Orange County’s tenant contractor industry is “crazy busy,” according to David Smith, president at Smith and Severson Builders of Lake Forest.
“The first thing out of every contractor’s mouth is, ‘I’m busy,’” he said. “I haven’t seen a cycle like this, and I’ve been at it for more than 20 years.”
This week’s Special Report includes a list of OC’s 33 largest tenant-improvement contractors ranked by dollar value of work performed in the county last year. The figure rose 19% to $1.1 billion. The minimum amount required for inclusion on the list is $3.5 million.
Tenant improvements typically occur when firms move into new offices.
Smith’s own firm, which he co-founded four years ago, reported the fastest growth on this year’s Business Journal list of contractors, with $13.7 million in sales in OC last year, an almost five-fold increase over 2015.
The firm, which debuts on the list at No. 22, specializes in remodeling industrial buildings, corporate headquarters and medical office facilities, such as Saddleback Memorial Medical Center. It worked on 147,563 square feet worth of space in OC, an almost six-fold increase over 2015.
Eighteen firms on the list reported increases in revenue, including 15 that said theirs rose more than 10%. Nine reported revenue decreases, two remained the same, and four declined to report revenue changes. Three firms debuted on the list.
They reported renovating 24 million square feet, an 8.9% increase.
“The uptick is because there are a lot of repositioning projects,” said Joel H. Stensby, founding partner of KPRS Construction, the largest firm on the list with OC revenue climbing 44% to $170.4 million. “A lot of investment groups are purchasing projects and preparing them for future generations.”
Stensby anticipates his firm’s companywide revenue will increase this year to about $650 million from $475 million last year.
This year’s 18.9% increase is the second highest in the past decade for all contractors combined, only slightly below the 19% reported in 2013. The firms have reported six straight years of revenue increases of at least 13%.
Both Smith and Stensby said business is near the peak of a traditional building cycle and that it may slow in the coming year.
“We are seeing the subcontractor community becoming more competitive in the last few weeks,” Stensby said. “It’s a good time for property owners to think about renovating.”
The list also details data about the firms’ current—the most recent available—number of employees, though that information didn’t affect the rankings. The contractors’ OC employee count rose at a slower pace—8.2% to 1,872 workers. Companywide, the employers had 5,812 employees, an 8.4% increase over 2016.
The top four contractors remained the same:
• No. 1, KPRS in Brea, reported its square footage climbed 40% to 2.8 million, and its OC employee count rose 16% to 215.
• No. 2, Howard Building Corp., a Los Angeles firm with a Costa Mesa office, increased the dollar value of work performed by 36% to $149.3 million.
• The Irvine office of No. 3, Swinerton Builders, experienced an 11% decline to $90.3 million. Its square footage also declined 11% to 750,000.
• Driver SPG of Anaheim jumped four spots to No. 5 by increasing OC sales 53% to $67.7 million. Its square footage worked on climbed 43% to 375,532.
Among other notable changes are:
• Esplanade Builders Inc. of Torrance, which reported an almost tripling of OC work to $16.2 million, good for the No. 20 spot. It renovated 295,000 square feet, more than double that of the prior year.
• CDG Builders Inc. in Irvine climbed to No. 11 with $35.5 million in sales, an almost doubling of the prior year’s number. Its local employee count climbed 74% to 40 workers.
• Amaron Construction Corp. of Anaheim Hills reported the largest decline, 29% to $5.2 million.
• Brea-based Caliber Construction Inc. fell to 16th place from 12th as its revenue dropped 26% to $19.6 million. Its square footage also declined 26% to $19.6 million.
