Local construction companies are anticipating a continued recovery in commercial projects in 2013, spurred largely by the growing health care and technology industries, even though a return to anything resembling pre-recession workloads is likely still years away.
“Most people in the industry are expecting things to improve over the next couple of years, but nobody is expecting any boom,” said Jim Roherty, president of Pacific Building Group Inc. in San Diego.
Aided by its focus on healthcare-related projects — primarily upgrades at hospitals and medical office buildings — Roherty’s company was among the few to see a significant uptick in business volume during the past year.
Revenue in 2012 reached approximately $80 million, up from $55 million in 2011, and Roherty said the company boosted its field staff approximately 50 percent in the past 18 months, to where it now employs around 200 throughout San Diego County. This followed a nearly two-year period when revenue and hiring trends were essentially flat.
Roherty said healthcare-related projects have been a steady source of work during the past five or six years for his and other firms. In addition to new construction, hospitals and medical offices have been renovating to meet California earthquake preparedness requirements, and also to accommodate changing technologies used to diagnose and treat patients.
Pacific Building’s recent work, for instance, involved structural, lighting and other enhancements to operating rooms and MRI facilities at local hospitals operated by the Scripps and UC San Diego healthcare systems.
More Outpatient Facilities
Privacy issues are prompting hospitals to favor solo rather than shared rooms for long-term stays, and care facilities are being pre-designed or renovated to give them more of a hotel or spa feel, in order to promote healing and reduce stress.
“They’re designing hospitals now to be places where you won’t mind spending some time there if you are visiting, or you at least don’t dread being there if you must have some kind of medical treatment,” Roherty said.
Local contractors said national health care reforms taking effect in coming months will encourage more use of outpatient facilities rather than long hospital stays. This is prompting care providers to improve the patient environments and enhance on-site amenities at branch clinics and medical office buildings.
Roherty said local firms are also finding new construction and upgrade work tied to local technology office campuses, as tech companies look to recruit the best workers and as campus landlords compete for tenants. He said companies such as Qualcomm Inc. and General Atomics continue to expand and upgrade their local research-related facilities.
Doug Barnhart, chairman of J. Reese Construction Inc. in San Diego, said the company this year will be working on projects including a new Sharp Rees-Steely branch clinic being developed in the Flower Hill area near Del Mar.
In the past year it completed work on Sharp Healthcare’s cancer center in Chula Vista, and in coming months will likely be submitting proposals for hospital and medical office projects in the works in North County, as well as Orange County and southern Riverside County.
New Public Education Projects
Barnhart said the second half of 2013 could bring his and other firms a number of new public education projects in the local region and elsewhere in Southern California, following recent voter approval of several school bond issues.
Industry veteran Barnhart has been involved with J. Reese Construction, a small family-run firm that employs about 12, since selling his former company, Barnhart Construction, in 2008. He said J. Reese had revenue of about $7 million in 2012, a significant improvement from 2011, and may be looking to boost hiring in the coming year, depending on how the overall economy plays out.
“I think things in 2013 should be better than 2012 for our company — it’s already looking to be that way based on our current backlog and the projects that are booked,” Barnhart said.
Chris Day, vice president of business development in the San Diego office of construction firm Swinerton Inc., said the company is also anticipating an uptick in local projects in 2013, including tenant improvements and new building in sectors such as health care and commercial office development. The company has projects booked with local community college districts — including San Diego, Mesa and Palomar — as well as higher-education work at UCSD and San Diego State University.
“The hospitality industry is also waking up again,” Day said, noting that Swinerton will be doing construction and improvements in coming months at local hotels.
The nationwide industry trade group Associated Builders and Contractors recently forecast a 5.2 percent increase in non-residential construction spending in 2013 over 2012. The group projected a 10 percent national rise in office-related construction, as well as for utilities and power projects, and also for retail and related commercial building.
The organization forecast an 8 percent increase in U.S. hotel construction for 2013, with 5 percent rises expected in health care and manufacturing. Public-sector construction spending is expected to be flat, due largely to constrained local and state government budgets.
The trade group’s chief economist, Anirban Basu, said nonresidential construction employment is expected to expand by 2.1 percent nationally in 2013, which would be slightly better than the 1 percent growth seen in 2012.
According to the U.S. Bureau of Labor Statistics, San Diego County had 57,600 construction jobs as of November, a 5 percent improvement from a year ago.