Regular readers of Engineering News-Record are familiar with the big names in the construction industry that lead off our annual “Top” lists of firms ranked by revenue. But size is no guarantee of success. The industry’s largest firms haven’t been immune from the global economic downturn. Between 2008 and 2009, ENR’s Top 400 Contractors, as a group, saw a 14.1% drop in revenue. Only nine of the top 100 firms on that list saw their revenue increase in 2009.
When times are good, it is almost expected that well-established firms will reap positive returns; it’s when the market presents significant challenges that companies prove their mettle.
In that spirit, ENR New York features its first-ever “Six Companies to Watch” list.
The firms spotlighted here—representing owners, general contractors, specialty contractors, architects, engineers and product manufacturers—have all made moves to strengthen their positions in New York, New Jersey and Connecticut in 2011.
Three of these companies made major acquisitions recently to help them diversify their offerings and create operational efficiencies. Structure Tone and Donaldson Interiors are both well-established firms in the tenant improvement and renovation sectors, areas that have held up relatively well through the recession, analysts say. Extell Development finds itself as one of the only developers in the New York-metro area with the financial resources to move forward with major towers. ThinkEco, a new player in the market, is poised to capitalize on the growing green movement.
In these turbulent times, it is not a given that these firms will rise above the rest in 2011, but all have positioned themselves as ones to watch.
Building on financial growth early in the recession, firm gets aggressive going forward
At a time when the economy has forced many firms into survival mode, Donaldson Interiors has experienced an upswing in business. From 2007 to 2009, the Hauppauge, N.Y.-based company’s revenues increased by 26%, and Doug Parrish, vice president and director of operations, says the firm remains in a growth mode.
“We’ve accomplished this, and continue to accomplish this, by giving our clients a single-source option,” Parrish says. “We’ve shown our clients through our preconstruction division what we can do to value something out, giving more options to the owner.”
Donaldson has also benefited from companies downsizing to smaller, less-expensive office spaces since firms on the move still need to tailor their new digs to accommodate their needs. Much of the work is taking place in the financial sector. Hospitals also continue to build and need interior fit-outs.
Donaldson Interiors employs about 500 people, including 400 union carpenters. The company works primarily in New York City and Long Island, but also in New Jersey and Connecticut.
Family-owned and operated, Donaldson Interiors, founded in 1906, has expanded its millwork division, AllCraft Fabricators, and promoted its ability to handle all aspects of the job. This includes the scope of its union jurisdiction such as drywall, framing, custom ceilings and millwork.
“The client doesn’t have to go to a different company to buy millwork or worry about additional coordination meetings between finishes,” Parrish says. “These things save general contractors on their general conditions. It saves them money. They don’t worry about certain things because they know it will be taken care of by us. There’s no one else to blame.”
Parrish hopes that meeting owners’ new value expectations will present challenges for subcontractors in 2011. “To be truthful and open in the bidding portion with accurate RFIs is how everyone is going to be successful,” he says.
Subcontractors, including Donaldson, have been accepting jobs with slim returns on investment just to keep staff busy—and so they can jump when a general contractor calls. Parrish adds, “We do that as an investment in the future, to be able to satisfy the clients tomorrow.”
Private firm bucks the trend and pursues base building in a down market
It’s easy to keep an eye on Extell Development these days; it’s one of the few developers making any moves in New York’s still-flat real estate market.
While most major developers focus their efforts on buying up cheap properties, the firm founded by Gary Barnett is opening buildings, managing new projects and planning groundbreakings across Manhattan in the residential and commercial markets.
“With Extell, Gary Barnett has built himself quite a real estate empire, both through good times and bad,” says Lou Coletti, president and CEO of the Building Trades Employers’ Association of New York. “You don’t see many other people building to the scale he’s at right now. He’s very well-respected in the financial community, and with his ability to get financing, he’s become one of the top-echelon developers in New York City.”
The notable list of projects under construction includes Carnegie 57 on West 57th Street, a 75-story, 800,000-sq-ft residential condominium and hotel tower rising on an L-shaped lot. The project, designed by Pritzker Prize-winner Christian de Portzamparc, is set to open in 2013.
Extell’s International Gem Tower, a 34-story commercial condominium tower, has broken ground in the diamond district on 47th Street. The building will cater to the diamond, gem and jewelry trades, complete with high-end security and vault facilities, emergency generators and spaces to support “light jewelry manufacturing.” After the foundations were finished last fall, construction was halted on the project as the developer sought more tenant signings, according to local real estate pundits, but some observers expect work to resume this year. The design by Skidmore, Owings and Merrill calls for a crystalline curtainwall featuring embedded diamond-shaped steel medallions.