As the U.S. economy sputters back to life, contractors wait for the green light on projects [2013 Giants 300 Report]

The narrative of the U.S. nonresidential construction industry of the last 12 months has been one of growth, but in all the wrong places. While five of the 16 major construction sectors grew last year—some significantly—those that experienced the largest gains represent a relatively small portion of the overall market. On the flip side, several sectors that saw the steepest decline last year happen to make up a fairly sizable portion of nonresidential construction.

Lodging, for example, has been on a tear in recent months, growing 16.6% between April 2012 and April 2013 in order to meet the increase in business and leisure travel. Double-digit YOY growth is good news any way you look at it, but the fact that lodging represents just 2% of the overall market means it will do little to move the needle. Same goes for the transportation (11.4% growth), commercial (1.9%), and office (1.6%) sectors: their growth is muted by their relatively small size.

On the other hand, major sectors like education, power, and highway and street all saw a drop in construction spending last year.

“As a result, when you look at the aggregate, we’re not seeing much of a recovery in nonresidential construction spending,” said Anirban Basu, Chief Economist with the Associated Builders and Contractors (ABC) and Chairman and CEO with Sage Policy Group, during his recent mid-year construction forecast.

TOP CONTRACTORS

2012 Total Revenue ($)

1 Turner Corporation, The $9,084,870,000

2 Fluor $4,268,290,500

3 Skanska USA $4,076,092,814

4 PCL Construction Enterprises $3,981,419,164

5 Whiting-Turner Contracting Co., The $3,699,782,771

6 Clark Group $3,563,246,719

7 Balfour Beatty $3,453,790,847

8 Gilbane $3,083,529,000

9 Structure Tone $2,947,433,000

10 McCarthy Holdings $2,546,000,000

SEE FULL LIST

TOP CONSTRUCTION MANAGEMENT FIRMS

2012 Total Revenue ($)

1 URS Corp. $297,282,076

2 STV $227,390,000

3 JE Dunn Construction $207,304,154

4 Barton Malow $182,697,897

5 Parsons Brinckerhoff $179,900,000

6 S. M. Wilson & Co. $168,859,740

7 Turner Corporation, The $157,920,000

8 Jones Lang LaSalle $140,020,000

9 LPCiminelli $139,198,329

10 Structure Tone $132,000,000

SEE FULL LIST

“What we’re seeing is a real dichotomy in the market. There is evidence of private-sector improvement in the data, but we also see strong evidence of constrained public-sector budgets affecting major markets like education and public safety,” he says.

Basu predicted a 5-6% bump in total nonresidential construction spending in 2013, with the bulk of the gains coming from the commercial and industrial sectors. “It’s not terrible news, but given how far nonresidential activity had fallen, this is a really slow rebound at best,” he added.

Adding to the frustration of AEC firms, said Basu, is the reluctance of many building owners and developers to pull the trigger on new construction and renovation projects. He said there are enough positive indictors in the U.S. economy to justify greenlighting projects: 2% GDP growth this year, even with the sequestration measures taking hold; falling unemployment numbers; positive consumer spending and household wealth figures; an upturn in housing construction; near-historic-low interest rates; shrinking office and industrial vacancy rates; healthy hotel occupancy rates; and budget surpluses in some states.

“All of this suggests we should be in the midst of a fairly robust nonresidential construction recovery, but it’s simply not taking place,” said Basu, offering some possible explanations: uncertainty related to the Affordable Care Act; an investor community that remains largely skittish; slow population growth; troubled state and local government budgets; public pension concerns; high unemployment rates; European Union budget woes; and the overall rise in healthcare costs.

This mixed bag of positive and negative economic data translates into a gradual recovery for the nonresidential construction market.

Read BD+C's full Giants 300 Report

Architect Zaha Hadid is in high demand these days, designing projects in Hong Kong, Milan, and Seoul, not to mention the London Aquatics Center, the swimming arena for the 2012 Olympics. But one of the firm’s smaller clients, the city of Elk Grove, Calif., recently conjured far different kinds of aquatic life when members of the City Council and the public chose words like “squid,” “octopus,” and “starfish” to describe the latest renderings for a proposed civic center.

| Apr 5, 2011

Are architects falling behind on BIM?

A study by the National Building Specification arm of RIBA Enterprises showed that 43% of architects and others in the industry had still not heard of BIM, let alone started using it. It also found that of the 13% of respondents who were using BIM only a third thought they would be using it for most of their projects in a year’s time.

Currently Reading

As the U.S. economy sputters back to life, contractors wait for the green light on projects [2013 Giants 300 Report]

TOP CONTRACTORS

TOP CONSTRUCTION MANAGEMENT FIRMS

Tags

| Apr 12, 2011

| Apr 11, 2011

| Apr 8, 2011

| Apr 5, 2011

| Apr 5, 2011

| Apr 5, 2011

| Apr 5, 2011

| Apr 5, 2011

| Apr 5, 2011

| Apr 5, 2011

Most Popular Content

Magazine Subscription

Get our Newsletters

Follow BD+C: