Riding High in the Saddle

Texas Builders Bullish on State's Market

by Rob Patterson

An aerival view shows progress on one of C.F. Jordan’s multifamily residential projects, a 882,516-sq.-ft. apartment complex on five acres at 2121 Allen Parkway in Houston. (Image courtesy C.F. Jordan.)

A robust market and steady growth across the board characterize the current state of construction in Texas, according to a survey of some of the state's top contractors that participated in Texas Construction's annual contractors ranking.

"We're seeing a clear expansion of the market and we think it will sustain itself," said Bill Scott, executive vice president of Linbeck Group LP in Houston.

Linbeck's work in general building offers a prime example of the statewide market strength. The company earned $239.8 million from its Texas projects in 2005 and ranked 17 on Texas Construction's list of the state's top contractors. Last year Linbeck completed construction on a new Federal Reserve Bank building in Houston with a project cost of more than $100 million and broke ground on the $32 million Co-Cathedral of the Sacred Heart for the Archdiocese of Galveston-Houston.

Zachry is leading Calaveras Power Partners, a joint venture to construct a new coal-fired power plant for San Antonio’s CPS Energy at its J.K. Spruce site. (Photo courtesy Zachry Construction Corp.)

The company is nearing completion of the $46 million Market Street shopping and entertainment center in The Woodlands and will soon get under way with a similar project in Allen. Linbeck recently completed a $40 million renovation for St. Luke's Episcopal Hospital in Houston soon to be followed by a $200 million expansion. Among other health care projects is a new Proton Therapy Center for M.D. Anderson and academic work includes projects for Texas Christian University and Rice University. Linbeck's new projects include the innovative $100 million Winspear Opera Center for the Dallas Center for the Performing Arts.

"I think what we're seeing is a continuation of large population growth, which drives housing," Scott said. "That doesn't look like it's abating as much as was forecasted, and it is fostering communities, which drives the need for health care, education and many other things."

Dallas-based McCarthy Building Cos. Inc. is enjoying the benefits of a brisk market with $181 million in 2005 earnings from Texas projects, ranking 32 on the list of top contractors. The firm will soon complete the $120 million W Dallas Victory Hotel & Residences as well as $40 million Emmett Conrad High School for Dallas Independent School District. McCarthy will break ground this year on projects including the approximately $50 million Dee and Charles Wyly Theatre at the Dallas Center for the Performing Arts, a $25 million vivarium for the University of Texas Southwestern Medical Center at Dallas and the $60 million Stoneleigh Residences luxury condominiums in Dallas.

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"In contrast to the past three to five years, we have a backlog of projects out through 2010," said Mike McWay, president of McCarthy's Texas division. "And I expect in the next three months to sign projects that take us out to 2011."

C.F. Jordan LP of El Paso took in $229.5 million from Texas projects last year out of a total income of $330.4 million. The firm ranked 21 in the top contractors list. One signature project completed in 2005 was a $16 million sanctuary for the Community Bible Church in San Antonio. Multifamily residential projects include >>

a 882,516-sq.-ft. apartment project on a five-acre transfer slab at 2121 Allen Parkway in Houston and military housing at Lackland Air Force Base in San Antonio and Dyess Air Force Base in Abilene.

"Overall it's a very positive market," said Jordan president and CEO Darren Woody. "Multifamily is trending upward. Industrial is good, there's still a lot of school work out there and the Texas bases seem to be a big beneficiary of military construction dollars." His only concern is the availability of labor within a strong national market combined with Gulf Coast reconstruction activities in the wake of Hurricane Katrina.

A mix of transportation, industrial and power projects is keeping Zachry Construction Corp. of San Antonio busy. Ranking number two on the top contractors list, the firm earned $793.6 million in 2005 from its work in Texas. Last year Zachry completed the $260 million High Five interchange in Dallas a year ahead of schedule. The firm is actively pursuing Trans-Texas Corridor transportation projects.

Williams Brothers Construction Co. erects trapezoidal steel box girders for the west managed lane at IH-10 and IH-610 in Houston. (Photo courtesy Williams Brothers.)

"The overall outlook for power projects looks good these days," said Keith Manning, Zachry's senior vice president of business development. The firm will soon break ground on a new coal-fired power plant for San Antonio's CPS Energy at its J.K. Spruce site. Zachry broke ground in early 2005 on the first liquid natural gas regasification facility to be built in the U. S. in about 30 years, the $215 million Freeport LNG in Brazoria County.

Another facet of Zachry's operations is maintenance services for industrial and petrochemical firms such as Citgo and DuPont at some 25 sites across the state. "The refining business is picking up quite a bit, so there are more projects that are springing out of those industrial projects, and that's a big part of our business," Manning said. "Capital projects cycle up and down, but the supplemental services are pretty steady work."

Manning is also bullish on the prospects for highway construction in the state. "The trend towards privatization and toll roads is beginning to gain momentum, so we're optimistic that it will provide some opportunities for us," Manning said. "For a lot of reasons, Texas is well-positioned to have good construction activity in the transportation and energy sectors."

San Antonio's CCC Group Inc. is also enjoying the benefits of its ongoing maintenance services work and small capital projects in Texas for industrial customers such as Alcoa, BP, Shell Oil and others. CCC also performs services for cement and lime industry customers in the Austin-San Antonio corridor including the Lower Colorado River Authority.

A combination of maintenance contracts, fabrication work and capital construction projects such as the $30 million seawall project in Corpus Christi, which is about 50 percent complete, helped CCC Group earn a total of $110.5 million in Texas revenue last year out of $228.9 million overall, ranking 50 in the top contractors listing. "You never know, but our volume for the last four years has been really good," said Jack Hockey, vice president of business development.

"We're thinking of opening another fabrication facility in Houston for pipe and expanding our San Antonio steel fabrication shop," Hockey said. CCC Group fabricates and erects mining equipment and material-handling systems for domestic and offshore and manufactures hyperbaric oxygen chambers.

"We feel like the market is going to remain strong," Hockey said. "Our mining division is busier than it's been in 20 years. The outlook for the next two years is very good here in the state of Texas and for the construction industry in general."

The Harte Research Institute of Gulf of Mexico Studies at Texas A&M University’s Corpus Christi Campus was completed in 2005 by Zachry in alliance with Centex. (Photo courtesy Zachry.)

Water and waste disposal projects account for about 50 percent of the work done by Archer Western Contractors Ltd. of Arlington, which earned $281.5 million from its Texas projects in 2005. The firm ranked 10 on the list of top contractors. "Last year was surprisingly slow in that market," said business group manager Joe Lindeman. "There were a few projects out there, but not what we anticipated. We anticipate 2006 will bring a fair more amount of work for us.

"One of the biggest problems is that a lot of cities are working on shoestring budgets and don't have the funding," Lindeman said. "But these are actually revenue-generating facilities, and it appears like funds are breaking free."

New Archer Western projects include $25 million in aeration process improvements for Dallas' Southside Water Treatment Plant and a $22 million ozone-generation facility at the city's East Side Water Treatment Plant. The company is also constructing a number of pump stations throughout Dallas at a cost of $4 to $8 million each.

In the transportation sector, Archer Western's highway jobs include the $107 million SH 45 project and the approximately $60 million of work on U.S. 183, both in Austin. The company is also finalizing a contract with Dallas Area Rapid Transit for expansion work. "I think our business will continue to increase over the next few years," Lindeman said. "We started here in Texas in 1994 and have grown every year since."

Ranking 29 on the list, J.D. Abrams L.P. of Austin earned $184.9 million in Texas in 2005 with its transportation work. Recently completed projects include a people mover system at George Bush Intercontinental Airport and the installation of 12 bridges into the new Terminal D at DFW International Airport.

In 2005 it also completed the $88 million IH-35/Ben White interchange and the $8 million Loop One flyover above William Cannon Boulevard, both in Austin. Other completed projects include El Paso's IH- 10/Loop 375 interchange and the U.S. 287 relief route around Midlothian in Ellis County.

Abrams has a full slate of upcoming highway projects, including reconstruction of U.S. 90A in Richmond and the Fred Wilson Rd./Airport Blvd. interchange in El Paso.

"We're pretty excited about the letting from TxDOT and North Texas Turnpike Authority and are pursuing comprehensive development agreement projects," said Bill Burnett, vice president of project development. The firm's CDA projects include the 183A turnpike in Austin, SH 45 in North Austin (in partnership with Granite Construction Co.), the FM 1604/U.S. 281 corridor in San Antonio and the LBJ Freeway/SH 121 project in Dallas.

"There's enough work here to keep us from leaving the state," Burnett said. "TxDOT has done a tremendous job of taking the tools that the Legislature has given them and expanding their regular program."

Another beneficiary of the booming highway construction market in Texas is third-ranked Williams Brothers Construction Co. Inc. of Houston, which earned $569 million in 2005 for its work, all in transportation. The company's major current project is $1.1 billion of work under five contracts along the Katy Freeway/IH-10 in the Houston area.

"It's my impression that the state is booming right along," said Williams Brothers president Doug Pitcock. "I don't know of any state I'd rather have a business in right now than Texas."