It’s no secret that real estate is a cyclical industry.
And after years of recession, the cycle has been up in recent years, bringing a surge of activity to L.A.-area construction firms, several of which are among the 100 largest private companies.
Tutor-Saliba Corp. in Sylmar, a contractor on the Metropolitan Transportation Authority’s subway project, moved up 13 slots from last year to No. 17.
Home builder J.F. Shea Co. Inc. in Walnut, ranked No. 12, saw its revenues rise to $693 million in 1996 from $603 million the year before, enough to climb four spots to No. 12.
“It doesn’t surprise me that construction is a standout,” said David Dale-Johnson, director of the program in real estate at USC’s Marshall School of Business. “It didn’t make a lot of sense to build until about 18 months ago, and now there’s a lot of need in many sectors housing, industrial and more.”
The trend is continuing sharply upward this year, according to the Burbank-based Construction Industry Research Board. For example, in the first three quarters of 1997, $85 million was spent on new industrial construction in L.A. County, while $68 million was spent in that period last year and about $54 million in 1995.
“The turnaround for L.A.’s industrial market involves companies from across the spectrum companies new and old, and some are high-tech while many are manufacturing-related,” said the board’s research director Ben Bartolotto.
Bartolotto also pointed out that in the first nine months of the year, the 5,140 building permits filed for single-family homes in L.A. County was about 1,000 more than the amount filed in that period in 1996.
L.A.-based construction companies are not only benefitting from increased activity locally. Some are also experiencing robust growth in their operations outside Los Angeles.
For example, J.F. Shea Co.’s biggest heavy construction project is as managing partner in a joint venture to build a $250 million water pipeline near Boston.
And much of the company’s anticipated future revenues will come from its development of three parcels of land it bought this year, one each in Mission Viejo and Aliso Viejo in Orange County and the third in Denver.
“Those projects will mean a big jump in revenues in coming years,” said John Shea, the company’s president.
One company not participating in the industry upswing is Altadena-based commercial contractor Charles Pankow Builders Ltd., which last year saw its revenues shrink by about $100 million, to $405.2 million.
Spokeswoman Heidi Swanson said the company finished up some very large projects at the end of 1995 and had not landed contracts large enough to replace them. One of the concluded projects was Gateway Center, a $250 million office building and bus hub for the Metropolitan Transit Authority near Union Station.
“We have some new projects coming up which I can’t discuss, but next year does look very good for us,” Swanson said.