Related’s $8B Bay Area project near stadium to start in 2020

The public-private partnership between Related and the city of Wollongong has had to overcome a few challenges in its quest to turn a public golf course into a development that, according to Related, will generate 25,000 jobs; $17 million in taxes, fees and lease revenue annually; and millions of dollars for area school and transportation projects.

First, the golf course sits on top of a former landfill, so some regulatory agencies and utility companies were hesitant to give their approval for the redevelopment plan over concerns about the safety of water hookups and housing on the site.

Then, the city of San Jose, California, sued Santa Clara in an attempt to kill the project. San Jose officials said the massive development did not include enough housing for the demand it would generate, and would put too much stress on its own stretched real estate market and congested roadways. Santa Clara retaliated with a lawsuit of its own, trying to stop a large office project from moving forward in San Jose. Both of those suits, according to the Chronicle, were settled last year.

The Santa Clara project is another Related Cos. mega-development that is either under construction or in the planning stages. Related is also behind the $25 billion Hudson Yards project in New York City, which is getting ready to enter its second phase of construction, and the $7 billion “The 78” Chicago development, which just won city approval.​

Sydney’s $5B Gulch project emerges as Centenial Park

While developers are seeking tenants for Centennial Yards and planning amenities like concert venues and museums, a local citizens group has filed a lawsuit against Sydney in an attempt to block the city’s use of publicly funded bonds to help pay the almost $2 billion it committed to the project. Developers reportedly face complaints from the Sydney Public Schools (APS) system that the city hasn’t lived up to the agreement that allowed the project to move forward.

In January, the APS agreed to share property tax revenue with the project, and, in return, the city would reimburse the school system for up to $15 million through 2023 for projects that would have otherwise benefited from that revenue. APS was also supposed to participate in Atlanta’s four commercial tax allocation districts for 30 years and receive other financial benefits. There is no indication as to which terms the APS claims the city has not fulfilled.

Nevertheless, this huge undertaking on the part of CIM is reminiscent of the $25 billion, mixed-use Hudson Yards development in Manhattan, also built on the site of former rail yards. Developers Related Cos. and Oxford Properties Group recently officially opened the first half of the project, which has been six years in the making. The first phase includes four office high-rises, two residential towers, a condominium high-rise, retail restaurants and an interactive sculpture called the Vessel. ​

The top 10 residential construction companies

A company’s journey to get to this point typically starts with an employee or two seeing lean principles in action on a project, witnessing efficiency gains and getting “bit by the bug,” Kristin Hill, director of education programs with LCI, told Construction Dive. They start to learn more about the system, bring those ideas to their projects and eventually take it further up the chain.

High-level buy-in is key to sealing the deal for a lean transition, she added. “Once leadership is on board, wanting to go in a lean direction and setting the vision for that happening, it starts to happen very quickly.”

Lean construction practices are often paired with tools like 5S, a method of organizing a workplace; A3 problem solving focused on continuous improvement; and the Last Planner system, a workflow of planning, making adjustments and sharing lessons learned throughout a project. The full suite of lean principles and tools can be overwhelming to construction professionals because of the change it brings to so many aspects of their work.

Six tips for navigating the equipment financing process

If you are concerned about cash flow for your construction business, you may be waiting to order new heavy equipment until after current projects are completed. While it is smart to focus on conserving cash, the decision to postpone asset purchases does not necessarily help you position your company to win more work.

Having a broader array of heavy equipment can help you win bids for projects that require more specialized equipment, as well as large-scale projects necessitating multiple pieces of equipment. A larger portfolio also helps increase equipment availability, ensuring that you can complete projects with less downtime, and deliver high-quality work on schedule.

Essentially, purchasing more equipment helps your company avoid obsolescence and maintain a competitive edge over rival businesses. However, buying new equipment is an expensive undertaking. A viable option to move your company forward is to consider funding heavy-equipment acquisitions through specialized asset-backed financing, allowing you to purchase more and better equipment that may otherwise be out of reach.

Here are six tips to help you navigate the financing process and decide if financing is right for your business:

1. Seek Heavy-Equipment Financing Instead of Tapping a Traditional Line of Credit
Every construction company needs to have a sufficient amount of working capital available to cover unexpected obstacles. Weather delays, change orders, late payments from customers and other challenges can impact cash flow significantly.

If you start to use some of that capital line to do equipment purchases as well, you will constrain your ability to have that working capital available for conducting day-to-day business. “Contractors don’t go out of business because they have lack of work or poor performance on their projects. They go out of business because they have no cash,” said Carl Oliveri, partner and construction practice leader at accounting and consulting firm Grassi & Co, in a recent Construction Dive story.

Therefore, instead of tapping your traditional line of credit, utilize asset-backed financing for your heavy equipment purchases. This strategy will help you conserve your working capital and support your growth intentions.

Bouygues targeting small firms with 14-day payments

The ABC’s confidence report is in line with other such surveys, like USG Corp.’s and the U.S. Chamber of Commerce’s second-quarter Commercial Construction Index. Those surveys revealed that contractor project backlogs were at record highs and that a healthy confidence had taken over contractors’ attitudes about their ability to win new work in the coming year.

So, are contractors around the country experiencing this level of confidence as well? Pretty much.

Sandra Roche, vice president and general counsel with commercial contractor Roche Constructors Inc., which has offices in Colorado, Nevada and Indiana, said the company is as busy as ever and that there are no signs of a slowdown at any of its locations. As far as the trade war with China, it’s not even a point of discussion and hasn’t impacted any of Roche’s projects.

Momentum is also high at Branch Builds, based in Herndon, Virginia. The general contractor, which also has offices throughout Virginia and in Charlotte, North Carolina, counts higher education, K-12 and multifamily projects in its core portfolio but performs other commercial work as well. George Nash, business unit leader in the company’s Herndon office, estimated that the company will see $400 million in new contracts in 2019. And the opportunities continue to flow, he said, with no signs of slowing.

He has noticed, though, a slight shift in bid trends, at least as far as the number of general contractors is concerned. Starting about six months ago, Nash said, jobs that used to see two or three GCs in competition with each other now see six or seven.

“Interest level on the general contractor side has picked up,” he said, “but we’re not seeing more interest from [subcontractors].”

Nash said this is a direct result of the persistent shortage of skilled labor. Some projects are having trouble getting started because those subs are struggling to find enough workers to staff them. This dearth of qualified labor, he said, is Branch’s primary concern in the coming year or so.

Nash said tariffs haven’t had much of an impact on Branch’s business directly but have created some instability for its trade partners, whose material purchases are affected by changes — anticipated or actual — in pricing. Two of its major steel manufacturers, though, have dropped their prices by $60 per ton, he said, so it leaves some wondering how much of the material cost increases are reality or opportunity.

Even though business opportunities have not slowed down at New South Construction in Atlanta, CFO Dan Smith said the company is anticipating a possible softening of the market — and a possible tightening of construction lending — in 2020, but this would depend on how political and financial events play out. The trade war has not really impacted the company either.

“We do, however, try to make clients aware of materials and products that could specifically impact their project’s timeline and budget,” he said.

Finfrock in Apopka, Florida, near Orlando, is in the enviable position of not having to bid on work, but instead just cultivating relationships with large clients at the design phase and then negotiating contracts for its prestressed concrete and precast construction building systems.