Despite Residential Decline, Southeast Contractors Keep Busy
Coastal Construction recently completed the Porsche Design Tower in Sunny Isles Beach, Fla.
PHOTO COURTESY PORSCHE DESIGN TOWER
Contractors see a slowdown happening in the multifamily market. Here, JE Dunn’s AMLI Arts Center apartment tower in Atlanta nears completion.
PHOTO COURTESY JE DUNN
While the multifamily residential market continued to drive contractors’ revenue throughout the Southeast region in 2016, that sector should be tapering off. At the same time, Southeast contractors say, other project sectors are rising up to fill the gap—preventing any potential lull in workload.
“Over the past year, the pace of activity in the Southeastern U.S. construction market has been stable,” says Rick Goldman, district manager for PCL’s Southeast buildings operation. “There is a great deal of work, consistent with last year in regards to the market and size of projects. There are no significant slowdowns of specific project types, but hospitality projects are rapidly picking up.”
ENR Southeast 2017 Top Contractors
Other contractors expressed similar sentiments about current market conditions.
“I see solid growth in most of the Southeast markets we’re in,” says Dan Kaufman, East region president of JE Dunn. The one outlier is the previously booming city of Nashville, which Kaufman now sees as entering a “slight cool-down.”
Overall, he adds, “I do not see a pause now. Whether you like the president or not, I still think the economy is pretty hot in most areas of the country. I think people are just plowing on in spite of the noise.”
The situation looks similar in South Florida, says Brad Meltzer, president with Plaza Construction Group Florida.
“It’s staying strong but steady,” he says. “The market’s dropped a little bit, to a more realistic, achievable pace. There was a time when everybody wanted to get their condo projects started, and that fever pitch was causing architects and designers to rush their designs to market, and for developers to rush their projects to market.”
As a result, Meltzer adds, “Contractors were having to follow suit to meet those schedules. That put a lot of pressure and stress on the marketplace.”
Condominium and apartment projects are thinning across South Florida, Meltzer says, but the office and retail sectors are increasing in activity. He adds that Plaza Construction is still hiring for all positions.
In North Carolina and South Carolina, Pat Rodgers, president and CEO of Charlotte-based Rodgers Builders, is “seeing activity in all markets,” but especially health care, offices, higher education and K-12 schools.
While she sees “cautious optimism” overall, and no strong indicator of an imminent downturn in Carolina construction markets, Rodgers believes some contractors are being aggressive—and perhaps overly so—in their pursuit of new contracts.
“There are still some people who are trying to grab as much work as they can,” she says, and as a result, “we’re already seeing a fragile sub market.”
Other Southeast markets that appear to be improving include industrial and data center projects as well as facilities related to renewable energy development, says JE Dunn’s Kaufman.
Though the pace of contracting is slowing slightly, it’s hardly relieving the stress on the region’s labor markets. Rodgers, who’s served as CEO of her firm since 1988, calls the current construction workforce situation “more challenging than I’ve seen it in all my years in the construction business.”
Goldman with PCL agrees, stating, “The rising construction demand continues to place pressure on the availability of skilled trade forces.”
“Subcontractors are stressed,” adds Kaufman. “The labor prices are probably going up more than the materials prices. There’s definitely stress in the marketplace on the labor side.”
Even so, he adds: “I think the Southeast has a good run ahead of it. We’re so far into the recovery we probably should have already hit a recession again. But it’s been such a slow recovery that I think we have another couple of strong years ahead of us before a downturn.”
About the Survey
As always, ENR Southeast’s Top Contractors survey ranks firms based upon revenue from the previous calendar year. Unlike previous years, though, the ranking published here covers an expanded region. In addition to the states of Florida, Georgia, North Carolina and South Carolina that previously made up ENR Southeast’s coverage area, the publication has added Alabama, Tennessee and Puerto Rico.
Along with revenue, the main ranking includes other information about each firm, such as top markets and recent contracts. Breakout lists rank firms based upon state and specialty market sector revenue.
This year, the 120 general contractors and construction managers that participated in the Southeast Top Contractors survey together reported just over $33.8 billion in revenue in 2016 from Alabama, Florida, Georgia, North Carolina, South Carolina, Tennessee and Puerto Rico. That marks a $10-billion increase compared with the $23.45 billion reported in last year’s survey, which, again, covered a smaller geographic footprint.
Revenue from Alabama, Tennessee and Puerto Rico didn’t account for the entire increase, however. Those three areas generated roughly $4.4 billion in revenue for this year’s Top Contractors respondents.
Contractors collectively reported approximately $29.4 billion in revenue from the pre-expansion states of Florida, Georgia and the Carolinas—a roughly $6-billion increase from last year’s survey total of $23.45 billion.
Following is a break-down for each state’s tally, in descending order: Florida, $13.3 billion; North Carolina, $6.6 billion; Georgia, $6.3 billion; South Carolina, $3.2 billion; Tennessee, $3 billion; and Alabama, $1.4 billion. Puerto Rico added $58.8 million.
ENR Southeast invites its readers to review this year’s Top Contractors rankings, including more than 25 breakout charts based on states, construction types and project delivery methods.
