Commercial Building Construction in the US Industry Market Research Report Now Available from IBISWorld

Despite a slow start, the next five years will be a period of robust revenue growth for commercial construction companies, mainly because of the economic recovery. Falling vacancy rates mean that businesses will require more office space, while rebounding disposable incomes will raise demand for retail buildings. Further, heightened consumer spending and rising business investment will fuel growth. For these reasons, industry research firm IBISWorld has added a report on the Commercial Building Construction industry to its growing industry report collection.

Los Angeles, CA (PRWEB) October 13, 2012

Commercial construction typically lags behind the overall economy by one to two years, due in part to the length of construction contracts and industry backlog. Industry revenue began to slow in 2008, and then plummeted 29.7% and 30.3% in 2009 and 2010, respectively. During those years, most contractors' backlogs diminished to unprecedented levels, despite the influx of stimulus dollars, causing profit to shrink. As the market for construction services declined, firms resorted to bidding on projects for a loss, just to keep their crews busy. In 2009 and 2010, profit margins dropped to less than 1.0% from a peak of 5.0% in 2007. Margins are expected to remain low in 2012, at 1.8%, showing a modest improvement as economic recovery stimulates demand for new commercial construction and as the prices of services gradually increase. After three consecutive years of revenue decline, the industry is expected to begin recovering in 2012, with revenue projected to grow 2.1%, says Alegria. Even more promising, over the five years to 2017, revenue is projected to increase at a much stronger rate. Improvements in the US economy will drive this growth, with demand for construction set to steadily rise as businesses begin to expand operations. Further, merger and acquisition activity will likely become prominent in the industry as the construction markets recover and more established firms compete for market share.

The Commercial Building Construction industry has a low level of concentration, with the four largest players accounting for about 5.7% of industry revenue. The largest industry participants are general contractors, but these firms often use subcontractors and local firms to develop projects. As a result, most participants are subcontractors that compete on a local or regional scale. Additionally, large participants operate in several construction segments outside commercial building, including civil projects, and municipal and institutional building construction, which further dilutes the concentration of industry revenue. About two-thirds of establishments employ fewer than 10 people, including about 47.0% of firms that employ fewer than five people. Only about 2.0% of industry establishments employ more than 100 people. These large-scale players are multi-establishment companies with branches that operate across many states and regions. For more information, visit IBISWorlds Commercial Building Construction report in the US industry page.

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IBISWorld industry Report Key Topics

The Commercial Building Construction industry includes firms that are primarily responsible for work on the construction (i.e. new work, additions, alterations, maintenance and repairs) of office, retail, hotel and entertainment buildings. The majority of participants are general contractors or project managers. This industry does not include municipal building construction, which comprises institutional buildings such as schools, hospitals, and churches.

Industry Performance

Executive Summary

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Commercial Building Construction in the US Industry Market Research Report Now Available from IBISWorld