flexiblefullpage

HORIZONTV FEATURING BD+C: WATCH EPISODES ON DEMAND AT HORIZONTV

Menu View Full Menu
Subscribe Here
billboard
interstitial1
catfish1
Currently Reading

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

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

There are enough positive indictors in the economy to justify greenlighting projects, but building owners and developers remain reluctant to pull the trigger. 

By David Barista, Editor-in-Chief | July 16, 2013
Completed in March 2012, the sleek office and prototype facility for global defe
Completed in March 2012, the sleek office and prototype facility for global defense contractor BAE Systems consolidates the companys operations in Sterling Heights, Mich. Walbridge was general contractor on the project, which involved building a 55,000-sf prototype center with 20 bays for vehicle and subsystem testing, and a 164,000-sf office structure to accommodate 600 employees. SmithGroupJJR was the AE firm on the project, providing architectural, structural, mechanical, and electrical services. PHOTO: COURTESY WALBRIDGE AND SMITHGROUPJJR
Continue Reading
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
 

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
“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

Tags

Related Stories

| Aug 11, 2010

29 Great Solutions for the AEC Industry

AEC firms are hotbeds of invention and innovation to meet client needs in today's highly competitive environment. The editors of Building Design+Construction are pleased to present 29 "Great Solutions" to some of the most complex problems and issues facing Building Teams today. Our solutions cover eight key areas: Design, BIM + IT, Collaboration, Healthcare, Products, Technology, Business Management, and Green Building.

| Aug 11, 2010

Permanent tribute to Daniel Burnham and his Plan of Chicago proposed for Grant Park Museum Campus

The first-place winner of a design competition for a public memorial celebrating Daniel Burnham's impact on Chicago will be announced at a news conference Wednesday, July 8, at 10am CDT. The proposed site for the memorial is on the Museum Campus just north of The Field Museum. The announcement comes after nearly two years of planning by Chicago's architecture, design and urban planning community about how to best honor the legacy of Burnham and the Plan of Chicago he co-wrote with Edward Bennett.

| Aug 11, 2010

Arup, SOM top BD+C's ranking of the country's largest mixed-use design firms

A ranking of the Top 75 Mixed-Use Design Firms based on Building Design+Construction's 2009 Giants 300 survey. For more Giants 300 rankings, visit http://www.BDCnetwork.com/Giants

| Aug 11, 2010

Architecture billings index takes turn for the worse

After showing signs of stabilization over the last three months, the Architecture Billings Index (ABI) plunged nearly five points in June. As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lag time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the June ABI rating was 37.7, far lower than the 42.9 the previous month.

| Aug 11, 2010

International Living Building Institute established to advance 'living buildings'

The idea of a Living Building, a high-performance building that produces its own power and cleans and reuses all of its water, is gaining momentum around the world.  In an effort to oversee the global development of Living Buildings, the International Living Building Institute (ILBI) has been established. 

| Aug 11, 2010

10 tips for AEC marketers in today's tough economy

| Aug 11, 2010

Populous selected to design 'crystalline skin' stadium for 2014 Winter Olympics

Russian officials have selected global architect Populous to design the main stadium for the 2014 Winter Olympic and Paralympic Games in Sochi, Russia. The 40,000-seat stadium will feature a crystalline skin that "engages with its surroundings by day and provides an iconic representation of the color and spectacle of the games when illuminated at night," said Populous senior principal John Barrow.

| Aug 11, 2010

M&A deal volume down 67% in engineering/construction sector: PricewaterhouseCoopers

Global Economic Uncertainty Results in Sluggish Deal Activity in U.S.; China Shows Significant Opportunity for Growth

| Aug 11, 2010

Three Opus Corporation companies file for bankruptcy

Opus Corporation, a developer headquartered in Minnetonka, Minn., filed for bankruptcy in three of its five regional operating companies: Opus East, Opus South, and Opus West. CEO Mark Rauenhorst said sharp declines in commercial real estate values and tight credit markets caused difficulties in refinancing assets and restructuring lending agreements.

| Aug 11, 2010

Nigel Gallaher, AIA, joins TRO JUNG|BRANNEN as a principal in healthcare practice

boombox1
boombox2

Top Articles

native1

More In Category

halfpage1

Most Popular Content

  1. 2021 Giants 400 Report
  2. Top 150 Architecture Firms for 2019
  3. 13 projects that represent the future of affordable housing
  4. Sagrada Familia completion date pushed back due to coronavirus
  5. Top 160 Architecture Firms 2021