Embracing The Tides Of Change: How McCarthy Has Stood The Test Of Time Through Diversifying And Innovating

While many parts of the country are still affected by elevated interest rates and construction costs, the West Coast has shown strong commercial real estate fundamentals to keep projects moving.

Southern California is seeing more activity now due to tourism, entertainment and the growth in healthcare and life sciences, increasing CRE developers' appetite to invest in new developments.

One construction company that has been on the ground in SoCal for the past 40 years is St. Louis-based McCarthy Building Cos., a construction firm with more than 160 years in the business.

Four decades ago, McCarthy chose the area as a new place to establish its West Coast roots and settled in Newport Beach, California. Jim Madrid, president of McCarthy's southern Pacific region, who has been with the company for 15 years and oversees projects from SoCal to Nevada, said the company has thrived ever since setting up shop in Newport Beach. 

“We originally operated in Phoenix until our former CEO Mike Bolen decided to enter the SoCal market,” he said. “While it was a distressed market at the time, he was able to partner with some great people who helped him build clientele. As a result, we got our footing before the market took off in the late '90s and early 2000s, and the Newport Beach office became our flagship location.”

Madrid said he has been at the front lines of many of the firm’s new projects in the region, but he emphasized that it is a team effort that makes these come to fruition.

He said his role is to help establish a strategy to identify emerging markets McCarthy should expand to while providing ideas, support and guidance to its office leaders to help make the business run more efficiently.

“Our regional executive committee is focused on our company's future as it relates to culture, business opportunities, client relationships and creating the next generation of leaders,” Madrid said. 

Madrid said this tight-knit work culture not only helped McCarthy stay afloat during recessions but also turned these challenges into opportunities to diversify its portfolio.

He added that one of the reasons the company was able to sustain itself so well was that it took on different projects in a variety of sectors, such as education, entertainment, Class-A offices and renewable energy. While healthcare accounted for 50% of McCarthy’s revenue several years ago, this diversification has allowed the company to grow from generating $500M every year to $2B annually.

Even with McCarthy's diverse mix of projects, it still does a lot of healthcare work in SoCal. One project the company completed in 2021 is the renovation of Loma Linda University Medical Center, a trauma center pivotal in the region because of the care and expertise it provides, Madrid said. 

Madrid said that not only did McCarthy construct a new 17-story adult tower and a 10-story children’s tower atop a shared podium that houses emergency, diagnostic and treatment, perioperative, administrative, food service and dining programs, but the facility now includes flexible spaces for adult and pediatric patients. It wasn't an easy task to complete because of its location. 

“Since the medical center is near the San Jacinto fault line, they had to build a facility that could withstand the impact of massive seismic activity,” Madrid said. “We conducted extensive preconstruction activities and consulted closely with staff and state agencies to ensure it met stringent safety protocols.”

The 268-foot-tall facility features 480 beds, 30 surgical rooms, 19 imaging rooms, a 71-bay emergency department and an entire floor dedicated to maternity services. It also features 5-foot-deep plate girders that rest on 126 base isolators to create a level of separation, allowing the building to move horizontally up 42 inches in case of an earthquake.

Another project that McCarthy is proud of is the new University of California, Riverside School of Business building, which opened in September after nearly a year and a half of construction.  

“We’re excited to have been a part of this project that positively impacts the city of Riverside by providing a modernized facility to help accommodate UCR’s rapidly growing enrollment,” Madrid said. 

The four-story, 63K SF building features a café, a 350-seat auditorium, two 80-seat classrooms, a computer and finance lab with a stock market ticker LED display, multiple study spaces and a graduate student lounge.

Madrid said this is just a taste of things that McCarthy has in the works. It has other innovative projects in the pipeline such as Brightline West, which will be the first high-speed passenger rail in the United States. The project is expected to be completed by 2028, connecting Las Vegas Valley and Rancho Cucamonga in the Los Angeles area.  

“Not only will this be great for McCarthy because we are building in our own communities, but we hope this new form of transportation will spark other developers to create high-speed rails in other cities across the country,” he said. 

Rather than solely thinking about increasing revenue, Madrid said for the next five years he is focused on the company's self-perform abilities, helping it grow and making sure it stays on pace with a culture of quality and safety of a true builder. Madrid plans to ensure the firm continues delivering maximum value to clients, completing projects on time and to the highest standards, and providing a great overall experience. 

In addition to expanding its West Coast operations to Corona, California, Madrid said the next step is to create a training facility in SoCal to help develop the community and usher in the next generation of construction workers.

“One of the challenges with the construction industry is the lack of resources to deliver and build projects,” he said. “We want to create an ecosystem where people who want to learn about construction can do so in a safe environment and help prepare them for a great career in this industry.” 

This article was produced in collaboration between Studio B and McCarthy Building Cos. Bisnow news staff was not involved in the production of this content.

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