increased and it’s become difficult to get some products, Taylor said.

“Any wood-frame project is going to see higher costs and there’s going to be a tougher time finding lumber packages,” he said. Also becoming scarce are lighting products, particularly if they are made in Asia, he said.

A year ago, construction managers said they were anticipating a strong 2020 and just as strong a 2021. That optimism isn’t as strong as it was a year ago.

“As with many things, the lens maybe isn’t as clear as it once was,” said Ward of Weitz.

Commercial building permits

Commercial building permits valued at over $1 billion in 13 Des Moines-area cities and Polk County were issued through the first 10 months of 2020, a Business Record review of city and county records shows. 

About 30%, or $295.8 million, of the permit value was for permits issued for Microsoft’s Osmium and Azure data centers currently under construction in West Des Moines. Nearly 60%, or $597.7 million, of the permit value was for new projects such as Amazon Inc.’s new sortation center under construction in Bondurant and a warehouse being built by Ryan Cos. Inc. in Ankeny.

To learn more about those projects and others, check out the Business Record’s interactive map and database of commercial building permits issued in 13 Des Moines-area communities and Polk County.

The interactive map, launched in July, includes information about the value of the permits issued, the type of work underway, the dates the permits were issued, and (when included on the permit) the general contractor and architect or designer. Links are included to stories we’ve done on some of the projects.

The feature includes a sortable spreadsheet. You can find information such as how many projects the Des Moines school district started this year (15) and the value of the projects ($14.89 million); the work Iowa Farm Bureau is doing at its West Des Moines campus (spending more than $12.1 million to do a complete remodel of its east wing); and what is occurring at Broadlawns Medical Center (a $5.3 million expansion of its surgical department).

The map and spreadsheet are updated monthly.

The map can be viewed at bit.ly/3lZAYjm

The spreadsheet can be viewed at bit.ly/2J0YDS0