In 2007, Galaxy Builders’ revenue peaked at $117 million. Then the market collapsed.
Instead of panicking, the company's president, Neilesh Verma, expanded Galaxy's portfolio to include new commercial construction—government buildings, medical clinics, and schools—to help his firm stay afloat.
But the real lifesaver (outside of the robust Texas economy) was relationships. The San Antonio–based general contractor built the family-operated business one client at a time, cementing its reputation and gathering a loyal following of customers.
“It's important that we provide the highest level of service to our clients and work to cultivate those relationships into future opportunities,” says Verma. “The relationships are what make this business exciting.”
Slow and Steady
Galaxy climbed 10 spots on the NMHC 25 General Contractors list this year—the largest jump of any firm—settling at No. 11 with 1,292 units started in 2014.
The GC has built more than 15,000 units since its founding, in 1991, and has grown its multifamily business each year since 2012. After hitting a low point in 2010, when the firm's revenue dropped to $46 million, Galaxy came roaring out of the recession and started off 2015 with a backlog of $120 million.
“Maintaining our relationships with subcontractors and clients is our objective every day,” says Verma. “The majority of our work is negotiated, and I think there is a lot to be said about this [approach]. In a negotiated environment, there's a significant amount of time and energy spent in pre-construction, operating in good faith to earn the trust of your clients.
"Our sustained level of success is all the proof I need.”
As a result of the recent boom in multifamily building, Galaxy seems to have kept up with the accelerated pace of activity, though the critical shortage of labor has forced the firm to manage expectations. Verma says the company recognizes that it can't build at the pace it used to.
“We don't bite off more than we can chew, and we operate in an environment that we have experience in,” says Verma. “We've always taken pride in not growing too fast but, rather, at a consistent, moderate pace.”
Onward and Upward
While Galaxy has relied on existing customer relationships and loyalty to build its business, 2015 presents a new kind of challenge for the company.
Oil prices could threaten to pull down starts in Texas, but at this point the decision to ease up on projects is all guess work, according to Ryan Severino, senior economist and director of research at Reis. “I think Houston will hold up OK because it is a larger, more diverse economy, but small, one-horse towns like Odessa and Midland could see some serious disruptions,” he says.
With all of its multifamily work concentrated in Texas, one would think falling oil prices and the loss that could accompany them would worry Verma. They don't. In fact, he sees opportunity.
“If there’s any kind of impact, it’s only going to help us. Commodity prices should come down, and the labor market in the oil industry should transition to the construction market,” he says. “Hopefully, by the end of the year, we will start to see skilled labor return to our side of the ledger.”
Verma says Galaxy doesn't have plans to venture to markets outside of the Lone Star State, whose population is expected to double by 2050. So there’s sure to be no shortage of multifamily work for Galaxy in the years to come.