A year ago, signs of the construction market’s collapse were as clear as a crisp autumn day – backlogs were drying up, revenues were swept away, sputtering projects went dormant, and new work was nowhere on the bare landscape. And in the midst of that chill in November 2009, Structure Tone, a New York contractor with a $3 billion book, jumped on an acquisition of L.F. Driscoll, a Philadelphia market leader with $650 million in work. Most market observers say the construction sector’s swoon actually opened a prime season of mergers and acquisitions, a time for strong firms to not
In the wasteland of the New York region’s slumping construction market, K-12 public schools were the oasis sustaining contractors, designers, and others as work dried up elsewhere. “Thank God for the schools,” says Tom Rogér, vice president for Gilbane Building. “It maintained some level of consistent activity through the recession.” The plodding finance process for school construction had set up several years’ worth of projects as the recession deepened. “Last year, there was still a significant amount of new construction going on, because those were projects approved three years ago,” Rogér adds. But the downturn’s ripples have begun lapping against
In a roaring development cycle, size is an edge. The construction company with a monster lineup of staff, resources, equipment, and experience nearly always has a jump snaring attractive projects – benefiting from economies of scale and fatter profit potential. Smaller players generally have to find niches and exploit them rather than compete against larger contractors. Photo: BKSK Architects ICS Builders recently broke ground for the new $4.1 million Community of the Holy Spirit building in Manhattan. Photo: Lauren Mancuso A $30-million, 176,000-sq-ft expansion and renovation project for the Ward Melville High School in East Setauket, N.Y., includes a new
As construction managers build new strategies – or otherwise scramble to respond to the development market slowdown – their moves often have significant repercussions for subcontractors. Related Links: Playing Small Ball Among the prime concerns for subcontractors are the dirt-cheap rates that some general contractors and construction managers are bidding for new work. That in turn has surety companies that bond subcontractors in similar distress, says Jay Price, executive v.p. of business development for the Conti Group, a contractor based in South Plainfield, N.J. “[Surety companies] are very nervous that the subcontractor default rates are going to be skyrocketing because
One of the harshest construction markets in decades is reminding contractors why it’s great to be a specialist, but even better to have many specialties. Contractors across the New York region are reaching into new markets to find business, but they’re taking many different paths. Related Links: Fit for Survival Crystal Ball Blues For Structure Tone, a decision to pursue work in the health care sector started several years ago, says Robert Mullen, the CEO. To establish a foothold, the $2 billion construction manager started modestly. “We were able to get some small projects with major health care institutions just
Construction industry faithful who thought 2009 was painful should stop thumbing through this year's calendar. Most observers say the region's market is going to get worse. At least in 2009, many contractors had backlogs to finish, even if they were lighter than normal, says Mike Kolakowski, CEO of KBE Building of Farmington, Conn. “I think 2010 will be a challenging year for a lot of companies,” he adds. “I believe that we’ll start to see some positive signs in 2011 but not feel the effects until the middle to end of that year and into 2012.” Related Links: Fit for
The storm clouds over the New York region’s construction industry had formed in late fall 2009 as project backlogs emptied and new jobs were few on the horizon. But that bleak juncture is when some general contractors and construction managers geared up for investments – even some that escaped them during the dizzying market boom of recent years. Related Links: Contractors Stretch for New Markets Crystal Ball Blues Top Contractors For Structure Tone, a decision to diversify its expertise was part of a long-term strategy – one the market bust didn’t deter, says Robert Mullen, CEO of the New York-based
“Grim.” “Dire.” “Hairy.”The words construction industry veterans are using to describe the state of project financing show how far the market has fallen since the 2008 economic crash. But while the lean times aren’t over, the market mood appears to be changing from shell-shocked in trenches to a cautious look outward for opportunity. “It is pretty dire out there, with up to 15 to 20% of construction loans in default,” says David Pfeffer, an attorney and co-chair of the construction practice group at New York’s Tarter Krinsky & Drogin. “But I have been seeing a little light at the end
The Empire State Building was a marvel when it debuted as the world’s tallest building in 1931. Built in 18 months, the 102-story building kicked off a race for urban construction heights that continues today. Photo: Skanska USA Skanska USA was recently awarded LEED Platinum status for the $4.6 million fit-out of its own corporate headquarters at the Empire State Building. Related Links: Getting to LEED Platinum It’s only fitting that a recent $4.6 million fit-out in the building may set the benchmark for what it costs, what it takes, and how much can be saved in the long haul
