New York: Having expertise in a highly specialized field — whether it’s building ultra-luxury skyscrapers or renovating prewar townhomes — gives a general contractor an edge when initially bidding on a development. It also proves beneficial when trouble arises mid-project.
Last year, Harry Macklowe swapped Gilbane for JT Magen Building Company on his office-to-residential conversion of One Wall Street. The challenge was that the project required an extensive reconfiguration of the building’s layout and a deep understanding of prewar construction, said Maurice Regan, president of JT Magen, a Manhattan-based firm with 350 employees and offices in Chicago and Los Angeles.
There are common design elements and vulnerabilities in these buildings that need to be addressed before a massive overhaul. For instance, JT Magen was adding another floor to such a building, but the existing steel in the roof was rusted to the point where additional weight would have collapsed the entire structure. “Having these surprises rear their ugly head in the middle of a project can be very costly,” Regan said.
Older buildings also tend to feature single-paned, energy-sucking windows, along with asbestos and lead paint. The location of bathrooms in a building — like in a hotel, where all the bathrooms are typically stacked on top of each other — can make leaks and mold more likely, Regan said. If contractors don’t anticipate these challenges, the results can be “devastating,” he noted.
With such importance placed on construction firms’ specialties, TRD also set out to find the top performing general contractors in specific markets by poring over permit applications filed with New York’s DOB from April 1, 2013, to March 31, 2018.
“If I have a heart problem and I need a doctor, I want to go to one who has dealt with that more than anyone else,” said Jay Badame, head of AECOM Tishman’s New York office. “I don’t want to go to someone who is just putting their training wheels on.”
In addition to dominating office construction, Tishman is billed as an expert on high-end condo projects. The company took second place on TRD’s list of general contractors building condos with projected sellouts of $100 million or more with nearly 1.6 million square feet of work. Lendlease topped that ranking with 2.4 million square feet, while Plaza Construction took third place with 1.3 million, followed by Turner with 587,681 million and Mc Gowan with 492,066.
But as the luxury market softens and fewer condo projects are on the horizon, construction firms are taking cues from their clients and finding other types of developments to take on. Last year, there were 305 plans filed for new condo buildings with either 5,000 square feet or five or more residential units across all five boroughs, according to filings with the Attorney General’s office. That’s down from 330 in 2016.
“The theme in the last year and looking forward has certainly been fewer condos — perhaps fewer market rate,” said Greg Bauso, president of Brooklyn-based Monadnock, which took the No. 7 spot on TRD’s ranking of general contractors doing ground-up construction. “We basically have no condo work in the backlog now.”
The largest construction companies rake in a significant volume of work across multiple asset classes. Lendlease, for instance, also ranked among the top five companies doing large and mid-size multifamily projects. Lendlease’s Esposito said that the firm also does a lot of hospital work, counting NewYork-Presbyterian Hospital and New York University Langone Medical Center among its clients. He said that large institutions often pose less of a credit risk than private developers.
“The work is very predictable. It’s not as volatile as condominium starts,” he said. “The institutions have very good policies and procedures, you always know you are going to get paid.”
Tishman — which has handled the bulk of construction work at the World Trade Center and is managing Brookfield Properties’ Manhattan West — took the top spot for new office projects that span 500,000 square feet or more, logging 6.9 million square feet. Gilbane Building Company ranked second with 1.7 million, followed by Tutor Perini Building Corporation with 1.4 million, New Line Structures with 1.14 million and then Turner with 1.12 million.
In addition to prewar residential building renovations, JT Magen does a lot of office and retail work; it was hired to build out spaces for Nordstrom, Adidas and Nike on Fifth Avenue.
And Turner was recently tapped to lead construction of Tishman Speyer’s the Spiral at 509 West 34th Street, a $3.2 billion office tower that will span more than 2.2 million square feet. Turner did not return multiple messages seeking comment. That project is not reflected in this ranking, since the new building permits haven’t been issued yet.
“All our eggs are not in the residential basket,” Tishman’s Badame said. “We make sure that we touch all those [other asset classes], such that if work slows down, we can transfer out talents.”