New sports facilities, subway work, high-rise hotels, apartments and condominiums added up to another boom year for general contractors in Los Angeles County in 2017.
The top 45 contractors handled $10 billion worth of work here. That’s a 16 percent increase from a year earlier, according to the Business Journal’s annual list of general contractors, ranked by L.A. County billings.
There were hits and misses among the ranked companies, as 23 reported a year-to-year rise in local billings, two were flat and 16 posted declines.
The overall growth marked the sixth straight year of steady gains for the industry, which has steadily added jobs over the period, according to industry anaalysts and major builders.
Several said they expect the trend to last into the 2020s.
“We are living in the good old days right now,” said Michael Concannon, general manager for the Los Angeles office of Lendlease Construction Inc., a global construction behemoth based in Sydney, Australia. Leandlease rose to No. 3 on this year’s list based on $524 million in local construction billings in 2017, a year-over-year increase of nearly 36 percent. “We anticipate the next several years to continue to be a great market for Los Angeles.”
Lendlease’s major projects included The Liddel, a seven-story condominium complex in Westwood developed by Sawtelle-based Palisades; upgrades at El Camino College in Torrance; and Shanghai, China-based Oceanwide Co.’s $1 billion-plus, triple-tower Oceanwide Plaza.
“We’re now seeing new clients,” Concannon, who oversees 150 professionals in the L.A. office, said, “and will break ground on a significant project in the next 30 days.”
Economists attribute the strongest development cycle in more than a decade to a renaissance in downtown Los Angeles, new sport stadiums, a robust tech and entertainment economy, brisk demand for multifamily housing and office space, and a bevy of public infrastructure projects ranging from subways to upgrades at Los Angeles International Airport.
Recent years have been good to the contractors working on the L.A. Stadium and Entertainment District at Hollywood Park, the estimated $3 billion future home in Inglewood of the Los Angeles Rams and Los Angeles Chargers.
Project contractors include Turner Construction Co. of New York, and the work helped propel it to the No. 1 spot with $726 million in local billings, a year-over-year increase of nearly 18 percent.
Executives said the stadium project in Inglewood accounted for about $500 million of its local billings in 2017.
Other current Turner projects include a $400 million midfield satellite concourse terminal at LAX, a Wells Fargo Center renovation downtown and a $50 million medical building at Long Beach Memorial Medical Center.
It plans to break ground on a $180 million renovation of California Market Center downtown this fall. A start on a 400-room hotel next to Staples Center –another $180 million project – is expected early next year.
“Very good year – with great success with our big projects,” said Kevin Dow, Turner’s general manager for the Los Angeles region, which employs 320 people. “We continue to proceed on schedule. And we’ve secured new work from clients we know and can bring value to.”
AECOM, a global engineering, design and construction firm based in Century City, debuted on the list at No. 2 on $597 million in local billings.
The Fortune 500 firm reports ramping up its Los Angeles building division after acquiring Tishman Construction Co. in 2010, Hunt Construction Group in 2014 and Shimmick Corp., a civil construction firm based in Oakland, last year.
AECOM also is working on the Inglewood football stadium, in addition to USC’s $200 million renovation of the Los Angeles Memorial Coliseum, a job it shares with Hathaway Dinwiddie Construction Co., the new Gerald Desmond Bridge, an L.A. Football Club Training and Performance Center, and a United Airlines maintenance and ground support complex at LAX.
“We have developed a very strong presence here in this market,” said Eric Schreiner, Southern California operations manager for AECOM Construction Services. “Our clients like working with a company that’s based in L.A., has a strong financial position, and delivers what’s promised.”
Norm Wilson & Sons, a 36-year-old family owned construction firm based in Long Beach didn’t make the last year but debuted at No. 38 on this year’s ranking, thanks to a 272 percent increase in local billings, to $63 million in 2017.
Major projects for the company included a $25 million facility for Mercedes-Benz, a $20 million Terminal at Douglas Park office complex and a $15 million facility for Snap Inc.
“We almost doubled our business in L.A. County,” said Randy Wilson, founder and chief executive. “Our client base is just busier. The economy is better. And it’s just been really good the last couple of years.”
Economists expect to see construction billings continue at the current yearly growth rate of around 15 percent into the near future.
“The level of building is not going to increase, but will not decrease, for a couple of years,” said Jerry Nicklesburg, director of the UCLA Anderson Forecast. “We’re at a plateau, at the top of the cycle of nonresidential real estate.”
Construction is expected to add nearly 15,000 more jobs to the region by the end of 2019 if it stays on track, said Somjita Mitra, director of the Institute for Applied Economics at the Los Angeles County Economic Development Corp.
A 9 percent increase in housing permits issued in 2017 in L.A. County, most of it for multifamily apartments and condominiums, seem to bode well.
“I think this is an encouraging sign of the growing health in our economy,” Mitra said. “We wouldn’t be investing in construction if we weren’t confident that we could recoup that investment.”
Headwinds from rising labor and materials costs, and tight supplies for items such as concrete, glass and steel could complicate matters.
“Our biggest challenge is not opportunities but in resources,” Concannon of Lendlease said. “We’re taking a proactive and selective approach … of opportunities and how they fit into our portfolio.”
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