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 throughout Southern California.
And developers aren’t likely to get a break anytime soon. February and March, normally the wettest months, were projected to see above-average rain, according to the National Weather Service.
“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 season, that planning is minimal. So the wet weather several times that of a typical winter has thrown a wrench into construction schedules.
Irvine, home to several major 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. Mud also makes it hard to move vehicles and materials to building sites. (Once the buildings have roofs, workers can stay busy.) In addition, steel beams become slippery when wet, making work treacherous.
At stake for developers are 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 have used up their allowances for weather delays. More setbacks stand to eat into profits.
Complicating matters are last year’s price hikes for steel and concrete.
It costs about 40 percent 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.
More rain likely
To build an empty office building, it costs $90 to $95 per square foot, compared with $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.
The developer should be able to make up for time lost, finishing the first tower late this year, according to Martin. But if rain slows down completion by a month, Bosa could face $500,000 in extra interest payments.
Bosa is used to building in wet weather back home in Vancouver, British Columbia, Martin said. But the company is dealing with subcontractors here who aren’t, he said. “A lot of days, they don’t come to work when it rains,” Martin said.
This year should be as wet and windy as the 1997-1998 season, according to Stan Wasowski, a forecaster with the National Weather Service’s San Diego office.
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. “We’re still expecting more storms,” Wasowski said. “We’ll see how it pans out.”
In Orange County, the rain delays have come at a critical time for developers. 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.
Voit has pushed back its completion date in Tustin a month to April. That’s a month more of interest Voit has to pay a bank, Camp said.
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. “Rain can take a clean job and really make it a mess,” said Dennis Katovsich, a senior vice president with McCarthy’s local operation.
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 can take place in any kind of weather.
