Writing our annual “Highs and Lows” commercial construction blog post was a bit more difficult this year because, on the whole, 2015 was pretty great for Englewood Construction and many others in the construction industry. Yet despite all its positives, 2015 wasn’t without its commercial construction challenges. Here’s a look back at our top “highs” and “lows” from 2015:
High – A Banner Year for Englewood Construction
As we mentioned in last month’s post, 2015 has been a good year for Englewood. Not only did we more than double our overall volume from 2014 to 2015, but our average value-per-project has doubled in the last two years, too. These numbers definitely reflect the continued economic recovery and the fact that there were simply more larger construction jobs for us to pursue, particularly a significant pipeline of ground-up construction projects. More importantly, they reflect a commitment we made at Englewood to grow – in the type of work we do, in the breadth of our relationships with our clients, and as leaders in this industry.
Thanks to clients who put their trust in us, we’ve built on our roots in tenant interior finish jobs and retail in-store build-outs and found our niche in ground-up projects, flagship stores and high-end restaurant construction and hospitality work. We’re proud to say we’ve evolved with the market and with the needs of our clients, and we value every relationship we’ve created along the way.
Low – Retail’s Continued Slump
The retail construction sector was one of our “lows” in our 2014 “Highs and Lows” blog post, and unfortunately it made the list again this year. Retail construction activity in 2015 confirmed that stores simply aren’t building like they used to. And according to a survey by the National Retail Federation, more people shopped online than in-store over the busy 2015 Thanksgiving weekend, clearly illustrating the challenges traditional retailers face.
But the good news is this downturn can be an opportunity for contractors as smart retailers rethink their physical space in order to be more competitive in today’s marketplace. For some, that means reconfiguring and renovating existing retail space or transitioning to a smaller retail footprint where they can operate more efficiently. Others are completely reimagining retail spaces to give consumers an engaging brand experience they can’t get online. In both cases, these retail brands are turning to trusted commercial construction partners to create the next iteration of their bricks-and-mortar presence. Smart retailers also know they need both an online and a bricks-and-mortar presence to be successful, and those who have developed this strategy are reaping the rewards. In fact, a big trend in 2015 was online-only retailers opening physical storefronts, something we think we’ll see much more of in the year ahead.
Low – Subcontractor Pricing Returns to Pre-Recession Levels
One downside of this year’s uptick in construction activity was that as subcontractors got busier and maxed out their capacity, their pricing increased accordingly. In fact, while margins remain low for general contractors, subcontractor pricing in 2015 was nearly on-par with pre-recession highs in 2008, resulting in higher competitive construction bids than we’ve seen in some time. Contributing to this was the labor shortage the construction industry continues to face, since many subcontractors trimmed their teams during leaner years and are now having difficulty finding qualified construction workers to staff up and meet increased demand. Besides affecting construction budgets, the labor shortage also prolonged construction timelines in 2015, and will continue to be a serious factor for our industry in the coming year.
High – New Opportunities with Existing Clients
A real high point of 2015 was growing our relationships with existing clients. Positive economic conditions meant many brands, both local and national, were in a position to expand. As a national general contractor with the capacity and resources to manage construction projects across the country, we were excited to build on our work with restaurant brands including Cooper’s Hawk, Fleming’s Steakhouse and Portillo’s as they branched out into new markets.
We also had the opportunity to provide new services to many existing clients through our Facilities Management group, which grew in 2015. The response to this division has been terrific, with clients telling us they appreciate the construction management approach we bring to the table. Clients are also trying to be more efficient than ever these days in terms of both time and money, so they value the “one-stop shopping” convenience our facilities management team gives them for all their construction and maintenance needs.
Happy Holidays to all our readers from everyone here at Englewood Construction! Be sure to check back with us in January, when I’ll take one final look back at 2015.
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