Builder Points to Diversification for Business Success
If a builder who has survived for a decade is applauded for his resilience in a particularly competitive industry, a man who has been around for four decades must be in the legendary category.
John H. Hedrick, founder of J. H. Hedrick & Co., San Gabriel, celebrating its 40th anniversary this year, puts it quite simply: “The key to surviving as a builder is diversification.”
Another key to survival is having in-house capabilities in architecture, estimating/purchasing and marketing, according to President Steve Boggs.
“We have in-house architects, responsible for client designs, general contractors to oversee subcontractors, superintendents and experts in estimating and purchasing,” he said. “We even have our own in-house interior design firm, Interiors Plus, to handle all aspects of residential and non-residential design.”
Providing in-house capabilities allows the firm to provide cost-efficient design the first time around, Boggs said, shortening turnaround time and lowering overhead costs to the client.
“When you have to go ‘out of house,’ you lose control and time since you must deal with several consultants,” he said.
The firm began by doing contract work and building apartments and has developed into a diversified firm under the current leadership of Boggs. Hedrick continues to be active as chairman.
Since its founding in 1947, the Hedrick firm has completed more than 15,000 residential units and more than 30 industrial, medical and commercial developments.
“We’re very proud of the fact that we’re one of only 17 building firms ranked as “Housing Giants” by Professional Builder magazine that have survived since 1968,” Boggs said, adding that the July, 1986, listing contained 474 builders.
Hedrick’s construction starts last year were valued at about $15 million, and the company expects to do at least $20 million in business this year, he added.
One of the more recent specialties of the Hedrick firm is constructing medical buildings, including projects under way in San Diego, the San Fernando Valley and the San Gabriel Valley. One reason for the growth in medical facilities, Boggs said, is the expansion of health maintenance organizations (HMOs) and preferred provider organizations (PPOs).
The firm puts together partnerships, acquires land, obtains financing, designs and constructs the building and tries to “put aside a certain amount of partnership interest for the doctors who are going to go into the building, so they can buy into the project,” Boggs said.
“This gives them (the doctors) some tax advantages, a good financial investment and enables them to offset some of their rental costs.”
Hedrick still builds apartments, but recent projects illustrating the breadth of the firm’s diversification include Villa Corona, 54 condominiums in Pasadena; Le Faubourg, 16 condominiums in Beverly Hills; the two-story, 12,000-square-foot Home Savings of America building in Valencia; Los Angeles Industrial Park, two 100,000-square-foot industrial buildings in Pacoima, and Pacific View Medical, a 34,000-square-foot medical office building in Chula Vista.
