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March 29, 2012

2012 Construction Surveys: Walsh Construction

Specialty: Mixed-use and multi-unit housing, including college, affordable and senior housing; commercial, medical and educational facilities; historic rehabilitations/renovations; resorts

Management: Bob Walsh, Tom Mathews, Bill Reid

Founded: 1961

Headquarters: Portland

2011 revenues: $268.5 million (company-wide)

Projected 2012 revenues: $215 million

Current projects: UW Alder Hall, student housing; Bay Vista West; Ernestine Anderson Place apartments; Columbia City Station Apartments, Urness House, Harborview Manor rehabilitation

William Wright Photography [enlarge]
Walsh Construction built Poplar Hall, a dormitory on the University of Washington’s Seattle campus.

Walsh Construction, a builder of multifamily housing, has some concerns about the many apartments that are being built, and how an overbuilt market could affect general contractors.

Company Vice President Tom Mathews talked about this and other issues facing the industry.

Q: In terms of workload, how would you compare what you have on tap for 2012 versus what you started in 2011?

A: We expect to start a similar amount of work in 2012 as we did in 2011. We will see a little less in Oregon and a bit more in Washington in the coming year.

Q: Walsh is active in building affordable and student housing. What’s the outlook for these sectors in the next five or so years?

A: We worry that affordable housing will be adversely affected by the budget woes at the state and federal levels. The state Legislature has historically supported affordable housing and we are hopeful that the new budget preserves a significant level of funding. Fortunately, the taxpayers of Seattle, Tacoma, King and Pierce counties have seen fit to strongly support affordable housing with various levies and funding. That should translate into some reasonable level of ongoing activity, though there is no guarantee.

Student housing is frequently funded through means that do not affect the debt limits of colleges and universities so the recent budget cutting has a more tangential than direct impact. The building activity on campuses is largely driven by the numbers of student enrollment and the need to update antiquated facilities. We expect there to be a relatively steady and stable amount of building activity for the next few years.

Q: What concerns do you have about the construction industry in general in the Northwest in the coming years?

A: International and external forces may have a big impact, but there is little we can do about that. We have some concerns about the flood of privately funded apartments and how an overbuilt market could impact those of us in the residential niche.

Also, the over-capacity of general contractors in the market means that during difficult economic times too many general contractors lower their fees to unsustainable levels. As an industry, we have been in that mode for the last several years. We would expect that this could result in an increasing number of subcontractors and generals having significant financial problems leading to a cutting of corners and a disregard for safety issues.

The hangover from that sort of activity lasts for many years and does little to elevate the trust and cooperation needed for owners, architects and contractors to develop high functioning teams.

Q: Does Walsh plan to enter any new sectors in the coming years?

A: We think there is sufficient depth in our market to keep us busy. We see sustainable, valued-added construction of housing as a market that we understand and so we will continue to develop and expand our skills. Providing more service and support to our client base will return more in the long run than chasing work where we are not as experienced and have less to offer.

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