The previous year was yet another downer for many Southeast contractors, as the combination of declining opportunities and hyper-competitive conditions made for tough going in 2010, according to ENR Southeast's most recent Top Contractors survey.
Cumulative 2010 regional revenue from respondents to this year's survey totaled slightly above $16.9 billion, or just about $7 billion below the amount reported in last year's ranking, for a roughly 29% decline in cumulative revenue. (It should be noted, however, that numerous firms decided not to participate in this year's ranking—though that is another sign of decline—and that the current Top Contractors list includes 110 firms, compared with the 150 from last year.)
Still, this year's total tells the tale of the Southeast construction market's decline. Three years ago, for example, Southeast contractors collectively reported a record $33.1 billion, or nearly twice this year's volume.
Southeast contractors describe current market conditions as spotty at best, with few areas of strength.
“Current opportunities are a mixed bag,” says Ray Riddle, vice president with Holder Construction Co., Atlanta. With technology-related projects, however, “We see a consistent flow of opportunities.”
Holder is seeing at least “limited activity” in the office buildings market, Riddle says. “We are tracking some speculative deals that are starting to look real.”
Overall, he says, “I am not sure I would call anything improving, just not getting worse. We're starting to see some signs of activity, but not enough to call it an improvement.”
In South Florida, Dale Scott, senior executive vice president with SIKON Construction, Deerfield Beach, senses that the market may be coming back.
“We are experiencing an increase in both the number and quality of opportunities,” he says, with several types of multifamily projects—such as affordable housing, student housing and independent- and assisted-living facilities—showing “some strength.”
Uneven Market Conditions
There continue to be market sector ups and downs. John Carlson, CEO of Charles Perry Partners, Gainesville, Fla., can attest to the uneven conditions.
“We see opportunities in the health-care market increasing, and research and innovation-based projects are also strong,” Carlson says. However, he adds, education projects are decreasing.
With backlogs depleting, aggressive bidding from hyper-competitive contractors will remain the norm.
“Unfortunately, there are still too many contractors chasing too few opportunities,” says Ron Davoli, president and CEO of sewer and water contractor Wharton-Smith, Sanford, Fla.
“The economy has been bouncing along the bottom for two years now with everybody hoping for a recovery,” Davoli says. “The industry needs a year of robust recovery in the general economy before it will recover. I am hopeful that a better 2011 will lead to a recovery in the construction industry in 2012.”
Thomas P. Murphy Jr., president and CEO of Coastal Construction Group, Miami, is more than just hoping for recovery. He's practically banking on it.
“(Future) hospitality projects appear to be on every corner,” Murphy says, noting that Coastal has signed on to build three hotel projects so far and is reviewing seven others currently.
The market for rental apartments is gaining steam, too, he says, noting separate 27- and 44-story projects scheduled to start in early 2012.
“I think Miami is going to surprise the nation,” says Murphy, who believes that another boom period could be approaching. “There are a lot of big projects being considered right now.”
But it is not just Miami where the hospitality market is showing signs of life. Bill Pinto, president of Hardin Construction Co., Atlanta, sees positive signs. “We're seeing more hospitality work, both in Atlanta and other geographic markets we're in,” he says.
On the public sector side, however, governmental capital budgets continued to get sliced and diced, and there's little prospect for improving fortunes there.
“The financial mess of government at all levels is stalling recovery, and this is not going to be fixed overnight,” says Holder's Riddle. He says that some businesses still sense uncertainty and are hedging their bets accordingly by holding back on investment.
ENR Southeast's Top Contractors ranking, like its other “Top” lists, ranks firms based on 2010 revenue from projects located in the states of Florida, Georgia and the Carolinas.
The main ranking chart, in addition to providing regional revenue, also includes market-sector breakdowns for each firm, top regional officers of the ranked companies and information about major projects started during 2010. A series of breakout rankings follows the main chart.