COVID-19 poses serious safety and marketing challenges for construction in Chicagoland

by Meg White

This week, the U.S. Census announced a significant year-over-year boost in the total number of single-family home construction permits issued, with activity up 24.7% in the Midwest (though Illinois’ increase was milder). But that was February, and today, the market looks much different under quarantine.

That’s why we reached out to some of our readers in the new construction field to get their thoughts on how the industry is faring in Chicago. Here’s what real estate brokers, developers and construction professionals are doing to prepare for the new normal in homebuilding and new-home sales.

Staying safe in the field

With both real estate and construction considered essential businesses in Gov. J.B. Pritzker’s executive order mandating residents to stay at home, the industry received an important economic break. But as legal experts from the Realtor community have noted, it’s vital that professionals take their roles seriously and ensure the safety of everyone involved in essential work.

While most professionals told us they believe workers are maintaining proper social distancing and companies are providing personal protective equipment, John Gagliardo, senior vice president of construction and development at GNP Realty and president of ONE Development, is disappointed in what he has been seeing at job sites across the city. “Frankly, big developers and construction projects aren’t doing enough to protect the skilled labor force,” he said. “They took care of the people in their offices. What about the skilled labor force? Everybody has totally forgotten about them.”

In what he described as being in stark contrast to what he’s seeing from many competitors, Gagliardo’s company shut down their construction sites for two weeks before the shelter in place orders were issued, in order to reevaluate how to safely continue development work. Now they’ve reopened, but the company only allows a maximum of 10 workers on a site, supplies protective equipment for crews, and requires workers to maintain 10 feet of social distancing onsite. “It can be done,” Gagliardo said. “This is about saving lives.”

Gagliardo said he believes developers and construction companies will later be judged by how they treat their workers today and wants to see executives at these companies step up. “They care more about the bottom line; they care more about the profits than the people,” he said. “Everybody has to approach this in a way that is about people.”

Business is still brisk

Meanwhile, brokers and developers told Chicago Agent they’re at least as busy as they were before the coronavirus shutdown, if not more so. Tricia Van Horn, vice president of marketing for Related Midwest, noted that while much of the house hunting experience has moved online, business is still robust. “We’re seeing continued interest in our condominiums and apartments,” she said. “We’re finding that prospective buyers and renters are still out there searching for new homes. So, they’re eager to engage in virtual real estate presentations.”

Christine Lutz, vice president of sales at development marketing firm ON Collaborative, noted that while some of the more superficial signs of buyer interest are down, there’s been a big uptick in serious buyers. “We are actually very busy. In Chicago, in the West Loop in particular, we are seeing the amount of people who are reaching out to get information has increased,” she said.

There have been some unavoidable delays, according to Jaime Kelly, sales specialist with Pulte Homes. “Permits are a little delayed by a month or so in certain communities,” she said. But she added that construction is still happening, and curbside closings are keeping the deals on track.

Lutz noted that they’ve seen a slower permitting process; two of their current projects — one in Chicago and the other in Sarasota, Florida — are still waiting on permits that the company had planned to have secured by now. Still, she noted that they’re expecting that to come through soon and that both projects benefit from the fact that the funding side is already in place. “Some developments are struggling in this environment to find commitments,” she said. “If they didn’t have their financing in place before the shutdown, I would imagine that’s very challenging.”

One thing ON Collaborative is doing differently in response to the COVID-19 pandemic is to reach out and try to help agents who might be struggling with certain aspects of doing business during a lockdown. The company has been offering educational webinars on topics from marketing to video to social media, bringing in experts to answer brokers’ questions. Readers who are interested in attending an upcoming webinar can email christine@oncollaborative.com to be placed on an email list and notified of upcoming presentations.

New-construction advantages becoming more apparent

Some of the difficulties associated with selling existing homes are less of an issue in new-home construction. “It will be much easier for [agents] to sell a home that is empty like ours, versus selling one that is occupied,” Kelly said.

Pulte has gone to a “by appointment only” showing schedule, with only two adults allowed in a listing at a time and everyone observing social distancing guidelines. Still, Kelly noted that the team has been leveraging technology, particularly Microsoft Teams and Matterport virtual reality tours, to show homes safely and get deals done remotely whenever possible. “We learned how to master scheduling, join meetings, share our screen with customers and co-workers and take virtual notes,” she said.

Companies with deep experience in the presales step of the new-construction selling process have the upper hand in this new reality, according to Lutz. “A general brokerage, they are selling a product that you can walk through, see and experience,” she said. “From that perspective, we’re at an advantage a little bit because we are very accustomed to painting a picture with virtual reality tools in order to convey what it is that we are offering.”

And it’s not necessarily just procedural considerations where new-home construction may have some built-in leverage over existing-home sales. Van Horn predicted some amenities that are more prevalent in new construction will be more appealing than they had been just a few months ago. Using Related Midwest’s One Bennett Park as an example, she touted the “air-filter technology, fresh air ventilation systems and abundant oversized windows” as features that will appeal to Chicagoans who have been stuck inside for the past few weeks. Also, the building’s “low-exposure personal training rooms and virtual exercise” could convince those looking to stay fit while at home that a new condo might fit the bill.

Working with buyers

Still, it’s a challenging time for salespeople, who are regularly talking to clients who may be afraid to move forward in a time of uncertainty. Pulte sales managers are coaching agents to let buyers know that it’s OK to “move forward on their home purchase despite the fears that are out there,” according to Kelly. She added that those who wait will likely end up paying more in the long run, with today’s rock-bottom interest rates currently boosting buying power. “The real estate market is not going away and once the market returns; it is going to explode.”

For buyers who are still firmly on the fence, Kelly suggested agents use specific examples of other clients they’re working with who are moving forward despite the turbulence: “Be bold and have the confidence to tell your prospects to stop putting their dream on hold.”

Given the amount of time that Chicagoans have had to examine the metaphorical four walls surrounding them, Lutz said she expects to see buyers come out of the experience with a better understanding of what they want. “I would imagine that everyone is going to be thinking harder about what amenities are important to them,” she said. At ON Collaborative, she noted that they’re “talking about cleanliness and how we can set the bar a little higher in order to anticipate changes” in buyer preferences.

Van Horn said she expects the idea of homeownership to be more appealing after the crisis has abated. “We expect to see an influx of newly motivated buyers who were previously deferring a home purchase, but now see the value of upgrading their living space,” she said. “As we all shelter-in-place, one inescapable sentiment has surfaced: The place we call home is more important than ever. And, with extra time to ponder how homes meet our needs and lifestyles, it stands to reason that some will come out of this unprecedented situation with revised priorities.”

Gagliardo also expressed optimism for the residential construction industry but noted that now is not the time to worry about the bottom line. “Ultimately, we’ll get through it,” he said. “It’s going to take some time to get back to normal, [but] we cannot, today, be focusing on profits.”

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