Irvine is home to the two largest construction projects currently underway in Orange County, representing a significant portion of the region's total construction activity. The expansion work at Hoag Memorial Hospital Presbyterian's Irvine campus holds the top position with a $583 million contract awarded to McCarthy Building Companies Inc. This project alone constitutes over a third of the value of the ten largest construction contracts in the county.
Following closely is W.E. O’Neil Construction’s $223.9 million project for The James senior living community, also located in Irvine. Together, these two Irvine developments account for approximately $807 million, making up over half of the combined value of the top ten projects highlighted in the region. Overall, the ten largest construction projects across Orange County have a combined value of $1.4 billion in construction contracts, encompassing more than 4 million square feet of development.
Healthcare, education, technology, and multifamily housing are sectors driving this large-scale construction activity. This investment continues even as contractors navigate an environment marked by rising costs, financing hurdles, labor shortages, and uncertainty regarding tariffs and material prices.
Rising costs stand out as a primary challenge for the industry. Jamie Macartney, a project executive at C.W. Driver Companies, noted that several construction indexes have increased between 42% and 60% since 2019, depending on the specific materials, building systems, and market sectors involved. According to Macartney, these cost escalations are leading to "fewer projects move into construction, with more being delayed, re-scoped, or canceled altogether."
McCarthy's Senior Pre-Construction Director, Domenic Koyama, stated his company monitors fabricated metals, electrical, and mechanical equipment for potential impacts from tariffs, supply chain disruptions, and extended lead times. Koyama identified uncertainty regarding material costs, availability, and alternative sources as the biggest challenge.
Contract values can also shift after construction begins, particularly if the project scope expands or unforeseen issues arise. For instance, the contract for Hoag’s Irvine campus expansion increased following the addition of more work. This included the integration of a medium-pressure gas line, an underground tunnel connector, and tenant improvements, according to McCarthy. On other projects, unexpected site conditions, such as discovering more impacted soil than anticipated, have doubled the required disposal and imported fill, as reported by Project Manager Jayson Short of Innovative Construction Solutions. Weather also presents challenges, with RM Dalton President Rick Dalton noting rain and wind complicated efforts to meet a move-in schedule for a technology center in Santa Ana, although that project was ultimately completed ahead of schedule.
Despite billions of dollars in projects underway, contractors observe that the market is becoming increasingly selective and competitive. Karl Kreutziger, President of C.W. Driver, described commercial construction as "relatively slow," pointing to particular weakness in multifamily and office sectors, while publicly funded education projects remain active. Kreutziger explained that the combination of higher construction costs and difficulties in securing financing is prompting more owners to favor redevelopments and modernizations over new ground-up construction.
McCarthy, for its part, identifies areas of growth in healthcare, higher education, public infrastructure, and other institutional sectors. Domenic Koyama also observed that owners are adopting a more deliberate approach to timing, funding, scope, and risk, particularly with privately financed projects. Projects moving forward require early cost planning, tighter schedules, and the ability to adapt to changes as they occur, a sentiment shared by many contractors mentioned in the report.
