As the pandemic continues, some of its long-term effects on homes, offices and entertainment are already visible in the construction industry.
John Wood and AJ Mueller, who co-founded Origin Construction earlier this year, are working with clients to create a “new normal” for office interiors, retail spaces, medical offices, restaurants and ground-up commercial buildings. Currently they have $60 million in active commercial projects, including build-outs and interior redesign for restaurants and high-end retailers preparing for post-COVID world.
Recently completed projects include offices for Porshe Latin America in the Southeast Financial tower, Kauffman & Rossin’s in Coconut Grove and Carlton Fields in 2 Miami Central; and retail spaces for Prada in Aventura and Sevan Bicakci Jewelry in the Design District.
Previously Wood and Mueller both were principals of Amicon Construction, whose projects included Live Nation, American Express, Facebook, FedEx, Pipeline Workspaces, Mount Sinai Medical Center, University of Miami, Porsche, and City National Bank.
Q: The past decade has brought both a real estate boom, construction labor shortages and new safety rules for job sites. What is the state of construction today, and how is the pandemic affecting the industry?
Wood: South Florida’s construction market, and Miami’s in particular, has fared better than that of many major cities over the past six months. A new report by JLL Research found that construction volume in Miami was initially down about 15 percent during the early phases of the pandemic, while places like New York and Chicago saw activity drop by as much as 85 percent.
A few factors are fueling this stability. For starters, our real estate economy entered the pandemic on solid footing. Coming into 2020, South Florida was in the middle of a decade-long period of economic growth driven by wealth migration, population increases, and domestic and international investment. That strength meant many real estate projects were already underway and financed when the pandemic took hold, allowing construction to move forward as planned.
On a practical level, South Florida officials have allowed construction work to continue through the pandemic with strict social distancing and safety measures in place.
Looking ahead, our clients at Origin Construction are mainly focused on the mid- and long-term future. They recognize that the pandemic is causing near-term disruption, but they believe the same factors that were driving our regional economy before the pandemic will still be in place once the dust settles. Our team currently has more than 30 projects underway in South and Central Florida, and we expect to end 2020 with gross revenues that are on par with 2019.
Q: To what extent are businesses rethinking how they design and build their offices for a post-COVID-19 world? Are you seeing a shift?
Mueller: There are two sets of dynamics at play in the office market. The first is in the ground-up construction space. Property owners and developers who are planning to build offices are able to incorporate new features and design elements that promote wellness, such as open-air common areas, enhanced HVAC systems that rely less heavily on recycled air, UV lighting systems that are believed to kill airborne germs, touchless technologies, automated lighting, thermo sensors, and more. Ultimately, floor-plan designs are created by individual tenants, but owners are taking steps to incorporate these safety features into new buildings.
At the same time, office landlords who operate buildings are working with tenants to retrofit existing spaces as best they can. We’ve seen everything from glass and plexiglass barriers installed between work stations and structural modifications to office layouts, to the installation of touch-free entry and exit systems that alleviate the need to interact with door handles and elevator buttons. There is always more flexibility when planning and building first-generation space, but several strategies can be implemented to enhance the safety of an existing office.
Q: Are your restaurant clients changing their plans to incorporate more space for outdoor dining? Are they introducing other creative solutions tailored to changes in consumer behavior?
Wood: The future of restaurant design boils down to three areas of focus: the expansion of outdoor dining, interior space planning and investments in technology.
Being in Florida, our restaurants are fortunate that they can offer year-round dining options and we have seen property owners and local municipalities take steps to help eateries expand those offerings by reclaiming parking lots and even traffic lanes to expand seating capacity. Going forward, we can expect that new restaurant designs will emphasize the use of outdoor spaces, even if it means scaling back the size of indoor dining areas.
When it comes to interiors, we are seeing our F&B clients get creative by making temporary changes to their layouts to accommodate the surge of takeout and delivery business that has persisted through the pandemic. Dining rooms have suddenly become makeshift fulfillment centers, and entrances have been replaced with takeout windows.
New technologies also factor into the mix. Our team has been assisting restaurateurs in contemplating how they can introduce touchless features in entry ways, dining rooms, and even kitchens. I think the future of dining will include digital waiting lists, QR codes that allow diners to order from their table with a smartphone, and contactless payment systems. Many of these strategies will require some element of redesign and construction.
Q: What is happening in the retail sector? Are the days of constructing brick and mortar shopping destinations fading away due to ecommerce and the pandemic?
Mueller: It’s no secret that online shopping and accelerated delivery times have changed the face of retail design and construction. The real estate strategies of large big box operators have been most heavily impacted by the growth of ecommerce, but for the most part, higher-end retail brands still value the boutique store model because it allows for personalized service.
Like with restaurants, we are seeing retailers embrace outdoor space innovation as a means for limiting indoor person-to-person interaction during the pandemic. For example, shopping destinations like the Miami Design District and Aventura Mall are marketing and programming around their open-air features. Another trend which has emerged in recent years is the idea that a retail space can serve primarily as a showroom, which enables a brand to sell an item in-person but fulfill the order digitally through delivery.
This shift has put emphasis on the design aesthetic of consumer-facing spaces, while reducing the need for significant back of house space. We expect more retailers will follow this business model post-pandemic, and we also expect to see continued growth in the number of brands offering curbside pickup. All of this is to say that retailers are putting more weight on the quality of store planning, design, and construction, as opposed to warehousing their inventory on site.
Q: As companies plan for their future, how feasible is it to retroactively renovate a workspace to meet new health and technology standards brought upon by Covid-19? Are renovations a realistic option, or is it easier to start from scratch?
Wood: It’s next to impossible to predict the heightened safety protocols that will become standard once the pandemic is over. All companies want their employees and customers to feel confident that they are safe, but it’s not that simple. There are regulatory considerations that will factor into the equation, and there are other issues which are unique to each business or property.
Companies have the greatest ability to plan and customize and adapt when they are building first-generation space or retrofitting a single-tenant property. Anytime tenants in neighboring spaces are involved, our clients are typically faced with challenges outside their control. The same goes for renovating older buildings. The newer the building, the easier it is to incorporate the latest systems and technologies.
The question of cost is primarily a function of location, building materials, design, and the level of customization desired. I always tell clients that the sooner they bring their general contractor into fold during the planning process, the more likely they are to save money, time, and stress down the road.
Origin Media Contact Information:
Aaron Gordon: Aaron@Schwartz-Media.com / 305.962.3292
Jaclyn Dadas-Kraper: Jaclyn@Schwartz-Media.com / 248.842.0597
Victoria Cela: Victoria@Schwartz-Media.com / 786.514.9250