Orange County’s largest tenant-improvement contractors continued their growth trend last year but slowed in all aspects, including local revenue and number of employees.
This week’s Special Report includes a list of the county’s largest tenant-improvement contractors. Their local operations are ranked by dollar value of tenant-improvement work done in OC last year. Data used to compile the list are from company submissions and Business Journal research.
The 28 companies on this year’s ranking did nearly $787 million worth of local work, up by $110 million, or nearly 16.2% from a year earlier. That followed gains of 29% in 2013 and 20% in 2012. The list reported modest revenue declines for three of the four years prior to that.
Companies reported working on 21 million square feet of commercial real estate projects last year, up 2.8% from a year earlier.
The slowdown in work-value increases came in tandem recent steady growth in the Orange County leasing market (see graphic, page 16). Vacancy and availability continued strong trends in the second half of 2014 as lease rates kept going up and landlords took a tougher stance on concessions and rents, according to commercial real estate firm Savills Studley Inc.’s 2015 Market Review and Outlook Report.
• All but five contractors reported gains in 2014. Four of the five that declined nonetheless ranked in the top 10.
• Los Angeles-based Howard Building Corp., which again claimed the top spot on the list, reported a more than $6.5 million decrease, or about 5.1%.
• Kentucky-based Gray Construction, which moved down from No. 2 to No. 5 this year, had a 22% decrease in annual revenue in 2014.
• Not all top 10 contractors’ revenue dropped: Sacramento-based Deacon Corp. had an increase of $20.6 million, or 241% over last year’s numbers. That followed a 135% jump over 2013. It also reported a 549% increase in total square footage of tenant-improvement work done in 2014.
Deacon attributes a dramatic revenue increase to its recent focus on rehab and tenant improvement for multifamily low-income housing properties, specifically four large properties owned by new client The Reliant Group.
“Part of what has driven this growth is simply the state of Orange County’s market,” said Deacon’s Southern California development manager, David Dasher. “A number of municipalities are 100% built out, so developers are forced to focus on taking existing assets and remodeling or revamping them to keep up with the demand.”
• Anaheim-based Driver SPG, No. 9, reported a nearly 500% increase in annual revenue and 1,838% growth in square footage in local tenant-improvement work, making it the fastest-growing contractor on the list.
The company cut employees by 41%, from 76 to 45, despite the substantial project and revenue growth.
Its website lists numerous tenant-improvement projects in its portfolio, including projects at Chapman University, California Institute of Technology, Balboa Bay Club, and Incipio’s Irvine headquarters.
The Business Journal added three contractors to the list, all based in Orange County: Newport Beach-based Pacific Tusk Builders, No.15; Foothill Ranch-based CDG Builders Inc., No. 18; and Irvine-based Servco Builders, No. 25.
Pacific Tusk reported annual increases in every category, including revenue, square footage of work done in Orange County, and number of employees. It focuses on high-end commercial offices throughout California.
• Mission Viejo-based ACR Builders Inc. went from No. 21 to 19 this year, reporting a 77% increase in work performed in Orange County. It nearly doubled the square footage of tenant-improvement work done in 2014.
The company was established in July 2010 and is owned by husband-and-wife team Steve and Michelle Richardson.
“Two large tenant-improvement contracts for Nordstrom Rack, in addition to quite a few of Nordstrom’s mainline stores throughout Southern California gave us a lot of work last year,” said Michelle Richardson, ACR’s chief executive.
Richardson also said the company just celebrated its fifth anniversary, which she said will continue to drive revenue in the coming years.
“A lot of national retailers want to see a tenant improvement contractor have at least five years of experience, so now that we have hit that mark, we will continue to grow even faster.”
