homepage home
subscribe to New York Construction magazine subscribe
newsletters free e-newsletter
advertise
industry jobs industry jobs
Dodge Data & Analytics
New York Construction Logo
Order Your RISK FREE Subscription
comment

Revenue Rises as Firms Pursue Diverse Project Mix

Text size: A A
[ Page 1 of 2 ]

As public sector work continues its downward spiral, regional contractors are filling revenue gaps with a much more diverse mixture of project types than in recent years. While several large-scale energy and transportation projects broke ground in and around New York City in 2013, most of industry's new construction was sharply focused in the private sector, executives say. The broader array of offerings, they add, is fueling industry growth and providing work for more firms that struggled through the downturn.

Rendering Courtesy of Turner Construction Corp.
----- Advertising -----

"The market today is unquestionably loosening up," says Pat Di Filippo, executive vice president of Turner Construction, which tops ENR New York's 2014 contractor ranking for the third consecutive year with about $2.7 billion in 2013 regional revenue. Regional revenue last year for the survey's top 50 respondents also strengthened—reaching $20.3 billion, up nearly 10% from the previous year's top 50 total.

"In a recession, everybody's chasing the institutional work," Di Filippo says. But by 2012, when New York City's residential tower market began to show signs of life, "everyone got excited and had false hope that everything would take off," he says. The marketplace responded more slowly than anticipated, but by mid-2013 more shovels were going into the ground, especially for major residential projects in and around the city and in northern New Jersey. "When residential work becomes a constant in the marketplace, then the overall industry opens up," says Di Filippo, whose firm is construction manager for the NYU Langone Medical Center's Kimmel Pavilion. It is Turner's largest regional project to break ground last year.

A strengthening residential sector is reflected in this year's revenue ranking, with several luxury tower projects getting under way in and near Manhattan. These include the 57-story, mixed-use tower at 252 East 57th St., where Lend Lease (ranked No. 5) is the construction manager.

On the Upswing

The increase in work also is reflected in a New York Building Congress study earlier this year. It shows that in New York City, the region's largest marketplace, construction activity climbed 11% to $18.8 billion last year.

Executives say those are good signs for industry but point out that revenue does not tell the whole story about regional construction sector health. They say scores of individual firms still struggle with profitability and that the industry as a whole has not yet made up for steep losses racked up during the recession.

That likely accounts for why many firms in the ranking more than doubled their year-over-year revenue last year, executives say. With such little industry activity during the down cycle, even moderate size projects could spike revenue for some companies, they add.

Industry is also trying to restore its fee structure, a challenge as it emerges from an economic environment where work was scarce and firms had to fiercely compete with one another on contracts. Owners, in general, have unrealistic expectations that the fees contractors charged during the recession will remain in place, executives say.

"The market is improving, meaning more work is available, and contractors can be more selective and inch our fees back up for the value we provide our customers," Di Fillipo says.

Many contracting firms say they are in a hiring mode, with some, including AECOM's Tishman Construction Corp., adding that employment is back to pre-recession levels.

"Our talent is being heavily recruited by some of the start-up firms coming in," says Jay Badame, president and chief operating officer for New York, New Jersey and Pennsylvania at Tishman (ranked No. 4). "During the recession, nobody steals your people, but when things are good, everybody tries."

Badame says he's "cautiously optimistic" about the year ahead. "We are stable [as an industry] now, and employment is good. But as land costs continue to rise, as well as labor costs, these could dampen the economy."

Even so, Badame expects the strong rebound to continue in many private sectors—including housing, hospitals and hotels. Tishman's largest regional project start last year was the 80-story 30 Park Place/The Four Seasons, a hotel and residential tower.

He says the hospitality sector is "making a comeback," especially in New York City and northern New Jersey. Besides skyscraper hotel projects, mini-hotels in midtown Manhattan and in the outer boroughs are also on the rise, he says.

Keywords:

[ Page 1 of 2 ]
----- Advertising -----
Dodge Lead Center
Search for local construction projects OR CALL 877-234-4246 and get a FREE Lead Now!
Search by Project Type & State





----- Advertising -----
 Reader Comments:

Sign in to Comment

To write a comment about this story, please sign in. If this is your first time commenting on this site, you will be required to fill out a brief registration form. Your public username will be the beginning of the email address that you enter into the form (everything before the @ symbol). Other than that, none of the information that you enter will be publically displayed.

We welcome comments from all points of view. Off-topic or abusive comments, however, will be removed at the editors’ discretion.