The largest construction firms in Orange County have been busy as a result of the booming economy, but a slowdown in new contracts at some big firms suggests the heady growth of the past year may be tempering.
Revenue for the largest 25 construction firms based or operating in OC totaled $5.4 billion for the past 12 months, a 7% increase from the activity recorded by the firms during the previous 12-month period, according to the Business Journal’s list.
The collective value of future contracts awarded to the 25 firms in the past 12 months totaled about $4.2 billion, a 7% increase from the $4 billion in future contracts the firms reported a year ago.
But despite the overall up trend in new business, a handful of sizable players saw their pipelines shrink in the past 12 months vs. the year-ago period.
One big gainer, No. 11 Rudolph and Sletten Inc., offset what otherwise was a decline in new contracts at other firms on the list. The Foster City-based firm, which has local operations in Irvine, saw new contracts surge 341% to $639 million. Without Rudolph, the other firms on the list saw new contracts drop 6% to $3.6 billion vs. their pipelines in the year-ago period.
Roger Williams, director of business development for Rudolph’s Irvine office, said work for hospitals and medical centers looking to rebuild or renovate their facilities to meet earthquake standards is a big part of the his firm’s new work. The local office also has gotten jobs at the University of Southern California and the California Institute of Technology in Pasadena.
“We manage a large geographical reach from Orange County,” Williams said.
Most See Declines Ahead
Other firms showed declines in new contracts awarded to their OC offices: No. 4 McCarthy Building Cos., down 45% to $337 million; No. 6 ARB Inc., down 66% to $87 million; and No. 9 Synder Langston, down 30% to $150 million.
Steve Jones, president of Irvine-based Snyder Langston, said he sees a cautious attitude taking hold in the construction market, which is being reflected in a slight slowdown. Nonetheless, Snyder Langston officials do not anticipate a major dip in business and expect to win additional contracts in the coming months, he said.
“In general, it seems like (companies) are confused enough about the economy that they’re all cautious,” he said Jones. “People are not willing to be aggressive in this marketplace because they don’t understand what’s going on.”
No. 14 S.J. Amoroso Construction Co. is another one of those firms that has seen a decline in the value of future contracts. Kurt Whaley, vice president and division manager with the Foster City, Calif.-based company, attributes the decline to a logjam in the public works sector, a situation he expects to be resolved later this year. Additionally, he pointed to a more cautious attitude among investors.
“In the public construction sector we’re probably still healthy,” he said. “In the private sector, you’re seeing financing tighten up a little bit so some projects aren’t being released as quickly as they were.”
Along with a thinner pipeline, Orange County employment among construction firms also is down, 4% to 6,329 people.
The list ranks construction firms by revenue from OC operations. A notable company on the list is No. 1 Fluor Corp. The Aliso Viejo engineering services counts construction as only a small part of part of its $12 billion in annual sales, but it’s still enough to dwarf other firms on the list. Fluor’s $2.1 billion construction revenue is a Business Journal estimate as the company declined to break out figures for the list.
Revenue Up
Taking Fluor out of the mix, the other 24 firms saw revenue jump 12% to $3.3 billion in the past 12 months. That’s a growth rate on par with the 24 firms (excluding Fluor) that appeared on last year’s list.
A slowdown in new contracts at most firms is in line with a recent report by The McGraw-Hill Cos., which found that the value of Orange County commercial and residential development contracts awarded through the first five months of this year totaled $1.4 billion, down 11% from the $1.6 billion awarded through May 1999.
The commercial segment of those future contracts alone was down 27% to $568.9 million from the first five months of 1999.
Wayne Lindholm, vice president with the Irvine office of Hensel Phelps Construction Co., said the market is due for a breather after five years of heavy activity.
“Our market will still be fairly robust, but it certainly isn’t climbing,” said Lindholm, whose company was ranked No. 2 on this year’s list San Clemente
88,000 sq. ft.
Type: Flex
Developer: Lowe Enterprises Commercial Group
Owner: W.P. Carey & Co. Inc.
Owner occupied
1665 MACARTHUR BLVD.
Costa Mesa
85,000 sq. ft.
Type: Industrial
Developer: Jackbilt Inc.
Owner: Jackbilt Inc.
Leasing co.: Jackbilt Inc.
Agent: Brad Howard
Phone: (818) 843-7850
CYPRESS CORPORATE CENTER
5790 Katella Ave.
Cypress
65,947 sq. ft.
Developer: Cypress Land Co.
Owner: Cypress Land Co.
Leasing co.: Colliers Seeley
Agent: Patrick Remolacio
Phone: (714) 634-4050
WARLAND/CYPRESS BUSINESS CENTER
6251 Katella Ave.
65,614 sq. ft.
Type: Flex
Developer: Warland Investments Inc
Owner: Warland Investments Inc
Leasing co.: CB Richard Ellis
Agent: Brian Derevere
Phone: (714) 939-2131
CYPRESS CORPORATE PARK
10605 Walker St.
Cypress
64,355 sq. ft.
Agent: Jerry Gillman
Phone: (310) 787-1000
WARLAND BUSINESS PARK
5700 Warland Drive
59,100 sq. ft.
Owner: Warland Investments Inc.
Leasing co.: The Klabin Co.
Agent: Murray Smith
Phone: (310) 329-9000
225 CARL KARCHER WAY
Anaheim
57,600 sq. ft.
Type: Industrial
Owner: Orange County ARC
Leasing co.: Orange County ARC
Phone: (714) 744-5301
TOWN CENTER CORPORATE PARK
26880 Laguna Hills Drive
Aliso Viejo
53,115 sq. ft.
Type: Flex
Developer: Shea Properties
Owner: Shea Properties
Leasing co.: Grubb & Ellis
Agent: Gary Allen
Phone: (949) 608-2111
* Gross area; rentable area is somewhat less
Sources: CoStar Group, The Irvine Co.
