Construction industry has been a wild ride

Kevin E. Burke is president and CEO of Burke Construction.

Las Vegas’ construction sector has made impressive strides since being pounded silly by the recession.

Burke Construction Group, Inc., an award-winning general contracting firm headquartered in Las Vegas, figures to be a big part of the era of new growth.

VEGAS INC recently sat down with the firm’s president and CEO, Kevin E. Burke, to talk about where his company and the construction industry have been, where they are going and what it means for the Las Vegas Valley.

How did your company get its start?

Burke Construction Group began in 1984 when my brother, Tim Burke, left the local office of Sletten Construction to start the company. We originally focused on the private and federal sectors, with early projects at the Nevada Test Site and Nellis Air Force Base. With very little capital, we were fortunate to have clients who believed in us and helped us through those formative years.

To what do you attribute your company’s growth?

Being on the front end of growth industries. We tend to be able to sense the growth markets and get there before everyone else does. We have positioned ourselves to meet the demands of a geographically diverse marketplace.

How would you describe the state of construction in Las Vegas today?

Albeit volatile, the commercial construction market is in a regrowth mode. As noted in the most recent Center for Business and Economic Research indexes for Southern Nevada, both employment and commercial permits are trending upward, both month-over-month and year-over-year.

That said, commercial permit activity, while increasing, still is relatively low and unpredictable. Quite a bit of downward pressure still exists on project profit margin for subcontractors and general contractors.

How far has the construction sector come since the recession?

A very long way, as construction in Nevada was in a depression and was the hardest-hit industry in the state. Construction employment in Nevada plummeted for almost six consecutive years, bottoming out in 2012 with the loss of more than 90,000 jobs, or a 60 percent decline.

What’s unique about the construction industry here?

Burke Construction Group builds in various parts of the country, and we always return to the reality that we have a highly skilled and flexible workforce with an amazing “can do” attitude in Nevada. We simply love building in Las Vegas.

Where does the industry need to go next?

The construction boom that we experienced for many years was driven in large part by steady population growth. We need positive, sustained population growth to fuel the construction markets going forward.

Which construction sectors are booming?

I would not say that any one sector is booming at this point. Moreover, we have seen steady re-growth in several core markets. My sense is that we may never see our market “boom” again as it has in the past, but I would take steady year-over-year growth over a boom market.

Which sectors are hurting, if any?

Many of Southern Nevada’s core construction markets — office, industrial, retail, multifamily, medical, gaming/hospitality — have seen positive trends. The senior care/housing market still is lagging due in part to seniors’ equity being trapped in their homes and therefore their inability to be relocated to senior communities, combined with a lack of population growth, particularly in the senior demographic.

What are your predictions for the industry in 2016? How about over the next five to 10 years?

Technology continues to drive our industry by way of software, “lean construction” (a method to design production systems to minimize waste of materials, time and effort in order to generate the maximum possible amount of value) and materials technologies (glass, battery, renewable energy). It will be amazing to be a part of the industry over the next 10 years, to see the rapid pace of innovation.

Headwinds for our industry will continue to be the skilled labor shortage. A significant portion of employees who left the industry during the recession never returned, and companies still are struggling to find workers at all levels to properly staff their teams.

What are some current trends you’re seeing in construction?

Prefab/offsite construction methods will become more popular. Building information modeling will become a necessity on projects. Green building will continue to grow across all markets.

Which projects have made you most proud?

When I think of our projects, what I really think of are the clients whom we have been so fortunate to build for, including Cashman Equipment in Henderson; Las Ventanas, a continuing-care retirement community; Pirch, a home products retailer that is rated America’s 25th-most promising company; and Mandarin Oriental at CityCenter.

Describe a couple of those projects.

Pirch enlisted the services of Burke Construction Group to build headquarters, distribution centers and several retail locations across the United States. Each project ranged from 25,000 to 52,000 square feet. The retail locations feature 18 kitchen vignettes, a live demonstration kitchen for guest chef appearances, a back-of-house support kitchen that produces nearly 1,000 meals daily and a fully active outdoor kitchen featuring a pizza oven, grill tops, beer refrigeration and more. Pirch corporate headquarters, the largest project, includes a full-service kitchen for employees, along with the customary Bliss Café.

Built on 53 acres, the 300,000-square-foot, seven-building Cashman industrial complex received multiple 2009 NAIOP Spotlight Awards. All required infrastructure was completed, as well as roads and parking areas on the site. The campus houses the company headquarters, administrative offices, equipment rental, equipment repair, training facilities, sales operations and warehousing. It was built using proven LEED strategies and cutting-edge construction techniques, and remains the largest office/industrial gold certified project in Nevada.

What have been the biggest challenges you’ve faced?

Leading our company through the economic downturn and then back out to regrowth. Much should be attributed to our staff’s mentality and tenacity in that, as we saw the local market go into a depression-like state, we took a “burn the ships” mentality. There was only one direction we could take, and that was forward. Forward, as we defined it, was continued geographic diversification and market diversification aided in part by the shale oil and gas boom in North Dakota and by an emerging market in experiential retail.

What’s on the horizon?

For us, it is all about regrowth in our core and new markets.

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