In December of 2014, we had the privilege of speaking with Gabriel Hernandez, who told us about family-run Tekton Construction of Florida. The company is a shell contractor, and this method has really taken the industry by storm.
Tekton Construction completes both commercial and residential construction projects, but with an emphasis on buildings over fifteen stories, the company has led the way through pioneering efforts to become the area’s most sought-after shell contractor. We caught up with Gabriel to see what strides have been made since we last spoke.
The boom in shell contracting has changed the construction industry in Miami over the last few years. Previously, when someone wanted the shell of a building constructed, they would “employ specific contractors to do the formwork aspect only. The placing and finishing of concrete, the rebar, and any other scopes would be subbed out directly through the contractor. Now, what they are doing is to package it all in one deal,” says Tekton Vice President Gabriel Hernandez.
This is what Tekton does. The company specializes in completing the entire shell package as a turnkey service. It can lift components with cranes, perform all formwork, finish concrete, place reinforcing steel and more.
The market is growing tremendously, so everybody is busy, and Tekton has doubled in size in a relatively short period. The biggest hurdle today is the labor force. Gabriel sits down to interview potential new hires at least every week, whether the company is looking to hire or not. He tries to keep a backlog of resumes, but times are tough, especially in this industry.
“What we are doing is picking and choosing who we hire under great scrutiny. We don’t take a job unless we know if it’s the right work for us, and the timing of it must work. We have quadrupled business over the last few years,” says Gabriel.
Tekton started with Gabriel and his father handling all the operations including estimating, pre-construction, and accounting. The company has between five hundred and six hundred people in its employ, so it has seen an aggressive and drastic increase in workforce. Its human resources department has been kept busy.
“Right now, our concentration is within Florida. We are not picking people from outside the state. However, that may be the case next year, as we see another big year in the works. We don’t want to overextend ourselves,” says Gabriel.
Shell contracting makes up forty percent of the entire cost of a project. Design teams are so busy, and sometimes drawings are incomplete when it is time to build. Tekton is constantly trying to fix the problems as they arrive.
“To deal with this, we have a project engineer on every job, and they are forecasting. They will go through the drawings and try to find any potential problems before we get there. We will try to have them resolved before we get to that issue so that it doesn’t affect that critical path or the schedule on that project. It is getting better with fine-tuning and as we gain more experience,” says Gabriel.
Most of the contractors that it deals with are very old companies that have grown within the last twenty years. Despite the boom in shell contracting, there are not many new companies in the sector, and this helps to solidify the position in the industry for Tekton.
The company’s challenges have more to do with logistics than complexity. The biggest issue is that Tekton is the contractor that is performing the work, so all the liabilities are pushed in its direction.
Tekton works in multi-residential and mid-rise to high-rise markets. “We can’t compete with the smaller outfits doing single-family homes due to overhead costs, but do perform multi-residential condos,” says Gabriel. The company also performs much commercial work, including parking garages.
Tekton is also involved in the Monad Terrace building, which will have close to one hundred high-end units. The cheapest unit is at $2.5 million. A twenty-story project has just been completed for Marriott in the Sunny Isles area. An office condo in Aventura and a 260-unit condominium building called the Crimson Towers have also been accomplished.
Overall, most of the projects are relatively big, with some being more complex than others. The Monad Terrace is certainly a challenging project and includes a saw-tooth slab that juts in and out of the building. “The fit and finish, which really makes a high-end condo, is a part of our scope,” says Gabriel.
Expansion is being considered throughout the region as well as out of state lines. The target areas now are within the Miami-Dade areas including Broward and Palm Beach. For the present, crews have been so busy that Tekton has not had the opportunity to branch out, but Gabriel tells me that in the next two to three years, the company will potentially move as far as Tallahassee.
“Right now, we are going to focus on the tri-counties and maybe dabble into the Orlando and Tampa markets, as well as the west coast. But, I feel that there is just such a high demand for South Florida that it wouldn’t make sense to move north,” says Gabriel.
Miami, for example is one of the fastest-growing cities in the U.S. Immigration is a big factor here as many of these people come from South America and invest foreign money in development. Buying a property in Venezuela or Argentina is not a safe bet compared to investing in the U.S. Not only is it a sound investment, but you can also live in the city and not worry about the safety of the neighborhood.
“I see this continuing to grow over the next couple of years. It won’t be slowing down anytime soon and has reached its peak. We don’t anticipate any slowdown reminiscent of the 2008 recession, but rather there will be a transition,” says Gabriel.
There are many buildings going up without the infrastructure to support them. Thousands of units are being built, but sewers, streets, and roads are desperately needed. The municipality is a little behind on this, so more government work is anticipated.
“They need to build up infrastructure to keep up with the buildings being constructed in South Florida. For example, Brickell and Midtown are building thousands of units per year, with people moving there without the proper infrastructure. Something has to be done fast, and I don’t see enough movement now to keep up with it,” says Gabriel.
Tekton has employees that have been working with the company for more than thirty years. It has been able to hire many new people as well. “Even though we have a lot of guys working, we are still more personable and hands-on than the average owner,” says Gabriel.
One of the many reasons Tekton is successful is because it knows its clients and has established strong relations. The company is not experimenting with new clients at the moment. The largest project being worked on now for Tekton is the second tower of the Modera Metro. It is a twenty-six-story, 460-unit building of 900,000 square feet. Ground broke in January of 2018, and the roof for the future apartment rental building was being poured as the interview with Gabriel was being conducted.
“We will be able to put up a structure of that magnitude within a nine-month period, which is seen as a very fast pace. This is very hard to accomplish, but we have maintained efficiency and effectiveness,” says Gabriel.