The Best (and Worst) of S.F. Construction
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We're living in the hottest construction market in the country, but with the good comes the bad (a labor shortage, need to poach workers, and bumped up salaries). Vets from the public and private sectors shared industry snapshots at Bisnow's Construction UpdateÂ at The Palace Hotel on Thursday. Videos courtesy of Allen Matkins.
Allen Matkins partner Raymond Buddie, who's repped players across the construction industry for 30 years, says the busy market is widely fueled by tech. One happy outcome of the competition is how public agencies are looking at alternative methods of contracting. To compete with work in the private sector, they need to replicate their delivery methods, he says. (Traditional lump sum-type bidding is so last year.) On the staffing side, attracting top talent is key, since inexperienced employees create a sense of anxiety, fear, and risk about the project. Video.
Gordon L'Estrange, senior associate at Lionakis, expects to see a new crop of biz heading to north of Market. As the booming tech market in SoMa gets squeezed and rents rise, he thinks institutional money will come in and buy buildings in traditional, old North of Market areas. As a result, renovation is going to be a part of the next cycle, he says, and he's advising clients on how to get their buildings ready for that. As housing heats up, he wonders whether ideas like micro units will still be around in five to 10 years if the market settles. Video.
In some cases, that renovation trend is already in full swing. When ROSSI Builders prez Craig Rossi walks down Montgomery Street he sees new, shiny lobbies all over. That's because landlords have more cash than in '09, when capital improvements were deferred. He's surprised how quickly the market has rebounded (do you think this rapid turnaround is what inspired Beyonce?), and TI biz is doing well. He says landlords bring in ROSSI early to build an efficient schedule and figure out how quick to get rent started ASAP--a landlord's biggest priority. Video.
Jim Sowerbrower, senior chief of construction management at The California State University, has been spending 90% of his time in North Bay, mostly in San Jose. That's where a $126M, 850-bed student housing project is underway. That project is testing a new "design-risk" delivery method that combines the best of CM risk and design build. When times are good, private sector work is more desirable to contractors and architects, he says, because the money's better. Recruiting folks for a Cal State job can be a struggle, and the only solution is to go out and steal workers. Having to match salaries and adjust pay scales is a problem in the public sector, he says. Video.
Airco Mechanical prez Wyatt Jones says S.F. has surpassed New York and Chicago for having the nation's highest-paid construction workers. (Maybe if those cities would stop arguing about who has better pizza, they'd catch up.) There's still a big labor shortage, however, and that could only get worse next year as Apple's big HQ project kicks up. His Sacramento-based mechanical systems company moved its fabrication facility to Treasure Island for just-in-time delivery to S.F. projects. He sees great potential for the island, calling it an underutilized piece of land that has a goal of becoming a mini Manhattan. Video.
David Bergquist, interim chief campus counsel at UC-Riverside, would like to see the public and private sector "get married," with more funds flowing into public work. The university, which has a gigantic hospital project in Mission Bay, is utilizing a "best value" pilot approved by legislation in 2007. UC can choose contractors similar to a private sector process, allowing the school to figure out who the most qualified bidder is and get their best people to stick together. In the past, when a contractor offered UC their top labor, six or seven months down the road UC could lose that foreman or superintendent to another project that pops up. (This sounds eerily familiar to our love life. Is there a legislative remedy for dating?) Video.