The industrial and electric vehicle markets have bolstered the dollar value of local tenant-improvement and construction contractor work as office contracts continue to decline.
The majority of firms on the Business Journal’s list of Orange County’s top 27 TI contractors reported year-over-year increases in the dollar value of their local work in 2023.
The total dollar value of TI work in OC for 2023 was $1.5 billion, up 2.8% from $1.4 billion in 2022.
However, the combined square footage of that work shrunk 6.7% from the year prior to 16 million square feet.
The rise in dollar value of TI work has deterred property owners and tenants from pursuing office upgrades, as such improvements currently average between $110 to $130 per square foot, according to Newport Beach-based DBaC Inc. project coordinator Skye Cernak.
“It makes sense that both tenants and landlords are looking to lease existing space ‘as is’ instead of spending significant capital to create their custom work environments,” Cernak said.
DBaC—No. 17 on this year’s list—reported a 5% decline in the dollar value of its work, which totaled $26.2 million in 2023. The company, however, saw a 54% increase in its OC square footage to 552,392 square feet because it accepted a few massively sized projects that only required demolition, paint and carpet work, which are not as pricey as other types of construction jobs, officials said.
While DBaC’s dollar value and square footage of its local 2023 work runs counter to the overall trends among OC TIs, the company’s reduced employee count reflects the overall personnel loss seen in most TIs.
DBaC’s payroll shrunk by 3% in 2023 to 34 employees.
Overall, the top 27 TI firms reported a combined 1% decrease in headcounts to 2,580 personnel.
Industrial Work
Three firms noted increases in industrial work.
Smith and Severson Builders, ranked No. 12 on this year’s list, posted a 13% increase in the dollar value of its OC work in 2023.
President David Smith of the Lake Forest-based firm attributed the growth to increased demand in the industrial outdoor storage segment as well as for EV charging for truck fleets.
Smith and Severson isn’t the only local TI contractor to benefit from EV demand. Gray West Construction in Santa Ana, No. 19 on this year’s list, attributed its increase in dollar value to a “significant contract for a major EV company’s facilities” as well as a “substantial volume of restaurant construction projects,” Marketing Manager Jessica Saavedra said.
Gray West saw its dollar value of local work jump 18% to $20.4 million, and its OC square footage rise 11% to 313,100 square feet.
Irvine-based Coastal Pacific Construction Inc. also saw its local dollar value and square footage of work increase because of industrial work.
The company, No. 21 on this year’s list, reported a 9% rise to $18.5 million in OC work, while its total square footage of work in OC jumped 25% to 241,650 square feet.
Caliber Construction Inc. in Brea, which took the No. 18 spot, also mentioned an increase in its industrial projects, though not in OC.
“Companywide, we have had an increase in our industrial work in the Inland Empire,” President Doug Bassett said.
Caliber Construction, however, posted a 15% decline in the dollar value of OC work to $20.4 million, citing the area’s widespread office vacancies.
