flexiblefullpage
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
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

Related Stories

Adaptive Reuse | Jul 12, 2024

Detroit’s Michigan Central Station, centerpiece of innovation hub, opens

The recently opened Michigan Central Station in Detroit is the centerpiece of a 30-acre technology and cultural hub that will include development of urban transportation solutions. The six-year adaptive reuse project of the 640,000 sf historic station, created by the same architect as New York’s Grand Central Station, is the latest sign of a reinvigorating Detroit.

University Buildings | Jul 11, 2024

3 considerations for designing healthy, adaptable student dining

Amanda Vigneau, IIDA, NCDIQ, LEED ID+C, Director, Shepley Bulfinch, shares three ways student dining facilities have evolved to match changes in student life.

Healthcare Facilities | Jul 11, 2024

New download: BD+C's 2024 Healthcare Annual Report

Welcome to Building Design+Construction’s 2024 Healthcare Annual Report. This free 66-page special report is our first-ever “state of the state” update on the $65 billion healthcare construction sector.

Transit Facilities | Jul 10, 2024

Historic Fresno train depot to be renovated for California high speed rail station project

A long-shuttered rail station in Fresno, Calif., will be renovated to serve as the city’s high speed rail (HSR) station as part of the California High-Speed Rail Authority system, the nation’s first high speed rail project. California’s HSR system will eventually link more than 800 miles of rail, served by up to 24 stations.

Government Buildings | Jul 8, 2024

GSA adopts new accessibility guidelines for federal properties

The U.S. General Services Administration (GSA) adopted a new rule with new accessibility guidelines for federal buildings. The rule establishes that pedestrian facilities in the public right-of-way are readily accessible to and usable by people with disabilities. 

Office Buildings | Jul 8, 2024

Office vacancy peak of 22% to 28% forecasted for 2026

The work from home trend will continue to put pressure on the office real estate market, with peak vacancy of between 22% and 28% in 2026, according to a forecast by Moody’s.

Virtual Reality | Jul 8, 2024

Can a VR-enabled AEC firm transform your project?

With the aid of virtual reality and three-dimensional visualization technologies, designers, consultants, and their clients can envision a place as though the project were in a later stage.

Green | Jul 8, 2024

Global green building alliance releases guide for $35 trillion investment to achieve net zero, meet global energy transition goals

The international alliance of UK-based Building Research Establishment (BRE), the Green Building Council of Australia (GBCA), the Singapore Green Building Council (SGBC), the U.S. Green Building Council (USGBC), and the Alliance HQE-GBC France developed the guide, Financing Transformation: A Guide to Green Building for Green Bonds and Green Loans, to strengthen global cooperation between the finance and real estate sectors.

Codes and Standards | Jul 8, 2024

New York State building code update would ban fossil fuels in new buildings

New York’s Building Code Council is set to include the All-Electric Buildings Act in its 2025 code update. The Act would ban natural gas and other fossil fuels in new buildings. 

AEC Tech Innovation | Jul 4, 2024

Caution competes with inevitability at conference exploring artificial intelligence for design and construction

Hosted by PSMJ, AEC Innovate in Boston found an AEC industry anxiously at the threshold of change.

boombox1
boombox2
native1

More In Category

Adaptive Reuse

Detroit’s Michigan Central Station, centerpiece of innovation hub, opens

The recently opened Michigan Central Station in Detroit is the centerpiece of a 30-acre technology and cultural hub that will include development of urban transportation solutions. The six-year adaptive reuse project of the 640,000 sf historic station, created by the same architect as New York’s Grand Central Station, is the latest sign of a reinvigorating Detroit.




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