The slowing drip of water has turned into rapid growth for ValleyCrest Landscape Cos., one of the largest commercial landscapers in the nation.
Despite a construction slump and a drought across the southern half of the United States, revenue at the 60-year-old company reached $1 billion in 2008, a 7 percent increase from the prior year. By comparison, revenue among the largest 100 landscapers in the country grew by just 1 percent, according to Lawn & Landscape magazine.
Chief Executive Richard Sperber said his customers have two concerns these days the real estate downturn that hurts them as they lose tenants, and water conservation.
Surprisingly, the challenge of dealing with drought conditions presents opportunities for a landscaping company.
"It has been a positive for us," Sperber said. "We have gained new clients because of our expertise in water management."
David L. Hanson, senior vice president and resident water expert at ValleyCrest's headquarters in Calabasas, said real estate property owners expect an investment in water savings to pay for itself within 18 months, a reasonable timetable under current economics.
When the company implements a water savings plan at its clients' buildings, the savings can be significant.
"We are running between 10 and 20 percent average savings, and as high as 40 percent on certain sites," said Hanson.
One of Hanson's favorite ValleyCrest water projects was a 65-acre condominium development in the Conejo Valley. The project began five years ago, when Hanson and his crew conducted a water audit that turned up broken pipes, stuck-open valves and damaged sprinkler heads.
After fixing the hardware, Hanson reprogrammed the water schedule, taking into account factors such as time of year, slope of the land and specific plants. The project involved about 360 man hours of work over a period of 90 days.
The changes cut water usage by 35 percent during the first year, and an additional 5 percent the second year.
In another big water savings project, ValleyCrest replaced plants with less-water-intensive ones and installed drip or bubbler irrigation systems at Century City's twin towers. The company also installed a satellite-controlled irrigation system that uses government weather data to calculate the amount of water needed there and the best time of day to deliver it.
"It had a relatively short payback period of less than a year, so it's prudent in today's environment to make the investment," said Brad Cox, L.A. managing director for Trammell Crow Co., which owns the towers.
Hanson said he expects many more water savings projects, as the price of water will probably increase 10 percent to 15 percent annually for the next three years.
Despite the chance for quick savings, many property owners don't fully consider the cumulative cost of water over time and avoid making the up-front investment, Sperber said.
"It's hard to get customers to focus on the problem, especially if it just rained," he explained. "The people managing these projects have a lot of issues and irrigation is usually at the bottom of the list. They're always worried about now, not the future."
ValleyCrest started training employees to become water consultants seven years ago. The timing was perfect as droughts have become more common and governments have become more restrictive about water usage. Currently, the city of Los Angeles allows landscape watering only two days per week, and an Assembly bill in Sacramento may require property owners to limit water use throughout the state.
ValleyCrest's emphasis on water conservation has helped the company through hard times in the world of landscaping. Businesses are feeling the effects of the slowdown in construction and commercial real estate leasing.
"There is definitely a downturn," said Angela Dye, a landscape designer in Phoenix and president of the American Society of Landscape Architects. "But while the markets for our services are depressed, there are still great opportunities, especially with regard to sustainability. Green has a new meaning for the general public now."
ValleyCrest started in 1949 as a lawn installer for housing tracts in the San Fernando Valley. The company gradually expanded to highway maintenance, golf courses, landscape architecture and water management.
In 2006, MSD Capital, the private investment firm of computer mogul Michael Dell, purchased a 51 percent majority ownership stake in the company. The Sperber family retains equity in the company.
ValleyCrest handles landscaping and maintenance at some of the most prestigious addresses in the United States. Client sites include the Getty Center in Brentwood, the Big Dig in Boston, Millennium Park in Chicago, Invesco Field in Denver and the Bellagio casino in Las Vegas. The company has more than 10,000 clients, and employs about 10,000 workers in summer and 8,000 in winter.
The company has lost some clients in its property design division due to the real estate downturn, but the growth in its maintenance operation the largest piece of the company has more than offset any losses.
Looking forward, Hanson expects the water conservation issue will continue to attract new customers to ValleyCrest even as the drought worsens.
"The water budget is a challenge we'll all face, whether we are in a corporate campus, a retail center, a college or a hospital," he said. "At some point it may come down to making choices. In the 1970s, we plugged irrigation systems to keep the trees alive and let the turf die. It can get pretty drastic, and if we go another year in this drought, we are going to have to make more drastic choices."
ValleyCrest Landscape Cos.
Core Business: Designs and maintains landscaping for institutions, golf courses and commercial property owners
Employees in 2009: 10,000 (down from 10,300 in 2008)
Goal: To build its business through environmentally friendly landscaping, with emphasis on water conservation
The Numbers: $1 billion in annual revenue
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