Commercial Building Contractors
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 40,500 commercial building contractors in the US coordinate resources and manage the building process for industrial, commercial, and institutional projects. About 71% of contractors are sole proprietors or entities without workers on payroll. Most commercial building contractors rely heavily on subcontractors.
Dependence on Subcontractors
Commercial building contractors are dependent on subcontractors for specialized activities, such as electrical, plumbing, or mechanical work.
Competitive Pricing Environment
Most commercial construction jobs are competitive bidding situations, and price is a major deciding factor in which commercial contractor obtains the job.
Industry size & Structure
A typical commercial building contractor employs about 21 workers and generates $11.6 million annually.
- The commercial building contracting industry consists of 40,500 companies that employ 884,000 workers and generate $471 billion annually.
- About 70% of contractors are sole proprietors or entities without workers on payroll.
- Most commercial building contractors rely heavily on subcontractors.
- Large companies include Turner Corporation, Tutor Perini, Jacobs Engineering, and Gilbane Building Company.
Industry Forecast
Commercial Building Contractors Industry Growth
Recent Developments
Jan 8, 2025 - Construction Spending Flat
- The total value of construction put in place was unchanged in November compared to October, according to the US Census Bureau. Spending on nonresidential projects decreased by 0.1%, and residential spending rose by 0.1%. Within the nonresidential building segment, pockets of spending growth included religious and healthcare, which saw increases of 1% and 0.1%, respectively. Commercial construction was flat in November and all other nonresidential building segments saw spending decline in November, led by public safety (down 1.3%) and followed by amusement and recreation (-0.7), lodging (-0.4%), educational (-0.3%), and office (-0.2%).
- High office vacancies have pushed down property valuations, making office to residential conversions more economical, according to The Wall Street Journal. A housing shortage and a glut of office supply made conversions seem like an obvious solution to both problems. However, until recently, conversion project economics were challenging to pencil out, even for an aging office building. That is changing as plummeting values for older office buildings in second-tier locations are prompting owners to take what they can get, making conversions more economically viable. According to real estate firm CBRE, there have been 73 US conversion projects so far in 2024, up from 63 in all of 2023. There are about 309 office conversions in the planning stages, and about 75% of them are office to residential. In all, about 38,000 housing units are in the pipeline.
- Demand for building design services dipped slightly in November from the prior month, but there are signs that the architectural services market is gradually improving, according to a December report by the American Institute of Architects (AIA). The AIA’s Architecture Billing Index (ABI) fell to 49.6 in November from October’s reading of 50.3. Any reading of 50 or more indicates growth in architectural billings. The score for new project inquiries was 54.1% in November, unchanged from the October reading, and the index for the value of new design contracts increased from 45.3 to 48.3. The steady rise of new project inquiries is a positive signal of future business opportunities. However, architecture firms are unlikely to see a significant uptick in design activity soon as new design contracts fell for the eighth consecutive month in November.
- Some building contractors are concerned that the Trump administration's promises of tariffs and a tougher stance on immigration could increase their costs and make their labor difficulties worse, according to The Wall Street Journal. Some industry observers suggest Trump’s plan to deport undocumented workers could cause labor shortages. In California, New Jersey, Texas, and Washington, DC, immigrants make up more than half of the construction workforce, according to the Harvard Joint Center for Housing Studies. Nationwide, undocumented workers make up about 13% of the construction sector’s workforce, according to the Pew Research Center. President-elect Trump’s proposed 25% tariffs on goods from Canada and Mexico could drive up construction costs for key inputs, including softwood lumber, cement, gypsum (used to make drywall), and iron and steel. However, some builders are optimistic that Trump’s deregulation plans could reduce construction costs.
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