Contractors working on tenant improvement projects saw a big jump in activity last year, spurred by rebounds in the economy and commercial real estate market.
The 20 largest tenant improvement contractors working in Orange County generated $302 million in revenue here last year. That’s a 20% gain compared to a year earlier.
This week’s Business Journal list of tenant improvement contractors ranks companies based here and elsewhere by work solely done in OC in 2004.
The list includes contractors who primarily do tenant improvement work as well as some general contractors doing a lot of tenant improvement.
The big gain in revenue was due to companies’ willingness to spend more, according to Bryan Howard of No. 2 Howard Building Corp. of Los Angeles. His company moved up two spots on the list on a 28% revenue gain to $31 million.
Howard Building’s gain came despite a 7% drop in total square feet his company worked on last year to 965,000.
Howard said companies are spending more per square foot because they have faith in the economy.
“If you’re not busy, there is something wrong with your firm,” he said.
All but one company, No. 8 Anaheim-based Amaron Construction, logged more revenue last year than in 2003. Its decline was a modest 4% to $10.1 million.
More than half the contractors worked on more square feet last year. Their gains pushed the list’s total square footage up 19% to 13.6 million.
The top contractors also hired 14% more staff in OC last year for a total of 579 workers.
Still, tenants are paying more for improved space partly because they had little choice last year when the cost of materials spiked. Everything from drywall to steel rose in price last year.
Steel in particular has been a thorn in the side of the construction industry,not to mention developers,since the beginning of 2004.
Prices spiked as much as 60% last year, depending on the type of steel. Some contractors say prices still are rising.
A construction and manufacturing boom in China largely was to blame, industry sources said. A surge in housing construction nationwide added to the mix, pushing up costs for lumber and concrete.
Mortgage companies continue to generate much of the tenant improvement work here.
Improving office space at Park Place in Irvine for subprime lender New Century Financial Corp. helped boost revenue at Howard Building, according to the company.
Bryan Howard said his company also did work for Quest Software Inc., which is moving to Aliso Viejo, as well as for attorneys and biotech companies.
A good chunk of No. 6 Irvine-based Casco Contractors Inc.’s 260% jump in revenue last year came from work for Viasys Healthcare Inc., according to Cheryl Osborn, president of Casco.
Casco completely redid the interior of Viasys’ new 135,000-square-foot warehouse in Yorba Linda, including the addition of 30,000 square feet of upstairs offices and a testing facility.
Conshohocken, Pa.-based Viasys does pilot building of its respiratory devices in OC, then makes them elsewhere.
Osborn said there is a lot more work this year as well. Casco added 10 employees last year for a total of 20.
“I’m hiring as many people as I can at this point,” said Osborn, whose company debuted on the list this year.
List Topper
Long Beach-based Turelk Inc., which has offices in Irvine, topped the list again this year on a 5% revenue gain to $50 million,about $20 million more than the No. 2 company.
Its total square footage fell just a hair to 1.75 million. The company had 4% less staff at the end of last year for a total of 46 workers.
No. 3 Ticon General Contractors dropped one place from last year. Its revenue of $31 million, up slightly from last year, is a Business Journal estimate, based on its square footage growth.
The company did not provide a revenue figure.
No. 4 Newport Beach-based DBAC Inc. also slipped a notch despite a slight revenue gain of 1% to $28.3 million.
DBAC worked on 13% less square footage for a total of 1.3 million,further proof tenants are paying more per square foot.
Rounding out the top five, KPRS Construction Services Inc. held its No. 5 spot on a 4% increase in revenue to $24.2 million.
It worked on slightly more square feet this year but reduced staff 4% to 110 workers.
