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2010 In Review: State of the Industry

Q & A with ValleyCrest's Tom Donnelly




Tom Donnelly, ASLA, is President of ValleyCrest Landscape Development. He is responsible for an extensive branch network that while national in scale is capable of delivering an array of integrated landscape development services at the local level. Additionally, Tom directs activities of the division's pre-construction services, design-build, and ValleyCrest Design Group, the company's landscape architecture practice. ValleyCrest is a $940 million a year company. Photos courtesy of ValleyCrest

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It is no surprise to landscape contractors that 2010 was not a good year for business overall. Unemployment hovered near 10 percent all year, home values continue to slip, and foreclosures and bankruptcies are at an all-time high record. These statistics are the headlines for the economy overall, but what do the experts in the landscape industry have to say? We sat down with one of the industry's top players, Tom Donnelly, President of ValleyCrest Landscape Development for his insights.







Commercial tenants now in many cases prefer to lease in LEED certified buildings, and that's creating more sustainable workplaces for the future. It is also interesting to note that in the public sector, green is on the rise as well. In fact, the government appointed its first chief greening officer under the GSA to oversee an aggressive push for more sustainable practices in government buildings. The GSA is striving to meet its commitment of achieving a zero environmental footprint in its 1,500 owned and 8,100 leased buildings - many of which are historic properties.


Q: What are your overall views of the landscape construction industry (current and future), challenges?
A: The landscape construction industry faces significant challenges that will require companies to hone in on their core competencies, focus on the geographic regions most important to them and deliver quality work in the most efficient and cost-effective way possible. Frankly, I expect the outlook for the construction industry for the next few years to be very challenging at best. The economy is in a fragile condition and until a substantial number of people get back to work there is going to be a limited need for the kind of projects we have seen over the last decade or so being developed and built in the communities we live and operate businesses in.

Certainly, there's been a tightening of the belt and companies are absolutely taking a more austere approach today in the industry. Landscape contractors must find ways to add value, deliver the highest productivity possible on jobs and partner with vendors and subs to meet clients' needs in new and innovative ways. Absent any job growth on a real and consistent basis, there won't be a full-fledged recovery though.

It is true that developers have remained silent, mainly on sidelines due to lack of access to capital. Though we're hearing demand is building to get projects kicked off, we're not seeing activity to support that notion. There hasn't been any meaningful hiring in architecture and engineering, and those are leading indicators. In short, there is a long road ahead of us to get those people back to work.

Q: How has ValleyCrest responded to the conditions?
A: ValleyCrest began anticipating a slowdown back in 2008 and the leadership team proactively took steps to prepare. As we all now know, companies in every industry have had to face the challenge of an extended economic deceleration. By continuing to operate within sound business fundamentals, ValleyCrest has adjusted and adapted. For example, we recognized that the landscape development industry was under severe pressure and would likely remain so into 2012, that's required us to look at how to make our landscape construction operations more efficient and crews staffed accordingly.

''The nature of our business allows us to flex staffing and, in some cases, we've been fortunate to be able to shift teams to where work is and that's helped us minimize necessary reductions in crews.'' -Tom Donnelly, President, ValleyCrest Landscape Development

Q: What specific trends or areas of focus is the company keeping in mind?
A: Obviously customer service remains a top priority today at ValleyCrest - though we believe that exceeding customers' expectations is a given no matter the state of the economy. But these days it goes beyond that basic foundation of listening to the client. For instance, we're hearing a good deal about a need for flexibility and sustainability. We're locked in on how owners and investors of all types of commercial properties have adjusted to the real estate slowdown by balancing costs of occupiers needs with returns. That approach creates a collaboration to find solutions that save time, maximize capital investment or deliver more value to tenants. Often today that means projects in urban core areas that incorporate transportation into the plan because there is a need to provide access and connectivity to workplaces and living spaces to better accommodate people's lifestyles. Owners really are walking the walk now because they see the competitive advantages a sustainable project can deliver.







ValleyCrest Landscape Companies is headquartered in Calabasas, California.


Q: What are some examples of projects that reflect the trends discussed?
A: Clients today are focused on how to get the most landscape for their dollars. They're using design-build to deliver a smarter development that considers the entire project lifecycle from the design phase, through construction and on into the maintenance phase. They are looking at design-build as solution to improve the development quality and process, not just for faster start to finish times.

Public entities are also being asked to provide a wider array of services and amenities to serve as many sectors of their communities as possible. For many public leaders, that means maximizing uses at increasingly constrained and overburdened facilities or building new ones. That's one reason we think the design-build project delivery method offers distinct advantages in today's marketplace. Not only does it help deliver practical, constructible, yet visually appealing places, there's a good chance people will be able to enjoy these facilities sooner than if the traditional design-bid-build process was used. ValleyCrest recently completed the design-build of Arlington Heights Sports Park, a new $13.7-million public sports park and community amenity located in Riverside, California, more than six months earlier than expected.

Design-build is ideal for projects that need to be fast-tracked, require special or long-lead materials, are slated for LEED certification, or have integrated or overlapping systems are all good candidates for design-build. The process helps everyone understand project goals and costs early on, expediting the program and delivering great design.

That's because typically when something goes awry in the traditional design-bid-build scenario, there's plenty of finger pointing between the builder and the designer, with the client ultimately on the hook for the increased costs and time delays. With design-build, the designer and contractor are contractually one in the same team, so finger pointing doesn't work. It also allows the design phase to overlap with certain parts of the construction phase, which significantly reduces the time required to plan, design and construct public parks.

''We are closely tracking and listening to what end-users, or the occupiers of our clients' properties demand. By doing that it puts us in a position to offer owners and investors ideas that ultimately put their properties in a competitive advantage.'' -Tom Donnelly

Q: What markets or property types have faired better or started to see signs of life? Why?
A: We are seeing activity that in my opinion is tracking to what I am hearing about real estate activity across the U.S. For instance, there are numerous opportunities in Texas, particularly the Dallas, Austin and Houston metro areas. In Dallas, ValleyCrest is installing a green roof for the Botanical Research Institute of Texas. Master planned community development work of any scale is currently on hold in all markets. Apartment communities are hot in the Sunbelt cities. Boston, New York and New Jersey are good markets for higher education and institutional projects, such as pharmaceutical and research. A few recent examples of ValleyCrest work in the Boston market include M.I.T Koch Center, Library Park, Harbor Park Pavilion and Linden Square. In New York, we were part of the team that built the Hudson River Park. Las Vegas and Phoenix are very quiet, though we are working on a new spring training complex for the Arizona Diamondbacks and Rockies called Salt River Fields at Talking Stick in Scottsdale. As a sector, resort work in the U.S. is limited to remodel type projects at existing resorts, with few if any new development projects underway - mainly due to overbuilt conditions and lack of financing options.







Clients today are focused on how get the most landscape for their dollars. They're using design-build to deliver a smarter development that considers the entire project lifecycle from the design phase, through construction and on into the maintenance phase. They are looking at design-build as solution to improve the development quality and process, not just for faster start to finish times.


Q: What types of projects are being done today? Why?
A: There are some non-speculative corporate projects in certain markets being developed, primarily for owner-users or a build-to-suit customer. For instance, Devon Energy in Oklahoma City is building a new corporate headquarters building. Other areas where we see projects moving forward include higher education and campus housing, senior housing - which is of course is specifically targeted to a buyer/user type - as well as apartment communities, and medical research and hospital facilities that corresponds to an aging population driving a need for new hospital facilities. In fact, we just completed a green roof project at the new Palomar Medical Center West project in San Diego.

Q: Are there other ways that you've adjusted?
A: Another way that ValleyCrest, has adjusted to industry conditions is to invest even more significantly into training people, so that our teams remain at the leading edge of the industry. We think that refining processes, practicing maximum efficiency, operating more safely, or encouraging professional development, will allow us to serve clients even better once the economy improves. This approach worked in past economic slowdowns, and ultimately we came out stronger when work became more plentiful.

We've taken other measures that have helped ValleyCrest Landscape Development meet the challenges faced; one of those moves included expanding internationally. There are several large jobs in the Middle East that we've been able to secure. Like the overall industry, we are seeing fewer and smaller jobs and that's resulted in reduced workforces - especially in segments relating to development, such as landscape construction and our tree growing operations - Valley Crest Tree Company.

A bright note is that two of our businesses, ValleyCrest Landscape Maintenance and ValleyCrest Golf Course Maintenance, are growing in a tough market. They have experienced expansion into market-leading positions, both organically and via acquisition. The strength and reputation of ValleyCrest's more than 61 years in the industry continues to attract talented industry professionals seeking career homes at ValleyCrest, as well as frequently prompting landscape maintenance firms to approach us about joining the ValleyCrest family of companies.


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June 17, 2019, 8:46 am PDT

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