Contractor of the Year Hunter Roberts

If you ask Robert Fee, he’ll be the first one to tell you: he was terrible at retirement.

Robert Fee (center) started Hunter Roberts Construction in 2004 and which the help of CEO Jim McKenna (left) and Larry Petretti (right) has positioned the firm as one of the New York region’s major players in less and four years.

It only took six months for the retired 40-year veteran executive for Turner Construction Company to embark on the second phase of his career. He secured a $50 million investment from an Oklahoma City banker and, in a 300-sq-ft office in Lower Manhattan started Hunter Roberts Construction Group in November 2004.

He quickly – and controversially – recruited some of his cohorts from his Turner days to join him and, by January 2005, Fee had 12 employees and a vision.

“We had, and we still have, a running 10 year plan that we update every year,” says Fee. “The plan initially was rapid growth, very heavy percentage change in ’06 and ’07, then starting to level off, and by 2010 we start looking at what we’re going to do after that.”

So far, the plan has worked.

At the end of 2005, he had 100 employees. By 2007, that number had swelled to 360 with the addition of an interiors group and offices in Charlotte, NC, Philadelphia, and New Jersey, and the company had raked in $553,905,865 in total revenue, placing them at number 8 in this magazine’s annual Top Contractor survey. In 2006, they were number 22 with just over $234 million in regional revenue.

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Hunter Roberts is currently working on a number of major projects across all sectors including the $390 million mixed-use complex at 77 Hudson St. in Jersey City; a $250 million stadium for Major League Soccer’s New York Red Bulls in Carney, NJ; a new parking facility at the new Yankee Stadium in the Bronx; and a $350 million residential tower in New York’s Tribeca neighborhood. The company is also providing program management and consulting on major infrastructure projects such as the World Trade Center Transportation Hub and the Metropolitan Transit Authority’s East Side Access Project. Meanwhile the interiors group has taken on high-profile jobs for MTV Networks, Goldman Sachs, and at the Empire State Building.

With a staff populated early on with several industry heavy hitters, as well as the initial $50 million investment, Hunter Roberts was far from your typical startup venture. But its quick ascension to the top echelon of the regional construction industry has earned the firm the nod as New York Construction magazine’s Contractor of the Year for 2007-2008.

Nearly 30% of Hunter Roberts’ 342 employees are female workers, many of whom work on job sites.

On an unseasonably warm and sunny afternoon in late April, Fee and three other Hunter Roberts principals – President and CEO Jim McKenna, Executive Vice President John Fumosa, and Larry Petretti, president of Hunter Roberts Interiors sat down with New York Construction magazine in Fee’s spacious office at 2 World Financial Center in downtown Manhattan to discuss the firm’s history, its success, and its future.

New York Construction: Going back to the very beginning, how did Hunter Roberts come to be?
Robert Fee: We opened the door in 2004. Well, let me go back. In 2004, about the middle of [2004], I was retired from Turner Construction Company, and I was still on the board of directors. I was getting antsy. I didn’t enjoy retirement, so, six months into it I said “This is not for me.” But you can’t go back. You can’t turn back the clock, so I started figuring out “Where else can I be?” So I resigned from the board, and put together a business plan for the balance of 2004.

ROBERT FEE

I knew Jeff Records, the chairman of MidFirst Bank [in Oklahoma City]. He had been a former major shareholder at Turner Construction Company, as well as a board member [and] he agreed with the business plan and I opened up our first office in November of 2004 it was just a young lady and myself in a 300-sq-ft office down on Broadway. I then went out and obviously recruited a number of these individuals here to have the nucleus of this organization. They started officially in the last week of January 2005. We went through a number of temporary offices and finally arrived in this building in May of 2005. That’s pretty much how it came together. We started out at the end of the first year we had 100 people in the organization and now we have over 300.

Larry joined the organization in June of 2006 and our Charlotte office opened at the same time. We also opened a Boston office in 2006 and we couldn’t crack that market and we shut it down after two years. That’s a tough, very insular market.

NYC: But you’re in Pennsylvania though, correct?
RF: Oh yes. In Philadelphia. John’s in 1717 Arch St. in Philadelphia, we’re in Bedminster, New Jersey, two offices here in New York. Larry runs a completely separate operation from the New York office. This is a core shell group, his is the interiors group. Which, obviously, there’s some overlap. He’ll lead certain pursuits. We just made a short list for Marist College in Poughkeepsie. Larry has a relationship with them, so he’s a principal in charge for that job. So he’ll move back and forth, whatever makes sense for the job.

NYC: So is there some thing or some specific project you can pinpoint and say, “This is what put Hunter Roberts on the map? This was a watershed moment for us?”

JOHN FUMOSA

RF: I’d say, and I don’t know if Jimmy agrees, but I would say there are two. One is [Edison Properties’] 188 Ludlow, which is an 80-20 residential building over on Ludlow St. just off Houston. That was like our first really big deal. That and the Village at Newark [student housing project for New Jersey Institute of Technology]. But I think Ludlow was the biggest. Definitely the most complicated. We took it through pre-construction, we gave them a completion guarantee, which put us at a risk that a contractor normally does not take. And of course 77 Hudson [in Jersey City] is a standout. For a young company, that was a $390 million job, with two different owners, so that was a leap of faith on both of our parts both with the ownership and the contractor to do a job of that size. But we have so many signature jobs right now.

John Fumosa: It’s not just one project, but I think there are different levels for different territories. Our biggest job in Philadelphia or one that was sort of a watershed job was the Temple University job. There were three large projects at Temple and there were four contractors chasing them, and we ended up getting the Tyler School of Art, a $55 million job, and we were in business when we got that for maybe a year-and-a-half and a lot of people were surprised.

LARRY PETRETTI

Larry Petretti: A good point to make though is that the experience of any firm is only as good as the people that work there. You have a lot of very senior individuals in key positions. And we hired a lot of senior people. People that come with 20 to 25 years experience all in these markets. So they know the subcontractor base, they know the banks, they know the developers, they know the game, if you will.

Jim McKenna: I almost look at it a little differently. Bob talked about the plan that he put together. I go back and I look and here it is three years. We’ve got three years behind us. And Bob’s original plan was that it takes three years to make money, it takes three years to hit almost this “watershed” you’re talking about. We all believed in ourselves. There wasn’t a person here or a person that we hired who didn’t believe in us and what we could achieve. It’s interesting: we all came from very large companies with a lot of experience. You have to now prove that and sell it. When you’re with a different brand or a different flag, you have to convince people to agree with us.

JAMES MCKENNA

NYC: Was it an easy sell?
JM: It was a very interesting time.

JF: It was very mixed.

JM: Very interesting times. You find that it’s yes and no. You find people you would’ve thought would be 120 percent behind you saying, “Lets let these guys succeed for three years, then we’ll try them.” And then there were other people who just did it for us. With some of these “watershed” projects, an Edison took a leap of faith to go with us. A New York Jets, [team president] Jay Cross backed us 100 percent over some major companies out there. A Goldman Sachs, an AON – Fortune 500s backed Larry. A lot of schools backed John. And not really because of Hunter Roberts, but it was our relationships. I wouldn’t say that there’s any one project that’s a big watershed. I see that the plan came to fruition. But it was a lot of hard work. It was a lot of baby steps. There’s no big one step that you’re just going off, because there were a lot of failures along the way. And the plan that Bob had laid out for all of us was much coming up the hard road. But there was going to be the hard, lump-sum bidding, the other world out there that nobody could deny if you want a job. That was going to be our “grammar school” to get us up to that first level, and then we could work on our advanced higher education at that point.

NYC: So, keeping with that education metaphor, where are you now?
RF: That’s ongoing. It’ll never stop. If we’re up to 340 people now, we’ll be up at 450 to 500 by the end of the year, and as you bring new people in, that’s a new culture, new training, new systems, so the education is continuous. Learning goes on.

JM: Well, some days I feel like we’ve got our PhDs and other day I feel like we’re in Kindergarten (laughs). That’s the humbling thing about this business. It’s great, you do a project and at the end of the day, you build the relationship with the team, the consultants, the designers, the developers, the subcontractors, and then its over and you’ve lost it and you’ve got to earn it again. You’re back down on that bottom rung and trying to build that up again. It’s a great thing about our business and it’s a very humbling thing about our business.

RF: Most of us in the senior leadership positions came from companies where we’d spent a lot of time so we’d built up an expectation of what your peers would do around you. Then you start a new company and you’re bringing in all these people from the outside, and it’s very difficult. There are different levels of training, different levels of risk management, so a project manager is different in six different companies. In six different companies you’ll get six different project managers. You have to be very careful of what they’re doing out there. So it goes back to training and review, a lot of things that you can’t take for granted. We’re at risk for virtually 75 or 80 percent of the work we do in some form, either in lump sum or cost guarantee risk. So we have to pay attention.

NYC: How big a year was 2007 for Hunter Roberts?
LP: To the extent that you were able to start and complete jobs by your third year, you’ve contacted that many more people so you’re getting that many more opportunities in the way of RFPs or bids, you’ve now established a track record with that many more architects, developers and owners, so everything kind of grows exponentially. So, yeah, I think it’s a giant wave that comes along, and after three years you’ve created some critical mass.

RF: We’ve completed jobs. A lot of people would say, “Let’s see how they do. Let’s see them finish a job.” By 2007 we had a fair number of projects that were completed that we could point at and say, “Those were successful.”

LP: Even on the subcontractor side, you’ve established or re-established relationships with subcontractors that you pay your bills, that you know how to run an efficient job, and they can make money as well. We’re only as good as our subs. And that’s how you get more work.

JM: That’s all true. And breaking into that [New York Construction’s Top Contractors] Top 10, that’s big. You kind of get lost at 24 or 57, does anyone remember that? But you’re in the Top 10, there’s something to be said about that.

RF: We have a very aggressive plan that goes out to 2010, we have a continuing plan that goes out to 2015 but it’s really pretty much inflation plus normal growth at six or seven percent. It’s not really “Where are we going to be? Are we going to be in South Florida, Northern Florida, are we going to be in Atlanta? What are we going to do?” That process is being looked at, but not really codified yet. We have one more office we want to open in 2010, and that’s in Washington [D.C.]. We have an office in Charlotte, we have a satellite in Raleigh which we do quite a bit of work in. In fact, in New Jersey, we have a small office right here on the Gold Coast, it reports to Larry, and it pursues tenant work in all these buildings along the coast. He did five floors for Goldman Sachs over there in Jersey City. We see markets within markets and try to look at who’s best able to pursue that market. Our people in Bedminster aren’t really inclined to go over there to Jersey City and pursue tenant work. It doesn’t feel right to them, but to Larry it’s natural. Probably 80 percent of all that work along the Gold Coast is getting built by New York City contractors. Why? Because they’re all New York City firms. The same firms we do business with here. Larry’s budgeting new work for Goldman Sachs in their new tower [in Lower Manhattan] based on what he did in Jersey City. He did five floors, they like what he did, so we’re definitely in consideration. So that will relationship will carry forward. Jimmy built the building over there five years ago, but right now they’re looking to Larry and his relationship. We’re not interested in doing a $500 million core shell building for them right now, we’re interested in getting $50 million, $100 million worth of tenant work for that building.

NYC: Has Hunter Roberts made a conscious decision to focus on working across all sectors and throughout the region or is it a matter of you still being a young company and still sort of looking for a niche?
RF: I look at in terms of, we started out and we took what we could get. So right off the bat, if you look by contract type the first year, we got a lot of lump sum, so we had two K-12 schools. We also had a lot of residential early. I pay a lot of attention to the F.W. Dodge data. So if commercial is 20 percent of our market, we’d like to have commercial be 20 percent of our business. We look at the five geographic areas we’re in now, and we evaluate them on a regular basis. Our plans are built around the F.W. Dodge data. [Dodge Reports are put out by McGraw-Hill Construction, which also owns this magazine. –Ed.] A lot of people will tell you it’s not infallible, but there’s nobody else who puts anything out, and it’s a metric that could be completely wrong, but you can measure against it. We say, “We want to be in health care, we want to be in sports.” We want to be in all those markets. We’re all in commercial, but no one is going to build a core shell office building if there’s a recession going on in the commercial sector. If the financial people are laying off 20,000 or 30,000 people, how much of an impact is that going to have on a new building? You don’t want to put all your eggs in one basket. So you always want to be in education, you always want to be in health care. In many areas, they’re just as big as the commercial market. Historically the commercial market was 30 or 35 percent. Today it’s not. It’s down in the 20s. So education and healthcare and these other sectors are very important.

NYC: Do you have an eye at all toward all of the infrastructure work that’s out there right now?
RF: Our role in that will not be as a contractor at-risk. We have a small presence at the World Trade Center, we have a small presence with the East Side Access project, we’re going to be an on-call contractor there. So yes, we’re in that market, but really not at risk, more in a program management role. Why do they need us? Why does a Parsons [Brinckerhoff] need us? We know the unions. We know labor practices here in New York City. They’re really the engineers on the civil side, but we’re the guys that understand practically how you put a job together. The schedules, the logistics … that’s our value to the team. We’re not going to design anything. We’re not going to be on that side of things. You won’t see us as a contractor working at-risk, you’ll see us as a contractor working in a PM role.

JM: We’re really vertical builders. That’s most of our background. So infrastructure work – heavy and highway – we won’t be involved except for in a management type roll, but really tying more into vertical building. We are working for the MTA, but that’s a relationship for the diversity of what we need to do, and also to maintain relationships. One of the first jobs we won as a new company three years ago was the World Trade Center with PB and URS. And I just got another call today that we’re going to go back over there with some more people. Those are relationships that you can build on. Then you can look at how it can benefit your at-risk work.

RF: When you’ve got stuff coming out of a hole in the ground and iron going up, you need people who understand how you coordinate that. There’s going to be three, four, five contractors trying to build on that site. There’s got to be someone who doesn’t just sit in an office, someone who’s used to walking out there with muddy boots and who is able to control the environment. That’s where we’ll have an involvement in those kinds of projects.

NYC: Was having an interiors group always a part of the original business plan?
RF: No, actually we started originally thinking about the Turner model where every unit has an interiors group within it. But Jimmy an I met Larry, who had been at Structure tone for 35 years, at a function down in Florida, and we started talking about wouldn’t this make a lot of sense if we just started something like this on our own. It took us a few months and we put it together and launched it.

NYC: So what does Hunter Roberts have in store for the future, projecting out five, 10, 20 years?
RF: We have a plan, but we haven’t got a commitment to that plan. I think it’s a work in progress. The first five years, there’s a very steep curve, once we hit that, then we’ll be looking at what’s the best opportunity perhaps for an acquisition, what’s the best opportunity in terms of personnel available to run it. You can open an office up but you’d better have some good staff in there to make it work.

We think about these things all the time. We’ve looked at a couple of possible acquisitions. We looked at one in Boston when we were struggling up there, but we decided it didn’t make a lot of sense at the time. We looked at someone in North Florida, but backed away and decided it was too early to go down there. It was too much of a stretch at the time. I think we want to beef ourselves up here a little more. So yeah, we look all the time, but I don’t think we’d do anything before 2010. We have enough opportunity to grow right now. We have metrics that take us out to 2015.

NYC: Are there thoughts of going global? Expanding westward, beyond the Eastern Seaboard?
RF: Not at this time. I would say that across the Eastern Seaboard top to bottom, we’ll be there. Other than that we’ll look at whatever makes sense. If there was ever a real opportunity to be in Chicago, we might consider going to Chicago. But not today. It would be too much of a stretch on manpower. Jimmy is both the President and CEO, but he also runs the Core Shell Business Unit in New York. We have to have someone running that before you expand out that far. We’d just be over taxing ourselves. But we think about it all the time. We actually bid a job in Chicago last year through a client. They had a large project, they were having trouble getting bidders, so I went out there to stir up the market (laughs). But once the new guys came to town there was a lot more interest in the job.

NYC: So expansion is definitely a priority, just not right now?
RF: Oh, yes. But it will take years. Where is the biggest opportunity right now? You have to follow the Sun Belt. The biggest markets out there that we haven’t really tapped into yet, you look at Washington, you look into the Florida market, across the southeast, and you look at Texas. Texas is a tough one. Turner’s been in there for 40 years and struggled. Unless you went to Texas A&M, University of Texas or [Southern Methodist University], you might as well be from Mars. You’re not going to get anywhere down there, so you’ve got to find somebody down there in that culture to try and get accepted. But it’s a $14 billion market. You compare that to New York and it’s not something you can ignore – nor is Florida. Every owner of a privately held construction company that has a home in Florida opens up an office down there so he can write off his travel expenses … and eventually he writes off a lot more than that (laughs). It’s a graveyard for contractors! But you’ve also got the volatility of those markets. You’re in a non-union market and subcontractors aren’t very strong and can go bankrupt pretty easily. You have to have strong management in there to make sure you know what you’re doing or you can get hurt. You can get hurt badly.

NYC: What projects do you have in the ground right now, or what’s coming up in the pipeline that you’re looking at as the “next round” of signature projects for Hunter Roberts?
JM: I think the Yankee Stadium parking garages are a very nice project for us. 56 Leonard is the second project now for Alexico, right downtown. [$350 million, 800-ft-tall residential tower in Tribeca) That’s a pretty significant building.

RF: (To John) Don’t we have a big one in Philadelphia?

JF: 1601 Vine …

JM: That’s the tallest building in Philadelphia.

JF: Well, there’re two of them. 1601 Vine is a $250 million mixed-use hotel/condo/retail, and 1800 Arch is the tallest building in Philadelphia. Hotel, condo and retail.

RF: John’s doing pre-construction on both of those. We were awarded both of them.

JM: That’s a nice team there, too.

JF: Yes, it is.

RF: And we’re finally going to come out of the ground in [Raleigh, NC] on the Soleil Center, which is a $120 million mixed-use project which is a hotel on the bottom with condos on top.

JM: That’s the tallest building in Raleigh, too.

RF: Now Larry’s role is a lot different. He’ll get a significant project on a Friday afternoon that we didn’t know about. The pace is different. He’s not in pre-construction for six or nine months, it’s [claps hands] “BANG” he goes and he does $25 million in 20 weeks.

NYC: Are you guys still doing the [MLS Soccer facility] Red Bull Stadium?
RF: Yes. There are two jobs there. There’s the Red Bull practice facility, which is about a $25 million job that’s on hold. There’s a zoning issue there. Then there’s the stadium itself in Carney, we’re driving piles and pouring concrete over there. That would be the signature job for New Jersey after the Jets facility is turned over in ’08.

NYC: What’s the schedule on that?
JM: Late 2010. They’re playing in Giants Stadium. (25,000 capacity)

NYC: Talk a little about your break with Turner and the subsequent fallout. Was it a tough decision to leave?
JM: The … To answer your question, no. It was not difficult. I’m probably a little different then most in that I love the idea of working hard and starting something new. That’s part of the enjoyment of this business and this industry. When I got that call from Bob, “Do you want to go?” I thought about it for a millisecond and my decision was made at that point. To me, it’s America. It’s about the American dream to do something on your own. It’s hard to leave a comfort zone. I was there for 27 years at Turner – a long time. I didn’t think I’d be there a year. I had my own company when I was 17 years old. 27 years just went fast. So, it’s hard leaving relationships and friends like that, but I looked at it as the next opportunity that was there. I thought it was the opportunity of a lifetime, and you have to capitalize on that.

LP: I think it is about opportunity. We were all at well-established companies, we all held senior roles, but also we were in a stage of our lives where you could just go on doing what you’re doing for the next 10 to 20 years, whatever your retirement window is, and you’ve got to ask yourself, “Would I get this opportunity at the place that I’m at now?” And the answer is no. At that stage of your career, you’re not going to go to another company of similar size. And given the opportunity to grow something and run your own show, but also have the attitude that, “I would have no problem going back and do what I was doing in the past.” I think that’s the ingredient for wanting to make it work and making it work. And it’s exciting. Not that I wasn’t excited about going to work in the past, but this is a whole new excitement. And you can make changes that are really epic. What we’re doing for diversity and things like that. You’re affecting change in the industry, and that’s a big thing. Like Bob said, it’s about doing what’s right. I don’t think there’s anything better than that.