Labor Utilization and Gross Margin Benchmarks for Multifamily Contractors in Texas: Are Your Numbers Where They Should Be?
Fresh Meadows Bookkeeping Services | Industry Insights
Running a contracting business in Texas’s multifamily space right now is a study in contrasts. On one hand, construction activity in San Antonio and across the state remains genuinely strong — total construction starts in San Antonio are projected to reach approximately $12.6 billion in 2026, up from $11.5 billion in 2025. On the other hand, the conditions squeezing margins haven’t let up: labor costs are still climbing, materials remain volatile, and the multifamily development pipeline that drove so much activity is now contracting sharply.
For contractors working in this space — whether you’re a general contractor, a specialty sub, or a maintenance and renovation operator serving existing multifamily inventory — knowing where your numbers should land isn’t optional. It’s how you stay in the game.
Let’s walk through what the current benchmarks actually look like, what’s driving the pressure on them, and what the San Antonio and Texas labor market tells us about where the real risk lives.
Gross Margin Benchmarks: Where the Industry Stands
First, let’s be clear on definitions. Gross margin is what’s left after you subtract your direct project costs — labor, materials, subcontractors, and equipment — from your revenue. It does not account for overhead, G&A, or owner compensation. That’s your net margin. Conflating the two is one of the most common financial blind spots we see in contractor bookkeeping.
Current industry benchmarks, drawing from CFMA’s 2025 Financial Benchmarker and multiple industry sources:
General Contractors
- Acceptable range: 12–16% gross margin
- Industry average (2024–2025): approximately 14.8%
- Best in class: 25%+
- Pre-tax net profit for well-managed GCs: 5–7%, with top-tier firms reaching 10%+
Specialty Contractors
- Acceptable range: 15–25% gross margin
- Industry average: approximately 16%+
- Best in class: 25%+
- Pre-tax net profit range: 6–9%
If you’re a specialty subcontractor serving multifamily — plumbing, electrical, HVAC, framing, concrete — and your gross margins are running below 15 percent, you’re working without much cushion. A few bad jobs, a material price spike, or a crew efficiency problem can flip that into a loss before you see it coming on a bank statement.
One benchmark worth highlighting from CFMA’s 2025 data: revenue per full-time employee reached $514,587 — crossing the half-million mark for the first time — while gross profit per FTE climbed to $83,554, also a record. Those are signs that contractors who have managed their workforce well are being rewarded. The ones who haven’t are getting squeezed.
Labor Utilization: The Number Most Contractors Aren’t Tracking Closely Enough
Labor utilization — the percentage of your field labor hours that are billable or directly tied to productive project work — is arguably the single most important operational metric for a contracting business. And in the current Texas market, it’s under real pressure.
San Antonio’s construction workforce numbers approximately 98,700 workers, and the metro is one of the tighter labor markets in the state. Two things are happening simultaneously that create a difficult management challenge.
First, wages are rising. Construction wages across Texas have increased approximately 4 percent year-over-year through 2025, driven by persistent skilled trade shortages. Electricians in San Antonio are averaging in the high-$20s per hour; plumbers similar. Entry-level construction wages in Texas run around $18.92 per hour. That’s not catastrophic, but when labor is already your largest direct cost category, a 4 percent annual escalation compounds quickly across a full crew roster.
Second, the labor shortage isn’t going away. A 2023 survey found that 68 percent of Texas construction firms reported being affected by the skilled labor shortage. That number hasn’t meaningfully improved. The good news locally is that electrical apprenticeship enrollment in San Antonio grew 18 percent between 2023 and 2025 — the fastest of any Texas metro — which signals the market is actively building its own pipeline. But that talent isn’t available today. It will be in two to three years.
In the meantime, contractors are managing the gap through a combination of staffing firms, extended overtime, and increasingly, modular and prefab components that reduce on-site labor hours. Texas had approximately 1,200 construction staffing firms employing 150,000 temporary workers in 2023. For many smaller operators, temp labor is a necessary bridge — but it needs to be priced correctly. Temp labor at a staffing markup that isn’t reflected in your bid pricing is a quiet margin killer.
The Multifamily Pipeline Shift and What It Means for Contractors
For contractors who built their business model around new multifamily construction — vertical builds, ground-up work, build-to-rent communities — the pipeline shift is significant. San Antonio saw apartment starts collapse by roughly 80 percent in 2024: from approximately 9,500 units to under 1,900. That’s not a soft landing; that’s a structural reset.
What fills the gap? A few things are worth watching:
Renovation and value-add work. With high vacancy forcing operators to compete for residents through amenity improvements and unit upgrades, renovation activity at existing properties is picking up. Investors pursuing value-add acquisitions — particularly workforce housing — will need reliable contractors for interior renovations, common area upgrades, and deferred maintenance backlogs. This is less glamorous than ground-up multifamily, but it’s steady, repeat-business work if you build the right relationships.
Industrial and infrastructure. San Antonio’s construction activity isn’t slowing — it’s shifting sectors. JCB’s $500 million manufacturing facility, nearly $2 billion in highway and bridge contracts, and a growing data center footprint are driving demand for contractors in industrial and commercial work. Residential-focused contractors with transferable skills are moving into this space. The challenge is that different sectors have different margin profiles, payment cycles, and bonding requirements. The financial management infrastructure that works for a multifamily sub doesn’t automatically translate.
Single-family residential. San Antonio single-family starts hit approximately $2.9 billion in 2025 and are projected to grow further in 2026. For contractors who can pivot to that segment, the demand is real.
Overhead Absorption: The Margin Issue Nobody Wants to Talk About
Here’s the part of contractor financials that gets glossed over when business is booming, and becomes the crisis when it isn’t: overhead absorption.
Your overhead — office staff, insurance, equipment depreciation, software, trucks, owner compensation above market — has to be absorbed across your billable revenue. When your revenue is high and your crews are full, overhead as a percentage of revenue looks fine. When you lose two anchor clients or the multifamily pipeline slows and your crews are running at 60 percent utilization, that same fixed overhead base gets spread across much less revenue. Your gross margin might hold, but your net margin collapses — or goes negative.
Current benchmarks suggest overhead typically consumes 10–15 percent of revenue for a well-run contractor. If your overhead is running above 15 percent and your gross margin is below 16 percent, you’re already in a negative net position before you pay taxes.
Tracking this in real time — not quarterly, not at year-end, but monthly — is what separates contractors who catch the problem early from the ones who find out in October that January through September wasn’t profitable.
The Bookkeeping Foundation That Makes This Manageable
None of this analysis is possible without clean books. And clean books for a contractor means something specific: job costing that actually captures your direct costs at the project level, payroll allocated correctly to the jobs driving it, and overhead tracked separately in a way that lets you see your true overhead burden.
We work with contractors across Texas and nationwide who are running QuickBooks but not running it correctly for construction-specific financial management. The result is usually a set of financial statements that look reasonable at the top level but can’t answer the questions that actually matter: Which jobs are making money? Which crews are underperforming? What’s my effective gross margin by job type — new construction versus renovation versus commercial?
If you can’t answer those questions from your current books, you’re navigating one of the tighter markets Texas contractors have faced in years without a reliable map.
Fresh Meadows Bookkeeping Services provides specialized bookkeeping for contractors, manufacturers, and real estate operators nationwide. We hold a Certified Advanced QuickBooks ProAdvisor credential and bring over 34 years of operational experience in the industries we serve.
