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
Dec 9, 2024 - Construction Sector Braces for Tariffs, Immigration Crackdown
- 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.
- The Dodge Momentum Index (DMI) decreased by 2.3% in November 2024 to 191.5 (2000=100), down from the revised October reading of 196. The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which has been shown to lead construction spending for nonresidential buildings by a full year. On a monthly basis, the commercial planning component fell 4.6%, but institutional increased 2.5%. Dodge’s associate director of forecasting, Sarah Martin, said, “Throughout 2024, we’ve seen robust growth in nonresidential planning activity – but labor shortages and high construction costs have prevented those projects from moving through the planning process at a normal pace. The current backlog may be constraining demand for commercial planning in the short-term. Uncertainty over new tariff and immigration policies under President-elect Trump’s administration may also generate some pause with developers, although it’s a bit too early to tell if that’s the primary factor here. Overall, easing monetary policy will help alleviate the backlog of projects in the planning queue throughout 2025 and spur more demand for projects in the coming months.”
- Demand for building design services improved in October 2024 after 20 straight months of declines, according to a November report by the American Institute of Architects (AIA). The AIA’s Architecture Billing Index (ABI) was 50.3 in October. Any reading of 50 or more indicates growth in architectural billings. The score for new project inquiries rose to 54.1 in October compared to 51.6 in September, but the index for new design contracts decreased from 48.3 to 45.3. The AIA’s Chief Economist, Kermit Baker said, “Billings finally stabilized this month, and firms are feeling more optimistic about revenue projections for 2025. Overall, 41% of responding firm leaders expect to see net revenue growth from 2024 to 2025, with 32% projecting growth in the 5% to 9% range.”
- North American construction and engineering spending growth is expected to slow to 2% in 2025 after growing an estimated 5% in 2024, according to FMI’s fourth-quarter 2024 North American Engineering and Construction Outlook. Growth in nonresidential building construction will be led by public safety (up 6% in 2025), manufacturing (5%), amusement and recreation (4%), transportation (4%), and communication (4%). Commercial construction spending is expected to decline 8% in 2025 amid weaker demand for warehousing space. Lodging construction spending is forecast to drop 8%, and stubbornly high office vacancies will continue to weigh on new office construction, which is projected to rise 1% in 2025.
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