The commercial construction segment in the U.S. includes about 80,000 firms with total annual revenues of $450 billion, including $200 billion of public construction. Several dozen have revenues over $500 million, led by such well-known giants as Bechtel, Fluor and Turner Construction.

Commercial construction activity banks heavily on the health of the U.S. economy, including government funding. While larger companies may be involved in many types of construction, smaller companies typically specialize in only a few, or just one. Of about 37,000 firms involved in constructing commercial buildings, for example, 75 percent get the majority of their business in a single specialty area. Small construction companies typically work in a limited geographical area.

The value of commercial/non-residential construction put in place in 2004 was split almost equally between private non-residential and public non-residential. The value of U.S.new non-residential construction, a major driver for commercial construction contracting, is forecast to grow at an annual compounded rate of 8.5 percent between 2005 and 2008.

Key Trends in the Industry

Several major trends are shaping the future face of the industry, including:

The Rise of Design/Build and Management Services - The technological sophistication of many projects and the increasing use of design/build contracts encourage the integration of engineering and construction companies.

Attention to Security – Today’s designs are influenced by security concerns. Greater emphasis on evacuation routes and stronger walls and windows is also likely, as is the protection of air-circulation systems (to protect against gas or biological attacks).

Specialization – Scale and cost are causing more contracts and subcontracts to be awarded to companies with expertise in a particular specialty such as framing, mechanical, demolition, roofing, electrical, public works or roads.

Critical Issues

Numerous issues affect the commercial construction industry, including:

Importance of Flood Control Expertise - Following Hurricane Katrina and heavy flooding in California, flood control has gained the national spotlight. Commercial construction contractors who specialize in flood control infrastructure stand to gain new business as communities seek to build infrastructure to mitigate flooding risks.

Commercial Vacancy Rates - The vacancy rate in office buildings in the U.S. dropped in the 4^th quarter of 2005, continuing an overall downward trend that is good news for commercial construction contractors who could benefit from the addition of office space in certain markets.