Site Prep 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 38,400 site preparation contractors in the US prepare land for construction activity. Services include excavation work; wrecking and demolition; trenching; sewer and water main installation; construction machinery rental (with operator); and road construction. While private sector projects account for the majority of revenue, site prep contractors also provide services to federal, state, and local governments.
Dependence On General Contractors
Because site preparation is just part of the construction process, companies often depend on general contractors to secure client business.
Seasonal And Weather-Related Factors
Seasonality and weather conditions affect project timelines and site prep contractors’ ability to perform work.
Industry size & Structure
The average site preparation contractor operates out of a single location, employs 9-10 workers, and generates about $2-3 million annually.
- The site preparation services industry consists of about 38,400 companies that employ 396,000 workers and generate about $97 billion annually.
- The industry is fragmented; most site preparation contractors serve a limited geographical market.
- Some large general contractors, such as Granite Construction and Sterling Construction, offer site preparation services in addition to other construction services.
Industry Forecast
Site Prep Contractors Industry Growth
Recent Developments
Nov 14, 2024 - Multifamily Developer Confidence Mixed
- Multifamily developers’ confidence was mixed in the third quarter of 2024, according to the National Association of Home Builders (NAHB) latest Multifamily Market Survey. The Multifamily Production Index (MPI) rose two points in Q3 2024 to 40 compared to the third quarter of 2023. The Multifamily Occupancy Index decreased by seven points to 75 over the same period. An MPI or MOI reading of 50 or more indicates that multifamily production or occupancy, respectively, is growing. Multifamily developers’ headwinds include a tight lending environment, higher borrowing costs, regulations, and land availability. The NAHB forecasts that multifamily construction activity will remain weak for about another year amid a significant volume of projects under construction. Multifamily construction is expected to return to more robust growth near the end of 2025.
- The Dodge Momentum Index (DMI) decreased by 5.3% in October 2024 to 197.2 (2000=100), down from the revised September reading of 208.2. 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 institutional planning component fell by 2% in October, and commercial planning declined by 6.7%. Dodge’s associate director of forecasting, Sarah Martin, said, “In addition to data center planning normalizing, a moderate pullback in the number of planning projects for several other nonresidential sectors also contributed to the decline in the Dodge Momentum Index for October. Regardless, owners and developers remain confident in next year’s market conditions, and the planning queue remains poised to spur stronger construction activity in 2025, following deeper rate cuts by the Fed.”
- US multifamily development activity appeared to have hit bottom by the end of Q3 2024, according to property data firm Yardi Matrix. At the close of Q3 2024, multifamily construction starts fell to an estimated annualized rate of 325,000 units, or about 50% below the levels seen in 2023 and 2022. While the Federal Reserve’s interest rate cuts should make it easier to secure financing, long multifamily development lead times will likely prolong the market’s recovery. Yardi Matrix expects multifamily completions to remain high through 2025 and into early 2026 before slowing significantly by mid-2026 and 2027.
- Developers are feeling more optimistic about construction conditions, which may be leading to fewer project abandonments, according to recent data from ConstructionConnect. In September 2024, project abandonments fell 49.8% compared to the same period a year earlier. Abandoned projects have a delayed bid date, have been paused, or have been canceled. Within the private sector, project abandonments fell 9.4% in September 2024 compared to September 2023, projects put on hold dropped 6.8%, and delayed bid activity was flat with a 0.1% decline. Public projects saw a 17.6% year-over-year drop in projects put on hold in September, and abandonments fell 5.5%. Developers are likely feeling more optimistic after the Federal Reserve cut interest rates by 0.5 percentage points on September 18.
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