A strong economy and more business across multiple sectors drove 2019 revenue growth, according to some of the most productive contracting firms in California and the Northwest.
For the ENR California’s annual Top Regional Contractors survey, 92 firms reported 2019 revenue of $44.85 billion in California and Hawaii, with the top 10 firms bringing in $18.98 billion alone. Last year, the top 10 contractors reported 2018 regional revenue of $18.27 billion, while 75 contractors tallied 2018 revenue of $39.58 billion.
For ENR Northwest, which covers Alaska, Oregon and Washington, 31 contractors reported 2019 regional revenue of $11.69 billion, with the top 10 contractors earning $9.51 billion. In 2018, Northwest’s top 10 contractors earned $7.13 billion.
Eric Foster, chief executive of Swinerton—which maintained the top place on ENR California’s list with 2019 revenue of $3.02 billion, and placed 10th on ENR Northwest’s ranking with $543.25 million for the same period—says 2019 revenue for both regions was largely supported by multifamily housing, Native American gaming, office, education, aviation, health care, mass timber projects and tenant improvement and build-outs.
For 2020, Swinerton originally projected revenue growth nationwide, but the firm now expects revenue of $4.6 billion, similar to 2019 figures, $3.6 billion of which is projected for California and the Northwest, roughly flat with its combined 2019 regional revenue of $3.63 billion.
“COVID-19 has impacted construction operations, in that many projects have been put on hold or outright canceled as clients navigate the impacts of COVID-19 and shutdown orders on their own original business plans for the year,” Foster says. He notes that the renewable energy and affordable-housing sectors are thriving, and education, health care and public safety projects continue to progress. However, he says that aviation, office and hospitality work is contracting.
Darin Stegemoller, senior vice president at Kansas City, Mo.-based JE Dunn Construction, which rose to the Northwest’s 13th spot, with regional revenue of $230.93 million, says a robust economy and clients’ high level of confidence drove growth, especially in manufacturing, advance industries, aviation, transportation, mission critical (data centers), education, hospitality and health care.
“The Northwest market remains busy, though a reduction in revenue for governments may affect the public-sector building programs unless a federal infusion of dollars comes in,” says Stegemoller. He notes that the Northwest continues to be a strong growth market for data centers, advanced industries and manufacturing work, while some health care and hospitality projects have been delayed because COVID-19 responses have changed revenue streams and forced some industries to rethink future deliveries.
Stegemoller points to possible changes in health care work, such as diminished need for exam room space as doctors and patients shift to telemedicine. Meanwhile, higher education institutions face financial challenges through canceled sports programs, reduced student housing occupancy and lower attendance as some students consider taking a gap year in lieu of paying for remote learning.
“Working, educating and connecting in general over virtual platforms, on the other hand, is driving the need for more data centers, reliable energy and connectivity infrastructure,” Stegemoller adds.
He says flexibility has been a key client demand as owners expect to use buildings for 50-plus years and must prepare for rapid changes. “However, flexibility is now being discussed also for the hopefully short term during COVID-19 with semi-permanent solutions for navigating physical distancing and personal safety.”
Vincent Ryan, executive vice president of J.T. Magen & Co., attributes the firm’s affiliate JTM Construction Group Inc.'s 2019 regional revenue strength to diversifying its portfolio. JTM CGI ranked No. 90 on ENR California’s list and reported 2019 California revenue of $23.9 million, with 64% from telecommunications projects and 36% from general building. Ryan says JTM CGI is increasingly working in retail, hospitality, interior office and critical work like data centers.
Ryan says that while COVID-19 is slowing its 2020 business, J.T. Magen’s business has seen little to no impact—so far. Ryan expects continued growth in office build-outs and data centers as companies adjust to safety regulations and more remote work, but says the retail sector will be hurt.
“You do have clients that are in design phase now that have slowed down to look at the impacts of social distancing and how to approach layout moving forward if that would be permanent,” Ryan says.