Transforming Forbes Avenue

Last Friday, Carnegie Mellon selected PJ Dick as construction manager for what is called the Forbes Morewood project. Depending on the final scope and schedule the project will be somewhere between $20 million and $30 million but its impact will be much bigger. A lot of the work will be focused on changing and updating the university’s “headquarters” – Warner Hall – but the latter phases of the project will form the physical linkage between CMU’s iconic “Cut” to the new north campus under development.

The importance of the north campus development is that it is going to be the home of what CMU’s visionaries, especially Pres. Subra Suresh, see as the future home of its corporate partners. Under Jared Cohon’s leadership, CMU upped its game in technology transfer, which is the commercialization of its research in new technologies across many industries. More recently, Google’s explosive growth has shown a spotlight on the talent at CMU and highlighted the value that a company can derive from working closely with the university. Dr. Suresh’s vision for what is being dubbed the “Tepper campus” – because the new home of the Tepper School of Business will anchor the development – involves corporate partners locating on the university grounds. This same concept has become bricks and mortar at MIT, Stanford and other schools, and clearly CMU intends to be among that group.

Imagine turning left onto Forbes from Craig at the end of this decade, driving past a hotel filled with corporate visitors and a new incubator-style office between the Hollow and Scaife Gallery, and on up a Forbes Avenue that has a town center spanning the street and connecting to a new campus that has the Amazon Building or the GE Building or the Uber Building or all three. By that time, the Gates/Hillman and Scott Halls will have filled in the east side of Panther Hollow and connected all of the science buildings together. The flow of research and information from the minds learning chemistry, nanotechnology, information technology, physics, etc. will cross Forbes to reach those entities that can apply that enormous knowledge to the real world.

If the vision is fulfilled, there will be a lot of money made by that flow of information. Southeastern Oakland is not going to become the new Silicon Valley but it doesn’t have to to have a transformative effect on Pittsburgh’s overall economy. So if you have to go from Oakland to Squirrel Hill over the next few years, maybe don’t detour around all the mess on Forbes Avenue. Take the time to witness something that will make your life a bit easier in the long run.

Real Estate Leasing Headlines

Two significant leases were signed within the past 24 hours that turned prospective speculative buildings into build-to-suits projects.

ServiceLink will be taking another building at the Pittsburgh International Business Park in Moon Township. Continental Building Systems will start work on the 68,000 sq. ft. building in October. In the Strip, Oxford Development announced that its second office building at Three Crossings will be a new headquarters for attorneys Burns White. Rycon Construction is the contractor for the 105,000 sq. ft. building.

There was project news from West Virginia and Washington. WVU selected the development team that included Yates Construction for its new $50 million+ hotel/conference center. The university also took qualifications for CM-at risk for the $22 million renovation of the Coliseum.  Monongalia General Hospital released its $11 million radiation therapy project to Gilbane, Landau, March Westin, Mascaro and Whiting Turner, due Sept. 18. Washington & Jefferson College selected Mosites Construction as CM for the remaining phase of its $14 million recreation center.

US Construction Prospects Brighten

Yesterday’s news from the AIA underscores how strong the demand for new construction is throughout the US. AIA’s Architectural Billings Index (ABI) for June rose to 55.7, the highest level since 2007. The survey of firms indicates that 55.7% saw billings rise in June, an unusually high number.

The four-month trend for billings and inquiries is sharply higher.

The four-month trend for billings and inquiries is sharply higher.

A dive into the numbers shows that it’s institutional and government projects that are leading the way, with commercial real estate development also above 50. One noteworthy change was a decline to 47 for firms engaged in multi-family projects, an indication that planning for apartments may finally be cooling. As an indicator, the ABI is a reliable forecasting tool for the 9-12 months forward.

In project news regionally, the design/build team of Mascaro/Tetra Tech was selected by Penn State for its $6.6 million Ag Digester & Dairy Barn. PSU also short-listed Barton Malow, Gilbane, Turner and Whiting-Turner for its $100 million Chemical-Bio Engineering Building. Horizon Properties was selected to redevelop the former Star Theater into a town center in South Fayette Township. The state of WV selected alternates that made Paramount Builders the successful contractor on the $33.2 million State Office Building #3 in Charleston. Oxford is working with Massaro Corp. to build its $20 million, 146-unit Emerald on Centre apartments in East Liberty.

Construction Ramps Up in Second Quarter

Owing to continued demand for apartments and the start of a number of long-awaited projects, construction activity in the first six months was up significantly in metropolitan Pittsburgh. Commercial and institutional construction jumped 24.3% to $1.38 billion from January to June. Residential construction was up 31% year-over-year, with 2,380 units started in the first half of 2015.

Within the residential segment, the increase in units started was all in the multi-family market, which had 1,488 units started compared to 843 for the same period in 2014. Because of lot shortages and continued regulatory pressures on development lending, construction of single-family detached homes remains depressed below the level of potential demand.

Along with apartments, hotels remain a hot property type. Fairchance Construction started work on an $11 million Hilton Garden Inn in Moon Township. Dynamic Building was selected as contractor on a $10 million Towne Place Suites by the Grove City Outlets.

Bear Construction has started work on the new 25,000 facility for Tri-State Supply outside Washington PA. Rycon has begun site work for the new Dick’s in Greenwood Plaza in Butler. PJ Dick has started the preliminary work on Google’s 66,000 sq. ft. space in Bakery Square 2.0. In State College, Clayco Corp. is taking proposals on the design-assist mechanical and electrical packages for the first phase of the $170 million East Residence Halls project.

Dog Days of Summer

One of the more deceptive characteristics of the market in summer of 2015 is the bidding activity. For general contractors, the activity is slow, maybe slower than normal; but there is action taking place in the next tiers down the food chain. Within the past 60 days there has been a marked shift in the subcontractor bidding environment, a shift that bears watching if you’re an owner.

Subs and suppliers are busier. In part this is due to the releasing of projects that had been delayed over the past year or so, or had a general on board while designs were being completed. There is also the reality that the skilled labor force is nearing full capacity. Within the majority of the trades, the halls are empty. One other consideration is that the Pittsburgh market may finally be shifting like the rest of the country to delivery methods other than design-bid-build. And subs have been bearing more of the burden of this extended slowdown, carrying an unfair share of project costs because of longer (meaning slower) pay cycles and increased administrative expense. There will be some hay-making while the sun shines.

Any or all of these factors will move the focus of the bid market from generals to subs and specialty contractors. The evidence of this is in higher prices and less participation. More than a few generals have expressed the sentiment that the latter is a reality now, especially when it comes to budgeting. Owners that haven’t brought a project to the market in six months or more may find it a very different environment. It may be too early to declare it a seller’s market but construction is no longer the buyer’s market that has existed since 2009.

For those looking ahead to big bidding opportunities, the PA Builders Exchange reported this morning on an $81 million new treatment plant for West View Water (with a general package over $40 million) that should bid in the fourth quarter. Check out the details at http://tinyurl.com/oq6qnz6. On the commercial side, Milhaus Development selected Strada Architecture and Rycon Construction as the team for its $100 million redevelopment of the 12-acre site west of the 40th Street Bridge in Lawrenceville.

Another Step Forward for the Cracker

As was reported in BreakingNews and BuildingPittsburgh on June 19, the Dept. of Environmental Protection announced today that it had issued the air pollution control permit for the operation of the ethane cracker and polyethylene production facility in Monaca. The permit was a major hurdle to overcome in the planning process for the plant.

The site plan for the proposed polyethylene complex. Image courtesy Shell Chemicals.

The site plan for the proposed polyethylene complex. Image courtesy Shell Chemicals.

Shell spokesman Michael Marr reiterated that the permit is just one piece of the decision-making process but his comments revealed little in the way of further obstacles to the project’s progress.

Additional steps still remain, including implementing the permitted preliminary work at the site, finalizing the engineering and design work for the facility, and continuing to strengthen our long-term feedstock portfolio,” Marr was quoted saying in the Pittsburgh Business Times.

Activity at the site is already heavy. The Mascaro/Trumbull Energy Services team has people working at the site, along with other early works subcontractors. A key project that should be starting soon is the construction of the marina and docks by Joseph B. Fay Co. Much of the cracker plant itself will be fabricated off site and shipped to the project by barge. Look to that project as a key indicator.

Mid-June Buzz

There has been a surprising amount of buzz surrounding the news that Shell closed on the land that on which it proposes to build an ethane cracker. I think that’s a sign of how thirsty we are for news about the decision. From the standpoint of the decision to proceed, the closing is kind of a non-event. Shell can still decide against the project for the time being or walk away and sell the property to someone else.

The bigger news about the cracker is that the needed permits are reported to be in hand. I assume that means that there has been informal word given, since it seems unlikely that DEP would have granted approval without someone announcing it. This, if true, is a big deal because it removes virtually all obstacles to the decision. Shell still wants to prove the long-term sustainability of the gas supply (something of a no-brainer) and then agree to invest in Monaca instead of other capital projects. So far, any guesses I’ve heard about when the final call will be are just that: guesses.

The last few weeks have seen the start of a bunch of small projects that have been around for a while. Village Theater Co. chose A. Martini & Co. to build it $2 million new theater in Sewickley. That’s the third new building to get underway in Sewickley this month. Oberg Industries awarded W. K. Thomas & Associates the contract to build its 67,000 sq. ft. expansion. Chapman Properties is getting ready to start construction on a new 23,575 sq. ft. Skyzone trampoline center in Monroeville.

In news of more companies entering the Pittsburgh market, Reynolds Construction opened an office in the RIDC O’Hara. The new office is located at 634 Alpha Drive, Suite 1100, Pittsburgh, PA 15238. The Pittsburgh office will be led for now by company President Jeff Merritt.