Building bust: big construction projects scarce in Utah.

• Author: King, Heather L.
• Position: Business Trends: Commercial Construction - Industry Overview

A LACK OF LARGE CAPITAL PROJECTS has Utah's construction companies and contractors scrambling to take advantage of limited building opportunities. David Layton, vice president of The Layton Companies, says, "Everybody is trying to make due without the big capital expenditures. So renovation, remodeling and small expansion are very much consistent with the right-sizing of businesses."

Steve Chilton, executive vice president at Cache Valley Electric, sees many businesses taking advantage of existing office space by upgrading to larger spaces. "This has created an interesting market for tenant improvement," he explains. "What we see available commercially is not new office buildings. The market is so overbuilt in Utah that it's going to be a while before a lot of major construction goes on here." Though building has generally slowed, Chilton believes certain industries will experience future growth. "The markets that we'll follow will be the healthcare industry government and institutional work."

Richard Thorn, president and CEO for Associated General Contractors, agrees, 'As our population ages and the baby boomers become more mature, that's going to create a whole new marketplace for us in healthcare, assisted living and retirement facilities. Those will become the hotspots in the construction industry"

Thorn also foresees potential highway work throughout the state. "Even though I-15 is done through the Salt Lake Valley Utah County is really going to be the next big bottleneck. I'm not sure they are going to be able to build that fast enough to alleviate some of the problems we see down there."

Diversifying business

Contractors are now offering a wider variety of services to those businesses that can still afford to build and expand. Cache Valley Electric offers telecommunications, customer service and construction management divisions that support their traditional electrical construction business. This diversification provides additional profit centers to the company and makes their bids even more attractive to customers. "We've tried to expand our business and diversify from just being a traditional electrical contractor," Chilton says. "It's been a real key for us to continue to grow."

Two years ago, The Layton Companies was created to oversee five small business units that allowed the company to enhance their response time to evolving market needs. "It's an age of specialization, and our customers demand the highest performance,"...