Michael Tester, Owner & President, Tester Construction Group LLC

In an interview with Invest:, Michael Tester, Owner and President of Tester Construction Group, LLC, discussed market shifts in the Philadelphia region, labor dynamics, and public-sector opportunities. “Over the last two years, developers and contractors have had to shift toward other project types including affordable housing, public sector work, education opportunities, and other commercial projects such as office and retail fit-outs,” Tester noted.

What market trends have most impacted your business over the past year?
Over the last decade in Philadelphia, and in many markets across the country, multifamily housing and market-rate apartment construction have led real estate development. This has included everything from small residential builds to large high-rises.

Philadelphia has seen a major wave of multifamily construction, and now that inventory needs to be absorbed. While housing demand is still strong, the supply on the market has slowed the apartment sector and, in some neighborhoods, caused a swift decline. That shift has impacted many contractors and developers who were focused on this segment over the past 10 years.

Over the last two years, developers and contractors have had to shift toward other project types, including affordable housing, public sector work, education opportunities, and other commercial projects such as office and retail fit-outs. In Philadelphia, the medical and education sectors remain foundational because of the city’s strong hospital networks and universities. Those continue to present clear opportunities. At our company, we’ve made a conscious shift over the past couple of years into construction types beyond traditional market-rate multifamily.

What economic factors are shaping your business strategy right now?
Beyond the inventory challenges in the housing market, the interest rate environment has had a major impact. Lending institutions have become more cautious about funding new construction and large-scale development. Interest rates have increased to the point where once profitable projects are now difficult to make financially viable.

Since COVID, construction costs have also risen significantly. Materials and equipment are more expensive and harder to source. That added cost has made it even harder to get projects to work from a financial standpoint.

There is also a lot of economic uncertainty right now. Political changes, tariffs, and policy shifts are creating hesitancy among investors. Many are still waiting to see how these factors progress, particularly regarding interest rates and the overall cost environment.

What were the most critical decisions or strategies behind your company’s rapid growth?
A major factor was our approach to hiring and staffing our projects. From the beginning, we aimed to bring in the most talented people we could find, even if that meant taking on additional overhead. We believed that hiring for the future, even at a higher cost, would allow us to grow faster and take on larger projects year after year.

We also identified a niche in the market. In Philadelphia, most non-union contractors tend to be smaller and unsophisticated. While the largest firms operate primarily and exclusively in the union space. We positioned ourselves in the middle. Our staff skillset is designed to handle larger projects, however we have the flexibility to work in both union and non-union environments. That flexibility gave us a competitive advantage and allowed us to take on projects that others could not or simply couldn’t be competitive. We focus on the proper labor type given the location and sophistication of the project deliverable, while trying to drive more union work environments and opportunities wherever possible.

Another key to our growth has been our adaptability. We started with new construction in multifamily and mixed-use developments, but we have since expanded into the education and commercial sectors. That diversification has helped us maintain momentum as the market shifts.

How do you attract, retain, and develop talent in today’s labor market?
Culture is the single most essential element in attracting and retaining your staff. In many large companies, and not just in construction, the sense of culture has weakened, especially with the rise of remote work since COVID. We have worked hard to maintain a strong culture while building in flexibility for those who need it, especially people going to job sites or balancing family responsibilities.

At the same time, we value being together to collaborate and solve problems. Construction is a high-pressure environment, so we try to make it enjoyable. Having a team of people who genuinely like working together makes all the difference.

When hiring, we often prioritize personality and attitude over experience. We look for good people who fit our culture and who represent the core values of our company.

We also invest heavily in onboarding and training. New hires go through a training period of several months to get familiar with their projects and project teams before taking full responsibility. We want them to feel confident and supported, not just handed a set of drawings and left on their own. Our goal is to set them up for success from the start.

What differences in market dynamics and regulations stand out across the regions where you operate?
In Philadelphia, the permitting and approval process may seem complicated at first, but once understood, it’s manageable. The city has streamlined many aspects of development, and we’ve become very experienced in navigating those processes efficiently. Despite perceptions, the system in Philadelphia is quite functional when approached with the right knowledge.

Outside the city, however, every township and jurisdiction tends to have its own rules and regulations, which adds complexity. Each location has different zoning requirements, building codes, and expectations for community impact. That lack of consistency can cause delays and uncertainty in getting projects started.

In terms of labor, Philadelphia has a strong base of union, prevailing wage, and non-union subcontractors and a deep pool of quality labor in both the city and the surrounding areas.

In contrast, our work in South Florida, ranging from Miami to areas north of Palm Beach, presents a different set of challenges. That region is largely nonunion, and it has been harder to find skilled subcontractors and consultants with the same level of discipline and reliability. The overall approach to construction in the Northeast is very “Type-A” and detail-focused. While there are many talented people in Florida, finding teams that maintain schedules and control budgets consistently has been much more difficult.

What practices have proven most effective in maintaining a strong safety record across job sites?
Safety is paramount to everything we do within our company. We take pride in the program we started nearly eight years ago, and each year we aim to improve. Safety isn’t something that gets integrated into company culture overnight. It takes daily training, attention, and long-term investment to build something that truly works.

One of our core strategies is having a full-time safety director on staff. He visits nearly every job site daily and works alongside project managers and superintendents. He is well-trained, highly organized, and deeply committed to monitoring site conditions, assisting subcontractors, and conducting regular training.

We also partner with a third-party firm, Compliance Consultants Inc., to perform safety inspections every week. They approach each inspection as if they were OSHA, helping us identify areas for improvement and offering another layer of accountability.

Internally, we require all employees to conduct weekly safety inspections on their job sites. These include documenting any deficiencies and outlining how those issues were resolved, often on the same day.

We also focus heavily on subcontractor training. Most workers don’t want to take unsafe shortcuts, but many haven’t been given the tools or knowledge to do things the right way. For example, we host fall protection stand-downs on every project, where crews are trained on how to use their equipment properly. Over time, these practices become second nature, and old habits are replaced with safer approaches.

When unsafe practices are observed, we stop them immediately, correct the issue, and then invest time in educating the team on how to do it correctly moving forward. It takes time and consistency, but over the course of a project, tremendous progress is made.

What trends or opportunities will shape your strategy over the next three to five years?
One of the biggest opportunities in Philadelphia is in the commercial business district, particularly Center City. Since COVID, many office buildings have been underutilized or vacant, which is a trend seen in major cities nationwide. We’re looking at ways to repurpose those spaces into multifamily housing or explore alternative uses such as wellness or healthcare facilities. There is a lot of potential to reimagine these core buildings in the heart of the city.

Affordable housing is another major focus, especially with support from Mayor Parker and council members across the city. Organizations like the Philadelphia Housing Authority are releasing numerous RFPs, and private developers are also active in this space. These efforts aim to meet the real housing needs within the city while also addressing related social and economic challenges. Further, President Trump’s “One Big Beautiful Bill” has been designed to promote additional affordable housing development through LIHTC opportunities and grants.

We’re also expanding our involvement in public sector work. In addition to private development, we are working on projects for school districts, universities, and other publicly funded entities. With access to state, city, and federal funding, these projects are playing a larger role in the city’s growth and represent a key part of our future strategy.