It was a year that brought down some of Australia’s biggest construction companies.
But 2022 also provided opportunity for newer entrants to rise up the ranks in the BCI Construction League.
The Urban Developer revealed Australia’s top 20 construction firms last week with new entrants in the top 20 including Hacer Group (11), industrial builder Texco Construction (17) and Alchemy Construct (20).
Texco Construction has been riding the wave of industrial construction during the boom of the past two years. It is a 12-year-old construction business that purely operates in the industrial sector and director Tom Bull said it was hard work and a “degree of luck” in the timing of their growth in the sector.
Bull said industrial was enjoying its time in the sun, but it had not been immune to the inflationary pressures washing through the development sector.
“We are purely focused on industrial design and construct market which, in a development sense, is dominated by the institutional groups or the A-REIT’s. About 80 per cent of the volume in our market would be done by around 10 major players,” he said.
“It's a busy space that’s performing well but it certainly hasn’t been immune from the difficulties experienced in the wider construction sector.
“The low industrial building vacancy rates across the industrial sector in Melbourne and Sydney are underpinning the relatively large development pipeline in our space.”
Bull said macroeconomic pressures had prevailed in the building industry in the wake of a steel manufacturing slowdown in China and the Russia-Ukraine conflict.
“Things are not easy, but they’re becoming less difficult. I have to give credit to our development partners as we’ve proactively worked with them to be creative in the way we are contracting our new projects to minimise the risk window associated with the rising cost of raw materials.
“The speculative development pipeline remains strong and the leasing outcomes have been exceptional. So while our development partners are feeling the strain of rising cap rates, volatile construction costs and rising land rates, increasing rents have been the saving grace.”
Also making its debut is Kapitol Group, which ranked 29th in the BCI Construction League.
Kapitol Group co-founder David Caputo said that he and Andrew Deveson started the construction firm with a “desire to do things differently and make a positive real impact” in the industry.
Caputo said from the outset they had set about lifting industry standards and conditions for workers, which had enabled them to attract high calibre employees and clients.
“The challenges we’ve faced over the last few years have helped us improve our internal systems and processes which in turn has strengthened us as an organisation and helped us grow in a testing period for the construction industry,” he said.
“We are constantly looking for ways to innovate and deliver for our clients, I think that is the way we've got through it and will continue to push through any challenges we face.”
Caputo said while they were in a good position in the sector, he anticipated “carnage for a little while to come”.
“There will be more subcontractors and builders that will continue to go broke. I think we’ve only seen the start of it,” he said.
“If projects continue to slow down, the full burden and hindrance of inflation and cost escalations will really come to light, and more companies will experience cash problems, which will lead to even higher insolvencies.”
But Caputo said he believed there was a “real growth opportunity” for tier-two and tier-three builders that can scoop up work with larger developers that hadn’t been as affected by price escalation in the sector.
Collapsed builder PBS Building was also in the Top 50, but sensationally walked off building sites in March this year.
While the builder had slipped from 37 to 43, according to BCI Construction League data it still had eight projects to the value of $175.3 million under way.
To download your copy of the BCI Construction League’s top 50 Australian builders click here.
