Southwest Specialty Contractors Still Hoping for Steady Market Improvements
Despite ongoing optimism for the Southwest construction market, 2014 hasn't become the boom year that most firms were anticipating.
Last year's ENR Southwest Specialty Contractors ranking revealed that eight of the top 10 firms reported higher revenue in 2012. In the current survey, based on 2013 revenue, only five of the top 10 firms showed an increase.
But the revenue of those top 10 firms rose to $1.8 billion in 2013 from $925 million in 2012.
Specialty contractor of the year Helix Electric of Las Vegas is one of the firms that grew, posting revenue of $112 million, up from $95 million in 2012.
Specialty contractor of the year runner-up Midstate Mechanical also saw a significant boost as revenue rose to $90 million in 2013 compared with $69 million in the year-earlier period.
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But Midstate Mechanical's revenue totals also indicate the current level of volatility in the regional market; the firm had revenue of $82 million in 2011.
According to Doug Jones, Midstate Mechanical CEO, the lack of predictability in Southwest construction market forecasts has many firms yearning for at least two or three years of steadily increasing revenue, unlike the peaks and valleys of the past five years.
"In Phoenix, the market seems to be getting worse, not better," Jones says.
The overall Southwest market, however, is improving, although modestly. Derek Wright, president of Suntec Concrete, Phoenix, says a positive way to look at current trends is that with fewer jobs available, competition increases and that's a good thing. It also helps to alleviate the big labor shortage problems that have developed in other areas of the country.
"The market remains very competitive in workload and price," Wright says. "However, that competition is a great motivator that continues to foster creativity, innovation and better products. Ultimately, it's about creating the best value for our clients and the best opportunities for our employees."
One market sector that may be on the upswing is the construction of data centers, says Dan Puente, president and founder of D.P. Electric.
"In the Southwest market, D.P. Electric has seen quite an uptick in the mission-critical sector due to the opportunities for growth in the region," Puente says. "We are currently working on a 100,000-sq-ft data center and 4.5-MW data hall for CyrusOne. This project is extremely fast-track, with the project schedule being ground up to commissioning in 52 working days on a 24/7 schedule."
According to an August report by Los Angeles-based real estate service group CB Richard Ellis, the Phoenix metropolitan area is second only to Northern Virginia for data center service, with the lowest vacancy rates of any of the top locations in the country at 3%.