Orange County’s largest tenant improvement contractors last year had their busiest year for billings in more than a decade, thanks to a handful of big construction projects that are moving ahead, as well as more work at existing buildings that are slowly leasing up.
The 23 largest tenant improvement contractors here reported more than $526 million in revenue from work done in the county over the past year, according to this week’s Business Journal list.
That’s a nearly 20% increase over those on last year’s list, which included 20 companies that combined for $440 million in revenue.
$500M-plus
It’s the first time total revenue reported topped $500 million since the Business Journal began tracking the industry in 2002.
The list reported modest declines in cumulative revenue for three of the past four years.
This week’s list ranks companies based here and elsewhere by work done in OC in 2012.
It includes contractors that primarily do tenant improvement work, as well as some general contractors that derive a sizable portion of their revenues from such work.
Gains were most pronounced at the top of the list.
All but two of the 13 companies that reported more than $10 million in revenue last year saw year-over-year gains. Six of the top 10 companies reported year-over-year gains of 10% or more, and four of those posted gains in excess of 30%.
Eight companies experienced declines in revenue, including six of the seven smallest companies.
n The Costa Mesa office of Los Angeles-based Howard Building Corp. moved up one spot to take over the No. 1 rank after reporting a 28% increase to nearly $74 million.
Howard Building reported working on new space in Irvine for Meggitt Defense Systems Inc. and said it’s working on tenant improvements for the Newport Beach office tower under construction for Pacific Investment Management Co.
Tenant improvement work for the 380,000-square-foot Newport Center building, which is expected to open early next year, could end up costing close to $50 million, according to real estate sources.
n The Irvine office of Long Beach-based Turelk Inc. moved up two places to the No. 2 spot, with a 39% jump in reported revenue to $61.2 million.
The company reported working on projects for Newport Beach-based Pacific Life Insurance Co. and on the new Irvine Spectrum headquarters for CoreLogic Inc.
While billings sharply increased, the amount of work done by companies on this year’s list—when measured by square footage—was less impressive.
Howard Building and Turelk were two of only nine companies to report increased work per square footage.
Eleven companies reported a decline in square footage, while two companies were flat and another was a Business Journal estimate.
With a combined 16.6 million square feet worked on last year, contractors still saw a 2.3% bump from the prior year.
The average tenant improvement project here cost about $32 per square foot, according to data provided to the Business Journal. That’s roughly the same amount as reported a year ago.
The costs of tenant improvements vary greatly.
Law firms and other financial services companies sometimes spend upward of $100 per square foot building out high-end office space.
Improvements to large retail spaces, such as a fitness center, can cost $60 per square foot or more.
Tenants in older office buildings and warehouses often spend a fraction of that to get their office operations up and running.
Old is New
Last year’s increases came despite another slow year for completed commercial real estate construction and development projects, with less than 1 million square feet of new office, industrial and retail projects wrapping up work in 2012.
Reworking office space at existing properties helped a number of companies post strong gains.
n Irvine-based Snyder Langston, No. 5 on the list, had a 32% jump in revenue last year, to $50 million. Its large projects included a 200,000-square-foot tenant improvement project for St. Joseph Health at LBA Realty’s mixed-use Park Place campus in Irvine.
The hospital operator announced plans last year to consolidate offices in Orange and Anaheim to the Irvine location. Its deal at Park Place was among the larger OC office leases of last year.
n Likewise, Brea-based KPRS Construction Services, No. 3 on the list with $60.6 million in work, used work from the area’s largest property owner—Newport Beach-based Irvine Company—to bolster its bottom line.
The 23 companies on the list reported employing 902 employees in Orange County, up about 9% from a year ago.
That outpaced employment gains seen elsewhere last year; the same businesses now employ about 3,250 people companywide, up about 33% from year-ago levels.
Download the 2013 OC’s LARGEST TENANT IMPROVEMENT CONTRACTORS list (pdf)
