As the US begins to show signs of an economic recovery, the fact remains that in a number of industries, this recovery may only be a partial one. For the hotel industry – both in New York and elsewhere in the US – many properties that closed because of restrictions on travel and tourism in the wake of the COVID-19 pandemic will not reopen. Similarly, many of the nation’s restaurants that closed as state and local governments tried to limit foot traffic to minimize the spread of coronavirus will also not resume business. Indeed, with 75% of all restaurant operators saying that they do not expect a profit for the rest of the year, it is to be expected that some eateries now open for business will not make it.
These reports indicate a key challenge to the US building construction industry – namely, thousands of hotel rooms and hundreds of restaurants are built in the US in any given year. How will firms react when there is not a need to build new hotels and restaurants because there is a glut of – in many cases – suitable structures awaiting tenants? Some companies will adjust by refurbishing these sites (as needed) in expectation of a return to an economy that looked like the one before COVID-19.
Other construction firms will adapt by looking to ways to repurpose existing properties. For instance:
- The shortage of affordable housing across the US – especially in cities – may spur the conversion of hotels and vacant office buildings into multifamily housing units.
- Closed restaurants may be converted into “pop-up” restaurants that require periodic refurbishment.
- Local and state governments may convert existing structures to medical facilities – such as hospitals or community health clinics – as a way to better handle future pandemics.
For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly in the Construction and Building Products area. Freedonia also offers an expanding catalog of COVID-19 Economic Impact reports, which highlight how various industries are responding to the current crisis with a comparison to recent recessions. Freedonia Custom Research is also available for questions requiring tailored market intelligence.