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Tenant Improvement Market Continues to Be a Challenge

The 13 companies on the San Diego Business Journal’s 2012 Tenant Improvement list generated just under $324 million in projects in 2011, a 10.3 percent decline from revenues in 2010.

The criterion used to rank the list is San Diego County revenue from tenant improvement projects in 2011.

Five companies reported a decline in revenue, while eight companies reported an increase.

The total number of local employees for the 13 companies on the list as of June 1, 2012 is 1,175 while the companywide employee count is 12,485.

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Swinerton Builders, No. 1 on the list, was established in San Diego in 1993, but its roots in California stretch back to 1888 in Los Angeles. Around the turn of the last century the company expanded to San Francisco and was instrumental in rebuilding the city after the Great Fire and Earthquake of 1906.

“We established an office in San Diego in 1993 because of a project for the U.S. Postal Service in the Carmel Mountain area of San Diego,” said Mark Payne, vice president and division manager. “The structure was a concrete tilt-up and included 100,000 square feet of office space.”

Today, Swinerton occupies a 24,000-square-foot office building that was heavily remodeled to include many green features and is home to the company’s employees and tenants.

“It’s a net-zero building, solar panels line the rooftop, and reclaimed wood is used throughout,” Payne said. “To fully utilize the open space created by the 18-foot clear height, office walls do not extend to the roofline, skylights dot the ceiling, while glass-lined conference rooms face a large panel of windows.”

Swinerton’s most notable recent projects include four luxury theaters for Cinepolis, with a fifth underway in Rancho Santa Margherita. Major tenant improvement clients include Qualcomm Inc., SDG&E, Bridgepoint Education, Kaiser Permanente, Sharp HealthCare and UC San Diego.

Next on the list in the No. 2 spot is Bycor General Contractors, up from No. 5 in 2011.

Bycor grew tenant improvement revenues 13 percent from 2010 to 2011.

The two founders, Scott Kaats and Rich Byer met on a project in Cardiff in 1981 and their first major project together was for TaylorMade Golf’s initial big expansion.

“We have always shared the same philosophy about focusing on our client’s needs and delivering the best project possible,” said Scott Kaats, president. “We grew from $3 million per year in 1984 to $120 million per year (including all projects).”

Bycor listed tenant improvement projects for ServiceNow and the Monarch School for the list as of June of 2012. Additional projects include ITT Technical Institute, CSA Travel Insurance, URS and UC San Diego.

“Our core clients have kept us busy during the recession,” Kaats said. “We have been steady and seeing a slow move toward growth, we’ve hired a few new employees, both in the office and in the field, and we have seen a modest increase in both retail and office activity, which has translated to about a 25 percent increase in projects this year.”

Turner Construction Co., No 4 this year, up from No. 9 last year, had the most impressive gain in tenant improvement revenue of 285 percent. The tenant improvement revenue grew from $8.1 million in 2010 to $31.2 million 2011.

“Since 1983, Turner has been successfully running a Special Projects Division in San Diego that focuses on a variety of project types including interior improvements and renovations, building expansions and facility upgrades,” said Jason Bakke SPD division manager. “Our clients spread across all sectors, including entertainment, commercial, biopharmaceutical, hospitality, health care and education, to name a few.”

Turner listed tenant improvement projects with Connections Housing LLC and SDSU BioScience on the list this year.

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