Coastal Construction Rides High on South Florida Surge
Three years ago, when Coastal Construction Group CEO and Chairman Tom Murphy Jr. predicted to ENR Southeast readers that an "unprecedented" building boom was coming to Miami, skeptics scoffed. "Everybody laughed," says Dan Whiteman, Coastal president.
Whiteman—who adds that Murphy "has a stronger sense of the market than any individual I have ever met"—is exaggerating slightly about the reaction. After all, contractors who know the well-connected Murphy would be reluctant to dismiss his insider perspective.
Still, back then there was reason for skepticism, if not a few laughs. In the summer of 2011, Miami's construction economy was still hung over from what had seemed a once-in-a-lifetime boom, fueled notably by condominium projects. Public and private budgets were tight, and banks were showing little appetite for residential construction loans. How was an even bigger surge of construction about to happen?
Today, Murphy's forecast is proving spot on. South Florida multifamily developers, adopting the international practice of requiring buyers to pay mostly upfront, are connecting with global investors to fund a wave of condo projects more lavish than the last—and attracting plenty of attention to Miami.
"The so-called starchitects are everywhere," Murphy says. "Everybody's trying to outdo each other."
Right now, at least, it's Coastal that's outdoing the competition. The contractor's 2013 total of $443.2 million in Sunshine State revenue earned the company the No. 1 position in ENR Southeast's Top Contractors Florida state ranking—despite the fact that Coastal works almost exclusively in Miami-Dade, Broward and Palm Beach counties, along with some jobs in the Keys.
That number is likely only going higher. "[The market is] building momentum as we speak," Murphy tells ENR Southeast. "Our  numbers are even larger." Right now, for instance, he estimates total contracts at just over $2.5 billion and current backlog at roughly $1.65 billion. Through the first half of 2014, he adds, Coastal landed more than $800 million in new work.
But those impressive numbers are just part of the reason that ENR editors selected Coastal Construction Group as this year's Southeast Contractor of the Year.
Poised for Success
Coastal's 2013 revenue more than doubled from 2012, when it reported $206.8 million to ENR Southeast. While such growth might cause outsiders to guess the firm is taking on as many contracts as it can, Coastal is actually turning down most job offers, says Murphy and others outside the firm.
"We've turned down more work [this year] than we signed last year in negotiated work," Murphy says.
"They're relentless in their prequalification process," adds Richard Ferrucci, senior executive vice president and managing director for Alliant Insurance Services. Ferrucci, who provides surety bonding for Coastal, agrees that the firm is rejecting most job offers. "The project has to make sense, the owner has to make sense and the designer has to make sense," he says.
The price has to make sense, too. "We don't lowball to get work," Murphy says. "We stay away from those." In short, he says, Coastal takes on projects that it's confident will be successful, and profitable.
One way the firm tries to stay profitable is by going to great lengths to manage the risk of building a condominium, considered one of the riskiest project types for builders. Murphy—who claims his firm has never faced a client in court in 45 years—says his firm deals with the inherent risk by using a painstaking system of third-party review and quality-assurance testing and documentation on all jobs. At job's end, Coastal keeps a set of the materials and even provides duplicate sets to clients and condominium associations.