Steady Market Keeps Region's Specialty Firms in Demand
As construction continues at a steady pace throughout New England, specialty contractors remain well positioned to pick and choose their projects. Some of the firms participating in this year’s inaugural ENR New England Top Specialty Contractor survey confirm that it is a seller’s market.
During each of the last four years, crews of Cambridge-based mechanical contractor TG Gallagher logged in about 325,000 worker hours. TG Gallagher, ranked No. 6 on the survey, reported $108.23 million in revenue for 2016. Despite the seller’s market, Brian Potter, Gallagher’s chief executive, says the firm has extra capacity and could handle as much as $130 million worth of work. “Our revenue has been pretty neutral based on the opportunities out there,” he says. “We try to focus on making sure we can do the work properly and not just gobble up new work.”
Gallagher isn’t the only New England specialty contractor that has the luxury of choosing its projects. The 17 firms that participated in the ENR New England survey reported a total $1.6 billion in regional revenue in 2016. By comparison, the 40 firms that participated in this year’s ENR New York-New Jersey Specialty Contractor survey reported $4.1 billion in revenue while roughly 90 respondents to the ENR Southeast survey collectively reported $7.3 billion in 2016. ENR Southwest Top Specialty Contractors Survey included data from more than 40 firms, with total revenue topping $1 billion.
The Top 5 firms in the Specialty Contractor survey recorded a combined $977.4 million in 2016 revenue in the region, which includes Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont.
EMCOR Group Inc., No. 1 on the survey, had the highest overall revenue—$313.3 million. With 100% of its regional revenue coming from mechanical work, the Norwalk, Conn.-based contractor also had the most mechanical contracting revenue. Four other firms in the survey reported mechanical work in 2016, accounting for $571.1 million of the total revenue reported.
Another four firms reported $300 million in revenue from electrical work. All of the work of Wayne J. Griffin Electric Inc., No. 2 on the list, was electrical. The company’s nearly $225 million in revenue was good enough to top the electrical sector.
The $2.4-billion Wynn Boston Harbor Casino development in Everett, Mass., was listed by three firms surveyed as their top project to break ground in 2016, including S&F Concrete Contractors Inc., which is No. 3; Liberty Construction Services LLC, which is No. 4 and Moretrench Assonet, which is No. 16.
Mechanical work is healthy because the renovation market is active, Potter says.
Renovations also provide plenty of work for other subs, especially during summer months at colleges. “There’s huge competition among colleges to attract students and nice and newly updated housing has been pretty robust,” says Matthew Soep, president of Soep Painting Corp., which is No. 13 on the list. “They want it done fast too.”
Soep’s student housing renovations, include Harvard University’s $75-million Standish Hall. In addition to that 81,000-sq-ft renovation, Soep has work at Boston University, Boston College and Northeastern University.
The union shop hasn’t struggled to attract workers. The firm has between 100 to 150 union workers at any given time and has grown as much as 15% each year during the last several years.
Gallagher and Soep are both working on the Joan and Edgar Booth Theatre and Boston University Production Center. The 75,000-sq-ft facility, with a 250-seat auditorium, is scheduled to be fully open in the spring. The project is part of the BU’s $50-million investment in performing arts construction.
The BU project is on a former parking lot. But a shortage of available real estate is likely to continue to fuel renovations says Potter, who also predicts the residential market will soften by the end of next year. He says a market shift toward health care and higher education would benefit Gallagher since the contractor typically doesn’t focus on residential.
Like Soep, Potter isn’t worried about finding union labor. Gallagher’s 40,000-sq-ft prefabrication facility in Andover, Mass., employs 20 union laborers, while another 125 work at jobsites. The difficulty is finding qualified project managers during the current building boom.
“Finding all those people, not in the trades, to support our tradespeople is tough right now,” says Potter.