Construction Industry Trends: March 2024 Roundup

March was a bit of a mixed bag for the construction industry. A $400+ million hospital project broke ground in Florida while a $1.5 billion mixed-use project in Detroit stalled. A group of contractors filed a lawsuit against the new PLA rule. And sadly, the industry lost six of its own in the tragic Francis Scott Key Bridge collapse, and they’re still missing among the wreckage. Here’s what happened in March.

Six Lost in the Francis Scott Key Bridge Collapse

Six members of the construction industry were lost in the tragic Francis Scott Key Bridge Collapse on March 26. The men working on the night shift were filling potholes on the bridge when the Dali, a Singapore-flagged shipping vessel, struck a support member of the bridge, causing it to collapse.

The crew was part of a team working for Brawner Builders when the collapse occurred. Two surviving crew members were rescued from the water shortly after the incident while rescue efforts for the other men ensued. Rescue efforts turned into recovery efforts, but divers have since stated that they’re unable to work any closer to the wreckage.

The names and ages of the six gentlemen lost are Miguel Lunda (49), Alejandro “Alex” Hernandez Fuentes (35), Maynor Yassir Suazo Sandoval (38), Dorlian Ronial Castillo Cabrera (26), Jose Mynor Lopez (in his 30s), and Carlos Hernandez (unknown).

As of now, there are several challenges around the reconstruction of the new bridge. But President Biden did state that the federal government will foot the cost of rebuilding the bridge, which is expected to be around $400 million.

ABC Files a Lawsuit to Stop Mandated Project Labor Agreements

On March 28, the Associated Builders and Contractors filed a lawsuit in federal court, aiming to stop the Biden Administration’s Project Labor Agreement mandate. The PLA mandate is estimated to impact at least 180 federal construction contracts with an estimated value of over $16 billion annually, and ABC believes that President Biden lacks the legal and constitutional authority to impose this regulation.

The ABC cites several violations in its lawsuit. The trade organization states that Biden’s PLA rule violates the Constitution, the First Amendment, and the Administrative Procedure Act. Also, the lawsuit states that the PLA rule is beyond the scope of the executive authority of the office of the President. Other complaints include violations of the Federal Property Administrative Services Act, the Competition in Contracting Act, the National Labor Relations Act, the Office of Federal Procurement Policy Act, and the Regulatory Flexibility Act.

Also, ABC argues that the PLA will negatively impact the industry as a whole. It states that the impact will increase the cost of construction by up to 20%, prevent small businesses from federal opportunities, and make the construction industry’s worker shortage even worse by discriminating against non-union workers. The goal is to stop the use of the rule, which went into effect on January 22, 2024.

$1.5B Detroit Project Will Have To Wait

The cost of securing cash has one massive Detroit project backpedaling on its timeline. The District Detroit project, which includes 10 total mixed-use properties, is on hold due to current challenges facing office construction lending—something projects across the nation have also had to deal with due to high interest rates, stringent criteria, and a massive stock of unoccupied commercial spaces.

The District Detroit project is a joint venture between Related Companies, Olympia Development of Michigan, and the City of Detroit. The project will cover 10 properties including the construction of six new buildings, 69 mixed-income residential units, 1.2 million square feet of commercial space, 100,000 square feet of retail, and 400 hotel rooms. It will also link the district to Comerica Park, Ford Field, and Little Caesars Arena—sports venues for Detroit’s major sports teams.

The challenge that the District Detroit team faces is that it can’t drag its heels forever. Even with the cost of borrowing being high, the project has to break ground on at least one of the planned properties by March 28, 2025, to take advantage of the $615 million Transformational Brownfield tax incentive. But with office building occupancy so low and the risk involved in lending to office projects, there is plenty of hard work ahead to meet the deadline.

Hurricane-Ready Hospital Breaks Ground in Florida

How much does it cost to build a hospital capable of withstanding a Category 4 hurricane? Gilbane Building Company is constructing one on Florida’s Space Coast for around $410 million, and the project just broke ground as the company announced in a press release on March 22nd, 2024.

The new Cape Canaveral Hospital has what it takes to weather some powerful storms. It will be constructed 13 feet above sea level to withstand storm surges, and it will also have an on-site central energy plant to produce power during catastrophic weather events. It will include 120 private inpatient beds, 25 emergency treatment rooms, and six operating rooms, totaling 268,000 square feet in all.

There will be a three-deck parking structure as well as a medical office building stretching over 3 floors and 92,000 square feet.

The storm-ready design is thanks to Missouri-based Lawrence Group, and Gilbane has also partnered with Chicago’s Concord Group and Golden, Colorado-based BCER for engineering needs. The hospital is projected to be finished by the end of 2026 and open to the public in early 2027.