Firms in Orange County’s tenant contractor industry reported slowing revenue growth last year, the lowest rate since 2009.
The 34 largest companies on the Business Journal’s annual list increased sales 1.5% to $1.15 billion, significantly down from 2016, when ranked firms posted a collective 19% bump.
Company executives, though, said last year’s result is probably a blip and not reflective of the business they’re getting.
• For example, top-ranked Brea-based KPRS Construction Services Inc. reported a 15% decline in OC sales to $144.8 million.
President Joel Stensby said there was a period of slow sales last year but that the drop was an anomaly. The decline was due to “the ebb and flow of a normal business model,” he said. “There isn’t a reduction in Orange County capacity.”
KPRS’ overall sales increased 35% to $602 million.
This week’s list ranks tenant-improvement contractors by dollar value of work performed in the county last year.
The minimum amount required to make the ranking is $3.5 million.
Tenant improvements typically occur when firms move to new offices.
Ranked companies reported a 3.8% increase in square footage to 24.7 million square feet, down from an 8.9% growth rate in 2016, when they renovated 23.8 million square feet.
Two Signals
Contractors reported sales declines in 2008 and 2009 during the financial crisis. Sales rebounded 3% in 2010, and for six straight years the firms had annual revenue increases of at least 13%.
The list reflects two signals that support the premise that the industry isn’t slowing.
Seventeen firms said their 2017 sales rose more than 10%. Only eight reported sales declines. Five reported increases of under 10%; one had no change; and three didn’t report numbers.
Companies also boosted OC employment in the year ended June 30 to 2,437, a 15% year-over-year jump.
• No. 4, Swinerton Builders, a San Francisco-based firm with an office in Irvine, grew revenue 11% to $100 million and increased employment 9.6% to 535. “There’s definitely no slowdown” in Orange County, Swinerton Division Manager Ray Haj said.
• No. 23, Caribou Industries Inc. of Santa Ana, doubled local employment 102% to 429, the list’s biggest workforce hike. Its OC revenue also climbed, rising 22% to $10.9 million.
Other notable list highlights include:
• No. 8, DBaC Inc. of Newport Beach, whose sales were flat at $49.3 million, though it’s still getting a lot of demand, said Vice President of Business Development Bruce Asper. Subcontractors are “extremely busy,” he said, and declining work.
“We haven’t seen a slowing down in the pace of construction. We don’t want to jinx it, but we don’t see a slowdown for the next year. We would sense it if there was a slowdown.”
• Smith and Severson Builders of Lake Forest, which reported revenue jumped almost fourfold in 2016. It almost doubled sales to $26 million last year, jumping from 22nd to 15th on the list.
“There’s lot of recent business in the marketplace,” said President David Smith. “Everyone is still active. There’s no feeling of slowing down. Everyone seems to wonder, when does the music stop?”
The company’s original business plan predicted it would do $10 million in business last year. Smith, who projects revenue to top $35 million this year, attributed its all-organic growth to repeat customers and quality service.
“We’re doing what we said we’re going to do,” he said. “People we’ve done work with haven’t left.”
• No. 7, Driver SPG of Anaheim, which said it worked on 1.1 million square feet of space, up 185%. However, revenue declined 27% to $49.5 million.
• Gray Construction of Anaheim, which reported a 75% drop in square footage to 224,800 while it cut employment 19% to 130. Its OC revenue declined 30% to $34.6 million, pushing the firm down on the list from seventh to 12th.
• PacifiCore Construction Inc. of Tustin, which said revenue declined 52% to $9.1 million, pushing it down from 18th to 25th. It boosted square footage almost fourfold, however, to 931,723, saying larger projects brought in less revenue.
