Building for the Future
On the building side, Skanska has seen expanded opportunities as well. Rob Ward, executive vice president and regional manager for Skanska USA Commercial Development, says that knowing how to read the market and being opportunistic have paid off. Skanska's commercial development unit was announced in fall 2008, right when the recession was taking hold.
"The timing seemed questionable to some," he says. "It was an awful time for most developers, but it was a good time for us. D.C. has very high barriers to entry in the real estate market. To come in at the bottom of the cycle was good for us. That gave us a foothold here."
Skanska expects to break ground on its 240,000-sq-ft 99 M Street, SE, office building in Washington by the end of the year. Ward says the company also hopes to start work on another 250,000-sq-ft office building at 2100 W. Pennsylvania Avenue, NW, in Washington next year. It also owns three large properties in Washington's NoMa district, which it plans to develop as office and residential properties.
Ward says its internal relationship with Skanska USA Building is the key component to its success. The teams engage very early to determine the viability of a project, running estimates and working with architects in design development. "Sometimes that relationship with external contractors can be adversarial," he says. "That's never the case on our projects. Everyone understands that we're on the same team. We eliminate the things that might slow down a project in a third-party relationship."
The company also offers turnkey options for prospective tenants through its interiors group.
Jeff Barber, principal and managing director of Gensler's D.C. office, says Skanska's model brings benefits to the design process. Gensler is the architect on Skanska's 99 M Street project. "It's special for us to work with Skanska because the development and construction are aligned," he says. "We see the benefits of being on board with them early, as well as them having a kinship and an alignment in goals."
Outside of its development work, Skanska faces the same challenges as most mid-Atlantic contractors, says Edward Szwarc, executive vice president and general manager in Skanska USA Building's Philadelphia office. His office once banked primarily on health care and pharmaceutical sector work. While health care opportunities remain, he says pharmaceutical work in the region has largely dried up.
"In 2010, we did a strategic plan," he says. "We looked at what was coming up and we knew that, to survive in the region, we had to adapt."
In response, the company has diversified into other sectors. In July, Skanksa broke ground on a $164-million expansion of the SugarHouse Casino in Philadelphia. In June, the company completed a $37.4-million addition to The Franklin Institute in Philadelphia. The company is working on its second student housing project for University of Delaware—a $25-million renovation of Harrington Residence Hall. Szwarc says the company is also building data centers for existing clients.
Health care remains a strong sector for Skanska, especially in Delaware, where it is ranked as the largest contractor by revenue. In late 2013, it completed a $210-million expansion of the Wilmington Hospital and it is on schedule for the fall completion of a $257-million, 450,000-sq-ft expansion of the Nemours/Alfred I. duPont Hospital for Children in Wilmington.
Szwarc says that although the market in Philadelphia and the surrounding area has been challenging, he sees signs of hope. "There is a lot in planning and it looks like we could see a lot of new work in the next five years," he says. "By next year, we should see a substantial uptick."