HITT Contracting Corp., this year’s ENR MidAtlantic Contractor of the Year (see p. MA20), cracked the region’s top three for the first time, reporting $1.4 billion in 2018 revenue. The Falls Church, Va.-based firm rose from No. 5 on last year’s survey, when it reported $1.1 billion in regional revenue.

IMC Construction Inc. made one of the biggest leaps in the ranking. Propelled by a 58% year-over-year revenue increase, the Malvern, Pa.-based firm jumped five spots, to No. 18, with $484.86 million in revenue. “The last several years have seen extensive growth,” says Thomas Verderame, IMC’s vice president of production. “We anticipate the growth to continue into 2021 and possibly beyond, but expect it will be at a much slower rate than we have experienced the last four to five years.”

Strong Pulse for Health Care

Verderame attributes the region’s construction expansion to “millennial migration” to cities such as Washington, D.C., Baltimore, Wilmington, Del., and Philadelphia. “Development has also benefited from easy access to financing and very favorable interest rates,” he says. 

Matt Hartzler, president of Warfel Construction Co., agrees that interest rates continue to help shape the construction market. Ranked No. 36 with $191.0 million in revenue, Warfel is based in East Petersburg, Pa. “Some businesses may be moving forward with construction projects now due to projections that rates may rise in the future,” Hartzler says.

The MidAtlantic health care market—which brought a combined $3.4 billion in business to this year’s ranked firms—is also a major factor in IMC’s and Warfel’s recent success. IMC ranks No. 6 in health care work, with $177.97 in revenue; Warfel ranked No. 16 with $67 million.

A key project that IMC recently completed is a $150-million office high-rise in Philadelphia for Penn Medicine. In new business, the firm’s largest project to break ground last year was a $163-million advanced outpatient care center in Radnor, Pa., also for Penn Medicine.

Looking ahead, Hartzler foresees strength in the region’s health care sector, particularly in Pennsylvania, the home of several major health care providers, which, he says, “continue to seek growth and market share.”

Warfel is currently building the 101 North Queen revitalization mixed-use project in Lancaster, Pa. The firm says the project  “breathes new life” into a four-story, windowless former manufacturing facility that was widely seen as an “eyesore.” The approximately $22-million, 21-month project is expected to open in September.

Labor Shortage

“We continue to see clients compressing project schedules while keeping budgets fixed,” Verderame says. “To successfully execute work in this environment, we need to have skilled craftspeople. Lack of manpower or inefficient labor and productivity can undermine project progress.”

The tight labor market could have a particular impact in Northern Virginia, where a lack of craftworkers is “putting significant price pressure on projects,” says Eric Tievy, Consigli Construction Co.’s director of operations for D.C.

Tievy says that demand for urban residential projects will grow further in that part of the region with the construction of Amazon’s second headquarters at National Landing in Arlington. Amazon’s targeted neighborhood is not far from where Virginia Tech recently announced it will build a $1-billion, 1-million-sq-ft Innovation Campus over 10 years. A Potomac Yard Metrorail Station is also going to be constructed in the same vicinity. The effects of the skilled-labor shortage “could eventually cause some private development to slow,” Tievy warns.

Nevertheless, Tievy expects that any impending slowdown caused by higher labor costs will be a  “brief blip.” He says that “the larger demand created by the overall job and population growth in the area will continue to be a positive factor for new construction for the foreseeable future.”

Heavy Traffic

A rise in population is also having an impact on the region’s roads, bridges and other infrastructure. Stephen Ordung, vice president of operations at No. 58 Curtis Contracting Inc., says, “Infrastructure is well behind the need, and the need exposes itself daily.”

The West Point, Va.-based firm reported $70 million in regional revenue. (It didn’t submit a survey response last year.) Ordung says, “We see a continued strong market for the foreseeable future despite [federal] legislation not being passed to support the long-term infrastructure needs.” 

Ordung—whose firm is building the $18-million Woolridge Road widening in Chesterfield, Va.—says municipalities are funding and managing capital improvements that the state traditionally has handled. He notes that because Curtis has mainly dealt with the Virginia Dept. of  Transportation over the years, it will be a challenge to build relationships with municipal and other local governments.

Meanwhile, the Maryland DOT is studying a proposed I-495 and I-270 widening, which could result in the nation’s largest transportation public-private partnership to date. The up to $11-billion project could include toll lanes and expanding about 70 miles of interstate, MDOT’s State Highway Administration says.