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How Coronavirus Is Affecting Construction in NYC

Posted by Melvin Monachan | Mar 23, 2020 | 0 Comments

The coronavirus outbreak has had an impact on many industries in the US, and the construction field is no exception. Heavily populated areas like New York City have been hit especially hard, as they're now facing major delays and rapidly increasing costs any time they're relying on China for manufacturing or shipping for construction materials. If you're thinking about buying, building, or selling in New York, here's how coronavirus might affect your plans.

Delays and Rising Costs Could Wreak Havoc on Construction

Anyone involved in real estate in New York is keeping a close eye on how coronavirus has affected the supply of construction necessities. More specifically, they're noticing concerns about the availability of supplies that come from China. It's likely they'll continue to see mounting supply chain problems for items like steel, floor tiles, concrete boards, plumbing fixtures, and electrical fixtures.

It already takes about three weeks for items to ship from China to the US, and that could easily turn into months if there are any delays due to coronavirus. The result is that many contractors are looking into other sources of construction supplies to avoid delays, and those are often more expensive than China. Furthermore, panic could increase prices as contractors buy as many materials as they can while they're still available, making supply a problem down the road.

Legal Issues in the Wake of Coronavirus

Clearly, this virus has the potential to not only delay projects in New York City but also increase costs. The question on the minds of many is whether contractors will be expected to pay those increased costs for materials and delays themselves, or if they have another option.

For example, some contracts have a force majeure clause that says the contractors are not responsible for cost overruns for projects when there's a disaster that can't be avoided. Of course, even when this clause is in the contract, the question will be whether coronavirus counts as a disaster of this kind. So, we can likely expect to see more cases looking into this issue as contractors seek ways to deal with the extra costs associated with coronavirus when it comes to construction.

What to Expect in the Coming Months

For now, most contractors in NYC are trying to avoid the issue by looking for alternatives to buying construction materials from China. Some are also trying to negotiate with clients who may need to pay higher prices than usual to account for this problem. Finally, contractors are trying to plan for the possibility that if the virus continues to spread throughout the US, construction workers might not show up to their jobs unless they're paid a premium, which could further increase costs or risk delaying projects.

But we won't see the overall impact of this disease on the construction industry until later in the year. After all, most contractors already have the raw materials for current projects. If in a few months the spread of coronavirus continues, it could result in a recession that would reduce construction costs in the long run due to less work in this industry. So, it's important for contractors to keep an eye on the cost and availability of any raw materials from China—and maybe check their contract to see what happens when their expenses unexpectedly go up.

If you have questions about how current events might affect a commercial building or home you want to buy or sell, contact a New York City attorney who can provide the answers and peace of mind you deserve!

About the Author

Melvin Monachan

Melvin Monachan is the founder of The Law Office of Melvin Monachan, PLLC, a full service, real estate law firm representing individuals, investors and corporate entities in all aspects of real estate law. On the transactional side, Melvin represents purchasers and...

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