Reno Contracting Inc., a local general contractor nearing the quarter-century milestone, has transformed itself from a builder of offices to a multifaceted player in multiple markets, from hospitality to health care.
Earlier this month, company founder Matt Reno was among a small crowd that gathered in the morning for a ceremonial groundbreaking at the site of 41West, a luxury condo project.
Developer AJ Tangsoc, whose firm Icon Properties is a local affiliate of Vancouver, Canada-based company Regent International, said Reno’s selection as general contractor for the 19-month project was influenced by the company’s local ties. The condo project is Icon’s first in San Diego.
Reno Contracting’s San Diego connections date back to 1989, when Reno and Walt Fegley began working together at M Q Construction.
In 1993, they formed Reno Contracting and for a while it “was an E-ticket ride,” with revenue starting at $3 million, shooting up within two years to $20 million and nearly doubling annually through the late 1990s, Fegley said.
Then rents and the cost of land began to rise and demand rose for steel-framed construction over tilt-up concrete construction. Reno adapted along with the region, Fegley said. As energy efficiency became popular, the firm got into green building.
By 2005, Reno was earning $115 million in annual revenue. That rose to $200 million the following year.
“We did that for three years; then the whole world came apart,” Fegley said. “We were only in the private market, and very well diversified within the private market, but that market collapsed.”
As the recession dragged on, the firm’s revenue shrank. In 2011, it was down to $60 million, less than half of what Reno had been earning five years prior.
“It was really, really a tough time for the industry,” Fegley said. “Candidly, I’m amazed more people didn’t go out of business. I think it’s because in 2003 and 2004, work was so plentiful.”
To stay afloat, Reno turned its sights on where money still flowed: government contracts.
Diversifying to Survive
“We saw the bad times coming, but they always come a little quicker and harder than you think,” Fegley said.
The company’s experience with sustainable building proved valuable.
“Solar got us through the bad years,” Reno said.
The firm began bidding for public works projects, from schools to military proposals, and while it wasn’t a perfect fit with the firm’s expertise, the company pursued that for a time “with limited success,” he said.
As the recession petered out, the company began working on multifamily projects; that market remains a strong one for Reno today.
The Workload
“We’re doing more of the multifamily and residential than I ever hoped,” Fegley said. Reno said the firm has built about 1,000 units since it entered the sector.
Still, Fegley says the firm’s “sweet spot” remains commercial construction. In San Diego, however, there is more renovation going on than new building.
Reno oversaw the refurbishment of the 14-story office tower at 625 Broadway.
The company also does a significant amount of work for biotech and life sciences companies, especially in Carlsbad, he said.
Building hotel towers has also proved lucrative, starting with the 12-story Gaslamp Residence Inn by Marriott, which opened in 2009.
Reno said while offices are going up again, he doesn’t expect to see the level of activity witnessed in San Diego in the years leading up to the recession for another decade.
Broadly speaking, competition in the region remains tighter than it once was because there still isn’t as much work to be had, Fegley said.
That’s also because of the intensifying presence of national contractors in San Diego who can often offer lower fees because of the volume of work they do.
Still, Fegley said that knowing the firm is local is a selling point.
“Any job we do in our home here, which is the majority of the work, we put our reputation on the line,” he said. “You can be at my house or Matt’s house in 40 minutes from just about anywhere in San Diego.”
Finding Labor
To date, Reno has built more than $2.5 billion worth of projects in San Diego, covering about eight million square feet.
The firm has received recognition from a slew of trade associations. This year the San Diego chapter of the Associated Subcontractors Alliance named Reno its General Contractor of the Year for the seventh time since 1998.
Nancy Grimes, executive director of the association, said it is unusual for a general contractor to be recognized as the top in the region multiple times. Members of the association nominate firms for the award; generally, about 25 are nominated before a second round of ballots narrows the field to three.
Reno’s repeated recognition reflects “the relationship that Reno has with the subcontractors, which goes along with their performance, their ability to pay on time and their dedication to safety,” she said. Another aspect of the business which has won subcontractor approval is its transparency and openness when problems arise, she said.
Fegley attributes the company’s success to its devotion to honesty and its insistence on hiring top talent.
“Since I’ve met Matt we’ve done business the same way we do it today,” Fegley said. “We’re pretty meat and potatoes. There’s nothing behind the screen; we’re very transparent.”
Hiring hardworking employees — “that’s really important to us,” he said
He believes the recession pushed graduates who sought to enter the industry to other industries after failing to find work during the downturn.
That’s had long-term ramifications.
“Right now, most of the contractors’ ability to grow is really controlled by the ability to find good, skilled labor out there,” he said.
If more talent was available, Fegley said he believes the firm could up its annual revenue, which he estimated at $115 million this year, to $180 million.
Planning Ahead
The challenge now is to transition Reno to its rising stars, he said.
“They are learning and they’re very, very bright, but the struggle is getting them the experience knowing how to build in the field,” he said. “Every day is different and you do a lot of things you weren’t trained for.”
So they don’t get caught unaware by the next financial slump, Reno’s top executives say they plan to stay ahead of the curve.
RENO CONTRACTING INC.
Founded: 1993
CEO: Matthew J. Reno
Headquarters: San Diego
No. of local employees: 55
Revenue: Estimated $115 million in 2016
