California construction crews continue to find themselves busier than ever. The Top Starts list of the 25 largest projects to break ground in the state during the past year shows that five 2015 starts topped $1 billion. That’s on top of six ongoing projects valued at between $1 billion and $5 billion that broke ground in 2014—all of which are still under construction.
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Contractors must sequence projects carefully to avoid bottlenecks, especially in hotbed construction epicenters such as San Francisco’s South of Market district and downtown Los Angeles. “Resources and capacity within the market are things we are very conscious of and have looked at closely on our projects, with the depth and availability from the subcontractor community as well as the physical workforce,” says Mike Concannon, general manager with Lendlease. The contracting firm landed two projects on the Top Starts list, both located in Los Angeles—the 1.8-million-sq-ft Circa residential and retail complex and the $1-billion Oceanwide Plaza, consisting of three towers between 40 stories and 49 stories.
Many developers expect the building boom to continue. In the annual Allen Matkins/UCLA Anderson Forecast released at the end of January, the commercial real estate survey predicts that multifamily construction will reach its 25-year peak sometime during the next three years.
Public infrastructure agencies are attempting to build capacity fast enough to serve all of the new residents. At $1.6 billion, L.A. Metro’s Purple Line Extension tops the list of largest starts in 2015. That’s in addition to more than $3.5 billion in transit projects the agency started in 2014.
Due to California’s aggressive Renewables Portfolio Standard that requires half of the state’s electricity use be served by renewable resources by 2030, the renewable energy sector also shows no signs of slowing. Five renewable projects made the top 25, with the $1.1-billion Blythe Solar Power Project ranked second overall.
The California Energy Commission estimates 680 MW of renewable capacity went online in 2015. In 2016, the agency expects more than 1 gigawatt of commercial-scale capacity—almost all of it solar photovoltaic—to the grid. The commission also identified 11.8 GW of renewable capacity in the permitting stage that could create significant future construction opportunities.
For the first time in several years, a retail-oriented project made the Top Starts list, with the $631-million Westfield Century City Expansion reflecting a retail renaissance that may come as a surprise to those that thought online sales would dampen brick-and-mortar store construction. “Retail is moving from simply a distribution outlet, where you would go to a store just to buy something, to being an experience. To create that experiential aspect of retail, you need to do some new building,” says Jerry Nickelsburg, senior economist with the Anderson School of Management, UCLA.