The wet winter is taking a toll on developers.
Heavy rain that started in October is adding time and money to condominiums, apartments and other construction projects going on around the county.
And, despite sunshine in early February, developers aren’t likely to get a break anytime soon. February and March, normally the wettest months, are projected to see above average rain, according to the National Weather Service.
So much for sunny Southern California.
“It really hurt us,” said James Camp, senior vice president of Voit Development Co., which is putting up 19 industrial buildings in Tustin. “The problem with rain is you have a week of rain and you have another week to dry out. For every week, you really lose two.”
Developers typically plan for rain in winter. But with Southern California’s mild winters, that planning is minimal. So this season’s rain,several times that of a typical winter,has thrown a wrench into construction schedules.
Irvine, home to several construction projects, got more than 7 inches of rain last month, seven times the average of the past five years. That deluge followed nearly 4 inches of rain in December and more than 5 inches in October, which often sees little to no rain.
Heavy rain turns hard soil at job sites to mush, making it impossible to pour concrete foundations. And forget about putting up steel beams. They become slippery when wet, making work treacherous.
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Bosa’s towers: company could face $500,000 in extra interest payments |
At stake for developers is added interest payments on construction loans, extra job site expenses and the prospect of having to wait longer to start recouping their own investments. Many said they’ve used up their allowances for weather delays. More setbacks stand to eat into profits.
Orange County isn’t alone in its weather woes. But the rain delays come at a critical time for developers here. The county’s first condominium high-rises are going up in Irvine. And office and industrial construction is starting to pick up after the downturn.
The erratic weather comes on top of last year’s price hikes for steel and concrete, which also dealt a blow to developers.
It costs about 40% more to put up a five-story office building than it did two or three years ago when materials were cheaper, according to Tim Strader Jr., who heads the local chapter of the National Association of Industrial and Office Properties, a trade group.
To build an empty office building, it costs about $90 to $95 per square foot, compared to $65 to $70 per square foot two or three years ago, he said.
Canada’s Bosa Development Corp. is far along on construction of the county’s first condominium towers in Irvine. But until its twin 18-story towers are enclosed, heavy rain is a problem, according to Eric Martin, the company’s vice president of development.
Bosa’s making its towers from concrete reinforced by steel. Workers pour concrete as floors are added. Rain delays the process, Martin said.
The developer should be able to make up for time lost, finishing the first tower late this year, according to Martin. If rain slows down completion by a month, Bosa could face $500,000 in extra interest payments, he said.
Along with its own investment, Bosa has borrowed more than $100 million to build the towers. The sooner the towers are finished, the sooner Bosa can pay its debt.
Bosa is used to building in wet weather back home in Vancouver, British Columbia, Martin said. But the company’s dealing with subcontractors here who aren’t, he said.
“A lot of days, they don’t come to work when it rains,” Martin said.
OC has had rainy winters before. El Ni & #324;o hammered Southern California in the early 1980s and again in the late 1990s.
This year should be as wet and windy as the 1997 to 1998 season, according to Stan Wasowski, a forecaster with the National Weather Service’s San Diego office, which monitors OC.
Every year, storms begin near Japan and race across the Pacific Ocean, most petering out before reaching California. But this year an odd combination of weather factors are bringing storms to Southern California, Wasowski said.
“We’re still expecting more storms,” he said. “We’ll see how it pans out.”
During the 1997 El Ni & #324;o, there wasn’t as much development under way as there is now, Voit’s Camp said. The impact is likely to be greater this season, he said.
Camp said he regularly checks in with his contractor at the Tustin Gateway Business Park. Voit is putting up buildings of 3,900 to 38,000 square feet there that it plans to sell.
“I called my contractor and he said, ‘We are pumping water from one mud hole to another mud hole,'” Camp said.
Mud also makes it hard to move vehicles and materials to building sites, he said. Once the buildings have roofs, workers can stay busy amid rain, Camp said.
Voit has pushed back its completion date in Tustin a month to April, according to Camp. That’s a month more of interest Voit has to pay a bank, he said.
Voit also pays for a manager at the site and for a construction trailer with phone and fax lines. It all adds up, he said. He declined to say how much.
Winter rain struck while the Newport Beach office of St. Louis-based McCarthy Building Cos. was digging a basement hole for St. Joseph Health System’s new patient care center in Orange. That halted some work temporarily, according to Dennis Katovsich, a senior vice president with McCarthy’s local operation.
“Rain can take a clean job and really make it a mess,” he said
Even more, rain is dangerous, Katovsich said. Workers have to cover electrical wiring. They have to stop work on steel structures.
“Somebody has to walk that beam to put the next column in place,” he said. “You don’t walk wet beams. That’s like walking on a slippery floor.”
Not everything is hampered by rain. The local arm of Miami-based Lennar Corp. kept right on demolishing the former Parker Hannifin Corp. campus in Irvine amid the rain.
Lennar and partner Highgate Holdings, an Irving, Texas-based real estate investor, plan some 1,300 condos, including one high-rise.
Demolition takes place in any kind of weather, according to the company.
