Back in Action: Construction Rebounds, Retail Lags as Pandemic Restrictions Ease

Brian Pascus, Crain’s New York, 6.15.20

Construction roared back last week during the first phase of the city’s reopening, but the rebound didn’t extend to small businesses, where sales were muted at best.

Coronavirus restrictions in the city began to ease June 8, allowing the construction, manufacturing, wholesale trade, non-food agriculture, forestry and fishing industries to resume operations.

Retail stores also opened up, though they were limited to curbside service.

Construction jumped across the five boroughs, with 33,556 nonessential work sites breaking ground.

“The reports I got back are that people are very encouraged,” said Lou Coletti, president of the Building Trades Employers’ Association. “Everyone is being completely cooperative in terms of the protocols that have been established.”

Coletti said he has seen his on-site workers participate in social-distancing measures as well as take part in temperature checks and wear personal protective equipment. His union staggered start times throughout the day to keep density down at construction sites.

“Safety has always been our first priority,” he said. “We’re trying to recapture the work that has been lost.”

With the thaw on the economy has come increased reliance on the city’s embattled transportation sector.

The Metropolitan Transportation Authority has opened subway lines at near-regular daytime service. The authority anticipated 400,000 riders per day during week one. Instead, it reported that ridership hit 800,000 Monday, 17% higher than the previous week. There had been a 90% drop in service during the height of the pandemic in the city.

“Here’s what it tells me: Customers are coming back,” MTA Chairman Patrick Foye said.

Many retail shops tried to get back into the swing of things.

Sylvia Parker restarted Magpie, her 400-square-foot Upper West Side gift boutique, Tuesday. Even with online sales, she said, business has not approached typical sales. The store relies on neighbors and tourists dropping in and browsing.

“We have many, many items in small quantities, so that’s been a challenge for launching an e-commerce platform,” Parker said. “But we’re hoping this can offer a new way to present ourselves to customers.”

Elsewhere on her stretch of Amsterdam Avenue, shoe stores have set up outdoor racks, and a fabric shop has hung out samples.

“Everyone is just trying to find their way right now,” Parker said.

Looking at car traffic as an indicator of business activity, the change last week was small. According to TomTom, traffic congestion levels were 10% higher than they were two months ago during the shutdown.

Despite the positive atmosphere surrounding the long-anticipated reopening, city business owners remain apprehensive about many elements of the economy.

The Brooklyn Chamber of Commerce last week surveyed 161 business owners in manufacturing, retail, restaurants, health care and nonprofits. Forty-five percent said the biggest hurdle they were facing was an inability to afford rent, utilities, licenses and other expenses. A quarter said staff not returning to work is their biggest concern. Thirty-five percent said they did not pay rent in June. Twenty percent said their landlord gave them a concession for rent this month.

“A lot of them fear that the cost of reopening is going to be greater than revenue,” said Loraine Lowe, membership director at the Brooklyn Chamber of Commerce, who managed the survey. “To retool their business—to do less business than they had done before—is concerning to them. They are not really certain it is going to be worth it.”

Even construction’s blistering reboot is at risk, stemming from revenue crunches in two of the city’s largest public agencies.

The MTA received $3.8 billion from the federal government in the Cares Act and requested $3.9 billion more, which has yet to be approved. Many projects associated with the authority’s $53 billion 2020–24 capital improvement plan remain in doubt. Furthermore, the Port Authority, which handles the region’s airports and bridges, recently said it will not be able to complete critical upgrades without $3 billion in federal assistance.

Carlo Scissura, president of the New York Building Congress, said that without federal funding, many of the city’s construction projects could grind to a halt.

“The funding to the capital program from the MTA and Port Authority remains critical pieces of our future,” Scissura said. “The city of New York will be facing some challenges, but we have to ensure that the money continues to be there and that things move forward.”

In Scissura’s mind, the fact that construction is off to such a great start in phase one show the demand for brick-and-mortar business is still there.

“The bottom line is, we need to build,” he said. “Getting this economy moving in New York and across the country is going to take building and infrastructure projects. Now is the time to build, build, build!”

https://www.crainsnewyork.com/economy/back-action-construction-rebounds-retail-lags-pandemic-restrictions-ease