Horizon International Group had just been cleared to develop, with city tax breaks, a 300-odd-room W Hotel atop the Partnership Tower in downtown Houston. That was in March of 2020. Two years of lockdowns, layoffs, supply chain issues and tens of millions of dollars later, the developer still can’t seem to get the luxury hotel’s construction off the ground.
The cost of the project has jumped by $20 million to $150 million in the last six months, according to Bisnow.
“Labor shortages and commodities costs [have] impacted every project,” Al Kashani, vice president at Horizon, told the publication. “[You] can’t just raise your menu costs, nor can you raise your room rate by 30 percent.”
The legacy of the 2008 housing crisis deterred Americans from the construction industry and now more workers are retiring without young people to fill the spots, says Paul Puente, executive secretary at the Houston Gulf Coast Building and Construction Trades Council. To make matters worse, souring public perception of construction labor means it’s few young people’s first choice, according to Makenzie Plusnick, communications manager for the National Association of Women in Construction.
Construction is also the deadliest occupation in Texas, with 127 deaths reported in 2020 by the Division of Workers Compensation. The high death rate in Houston and the state at large can be tied to the lack of workers with formal training, says Puente.
“It’s a risk, but it’s a risk that a lot of [companies] have taken and won, and sometimes they’ve lost,” he says. “It depends. It’s not their life on the line, it’s the individual’s life on the line.”
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Labor shortages have especially plagued long-delayed developments like Horizon’s, and with skyrocketing demand for housing and $1 trillion in bipartisan infrastructure funds on its way to Texas, it’s developing into a crisis.
“Oh, my god, you never have enough labor in Houston,” Kashani said.
Kashani’s solution? Building a trade school to create them.
“If you have a shortage of tomatoes, what do you do?” Kashani said. “Create a tomato farm. If it’s cold and freezing, what do you do? Build a greenhouse.”
Horizon Workforce Development School aims to train new construction managers. The school, which will operate out of the former Peck Elementary School in Houston’s Third Ward, will not be employing formally trained teachers, says Kashani. Instead, instructor positions for the nine-month program only need $15 million worth of project experience. The program is set to cost the company about $600,000 for 75 students.
Though the endeavor may seem simple enough, it is unlikely to be widely adopted by developers. The high price of running a trade school and, according to Puente, the risk of paying to train workers only for them to get snatched up by a competitor– a fear Kashani dismisses as the cost of training.
It’s simply “the nature of the beast,” he said.
[Bisnow] – Maddy Sperling