After another year of increasingly robust construction activity in the Arizona, Nevada and New Mexico region through 2023, there appears to be no increase in sight as companies struggle to find enough workers to offer the wide variety of projects that will advance.
Graph by ENR
Keenan Driscoll, CFO of Sundt Construction, the 2024 Southwest Contractor of the Year, told ENR that with the region’s construction market in growth mode, contractors can expect “a street fight for talent, with everyone trying to outdo the next guy.”
Driscoll’s comments about growing demand are backed up by data from this year’s contractor survey.
In Gilbert, Arizona, Sundt Construction and PCL Construction are delivering a $500 million water treatment facility.
Photo courtesy of Sundt Construction
Overall, the top 25 companies on ENR Southwest’s prime contractor list reported total revenue of $12.52 billion in 2023, up 13% from the same group’s revenue in 2022. This continued the trend of growth from the previous year, when the top 25 South West contractors collectively reported a 22% increase for 2022, which followed a 21% decline in 2021.
Overall, the revenues of the 49 companies included in this year’s ranking follow a similar pattern. Average revenue per company increased to $297 million in 2023 from $263 million in 2022, a 13% jump. The previous year, average revenue per company had seen a healthy 19% increase in 2022, after falling 17% in 2021 during the pandemic.
In specific market sectors, general construction saw modest growth of 7%, from $7.97 billion in 2022 to $8.54 billion in 2023. However, there were significant changes in the overall construction market. Revenues from multi-unit residential and hospitality projects grew by 37% and 45%, respectively, through 2023, while revenues from retail projects fell by 47%.
Manufacturing projects to produce revenue growth of just 4% by 2023, according to this year’s survey. On the other hand, telecom projects, a category that includes data centers, increased revenue by 74% to $2.5 billion from $1.44 billion in 2022.
Clayco Construction recently completed the 26-story Skye on 6th, a residential tower in Phoenix.
Photo courtesy of Clayco Construction
No slowdown ahead
The Arizona market remains strong. “We see strong business across our footprint,” says Gretchen Kinsella, DPR’s Arizona construction business unit leader, noting that the healthcare, data center and advanced manufacturing sectors are particularly strong
“We’re seeing local health systems continue to make strategic investments of varying size and scale,” he says. Meanwhile, the market for data centers and advanced manufacturing facilities is “booming,” he adds.
“We see strong business across our footprint.”
—Gretchen Kinsella, Arizona Business Leader, DPR Construction
“The continued growth of the cloud, the continued growth of AI and the focused effort to increase domestic manufacturing are driving a lot of work,” says Kinsella, who notes “an increase in second- and third-tier manufacturing providers investing in projects to support semiconductor and electric vehicle production”.
Mike Hoover, CEO of Sundt Construction, agrees that data center projects will continue to be important, noting that “the explosion of AI is creating the need for more data centers.” This is further fueling demand for solar projects, which are needed to help power these facilities.
“There will be a resurgence with energy providers needing power generation,” says Hoover. “This could be solar, [but] I could see where I might have to go back to some gas-fired power plants.”
Graph by ENR
Clayco Construction Southwest Region President Ryan Abbott, who did not participate in this year’s ranking, sees both expansion and continued transformation for the region.
“The projects are growing in ambition and scale [and] shrinking the schedule,” Abbott says, adding that the market is harder to orchestrate than ever. “We’re no longer building a product in a singular location, we’re building modules across the region and then transporting them for assembly.” .
