State College High Under Budget

The long-awaited State College High School project bid Wednesday afternoon and came in under Massaro CM Services’ budget at $116,996,100. Lobar Construction from Mechanicsburg was the low general at $70,755,000. Most of the low bidders were from the Lancaster/Harrisburg area with only Bob Biter Electric as a local contractor that was a low bidder. Few Pittsburgh area firms bid the job and those bids were 10% or more above the low bid. See the full results.

The project is likely to be the biggest K-12 project in the state for a while and the bidding showed that. Bidding on Thomas Jefferson High School will present an interesting counterpoint to see how aggressively the school builders bid that $76.3 million job in mid-January.

Also in State College, Clayco has the first phase of the $173 million East Residence Halls renovation and new North Residence Hall out to bid, due Dec. 22. View details at the PBX.

In contracting news, Continental Building Systems was awarded the $8.5 million Fairfield Inn & Suites at McCandless Crossing. DGA Construction started work on the $20 million, 149-unit Cosmopolitan Apartments by Ross Park Mall. There is no confirmation from any parties involved but it’s reported that the Mascaro/Trumbull Energy Services/PJ Dick team will build the 900+-car parking garage at the Monaca cracker, should the project proceed.

Rumors about the cracker continue to circulate. Within the past three days I’ve been told that announcement will be made Dec. 10, Dec. 14 and at least 90 days from now. Shell’s word on progress is that evaluation continues with no schedule for an announcement. The mystery continues.


(Left) Lou Gilberti from the Carpenters, Seubert’s Jay Black and Burchick’s Dave Meuschke mingle at the MBA’s Excellence Awards nominee event.

The Master Builders’ announced the nominees for its 2015 Building Excellence Awards at an event on Nov. 18. You can read about the projects here. Winners will be announced at the Feb. 25 Evening of Excellence.

Bidding a Project the Right Way

On Nov. 18, the West Jefferson Hills School District board will authorize the bidding of their $76.3 million new high school. The school district, architect and construction mgr. have created a schedule and bidding method that really makes sense. For that reason it stands out in our industry.

First, the documents are set to be available the day after the board approves the bid date. Second, the bid date will be Jan. 12, meaning the owner isn’t expecting that the industry will ignore the holidays to bid its job. But beyond the reasonable lead time, the architect and CM have set a pre-bid meeting for Dec. 8 and asked for all RFI’s by Dec. 16. That gives bidders two weeks (plus the Thanksgiving holiday) to review the documents before the pre-bid, then allows another week for RFI’s. The architect has committed to reply to all RFI’s by Dec. 29, meaning that the major addenda will be issued two weeks before bid date. That also means that answers will be waiting for contractors once they return from the holiday downtime.

This project was going to get everyone’s full attention regardless of how smoothly the bidding process went but showing respect for the industry’s time during this time of year is extraordinary and should yield dividends down the road. Let’s hope other owners follow the example.

A sidebar discussion at the Allegheny Conference’s commercial real estate luncheon Friday yielded news that Oliver Hatcher Construction had started work on the 316,000 sq. ft. spec warehouse for Ashley Capital Group at the FIP.20151113_105213_resized Buncher should be starting work on an 82,000 sq. ft. warehouse at Findlay Industrial Park sometime later this winter

The park’s developer, Imperial Land Co. said that there were other users interested in lots at the park, as well as at smaller sites in Imperial Land’s new Westport Woods. The entry road for that is shown on the photo at left.

Continental Building Systems has started construction on the next flex office at Pittsburgh International Business Park, a 62,000 sq. ft. fifth building branded as Building 400. Continental was also selected to build the retail shops at the Siena at St. Clair. The 87,000 sq. ft. building will house the complementary retailers at the center anchored by Whole Foods.

More Apartments and Jobs

Two groundbreakings in the last two weeks bring another 331 multi-family units into the Pittsburgh housing market.

Cranberry developer Larry Dorsch and Morgan Management started work on the 149-unit Cosmopolitan at Ross Park, the first new apartment project in Ross Township in decades. The high-end units will be located on the southern access road of the Ross Park Mall at the Cheryl Drive intersection of the McKnight Park East office complex.

Willow Street Associates and Walnut Capital celebrated the start of their Foundry on 41st, a $35 million, 182-unit project being built by PJ Dick. The complex will be between Willow Street and the Allegheny River at 41st Street in Lawrenceville.

The Foundry is an example of the strength of the housing market in the city of Pittsburgh. New Urbanism is often cited as the driver behind the boom (relatively speaking) of the Pittsburgh apartment market. There’s some truth to that, especially in the Downtown market, but the biggest drivers in the city’s multi-family growth have been East End jobs (CMU, Google, UPMC) and the arrival of new product that hasn’t been offered. Where the real impact of urban attraction has shown up is in single-family homes. Pittsburgh has had the third-highest total of new single-family homes. Counting townhomes for sale in with single-family detached units, the number of new homes in Pittsburgh soars above all other communities.


For housing growth to be sustained there will have to be job growth, of course. Friday’s jobs reports looked spectacular, with 271,000 new jobs created in the U.S. in October. There are reasons to be calm about the results. First is the fact that October’s jump only levels out the declines in September and August, bringing the three-month average to 188,000. That’s not terrible, especially for late summer, but the moving averages show a flattening of the growth curve. Reinforcing that trend is the pattern of revisions.  Because of its methodology, the Bureau of Economic Analysis adjusts the previous two months data as results come in after the reporting month, so this report showed small downward revisions to September and August. More important than the size of the revision is the downward trend. In growing markets, the lagging data tends to add to the previous estimates. The opposite is true in slowing markets. Data from the summer on is suggesting that the arc of the job growth into 2016 will be flat rather than higher, probably averaging closer to 175,000 jobs than 200,000.

Spec Industrial in Findlay

I spent the lunch hour eating bratwurst and listening to Chapman Properties present the next spec industrial building at Chapman Westport to the brokerage community. The building is 1074 Westport Road and will be a 50,400 sq. ft. flex industrial building that can be demised down to 7,500 sq. ft. spaces.

Developer Steve Thomas (right) listens as Dan Delisio from NEXT Architecture talks about the 1074 Westport building to be built at Chapman Westport.

Developer Steve Thomas (right) listens as Dan Delisio from NEXT Architecture talks about the 1074 Westport building to be built at Chapman Westport.

The building will be built directly behind the new GE Plastics advance materials research facility, which is nearing completion for a year-end occupancy.

Across Westport Road on the north side of Route 576, two pads were being readied in Findlay Industrial Park for construction. Ashley Capital is planning a 316,000 sq. ft. building and Buncher recently acquired 12 acres to build an 80,000 sq. Ft. spec warehouse. The projects bring the total spec Class A industrial product in the pipeline to more than 1 million sq. ft. That’s great news for a market with almost no new industrial product for the last two years.

Apartment Market Insight

Thursday morning’s joint NAIOP Pittsburgh/Master Builders’ Association program on the hot multi-family market was surprisingly informative. Surprising because there has already been so much talk about the apartment market that I didn’t expect anything new. The panelists – Oxford’s Steve Guy, IRR’s Paul Griffith, First Niagara’s Kris Volpatti and PJ Dick’s Eric Pascucci – lived up to expectations, however, and gave some different insight.

Pascucci provided a better look at what drives costs on multi-family projects and offered suggestions for planning so that developers could meet the critical June 1 shopping date. Volpatti and Griffith gave an inside look at what makes lenders and appraisers happy – and nervous. These two were especially helpful in looking out at the 3,900 units coming online in 2016-2017 to forecast some rent softening until absorption caught up.

Steve Guy talked about Oxford’s appetite for developing apartments based upon some very stark changes in demographics and renter preferences that they had observed after the housing crisis. Guy especially stressed the strong demand in the urban core and fringe. He also noted that while lenders may be growing more cautious, there was no shortage of investors anxious to add equity to an apartment deal.

Lots of comments followed the program. Perhaps the most interesting was from Chapman’s Steve Thomas, who said he came into the program thinking his company should build some more apartments and left feeling he should sell the ones he owns.

Panelists (left-to-right) Kris Volpatti, Steve Guy, Paul Griffith and Eric Pascucci.

Panelists (left-to-right) Kris Volpatti, Steve Guy, Paul Griffith and Eric Pascucci.

Some project news: Trumbull Corp. was awarded the $164 million CSVT Bridge in Union County. Black & Veatch was selected as EPC contractor for the new $500 million Tenaska Westmoreland plant in South Huntingdon Twp. Fort Willow Development selected PJ Dick Inc. to build its $25 million Fort Willow Apartments, a 191-unit complex in Lawrenceville. The Western Westmoreland Municipal Authority is set to award contracts for its $23.9 million Brush Creek WWTP on November 16. Chivers Construction from Erie is the low bidder.

Hunt Armory Update

The Urban Redevelopment Authority has short-listed the developers competing for the right to re-purpose the 93,671 sq. ft. Hunt Armory in the heart of Shadyside. The URA will select from Walnut Capital, Kratsa, Mosites Co. and Sutton Development to move the project forward.

From bid results of the past week a couple of highlights: Mosites Construction was low on the Pittsburgh International Airport’s $10.5 million south baggage handling system modernization. Pipeline Systems was low on the $10.4 million upgrade to the Bethel Park wastewater treatment plant. Advantage Steel & Construction was low on the $14.7 Van Port Bridge repairs for PennDOT. Weddle Bros. Construction is underway on the $13 million expansion to Cook Myosite in the RIDC O’Hara Industrial Park.

Rendering by Neyer Inc. of the first building  at Clinton Commerce Park Phase II.

Rendering by Neyer Inc. of the first building at Clinton Commerce Park Phase II.

CBRE announced that Al Neyer was ready to start construction on the first of two Class A spec warehouse/industrial buildings in the second phase of the Clinton Commerce Park. The first building will be 252,000 sq. ft. with a second 215,000 sq. ft. warehouse to follow.

Analyzing the Low Oil Price

It’s not clear whether Royal Dutch Shell would have taken this long to make a final decision to proceed on its ethane cracker had the oil price stayed at $100/barrel. Certainly, Shell and its competitors have been forced to downsize and reel in capital spending to remain profitable to the degree that shareholders demand. Lower profits were part of the reason that Chevron put its regional HQ project on hold and the price environment seems likely to have extended the decision-making process for the Monaca project; but has the decline in oil and natural gas hurt the Pittsburgh region in the way that Texas or North Dakota has been hurt?

Real estate service company CBRE Inc. published an energy market report Tuesday morning that covers this issue very well. Its conclusion is that Pittsburgh hasn’t been negatively impacted much at all, except to the degree that the exploration and expansion of the Marcellus and Utica formations has slowed.

You can read the full report here: CBRE Energy Report 2015_Pittsburgh