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 36,700 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 36,700 companies that employ 352,900 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 16, 2022 - Nonresidential Building Construction Outlook Improves
- The Dodge Momentum Index (DMI) increased 9.6% in October 2022 to 199.7 (2000=100), up from the revised September reading of 182.2. The DMI 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 increased by 13%, and institutional rose by 2.9%. An increase in office and lodging projects boosted the commercial planning pipeline. The institutional sector was mixed amid a growing pipeline of recreation and education projects, but the number of healthcare and public planning projects declined. Developers and project owners continue to see healthy demand, despite recession concerns, although continued inflation, high interest rates and materials costs, and labor shortages have the potential to blunt the flow of new projects.
- Some real estate developers are holding off on new office projects as remote work has eroded demand for new office space, and rising interest rates make projects more expensive, according to The Wall Street Journal. Office occupancy is only about half of what it was before the pandemic, which has prompted some major real estate firms, including Varnado Realty Trust; Hines, Kilroy Realty Corp.; and Brookfield Asset Management, to tap the breaks on new office development projects. The national office vacancy rate is 12.5%, up from 9.6% in 2019, according to commercial real estate data firm CoStar Group. About 37% of the office space currently under development remains available, double what it was in 2019, according to CoStar.
- Business optimism among civil construction contractors and engineers moderated in the third quarter of 2022 compared to Q2, according to The Civil Quarterly released by Dodge Construction Network, Infotech, and Hexagon in October. About 53% of civil contractors surveyed in Q3 said they expect their revenue to increase over the next 12 months, which was down from the 66% who had the same expectation in Q2. In Q2 2022, 51% of civil contractors felt their profits would rise over the next 12 months, but those expecting rising profits fell to 45% in Q3. Among civil contractors who expect revenue and/or sales to drop over the coming year, 60% believe an economic downturn will result in fewer private projects. More than 90% of survey respondents said their projects have been affected by rising construction materials costs.
- US housing affordability fell to its lowest point since the Great Recession in the third quarter of 2022 amid rising mortgage rates, inflation, low housing inventory, and high home prices, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI). Only 42.2% of new and existing homes sold between July 2022 and the end of September were affordable for households with a median income of $90,000. The third quarter of 2022 marked the second consecutive quarterly record low for housing affordability in more than 10 years. According to the HOI, the median home price in Q3 2022 was $380,000, down from the all-time high of $390,000 set in Q2 2022.
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