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1 Example | Market Assessment Study© 2017 FMI Corporation
Example Geographic Market OverviewConstruction spending forecast and market characteristics
2 Example | Market Assessment Study© 2017 FMI Corporation
$-
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$400
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$1,000
$1,200
$1,400
$1,600
$1,800
Forecast construction spending in the company’s target segments is expected to range from
approximately $1.25 billion to $1.5 billion over the next five years.
Target segment construction spending put-in-place forecastCommercial (i.e., retail), Office, Health care, and Manufacturing segments; Millions of current dollars
Source(s): FMI, Global Insight, Reed Construction Data
History Forecast
2-period moving average
Linear trend line
(R² = 0.322)
Aggressive forecast
(1.7% 6-yr CAGR)
Conservative forecast
(-1.2% 6-yr CAGR)
Construction spending is
forecast to follow the historical
trend, peaking in three to five
years.
3 Example | Market Assessment Study© 2017 FMI Corporation
Forecast construction spending is largely dependent on developments in the overall national and
state economies due to local market’s industry base.
ForecastSupporting Arguments
Assumptions and Potential
Implications
Aggressive • Demand for commercial space remains strong as national retailers have
announced plans for new construction and redevelopment projects in the
area. Markets like this one have become even more attractive to investors
pursuing higher yields.
• Speculative development in the manufacturing segment and downward-
trending vacancy rates bode well for continued growth in the coming years.
• Decreasing office vacancy rates and high price per square foot from landlords
show that the market is tightening. Lack of large blocks of space are forcing
tenants to consider build-to-suit options or wait until space becomes available.
Vacancy rates are at their lowest point and rental rates are at their highest
point since 2009.
• Commercial construction is also being driven by the rise in multi-use
development as a result of inflow of millennials and the market’s thriving multi-
family market.
• The local market could defy emerging
signs of stalling economic expansion at
the national level, creating an opportunity
for modest growth in the company’s target
segments.
• Recent labor challenges in the local
market would likely be exacerbated.
• Competition may increase as more out-of-
market contractors consider the local
market an attractive location for business
expansion.
Conservative • Interest rate uncertainty lingers, and if rates are raised, it could cast lots of
uncertainty over owners.
• The status of the national and local economy are always impacted by the
outcome of federal, state and local elections.
• Local unemployment rates fell because of a shrinking labor force at the end of
2014; stagnant wages continue to throttle the pace of growth; and the local
market’s housing market, though appreciating, has not bounced back when
compared to its 20 peer metropolitan areas.
• The spike in office construction could be attributed to construction of larger
projects
• Construction spending in the company’s
target segments could be reaching their
respective peaks and begin to decline
within the next three years.
• Project postponements and related delays
may become more common.
• Competition could ease if one or more
recent entrants decides to leave the local
market.
Construction spending forecast assumptionsAggressive vs. Conservative views
Source(s): FMI analysis of multiple sources
4 Example | Market Assessment Study© 2017 FMI Corporation
The company’s target segments,
which include the commercial
(i.e., retail), office, health care, and
manufacturing segments, represent
approximately 15% of total construction
spending put-in-place in the local market
for 2014. However, this should not be confused
with the company’s “addressable” market. In other words,
it is assumed that the company would not pursue nor be considered for all project opportunities
within its target segments (e.g., preferred project size, contract/delivery method). As such,
the company should consider what its true “addressable” market is within this volume.
Construction spending in the company’s target segments represents 15% of total construction
spending in the local market and roughly 25% of the state total.
Target segment opportunity comparisonsLocal market and statewide (2014)
Source(s): FMI, Global Insight, Reed Construction Data
Total construction
$9,550 million
Nonresidential buildings sector
(includes multi-family)
$3,556 million (37% of total)
Target segments
Commercial, Office, Health care, and Manufacturing
$1,980 million (21% of total)
28%
72%
Nonresidential buildings
sector (includes MF)
35%
65%
Commercial segment
33%
66%
Office segment
23%
77%
Health care segment
22%
78%
Manufacturing segment
MSAStatewide
5 Example | Market Assessment Study© 2017 FMI Corporation
The majority of construction spending in the company’s target segments (on a dollar basis) has
been negotiated construction management and design-build.
11%2%
33%
54%
17%
35%
48%
33%
33%
33%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Open Prequalified Invited Negotiated General contract Design-build Construction
management
<$500 $500-$1,300 >$1,300
By contract method By delivery method By project size
Construction spending distributions in the company’s target segmentsPrior 36 month trend; Dollar basis
Source(s): FMI, Reed Construction Data
$USD Thousands
6 Example | Market Assessment Study© 2017 FMI Corporation
There is relative parity of forecast construction spending in the company’s target segments.
$-
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$1,600
$1,800
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015f
2016f
2017f
2018f
2019f
2020f
Commercial
Manufacturing
Office
Health Care
History Forecast
Construction spending by segment (Conservative basis)Millions of current dollars
Source(s): FMI, Global Insight, Reed Construction Data
7 Example | Market Assessment Study© 2017 FMI Corporation
Commercial construction spending is forecast to range between $300 million and $400 million per
year through 2019.
Commercial (i.e., retail) construction spending put-in-placeMillions of current dollars
Source(s): FMI, Global Insight, Reed Construction Data
2012 2013 2014 2015f 2016f 2017f 2018f 2019f
History $237.27 $272.76 $325.92
% change 12% 15% 19%
Aggressive $237.27 $272.76 $325.92 $364.57 $380.09 $389.20 $396.59 $400.99
% change 12% 15% 19% 12% 4% 2% 2% 1%
Conservative $237.27 $272.76 $325.92 $334.51 $361.07 $365.07 $311.64 $313.12
% change 12% 15% 19% 3% 8% 1% -15% 0%
$-
$100
$200
$300
$400
-10%
-5%
0%
5%
10%
15%
20%
25%
2012 2013 2014 2015f 2016f 2017f 2018f 2019f
% chg. $Definitions
Includes buildings and structures used by the
retail, wholesale and selected service industries.
8 Example | Market Assessment Study© 2017 FMI Corporation
Most economic indicators illustrate the influence of national trends on the local economy.
$30,000
$34,000
$38,000
$42,000
$46,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Per capita wages
8.7%
4.0%
7.6%
10.2%
7.9%
-0.9%
3.0%
-3.7%
3.6%
7.6%
3.4%
6.5%
4.3%
3.4%
4.9%
6.6% 6.7%5.8%
4.5%
1.6%
-2.1%
3.8% 3.7% 4.2% 3.8% 3.9%
-6%
-3%
0%
3%
6%
9%
12%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
GDP growth
2,223,894
2,257,149
2,295,879
2,337,339
2,380,314
11.0%
9.8%
8.8%
6.4%5.0%
0%
2%
4%
6%
8%
10%
12%
2010 2011 2012 2013 2014
Population and Unemployment Rate
MSA
U.S.
MSA
U.S.
Over the last 5 years, the population in the metropolitan area has
grown annually at a rate of 1.4%, however, the per capita income
for the MSA is approximately 7% less than that of the rest of the
United States. The unemployment rate has also steadily
decreased, reaching 5% in 2014, its lowest rate since the
recession.
The local market’s reputation of having a highly educated
workforce and its position as a desirable location for millennials to
thrive in a work/play/live is expected to attract talent to the area.
Economic indicators for the local marketSource(s): Census, FMI, US Bureau of Economic Analysis
9 Example | Market Assessment Study© 2017 FMI Corporation
The leading local market contractors have market shares ranging from 13% to 3%.
Ma
rke
tsh
are
Mu
lti-
fam
ily
Lo
dg
ing
Off
ice
Com
me
rcia
l
Hea
lth
ca
re
Ed
uca
tio
na
l
Relig
iou
s
Pu
blic
sa
fety
Am
use
me
nt &
recre
atio
n
Tra
nsp
ort
atio
n
Com
mu
nic
atio
n
Ma
nu
factu
rin
g
CONCORP 13% ● ● ● ● ●
ABC 9% ● ● ● ● ● ●
American 8% ●
Southern
Builders7% ● ● ● ● ● ●
Eagle 6% ● ● ● ● ● ● ● ● ●
Brown & Co. 4% ● ● ● ● ● ●
Excel 3% ● ● ● ● ●
Smith Inc. 3% ● ● ● ● ● ● ● ●
Big Builder 3% ● ● ● ● ● ● ● ● ●
General
Contracting3% ● ● ● ●
Estimated market share and primary segment coverage for the 10 largest contractors in the local marketRevenue basis; Nonresidential buildings (including multi-family)
Source(s): Local Market Business Journal, FMI, Global Insight, public corporate press
The top 10 non-residential building contractors in
the local market have estimated market shares
ranging from a high of 13% (CONCORP) to a low
of 3% (General Contracting). Should the
company desire to establish a permanent
presence in the local market, it is assumed that it
would do so only if the company could achieve a
market share on par with the leading competitors.
Those contractors with a broader range of
segment coverage demonstrate no greater
overall market share than those with a narrower
focus. the company has indicated interest in four
primary segments; Commercial (i.e., retail),
Office, Health care, and manufacturing. As such,
FMI assumes a target market share for the
company in the range of 3% to 5%. Should this
be a reasonable estimate, then the company
could expect annual revenues generated from a
permanent local market presence of $50 million
to $60 million over the next five years.
the company must determine the Return on
Investment associated with establishing
permanent local presence vs. it’s current model
of serving the market from its current location
(similar to the model employed by General
Contracting).
10 Example | Market Assessment Study© 2017 FMI Corporation
Market shares reflect current/ recent potential estimates more so than definitive or static
figures. These market potentials were determined by estimating the trade-related revenue
range for each firm based on publicly-available sources and interviews with local industry
stakeholders (e.g., general contractor estimating and/or preconstruction staff, trade
associations) by FMI. The market potentials and trade-related revenues are limited to the
nonresidential building and multifamily construction
segments only.
23%
18%
16%
7%
3%
3%3%
3%3%
3%
16%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Market competitor landscape
Leading contractors and self-performing CM/GCs in the MarketLocal market share potential (recent years basis); Nonresidential building and multifamily construction spending only
Source(s): FMI analysis of multiple sources
Other trade contractors and self-
performing CM/GCs identified include
but are not limited to the following.
• Company
• Company
• Company
• Company
• Company
• Company
$__M
Total estimated trade spend (2015)Market
Nonresidential building and
multifamily construction segments
Source(s): FMI
Specialty trade contractor
Self-performing CM/GC
2%
11 Example | Market Assessment Study© 2017 FMI Corporation
Market competitor landscape
Project size association Firm Estimated revenue Local market perceptions
Large Company $50 Notes
Company $40- $45 Notes
Company $32.5- $37.5 Notes
Medium Company $12.5- $17.5 Notes
Company $7.5- $12.5 Notes
Company $7.5- $10 Notes
Small Company $5- $7.5 Notes
Company $5- $7.5 Notes
Company $5- $7.5 Notes
Company <$5 Notes
Company <$5 Notes
Company <$5 Notes
Company <$5 Notes
Self-performing CM/GCs Company $5- $7.5 Notes
Company $5- $7.5 Notes
Company $2.5- $5 Notes
Company $2.5- $5 Notes
Other self-performing CM/GCs identified include Company, Company, and Company. These three firms were estimated to self-
perform $2M to $4M in the local market.
Identified trade contractors and self-performing CM/GCs in the MarketLocal market revenue estimates (millions)*; Nonresidential building and multifamily trade construction only
Source(s): FMI analysis of multiple sources
*These revenue estimates reflect the typical for each firm.
However, annual revenues can vary significantly (e.g., 50%-
100%) by year depending on the award of a major project.
12 Example | Market Assessment Study© 2017 FMI Corporation
Rank (
by 2
013 lo
cal
revenue)
Competitor
Comparable
company
NPS; average
likelihood to
recommend
score
2013 local
revenue
(millions); %
change from
2012
Estimated
market
share
Estimated
success
rate
Construction segments served*
Air
po
rt
Hosp
ita
lity
Ind
ustr
ial
Infr
astr
uctu
re/
pu
blic
wo
rks
Institu
tio
ns
Ma
nu
factu
rin
g
Off
ice
Resid
en
tia
l
Reta
il
Sp
ort
s
facili
tie
s
Oth
er
1CONCORP
100%
9.5
$649.0
-20.8%
5%-7% 30%-40%
2ABC
0%
7.5
$629.2
7.0%
7%-9% 15%-25%
5American
70%
9.0
$446.2
-2.6%
3%-5% 25%-35%
6 Southern
Builders
86%
9.6
$438.1
-34.9%
4%-6% 40%-50%
11Eagle
100%
9.9
$279.1
7.2%
2%-4% 30%-40%
14Brown & Co.
82%
9.4
$235.9
-25.2%
2%-4% 35%-45%
19Excel
70%
9.2
$170.0
1.2%
1%-3% 30%-40%
24Smith Inc.
100%
9.5
$132.6
43.2%
<2% 45%-55%
Leading competitor characteristics (Local Market)Source: FMI, Crain's; Survey questionnaire response (n=51)
* These are the reported segments by Crain’s. The light blue shaded cells indicate the construction segments served by each competitor. The dark blue shaded cells indicate those
construction segments that the competitor was most often associated with the company according to survey questionnaire responses.
No leading local competitor appears to have more than 10% market share in the company’s pursued
construction segments (and most average less than 5%).
13 Example | Market Assessment Study© 2017 FMI Corporation
Relatively few nonresidential building contractors have achieved revenues in excess of $100 million
in recent years.
Company 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014CAGR
09-14
CONCORP 80 83 139 116 156 254 270 497 774 414 415 441 418 306 399 -0.7%
ABC 220 171 128 125 108 126 134 294 322 305 282 328 292 189 279 -1.8%
American 69 139 165 209 224 227 144 195 164 65 108 134 292 325 236 22.5%
Southern
Builders125 140 184 119 125 109 241 251 272 309 221 201 232 151 223 -6.3%
Eagle 117 129 159 153 155 167 199 208 174 125 117 147 172 212 188 8.5%
Brown & Co. 175 178 180 223 217 149 221 248 284 122 65 128 1.1%
Excel 267 458 407 53 102 86 125 140 129 112 63 55 95 146 97 -2.9%
Smith Inc. 72 86 75 92 105 110 115 106 138 140 71 78 102 82 94 -7.6%
Big Builder 80 91 136 102 106 134 264 191 60 97 45 48 54 70 87 -2.2%
General
Contracting92 111 77 76 116 131 138 121 126 106 87 71 65 63 70 -7.9%
Runner Up 134 263 103 73 157 140 124 109 166 110 68 76 60 71 69 -8.9%
Last Place
Co.28 32 24 27 32 59 56 91 95 37 30 62 65 61 69 13.1%
Largest non-residential buildings contractors (by 2014 revenue rank)local market revenues; Millions of current dollars
Source(s): Local Market Business Journal, ENR Southeast Top List, FMI
14 Example | Market Assessment Study© 2017 FMI Corporation
Several of the leading contractors in local market have been recent entrants, typically via
acquisition.
$-
$100
$200
$300
$400
$500
$600
$700
$800
$900
1 2 3 4 5 6 7 8 9 10 11 12
1 acquires A in 2007 and
B in 2009.
3 acquired C in
2004.
7 acquired D in
2000.
6 has transitioned to a pure program manager role in the
local market following its recent award to manage the
entire capital program for Big Owner.
The grey bar indicates the range
in annual revenue the company
has experienced from 2000 to
2014. The orange diamond
indicates 2014 revenue.
Revenue trends for the largest non-residential buildings contractorslocal market revenues; Millions of current dollars
Source(s): local market Business Journal, ENR Southeast Top List, FMI investigation of multiple sources.
In addition to the contractors presented in this chart, the following additional contractors should be
noted (2014 local revenue estimate).
• 13 ($107M); State headquarters located in Big City. Appears to be pursuing opportunities in the
local market more aggressively.
• 14 ($95M); Opened its local market office in 2008 in conjunction with a $20M plant for MFGI INC.
in Metropolis. The company purchased the backlog of 18 (which filed for Chapter 11 in 2011).
• 15 ($62M); Little City-based contractor that appears to be pursuing projects beyond the Hillside
market more frequently in the past three to five years.
• 16 ($22M); Established a local market office in 2007 upon following long-time client .
• 17 ($21M); Opened its local market office in 2001 and acquired local contractor, XYZ, in 2011.
15 Example | Market Assessment Study© 2017 FMI Corporation
The share of nonresidential building construction spending has steadily been taken by the largest
local contractors.
$-
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$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
All others Top 10 contractors
Share of nonresidential buildings construction spending put-in-place (including multi-family) by the 10 largest local contractorsMillions of current dollars
Source(s): Local Market Business Journal, ENR Regional Top List, FMI, Global Insight
1993-2000
2000-20072007-2014
The top 10 contractors in terms of
revenue have increased their combined
share of nonresidential buildings construction spending put-in-place in the
local market by roughly 10 percentage points every seven years since
1993.
~30% share(1993-2000)
Average non-residential building
construction spending put-in-place
(including multi-family)
Average non-residential building
construction spending put-in-place
(including multi-family)
Average non-residential building
construction spending put-in-place
(including multi-family)
~40% share(2000-2007)
~50% share(2007-2014)
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