Contractors working in the Southeast continued to enjoy rising revenue in a hot market in 2022. And even as some see the momentum of recent years starting to cool a bit, activity remains high.

The 106 firms listed on ENR Southeast’s Top Contractors ranking completed nearly $52.5 billion in work last year, about $3 billion more than in 2021. The ranking’s top 25 contractors tallied $33.1 billion last year, up from the $28.18 billion the group posted in 2021.

The Southeast’s business-friendly environment and rapidly growing populations have fostered a highly favorable view of the region among the industry, says Matt Brewer, president and CEO of Atlanta-based Choate Construction Co.

“Choate experienced 35% growth in 2022, primarily through repeat client relationships,” he says. “Although we experienced significant growth in multiple sectors, the industrial market produced the strongest gains.”

Choate jumped into the top five in this year’s ranking, reporting more than $1.6 billion in revenue in 2022, compared with just under $1.18 billion in 2021.

“The Fed’s rate hikes are taking their toll, and conventional lenders have been toughening their lending standards and increasing their capital contribution requirements over the past year,” he says. “This reduced access to capital will continue to have a cooling effect on a large part of the development and construction industry.”

Still, Brewer says most see the slowdown as a short-term challenge and are looking to the future with optimism. Depending on the market sector and clients’ capital structures, many developers continue to proceed either with no hesitation or with some caution.

“Although no one can predict the final depth and duration of the current slowdown, I believe the Southeast is well positioned to remain a highly attractive region for growth in the long term,” he says.

In 2022, at least, the region was specifically attractive to electric vehicle and solar manufacturing as consumer demand drives investment that’s being bolstered by Infrastructure Investment and Jobs Act (IIJA) funding, says David Robinson, senior vice president for Turner Construction Co.

“Turner achieved a record level of work-in-place revenue and sales in 2022,” says Robinson. “The most active markets across the Southeast are very consistent with our experience and the expertise of our people.”

New York-based Turner ranks No. 7 in the Southeast this year, down from No. 4 in 2022’s ranking, even though the firm saw an increase in revenue in 2022, to $1.46 billion from 2021’s $1.39 billion.

Part of that growth is also due to significant investment in data centers and the growing space economy, especially along Florida’s Space Coast, Robinson says.

Labor, Materials Troubles Persist

Last year, firms still faced supply chain challenges, Brewer says, even if they weren’t as severe as in 2021. Long lead times and increased costs for high-demand materials continue to strain schedules and budgets. Choate navigates these with a proactive and thorough planning process utilizing early procurement, alternative scheduling, alternative materials and more.

Looking forward, he sees those supply chain issues normalizing through 2023 as attention turns to the need for skilled workers.

“This shortage of craftworkers will continue to result in higher costs for any firms that don’t have well-developed relationships and reputations within the industry,” Brewer says. “At Choate, we place great emphasis on going the extra mile and nurturing strong partnerships with our trade partners as they feel the brunt of this shortage.”

The lowest unemployment rate in decades is also making it more difficult for contractors to meet labor needs. That, many feel, may be the most resilient contributor to high inflation and the toughest factor for the Fed to get under control.

“The largest challenge we faced in 2022 was the availability of material and labor,” says Robinson. “Although this has improved over the past 12 months, we continue to see pressure on certain materials and availability of labor.”

To overcome this challenge, Turner supports project teams with 300 procurement and supply chain professionals across the company and is increasing the use of prefabrication, resulting in gains in installation efficiency and schedule improvements.

“Higher interest rates and the challenges associated with the cost of money may influence the pace of construction,” says Robinson.

Turner is finding that a focused and strategic approach to procurement, one that engages contractors, designers, suppliers, manufacturers and clients early in the planning process, reduces risks of price escalation and produces the most competitive results, he says.

About the Ranking

In all, the 106 contractors that participated in ENR Southeast’s Top Contractors ranking this year increased total revenue over last year’s 125 participating firms by almost $3 billion, to a total revenue of $52.46 billion across the Southeast.

Firms reported $16.1 billion in revenue in Florida in 2022. While the state ranks as the most active in the region last year, it continues to experience a multi-year drop in revenue, including from 2021, when firms working in the state reported $18.1 billion, which itself was a drop from 2020’s $18.3 billion.

Revenue for other states in 2022, with 2021 totals in parentheses, include: North Carolina—$11.2 billion ($10.4 billion); Georgia—$10.77 billion ($9.6 billion); Tennessee—$7 billion ($5.16 billion); South Carolina—$4.31 billion ($3.61 billion); and Alabama—$3.14 billion ($2.97 billion).

Six firms reported work in Puerto Rico, where revenue more than doubled in 2022 to $112.8 million compared with $48.8 million reported in 2021 as revenue continued to climb back toward 2020’s $270 million.

ENR Southeast’s Top Contractors survey ranks firms on regionwide revenue and includes other information about each firm, including top markets and recent contracts. Breakout lists rank firms on state and market-sector revenue.