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April 30, 2015

Survey: Sellen Construction

Image courtesy of The Miller Hull Partnership [enlarge]
Sellen is building the MarketFront project, which will connect the downtown core to the waterfront.

Specialty: General construction

Management: Bob McCleskey, CEO; Wilf Wainhouse, COO; Scott Redman, president

Founded: 1944

Headquarters: Seattle

2014 revenue: $456 million

Projected 2015 revenue: $700 million

Current projects: Amazon blocks 14 and 19; Pike Place Market WaterFront; Ninth and Lenora and Eighth and Virginia apartment towers; KEXP at Seattle Center; Eighth Avenue and Howell Street R.C. Hedreen Co. hotel; Madison Centre; Urban Union; Centre 425; Museum of Flight Covered Air Park; MultiCare Health System Covington (phase two); Second Avenue and Pike Street Tower; 4545 Roosevelt Way

Sellen Construction is building several projects that will transform Seattle. It is working in new neighborhoods like the Denny Triangle, where it is building two high-rise apartment buildings and Amazon.com’s new headquarters. It is also working on improving signature Seattle spaces like the Pike Place Market and KEXP’s headquarters.

Sellen President Scott Redman answered questions about the construction market. Answers are edited for style and length.

Q: What are the biggest trends and issues in the industry?

A: Over the next few years, the real estate and construction market will continue to improve and jobs will continue to grow.

The extensive growth, however, brings many challenges. Cost escalation will increase. Locally sourced materials will rise in price due to supply and demand. Tower cranes specifically are in short supply and will see a jump in pricing in 2015.

Subcontractor capacity and financial capability is a major concern. The industry can expect to see a 4 percent to 6 percent cost increase in subcontracted work this year.

Additionally, companies should expect labor shortages and reduced productivity. Specifically, labor availability will be tight for carpenters, laborers, cement masons, sheet metal workers and electricians.

Q: How will MarketFront affect downtown and the Pike Place Market?

A: The MarketFront project is an idea that has been talked about for the past 40 years. Finally, Seattle will be able to provide residents and visitors with a connection from the downtown core to the waterfront. This will not only lead to increased customers for downtown and waterfront businesses, but it will also provide Seattleites with a dynamic new public amenity.

The MarketFront will preserve and strengthen Pike Place Market’s cultural heritage for generations to come. We love working on important projects like this that are truly building community.

Q: Which sectors are you excited about and which are you avoiding?

A: Sellen has always built a variety of project types. Right now, we’re building a lot of office, high-rise residential and health care projects. One market that’s especially dynamic and interesting to us is tenant improvements. We have great teams that excel at that type of work.

With so many companies expanding here or moving to Seattle, we’re excited to partner with them and help build some really great new spaces. We don’t avoid any specific project types. Instead, we focus on clients with whom we have great relationships and then make sure we have the right teams available to build almost anything they might need.

Q: How does your firm use green practices?

A: We have been committed to sustainable design and building practices since the mid-90s. We have dedicated in-house LEED and sustainability resources with expertise in preconstruction, new construction and existing buildings. We are also focusing on re-certifying our own office space and greening up our operations to ensure Sellen continues to walk the talk. Responsibility is one of our core values, and sustainability is a big piece of that.

Q: How are rising construction costs affecting Sellen?

A: The construction industry is beginning to face shortages of materials and skilled labor, putting further pressure on the cost of both.

Fortunately, a little industriousness and proactive planning can go a long way in reducing the risks. We strive to stay current with local and global market pricing to provide accurate estimates. Our project teams are using tight job controls and early procurement to secure materials that are in high demand, such as tower cranes.

With this volatility, awarding subcontracts requires an extra level of due diligence to check subcontractor financial capacity. Additionally, the abundance of work allows subcontractors to be selective in which projects they pursue — a luxury they haven’t had since 2008.

Early subcontractor commitments are essential to ensure subcontractor capacity, as are enhanced subcontractor risk mitigation strategies such as subcontractor default insurance. Staying proactive on all fronts is crucial to eliminating surprises.

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