June 13, 2002

Big players, little market

Photo by Benjamin Minnick Swinerton Builders, which opened a local office last year, was the general contractor on Lincoln Square in Bellevue. It lost its contract to build the giant mixed-use project and is now working on much smaller projects.

Just a few years ago, the construction market in the Puget Sound area was booming, with plenty of work to go around.

The hot market attracted a number of large, national firms to the area.

For example:

• Skanska Inc., listed No. 3 on the Engineering News-Record's Top 400 Contractors with $6.7 billion in revenues last year, made its mark on the area in late 2000 by merging with local firm Baugh Enterprises.

• In January 2000, Granite Construction, listed 25 on ENR's Top 400 Contractors with 2001 revenues of $1.5 billion, purchased an equity interest in Everett-based Wilder Construction.

• Gilbane Construction, listed at 98 on ENR's top 100 design/build firms, opened an office in Kirkland in 1999.

But now the building boom has gone bust, leaving visible holes in the landscape and a number of construction companies searching for work.

The question now: What are these big players working on, and will they stick around?

Charles Pankow Builders, one of the largest general contractors in the United States, established a Seattle office in 2000, then moved to Bellevue in 2001. The company came to the area to work on mixed-use developments surrounding the Meydenbauer Convention Center.

Hafenbrack

Things changed, however, when Tochterman Management Group sold the property to Schnitzer Northwest. Charles Hafenbrack, director of business development for Pankow's local office, said, "when that property changed hands, we lost our opportunity."

The events of Sept. 11 and the slowdown in the economy both before and after the tragedies has had a major effect on the construction market, Hafenbrack said.

"From my office, I can look at the excavation for the Tech Tower. There's not much happening over there today," he said. Hafenbrack also has a pretty good view of the Lincoln Square site. Given the current market conditions, he said, it may be a while before some of the larger projects are completed. "It's an indication that the market has slowed."

Pankow is looking to work on a number of larger projects, and "in the mean time, the special project work will certainly keep us busy."

Those special projects include tenant improvements and seismic upgrades. "Our office here has been staying busy working on local jobs, on the smaller side," Hafenbrack said, while at the same time pursuing larger design/build projects in other markets.

Pankow doesn't plan to pack up the local office just because things are slow now. "We're fully intending to maintain a presence here," Hafenbrack said. "It's a cycle, it's always come back. It's just a matter of when it comes back."

Swinerton Builders, listed 24 on the ENR's top contractors list with 2001 revenues of $1.5 billion, opened a Bellevue office last August. According to a company press release, the local office is working on renovations and tenant improvements for Fred Meyer, Carter-Burgess and Fidelity Investors.

Another big player, J.E. Dunn Construction, opened an office in Bellevue last September. J.E. Dunn was listed 22 on the ENR's top contractors list, with 2001 revenues at $1.5 billion.

Kelly Roth, vice president of operations at the Bellevue office, said that "in general, the market is slow for everyone."

But J.E. Dunn has been keeping busy, Roth said. Some of the firm's recent projects include The Olympus, a 327-unit luxury residential complex in Belltown for Legacy Partners and Equity Residential Properties Trust; Kitsap County's $25 million jail expansion; and a $25 million, 600,000-square-foot renovation for the United States Postal Services distribution center in Seattle.

Not all of the larger companies are sticking around. McCarthy Building Companies, listed 43 this year on ENR's top contractors list, with 2001 revenues of $1.03 billion, decided to pull out of the Northwest market last November. The company established its Northwest Division in 1991 when it purchased what was then SDL Corp., and opened a Portland office in 1996.

In a Nov. 29, 2001, Journal story, McCarthy CEO Michael D. Bolen said "It's a pure business decision... We've been concerned about the market for some time. The division has struggled for a number of years."

Previous columns:

• Jobsite trash can be cash, 06-06-2002
• Portland's bridges influence city's development, 05-30-2002
• Cast glass clearly becoming popular, 05-23-2002
• Paving the way for asphalt's future, 05-16-2002
• Keeping out of harm's way, 05-09-2002
• Custom work trucks becoming the rage, 05-02-2002
• Keeping money from going down the drain, 04-25-2002
• One tough blueprint, 04-18-2002