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Chapman University Gallery in R.D. Olson’s Curriculum

CONSTRUCTION: Builder looks to downshift on hotel work

by Paul Hughes

R.D. Olson Construction is rejiggering its outlook as it renovates an Old Town Orange building into an art museum for Chapman University.

The job is one example of moves by the Irvine-based builder—known mainly for hotel construction—to get ahead of an expected drop in that market.

“We’re in the process of diversifying,” said Olson Construction President Bill Wilhelm. “We’re getting involved in education again to take our company forward.”

The renovation will turn the space into a temporary home for the Hilbert Museum of California Art. The museum’s collection of 246 paintings of California scenes were donated to the school last year by real estate developer Mark Hilbert and his wife, Janet, of Newport Beach.

Chapman estimated the gift’s total value at $10 million, including $3 million to establish a home for the museum, which eventually will take permanent residence at a former fruit packing house near Chapman’s film school.

“We’ll have a hundred paintings in the initial show, and subsequent exhibits will draw from the collection,” Hilbert said.

Olson Construction is only signed to renovate the temporary space.

The job is an early move in what Wilhelm said is a planned pivot toward more education projects.

The company plans to cut its hospitality building from about 60% of its work to about 45%. The rest will be spread over multiunit residential—including student housing and timeshares—with a smattering of healthcare and other work, he said.

Growth Market

The builder is shifting gears at what appears to be an opportune moment.

Wilhelm said the hotel industry is near the top of its market cycle. And education is on an upswing, thanks to a mix of public funding and private fundraising.

“New builds will slow down in hospitality,” he said, but “any campus, public or private, is bursting at the seams.”

Some local examples:

• The district board of Orange Coast College in Costa Mesa last week approved $450 million worth of renovations and additions to its campus funded by Measure M money to include dorms, a swimming pool, and buildings for a half-dozen academic areas over 10 years.

• University of California-Irvine has about $119 million in new construction and renovation projects approved for next year after about $118 million that was on tap for 2015.

• Some 81,000 square feet of construction under a previously completed master plan at Concordia University in Irvine are wending their way through specific city approvals.

Concordia Provost Mary Scott said, “We’re waiting for the [environmental impact report],” which is expected in the spring.

Most buildings are planned to be completed within 10 years, she said. The first is a music and worship center.

“The project is on schedule” for what the school hopes will be a late-2016 start, and the estimated costs for the first phase of Concordia’s project is about $26.5 million, according to Scott.

A dozen companies—a list that will be whittled down to six finalists, she said—have so far responded to the university’s request for qualifications.

Wilhelm said Olson Construction expects to get on the list for the Concordia work.

Old Friends

The $3 million job for Chapman is significantly smaller than Olson Construction’s typical contracts.

A 200-room hotel, for example, runs about $50 million to build, industry estimates show.

Olson’s local operations had 2014 revenue of $145 million, good for No. 12 on the Business Journal’s most recent list of commercial construction companies.

The company isn’t entirely new to Chapman’s campus.

It renovated Chapman’s Partridge Dance Center, which is next door to the new museum, in 2002, according to Kris Eric Olsen, Chapman’s vice president of campus planning and operations. He worked for R.D. Olson Development, a sister company to the construction firm, before joining Chapman.

“Partridge had a significant role in our decision” to hire Olson, he said.

Olsen said Chapman opts for builders “with direct experience” in the type of project it needs.

Chapman chose McCarthy Buildings Cos. in Newport Beach on that basis for the $78 million Marybelle Sebastian P. Musco Center for the Arts, which is due to open in March.

The school has a 140,000-square-foot science center out to bid.

It’s also “looking at new student housing,” Olsen said.