Construction Gains: Builders Post Strong Year with Help from Public Works and Retail
By DANIEL D. WILLIAMS
Orange County’s largest builders last year benefited from public works projects, retail development and a smattering of build-to-suit projects.
OC’s top 25 construction companies took in $5.7 billion in revenue for the most recent 12 months: for most companies that was through March. The total is 4% more than the top builders posted a year earlier, according to the Business Journal’s list of top construction companies based on revenue from OC operations.
The public sector held strong throughout the year, as private work began to shrink last summer and was exacerbated by fallout from Sept. 11.
The results contain an 800-pound gorilla: No. 1 Aliso Viejo-based Fluor Daniel. Fluor, a global engineering and construction company, dwarfs the others on the list with construction revenue of $1.8 billion,one-third of the list’s total and three times that of No. 2 Clark Construction Group Inc. in Costa Mesa.
Fluor’s sales are an estimate: the company, a global player in the engineering and construction fields, would not break out its construction revenue for the list.
Excluding Fluor, the other 24 companies on the list posted a healthy 15% revenue gain vs. a year ago aided by an expanding OC population that demands everything from schools and public works projects to malls.
“Schools and institutions have been strong,” said Jim Cunningham, a senior vice president with the Newport Beach office of Grubb & Ellis Co., which provides construction consulting among its services. “Those are segments that we just don’t hear (being talked about).”
And there’s some good news looking ahead: construction companies signed new contracts worth $4.9 billion, up 14% from a year earlier.
But not all of the major players were beneficiaries of new contracts.
Ten companies saw a drop in new business while 12 saw increases from the previous year.
One company,No. 18 DPR Construction Inc. in Newport Beach,was unchanged while two companies did not give information on their contracts signed.
Biggest Gainers
One of the biggest gainers was No. 4 Lake Forest-based ARB Inc. Its revenue jumped 104% to $365 million last year and its new contract wins were 24% higher.
ARB benefited from education and government contracts. It counts revenue from projects with Soka University, Orange Coast College and the Moulton Niguel Water District.
One of the biggest beneficiaries of public sector construction is the Costa Mesa office of Redwood City-based S.J. Amoroso Construction Co.
The firm took on construction for the Orange County Fire Authority Regional Fire Training Center. The No. 9 company grew 26% for the year, taking in $156 million.
The healthcare industry also was a positive for construction companies.
No. 14 Orange-based Bomel Construction Co. benefited from its contract with Allergan. Bomel moved up five spots on the list, with revenue 20% higher at $108 million. The company landed major projects with the Nexus Twin Towers and the addition to South Coast Repertory in Costa Mesa.
Another beneficiary of the healthcare boom is No. 3 McCarthy Building Cos. in Newport Beach. The local office of St. Louis-based McCarthy worked on the Hoag Hospital Women’s Pavillion.
McCarthy’s sales grew 48% to $372 million.
The company’s diversity has helped it grow during the economic slowdown, said Dennis Katovsich, McCarthy senior vice president.
“We have had the great fortune of being able to construct many different types of buildings,” said Katovsich.
The company worked on major parking structure developments at Hoag Memorial Hospital and the University of California, Irvine.
More recently, McCarthy landed the contract for the Arena Corporate Center in Anaheim.
The project is one of Orange County’s few class A office projects in the pipeline. The three-building, 24-acre office campus will have about 400,000 square feet near the Arrowhead Pond of Anaheim. Trammell Crow, the complex developer, says it is 40% preleased.
Construction company payroll grew 9% to 6,260 workers in OC. Big gainers included the Clark Construction Group, which boosted its workforce 71% to 120. A big jobs loser was No. 17 Irvine-based JPT Constructors Ltd., formerly Haskell Constructors Ltd. JPT scaled back its workforce by 57% to 15.
The effects of a sluggish economy might not show up until 2002 figures are in, due to the lag time in getting a construction project going.
“The first quarter of 2002 was weak, but the second quarter is picking up,” said Jerry Holdner, an analyst in Anaheim with Voit Commercial Brokerage LP.
Through June, industrial construction in OC is off 58% to 1.2 million square feet compared to the six-month period a year ago, Holdner said.
Office construction is down, too.
OC had 1.4 million square feet of office space under development in the first two quarters this year, down 45% from last year, Holdner said.
Newcomers to the list included No. 11 Brea-based KPRS Construction Services Inc., with 80% higher sales to $135 million, and No. 21 Anaheim-based Lyle Parks Jr. Inc., which posted a 24% revenue increase to $74.3 million.
Dropping off the list were last year’s No. 23 Summit Builders in Newport Beach and No. 24 Austin Co. in Irvine, neither of which had revenue higher than the $57.5 million cutoff.
