Realizing the similarities between the Seattle and Bay Area regions, Bellevue-based Prime Electric is expanding into the California market with the acquisition of Dublin-based AMS Electric. The acquisition became effective at the first of the year and was formally announced in March.
The two companies share a history of working together on projects, so the merger made sense, according to Prime’s president Eric Reichanadter. “Leadership from both companies working together in a previous firm and sharing ‘like minds’ on how to effectively operate and develop a specialty construction firm also had a strong bearing on why the Bay Area made sense at this time,” he said.
Over the last decade, the Bay Area and Puget Sound regions have become linked by the commercial, high tech and biotechnology markets. Prime’s clients sought to be supported in both regions, says Reichanadter.
Prime conducted an 18-month examination to determine project backlogs, a cash flow analysis, compare cultural elements, and to understand the potential financial benefit of the acquisition. “AMS and their Bay Area clientele provide the opportunity for substantial economies of scale, which allow us to reduce our costs in serving all of our clients,” said Reichanadter in a prepared statement. “Joining the Prime Electric organization was a natural fit because our personnel, procedures and, most importantly, our cultures are so similar,” added AMS CEO Bill Breyton.
Prime is a union-affiliated electrical construction firm that focuses on commercial work within the Puget Sound region. With 29 years of experience, some larger projects it has worked on include the Washington Convention Center, Facebook’s Seattle office and The Center for Childhood Cancer Research.
Similar to Prime, AMS is also a union electrical firm that operates in Santa Clara, Alameda, San Mateo and San Francisco counties. With 13 years of experience, some of the company’s projects in its portfolio include Veeva Systems, UC Berkeley Art Museum and Pixar Studios.
“It would seem logical that more Bay Area companies are doing acquisitions in the Puget Sound, rather than the other way around,” said Reichanadter. “Measured by commercial permits, the Bay Area market is five to six times that of western Washington.”
Reichanadter believes that the commercial office space market in the Puget Sound region is solid and may potentially even show an upward climb continuing through 2019 as companies continue to expand in the area. “Clearly Amazon is significant within this sector as the user of large blocks of office space, primarily in the Seattle area.”
High tech, data center and biotechnology are other areas that Prime believes are solid in the region. If capital for real estate investment continues to flow into these sectors, they should be able to maintain a reasonable pace of development, according to Reichanadter. He also stated that municipalities will plan and deliver many infrastructure and traffic projects in the Puget Sound region.
As for Bay Area market trends that Prime is witnessing, construction resources appear to be very tight due to several “mega” projects going on within the area. “The area possesses diverse and unique companies that have always been very resourceful in reinventing themselves over time and in differing types of economies,” said Reichanadter. “There is no doubt that construction companies from outside the area will be investing in Bay Area construction, either by acquisitions or by traveling, in an effort to meet strong demand for years to come.”