As the general building market continues to show strength, several top contractors have boosted their revenues, thanks in part to an increase in megaprojects. Numerous vertical building projects valued at more than $1 billion have hit the market in recent years, and more could be on the horizon.
Turner Construction is working on several developments valued at more than $1 billion each. In March, Turner topped out the 1.5-million-sq-ft Wilshire Grand redevelopment in Los Angeles.
The 73-story building will contain 400,000 sq ft of office space and 42 floors of hospitality, with 900 guest rooms. The project is scheduled to complete in March 2017. In July, a joint venture of Turner and AECOM was selected to build the new 70,000-seat Rams Stadium, which is sited in Los Angeles and valued at more than $2.5-billion.
“We’re seeing an unprecedented amount of large projects,” says Mike Kuntz, executive vice president at Turner Construction. “When we started the Wilshire Grand two and a half years ago, I was amazed that we were taking on a $1-billion [building] project. I never thought I’d see that in my lifetime. Now, we have a few of them.”
And more are on the radar. Kuntz says Turner has targeted 10 $1-billion-plus projects it plans to pursue in the next year. Those megaprojects are in addition to numerous other large projects that Turner is eyeing.
Because large projects are multiyear jobs, those jobs could help to sustain revenues into the future, Kuntz notes. After domestic building revenue dipped slightly to $8.3 billion in 2015 from $8.4 billion in 2014, Kuntz says Turner has seen a stronger 2016 and he expects that to continue through 2017 and into 2018.
Skanska is seeing a similar trend. Its domestic general building revenue dropped to $3.5 billion in 2015 from $3.9 billion in 2014, but revenues are back on the rise, says Bill Flemming, president and CEO of Skanska USA Building.
Flemming says revenues dipped as the firm began to ramp up work on new large projects. “A lot of these larger projects take a few years to materialize,” he says. “The market wasn’t as hot in 2014 as it is now. We’ll see a steady increase for this year, maybe a slight dip next year and then an increase the next year with everything on the docket now.”
Flemming says Skanska also is targeting several building projects valued at more than $1 billion each. “One advantage is that they span you over recessions,” he says. “If you look at the World Trade Center, that ended up being a six-year project for us. Those are good jobs to get you through recessions. We look to diversify and have some big projects like that in our portfolio.”
Still, Flemming says he wants to keep a limited number of megaprojects on the company’s prospect list. “If you put all your eggs in one basket and those projects don’t go forward, that can really affect your business,” he says.
A joint venture of Skanska and DPR Construction last year left its role as general contractor on the multibillion-dollar Apple Headquarters project in Cuppertino, Calif. The project is being completed by Tutor Perini, which saw its domestic general building revenues jump to $3.4 billion in 2015 from $2.3 billion in 2014.
Suffolk Construction added a mega-project to its docket in August, landing a $1-billion contract to build the 3-million-sq-ft Wynn Boston Harbor gaming resort in Everett, Mass.
The project follows a strong 2015, when domestic general building revenues hit $2.5 billion, up from $2 billion in 2014.
Mike McKelvy, CEO of Gilbane Building Co., also credits large projects for the company’s recent success. Domestic general building revenues rose to $3.6 billion in 2015 from $2.9 billion in 2014, and McKelvy says the company is on target to exceed that in 2016.
“If we make our projections, it will be a record year for the company,” he adds.