Job scarcity has builders constructing new revenue

A few of the Springs’ largest general contractors expect to stay busy during the year ahead — but not as busy as they were in 2007.

Peak Professional Contractors President David Brinker, G.E. Johnson Construction Co. President Jim Johnson and Bryan Construction Co. President Scott Bryan agreed with Associated General Contractors, Colorado Chapter executive director Mike Gifford’s analysis that the public sector will keep crews busy this year.

Here’s a look at each owner’s business outlook and plans for navigating another challenging year.

Contractor gets creative

Brinker is no stranger to tough economic markets. He started Peak Professional Contractors during 1986, just as the local lending and commercial real estate sectors entered the Resolution Trust Corporation’s crackdown on over-leveraged development.

Last year, the company completed a number of large jobs in its pipeline that included the demolition of a Wal-Mart building as well as construction for Country Buffet at the Citadel Crossing retail center, work on a 9,000-square-foot addition to the Cliff House in Manitou Springs and construction of seven retail buildings at University Village Colorado on North Nevada Avenue for developers Kevin Kratt and Tom Cone.

“We’re getting ready to start one more building at University Village, Brinker said, “but that’s the only ground-up project we have right now. That’s it, there’s nothing else new. We’ve trimmed about 20 percent of our staff. But we’ll do what we’ve always been good at — tenant finish and remodels,” he said, adding that the tenant improvement industry remains fairly level and might even pick up.

Beyond that, the company has expanded its reach into a second specialty: hotel renovation and occasionally, new construction.

Because of the company’s track record with more than one national chain, he’s been able to keep “gypsy” crews busy on the road in places like Atlanta or Las Vegas, as well as in the states of Ohio and California on multiple hotel update projects.

“It’s a good niche for us. They give us rooms, and we send in a team that does wallpaper, paint and furniture liquidation and replacement. A lot of times we end up changing out the TVs or the mattresses. The requirements in each city or state vary. To get rid of an old mattress, for example, in California we have to fumigate them before they’re disposed of. But it’s good work and it’s always coming up — hotels have to update their rooms and common areas pretty regularly,” he said.

One new job that might make it back onto Peak Professional’s schedule during 2010 or 2011 would be the renovation and expansion of the Cliff House’s Wheeler House annex which was delayed last year. Another would be to finish inline retail renovation at Citadel Crossing, halted when Lowe’s put off breaking ground on its new store last summer. Brinker is also in touch with banks that have older retail centers on their books that need refurbishing and remarketing.

G.E. Johnson pipeline flowing

“We’ll end the year at just over $300 million for 2009,” Johnson said, pointing to the company’s St. Anthony’s Hospital multi-year project currently under way in Denver and its work on the Parker Adventist Hospital. “For 2008, we did $360 million — and before that in 2007, about $330 million in business.”

In order to keep its crews busy during a slow economy, however, G.E. Johnson looks to the Denver metropolitan area for at least half of its work. Only about 20 to 25 percent of revenue is generated by Colorado Springs’ jobs.

“We’ve tried to stay diversified, and that strategy is paying off,” he said, adding that so far the firm has remained focused on traditional categories rather than shifting overnight, like some of its competitors, to new and alternative energy facilities.

The company is, however, working with the town of Jackson Hole, Wyo. to use federal grant money to make the town more energy efficient.

“We’re leading a team to upgrade both residential and commercial properties. The town’s goal is to reduce county energy consumption over 10 years, so part of our work involves remodeling and updating aging structures. Energy efficiency forces you to use your ingenuity,” he said.

Johnson said material costs, which have gone up slightly but are still very reasonable, are expected to decrease this year.

While his prognosis for 2010 is to maintain or possibly experience a decrease in billings, the company’s pipeline is relatively well-stoked.

Projects in progress or expected to begin work during 2010 include:

• the 2100 University apartment complex near Denver University
• a new visual arts center at the University of Wyoming
• the Lone Tree Cultural Arts Center
• at least one new school near Mosca, Colo. and another out for bid near Monte Vista
• a 950-student middle school for Denver Public Schools in the Stapleton Community.
• work with Peak Vista on project management for the El Pomar Community Health Center and
• the interior build-out of the United States Olympics Committee building at 27 S Tejon St.

Bryan busy, pushes for a proactive city

Bryan Construction President Scott Bryan expected 2009 to end on an upbeat note, thanks to about $50 million in ongoing construction work at Fort Carson.

“We used to do about 50 percent of our work in commercial and 50 percent government,” he said. “Today it’s more like 70 percent government and 30 percent commercial.”

While Bryan Construction would like to see the commercial markets return with gusto, the general contractor expects the market to remain flat for another 18 to 24 months.

“It could get worse in nonresidential,” he said, adding that the bad news will continue until capital markets improve and federal regulators ease requirements on lenders.

“I concur with Jim (Johnson). It seems like everyone wants to jump on the energy bandwagon. Thankfully, we have always had a large presence in the military market — it’s not easy to break into. We’ve had multi-year, multi-project contracts in place for a long time and have capitalized on them; 2009 will actually be our second best year ever — just after 2008. We’re going to focus on the same relationships for 2010 — at local bases and other (government) installations west of the Mississippi, not just the Army Corps [of Engineers], but also based on a long-term contract with the GSA.”

While Bryan believes “milcon” work will remain robust through 2010, he expects a dramatic drop in new contracts in 2011 along with increasing competition from out-of-state firms.

“There are hundreds of millions of dollars [in contracts] at Fort Carson we can’t look at because they were awarded to billion dollar companies contracted out of Georgia and Alabama under national rather than regional contracts.”

Even in this environment, however, Bryan Construction was fortunate to be awarded several new contracts just prior to year end 2009.

But just looking out for his own company won’t be enough, he said.

As one of the city’s most visible stakeholders and serving again during 2010 as chairman of the Colorado Springs Economic Development Corporation board, there are broader economic issues ahead — not just for general contractors, but for the city as a whole.

“The region has received funding for some ARRA projects, but I would encourage the city to aggressively procure as many stimulus dollars as they can. They should have a full-time person who watches for grant and stimulus money opportunities. By the end of February most of the money will be shelled out. If the city’s not proactively lobbying for money coming out of the military funding bill, the stimulus bill, we’ll lose out — and that will impact a majority of Colorado Springs business owners.”