North Bay construction leaders reveal what’s ahead for the building industry

The pandemic is fading, and the North Bay’s construction industry is on the mend. Still, industry leaders face a number of challenges, including backlogs in materials, higher prices and worker shortages. But progress is being made, and revenues are growing.

Those were threads through responses from 10 of the region’s industry executives that the North Bay Business Journal recently surveyed to find out how they are managing their companies and to learn about their current projects.

Journal researcher Michelle Fox prepared this survey. Some responses have been edited.

How much revenue growth are you anticipating in 2022 over 2021? What is contributing to that?

Rob Cantu: 15%. Contributor is backlog.

Mark Davis: We anticipate revenue in 2022 to be approximately the same as in 2021. While our number of projects has increased, many of those are smaller in nature.

Thomas Dawson: Approximately 8% growth. Demand for multifamily housing has been strong.

Jerry Eddinger: 5% to 8%. Natural growth in Sonoma County and our repeat customers.

Richard Ghilotti: 10% due to an increase in funding of infrastructure and explosive growth in the housing market of Northern California.

David Koch: $5,000,000 more than in 2021. More demand in the commercial marketplace.

Seth Maze: GMH Builders expects to grow by 25% in 2022.  The company’s pandemic backlog coupled with the pent-up demand for construction for 2020 and 2021; GMH Builders continues its steady growth trajectory.

Roger Nelson: Gross revenue will continue to grow due to the demands of construction in the North Bay. We expect continued growth in revenue.

Craig Nordby: We anticipate 10% growth in 2022 over 2021, growth that we attribute to our reputation in the field, and ongoing regional growth trends as the North Bay market continues to be where people and business want to be.

Steve Ronchelli: We see 2022 being very flat. The inflation and the supply-chain issues will keep growth down.

Also, of all the issues created for your business in the past year, which one has been the toughest to deal with, and why?

Cantu: Supply-chain interruptions.

Davis: Supply-chain issues have been the most challenging due to uncertainty of timing on long lead items and continuing shortages and availability, typically “stock” materials.

Dawson: Due to worker shortages, finding appropriate manpower for our project sites, as well as for our company, has required increased patience, fortitude and recruitment resources.

Eddinger: Long lead times and lack of supplies.

Ghilotti: Safety is our No. 1 priority. Making sure all our employees and their families are healthy during this phase of the pandemic is a difficult task, even with all our precautionary measures in the workplace and the field.

Koch: Supply chain. In the manufacturing area, people have still not come back to work and the shortages are industrywide.

Maze: Ongoing COVID-19 and similar illnesses result in frequent sick days.  Between preventive protocols and confirmed cases, GMH Builders need to cover for otherwise lost productivity.

Nelson: The COVID-19 virus has continued to present challenges throughout this past year. The COVID-19 precautionary measures have eased in each county, but the health and safety of each individual still is of upmost priority. Construction is in high demand as owners are getting funding approvals and able to secure loan closings to commence work on their projects. Manpower and material availability are a real challenge with the uptick in COVID-19 cases within the Bay Area, California, and the USA as a whole.

Nordby: The toughest issue for our industry has been the inflation in the costs of construction materials, coupled with supply-chain issues, which hamper the timely availability of those materials.

Ronchelli: The supply-chain issues are the most frustrating. We and the clients understand material and equipment are going to take longer to get. We can deal with the long lead times. It is when you are given a date, months in advance, for delivery, and then a week before that date you get a call saying it has been delayed. Clear communication preserves relationships.

How have the supply and cost of materials changed in the past 12 months? What have you been doing to adjust?

Cantu: Supply has decreased while costs have increased.  Employing best management practices in procurement.

Davis: Cost of materials keeps escalating and lead times/supplies keeps changing. Constant communication with suppliers and key trade subcontractors is important so that we can try and stay on top of the changes and keep our clients informed. For some projects with certain materials and/or equipment that we know will not change, we will pre-order and store so that we know it is in our possession when it is needed.

Dawson: They've been erratic and are therefore unpredictable. We often see wild swings in pricing and product availability, which leads to higher prices and longer construction duration. Precision has been aggressively ordering materials in advance and working closely with our subcontractor partners to follow and monitor deliveries carefully.

Eddinger: Lead times are ridiculously long and are not improving. We try to set expectations and order far in advance, but delivery is often disappointing.

Ghilotti: Decrease in supply and increase in price. We're adjusting by expanding our footprint.

Koch: Steel products have really gone up, as well as copper, ABS piping, lumber. Although, currently, lumber seems to be coming back down.

In ordering a metal building — of which we use a lot — the trend is a 6-to-8-month delivery time from date ordered versus the historical 3 to 4 months. There is no ability to adjust to worldwide steel, lumber, raw material cost increases.

Maze: The cost of materials continues to rise sharply, and lead times continue to surprise us. We preemptively address these challenges by planning, making early inquiries to effectively budget, and making purchases to mitigate project impacts. Additionally, we increased contingency for unforeseen costs and advised clients to do the same.

Nelson: Cost of materials are at an all-time high, coupled with long lead times of material availability and fabrication times has been challenging. Midstate takes a proactive approach by approving the needed materials well in advance so orders can be placed and cost secured.

Nordby: Over the past 12 months, costs have continually increased as the supply chain continues to be restricted and hampered by delays. Taking into account long lead times for materials, we order as far in advance as possible and work to verify delivery schedules whenever and wherever we can. We continually educate clients on the current market conditions to allow them to make educated decisions on when to order materials and what material to order to avoid lead time issues. We also work to lock in pricing as soon as possible to avoid price escalations by manufacturers.

Ronchelli: We have not noticed a difference. Those two issues have been around longer than 12 months. There have always been certain materials that have a long lead time. We work closely with the architect and client to make sure they know which items must be selected and ordered to ensure there will be no schedule impacts. That list is just a lot longer than it used to be.

If you do home remodeling, how have the pace and scale of projects changed during the pandemic?

Eddinger: Our workload has remained consistently busy for remodels, with interesting product integration.

Maze: During the pandemic and beyond, the pace and scale of home remodeling project inquiries increased for GMH Builders.

Ronchelli: We have seen an uptick in the number of remodeling projects, but the scale has stayed about the same pre-pandemic.

If you primarily build homes, how different is the number of proposed projects from a year or so ago?

Eddinger: Still building one per year.

Maze: So far this year, GMH Builders has received fewer custom-home project inquiries. Economic contraction, materials costs, and supply-chain challenges negatively affect single-family residential projects, which tend to have deferred design decisions, ultimately impeding the efforts to mitigate the project impacts.

Nordby: The Nordby Companies constructs homes through Nordby Signature Homes, a business entity devoted to custom residential construction. The proposed number of homes to propose on has remained flat relative to previous years.

Ronchelli: We are seeing more estate homes projects coming online. The pandemic caused many people to rethink where they want to live. Unfortunately, it takes 12 to 16 months, once you make that decision, before a shovel goes in the ground. We are now seeing the outcome of people deciding to live in Sonoma and Napa counties.

What are your three biggest jobs right now? What is interesting about them?

Cantu: Large office campus in Napa. Financial branch construction. Commercial tenant improvements.

Davis: Caritas Center, Enchanted Hills Camp and River City affordable senior housing.

Caritas Center — Catholic Charities of Santa Rosa and Burbank Housing are creating Caritas Village to consolidate and expand existing on-site family support and homeless services in downtown Santa Rosa into a single comprehensive facility totaling approximately 46,500 square feet with three elevators.

The three-story structural steel building uses of a system of steel elements developed in Japan called “buckling restrained braces,” composite steel diagonal braces that work in both tension and compression during an earthquake and support the core of the building, preventing failure. Four hundred fifty-one deep-drilled displacement columns under the building densified the sandy clay soils to a depth of about 30 feet to prevent excessive differential settlement due to liquefaction during a strong earthquake.

Enchanted Hills Camp — In 2017, wildfire destroyed many of the structures and over 700 trees at Enchanted Hills Camp, which has been serving blind children, youth, adults and their families in Napa since 1950. Overall, 20 structures, almost half of the buildings, were destroyed. The Enchanted Hills team is reimagining camp with full ADA accessibility and blind design in mind as they engage in the rebuilding process. The camp is being built in phases so that portions can be used while others are under construction. Wright Contracting’s current phase includes new underground electric and water, including a 420-foot bore section. There will be new 12KV medium voltage electrical distribution, new water tanks and a new parking lot with a 450W photovoltaic system. A future phase will include construction of 11 cabins, two bath house buildings, and 7,000-square-foot commons building that offers a gathering space with an indoor and outdoor kitchen, dining area and program space.

River City affordable senior housing — This PEP housing, affordable senior housing project alongside the Petaluma River will offer 54 living units with resident services and associated common areas, arranged in two two-story and one three-story buildings on 1.31-acre site. The units will be occupied by very low- and low-income seniors, 62 years old and older, with 19 units reserved for veterans. The property will offer residents a community room with full kitchen, garden beds, dog run, wellness center, outdoor patio and public access to the river.

The project has received a GreenPoint Silver rating, which certifies that it is energy efficient and built with sustainable materials wherever possible.

Dawson: Pullman Lofts, Pony Express and Linda Tunis Senior Apartments.

Pullman Lofts in Santa Rosa is a transit-oriented development that will bring additional momentum to the revitalization of downtown Santa Rosa. Consisting of 94 mixed-income units, this new construction project is located at the site of a former lumber yard near historic Railroad Square and will be among the first housing projects adjacent to the SMART passenger rail line. Its proximity to SMART, along with quick access to five CityBus routes and a walk score of 87, will provide households with alternative commute options for reducing their carbon footprint.

Pony Express in Vacaville is a new construction project utilizing specialty techniques, including a waffle slab concrete foundation system, and its GreenPoint certified buildings will include a photovoltaic solar system and thermal solar water heaters. The 60-unit affordable housing complex will be available to low- and very-low-income seniors and veterans, including 15 units set aside for seniors experiencing homelessness.

Linda Tunis Senior Apartments in Santa Rosa is an adaptive reuse project. Using innovative design and construction methods, we are remodeling the Scottish Rite Masonic Lodge, which was little used, into 26 studios for seniors who have been impacted by a federally declared disaster such as the Tubbs, Kincade and Camp fires. Linda Tunis was a resident at the Journey’s End Mobile Home Park and died during the Tubbs fire. This project is named in her honor.

Eddinger: Healdsburg Lumber Company, Honor Mansion and Sauers 1432.

Healdsburg Lumber Company — This new headquarters allows HLC to continue their 100-year-plus tradition and remain in Healdsburg. The site is in the city limits but, without some typical city utility infrastructure, the location is challenging and interesting.

Honor Mansion — Honor Mansion includes a Jack Nicklaus putting green, pickle ball and bocce ball courts and pool. The project consists of remodeling the existing mansion building to include seven rooms.

Sauers 1432 — Industrial warehouse in a thriving commercial area on an odd-shaped lot for a long-time customer.

Ghilotti: Highway 101 widening, Sir Francis Drake Boulevard reconstruction and Yerba Buena Island Southgate offramp.

Highway 101 in Petaluma — This 3.3-mile Highway 101 widening project through the heart of Petaluma, is a part of a two-decade-long effort to add carpool lanes and decrease congestion along Sonoma County’s main artery. Ghilotti Construction is serving as the general contractor whose portion is $86,393,790 of this $121 million project, making this the largest contract awarded in GCC history.

Sir Francis Drake Boulevard — Ghilotti Construction will be managing a full roadway reconstruction of Sir Francis Drake Blvd. from Pierce Point Road through 12-plus miles all the way out to the Light House. The project also includes over 25 miles of surface treatments and safety improvements for various Point Reyes National Seashore routes to all the beautiful, preserved landscape areas within the park. With over 125 storm drain systems, placing over 50,000 tons of asphalt, and a new precast voided deck slab bridge over Schooner Creek, we are more than excited to rebuild this beautiful area while maintaining and preserving our environment and wildlife during the process.

Yerba Buena Island Southgate Project — When completed by the end of this summer, this project will provide a much-needed new off-ramp to Yerba Buena Island from eastbound Interstate 80 from the San Francisco–Oakland Bay Bridge. This project included 11 retaining walls, two bridges, 2,500 feet of barriers, 2,400 feet of storm drain systems, 700 feet of water line, 1,000 cubic yards of concrete base and 3,000 tons of asphalt.

Koch: Recology Sonoma Marin Material Recovery Facility, Kunde Winery and Rodney Strong Vineyards.

Recology Sonoma Marin Material Recovery Facility expansion (Recology Waste Zero) — It will be Interesting to see how their new equipment for recycling will work to increase the volume of recycled materials to zero waste.

Kunde Winery (Vintage Wine Estates) — New showcase barrel storage building. We have decades of experience in working with the wine industry and enjoy working with winery people and surroundings.

Rodney Strong Vineyards — New building to support the new Ammonia cooling system that works with barrel storage.

Maze: Cardinal Newman High School Student Life Center and Library, Russian River Health and Wellness Center, and Cherry Creek Village.

Cardinal Newman High School Student Life Center and Library — A new 24,000-square-foot facility on the existing high school campus, providing students with a new hub to enjoy both indoors and outdoors.

Russian River Health and Wellness Center — A new medical office and dental services building situated along the Russian River riverbank in downtown Guerneville. The two-story structure is built on a podium with parking at grade on the first level, and services are provided on the two levels above. A new single-level Resiliency administrative building was also constructed on the property.

Cherry Creek Village — A 100% affordable housing development in the city of Cloverdale offering 24 new units and a community center providing additional services.

Nelson: Two residential projects and parts of the Mirasol Village redevelopment project.

Residential community — This undisclosed project was for a spectacular owner and in an amazing setting.

Residential townhomes — This undisclosed project was for a spectacular owner and in an amazing setting.

Mirasol Village (Twin Rivers) blocks B & E ($43 million) — These are two blocks of a five-block new affordable multifamily residential community in Sacramento.

Nordby: Antica Winery, Newton residence complex and 113 Plaza Steak House.

Antica Winery — For a wonderful repeat client with an amazing property and view.

Newton residence complex — A fire rebuild.

113 Plaza Steak House in Healdsburg — A complex high-end restaurant in a prominent location on the town’s main square.

Ronchelli: A Healdsburg home, San Francisco remodel and Sonoma County residence.

A hillside residence outside of Healdsburg. It has the most incredible 270-degree view of Sonoma County.

Remodel in San Francisco — Originally built in the early 1900s. They did things differently back then.

Sonoma County residence — We were originally going to do a major remodel, but after the 2020 fires, we are now doing a rebuild.