Big Office Development News

Two big office developments made the news last week, both on the fringe of the Golden Triangle. Projects like these, and the boom in the Strip District, show the potential for the central business district to burst its traditional boundaries.

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Gensler rendering of the $100 million Lower Hill development.

The developers of the former Civic Arena site revealed their plans for a $100 million mixed-use development that is far closer to reality than expected. The Cuccini/Pollin Group unveiled details of the project, which includes 810,000 square feet of office, 190,000 square feet of retail, 50,000 square feet of entertainment, and a 220-room hotel. The first office is rumored to be a mid-rise with a corporate HQ tenant as a lead. Names like FNB and Peoples Gas have been linked to the project.

Intergen Real Estate Group will be responsible for the residential phases of the Arena site, led by KBK Enterprises, the Keith Key company that has redeveloped former Housing Authority of City of Pittsburgh communities in the Hill and is currently working in Larimer.

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Trammel Crow’s proposed office and hotel development west of Station Square. Rendering by Hord Coplan Macht.

Trammel Crow announced plans for three office buildings, totaling 400,000 square feet, earlier last week. The project will develop along East Carson Street, just east of Station Square and immediately behind the Glass House apartments that Rycon Construction is building for Trammel Crow now. Plans also include a new hotel. The first of the buildings will be branded Glass Works and will be 120,000 square feet. The other buildings will be dubbed Bottle Works and Forge Works. Trammel Crow is working on landing a lead tenant now, but has not ruled out going the speculative route. No CM has been hired.

Franjo Construction was awarded the $10 million Friendship Hub at the Allegheny Center Alliance Church on the North Side. Franjo also started construction on the $20 million conversion of the Commonwealth Building into 150 apartments. The Mascaro/Barton Malow team was selected by Pitt to build its $90 million Student Recreation Center. Turner Construction was awarded the $14 million Ostermayer Lab at Penn State Greater Allegheny Campus in McKeesport. Penn State has its $310 million College of Engineering buildings out for CM proposals, to be awarded in May.

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The Airport Revealed

The Allegheny County Airport Authority unveiled the first views of the developed design for the terminal modernization program last week. The $1.1 billion project will proceed in 2 major pieces. One includes the new parking garage, ground transportation center, car rental center, and related facilities, for which the ACAA is working with Turner Construction to award a CM contract. The larger piece will be the landside/airside terminal work, which includes a new terminal building, for which PJ Dick/Hunt AECOM have been selected. No contracts for construction management have officially been awarded.

Pittsburgh International Airport. © ACAA

The roadway and enabling packages are scheduled to get out to bid around year’s end, with bids hoped for on building packages by mid-2020.

The bid market continues to be competitive. Bids came in last week on the North Allegheny McKnight Elementary. As was the case with the Franklin Elementary, the $17 million total of the apparent low bidders was below the published estimate. Nello Construction was the low general. Nello was also low on both the Franklin Regional elementary bids from the week earlier, which came in at or just below the overall $55 million estimate.

In follow up on some other projects, Landau Building Co. was selected for the $1.4 million Sarah Heinz House job. Rycon Construction was selected to provide pre-construction CM services for the proposed $1 million Carnegie Library of Homestead – Phase 1 Renovations. Bear Construction will be building the new 45,000 square foot facility for KTA Tator in the RIDC West in Findlay Township. Massaro Corp. is taking bids for its GMP on Washington Presbyterian Church.

Commercial Project News

The strong Pittsburgh economic performance is driving an upswing in spec office projects. While Oakland, the Strip and Second Avenue have received most of the publicity for spec commercial activity, the suburbs aren’t dead yet. Construction just got underway on a two-building spec office project called The Boardwalk in North Fayette Township. The $55 million, 220,000 square foot development is being built by Burns & Scalo Real Estate Services. It has landed a tenant for the first building and will follow through with the second building after that is completed. Burns & Scalo is looking at other land in the Airport Corridor for additional spec development.

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The Boardwalk. Image courtesy NEXT Architecture.

Following up other commercial projects that have been bid, Franjo is doing pre-construction on the $20 million-plus conversion of the Commonwealth Building into apartments Downtown. Rycon Construction was awarded the $7 million addition to the Sunrise Assisted Living in McCandless.  C & C Contractors was awarded the $22 million expansion of the Cemetery of the Alleghenies, near Southpointe. Burchick Construction was awarded a $4.5 million contract by General Services Administration to renovate the Weis Courthouse on Grant Street. The MEP packages are out to bid for the new $150 million Children’s Hospital at WVU Medicine in Morgantown. Yates Construction is the CM for that project. Wildwood Country Club invited Burchick Construction, R. A. Glancy, GoGreen Construction and Wm. Miller’s Sons to submit design/build proposals on its $4 million renovation/expansion.

Some Surprising Results

The final tally of housing starts in Pittsburgh found several surprising changes from 2017, and the trends of the previous five years or so. Most notable among these was the steep decline in construction of new multi-family product. After five years of at least 2,100 new apartment or condo units, construction of new multi-family in the metropolitan Pittsburgh market fell 52.3 percent to 1,234 units. As has been true during the past decade, the preponderance of these new units were started within the city of Pittsburgh. There were 584 multi-family units permitted in the city proper, nearly half the total for the region.

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Another trend that broke in 2018 was the output of townhouse or other attached homes. Driven by empty-nesters and first-time buyers, townhome construction has been supported by the demographics of Pittsburgh and the scarcity of single-family detached homes priced under $250,000 to $300,000. Both of those drivers were stronger in 2018, but construction of new single-family attached homes dropped 23.6 percent, or 244 units. There is little or no evidence that demand for townhouses declined, other than anecdotal evidence that younger buyers aren’t entering the market or aren’t interested in entering by the townhouse route. It’s likely that the decline, like with detached homes, stems from the lack of lots and new development.

The bright spot for residential construction in 2018 was the traditional single-family detached home, which saw a 11.3 percent increase to 2,193 units. The 222-unit jump from 2017 nearly offset the decline in attached homes.

There were a couple of other interesting notes in the housing data. In the more active communities, there were more new homes than during the past few years. The municipality with the most new single-family homes, Pine Township, saw 162 new detached homes get underway. That’s the most new homes started in any municipality since before the Great Recession. And there were four communities with at least 100 new homes. There were zero apartments built in any of the top ten communities for single-family homes. And while apartment construction slowed, the City of Pittsburgh still had the most new residential units by far, with 673 units overall and 89 single-family dwellings.

There was a surprise in the public bid market last week as well. Bids were opened for the Franklin Elementary School additions and alterations in North Allegheny. The project was expected to come in around $30 million but the apparent low bidders totals were less than $24 million. That’s a pleasant surprise for the owner, especially if there were alternates that can add to the scope of work for the project. There is a second project out to bid at NA that should be in the $20+ million range and two projects of very similar size out at Franklin Regional School District. The results give an early reading as to how the K-12 market is responding to what is otherwise a busy construction industry. You can view the apparent low bidders at the Builders Exchange.

In unofficial construction news, Massaro Corp. was selected as CM for the $60 million Conemaugh Hospital Building B expansion in Johnstown. Turner Construction was tabbed for the $125 million 1501 Penn Avenue tower and Franjo Construction was successful on the $40 million Arsenal apartments second phase. Construction on the latter two still has a ways to go.

Strong Start

Bad years can start with a bang but very few good construction years start with a bid market that limps out of the gate. So far, 2019 is not limping.

The K-12 market is very active. Franklin Regional School District advertised the $35 million new K-3 Elementary and $20.5 million Sloan Elementary Schools, which bid Feb. 5 and can be bid separately or combined. North Allegheny’s $22 million McKnight Elementary should go out to bid next week. The $31 million Franklin Elementary at NA is scheduled to bid Jan 23. The $15 million Mars Area Middle School is slated to bid in March.

The Allegheny County Airport Authority is reported to have selected the CM teams of Turner for the $250 million garage/ground transportation centers, and PJ Dick/Hunt AECOM for the $700 million landside/airside terminals portions of the Terminal Modernization Program. No contracts have been approved as yet.

(Ed. note: The CM team for the parking garage and ground transportation centers was previously listed as Turner/Parsons in error.)

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300-foot cranes tower over the construction at Shell’s Franklin Plant in Monaca.

Commercial real estate projects continue to fill the pipeline. The 230,000 square foot District 15 Beta Version spec office was announced by RDC, which expects to bid packages this spring and start construction mid-year. Oxford Development’s $13.5 million Stacks at 3 Crossings project was approved by city Planning Commission. Rycon is the contractor for The Stacks. TWG Construction held a prequalification meeting on its $40 million Connection at South Side Apartments on Thursday, Jan. 17. The project is to bid March 15. Read about the subcontracting opportunities. Chapman Properties is planning to start a new 75,000 flex building at Chapman Westport.

Pitt short-listed CMs for the RFP for its $90 million student rec center. Among the finalists are Mascaro/Barton Malow, Hunt/PJ Dick, Walsh and Turner.

 

Happy Holidays & End-of-Year News

Hope you are reading this at your leisure while relaxing with loved ones. Happy holidays and thanks for your support of our little construction information business for another year.

The end of 2018 is not is still busy with RFPs and interviews that will carry over into a running start to 2019. CMU is taking proposals from PJ Dick, Massaro and Mosites on its next new dormitory, a $45 million residence hall to be built along Forbes Ave. near Beeler. Duquesne University selected PJ Dick for its renovation of the A. J. Palumbo Center. Volpatt Construction was awarded the $4.5 million 2 South Renovation project at Canonsburg General Hospital.  Walsh Construction was the low bidder on the Section 55-C2-1 of the Southern Beltway at $174,300,000. Trumbull Corp. and Beaver Excavating were second and third at just over $183 million (separated by 0.1%).

Happy New Year!

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Drew Parish (far left) from the Mario Lemieux Foundation accepts the $7,000 donation from the proceeds of MBA YC Holiday Party. Representing the YC are Sean Fischer from Massaro Corp., and the MBA’s Jack Ramage, Connie Churchel, and Mary Chuderewicz. Photo courtesy of Mario Lemieux Foundation.

Apartments Make a Rebound

Preliminary data on permits for new construction of apartments in 2018 from the Pittsburgh Homebuilding Report reveals a big drop. Some 50% fewer apartments were started in 2018, with permits for 1,164 units vs. 2,368 in 2017. The decline appears to be a pause rather than a trend, as some 1,200+ units of new multi-family are about to start work or are being budgeted at the moment. TWG Development is budgeting its 280-unit South Side apartment project. Continental Building Co. is looking at the Waterfront apartments in Homestead. Elford Construction is budgeting a new complex in Cranberry Township at Brandt Road.

In construction news, New-Belle Construction started work on the new 100,000 square foot facility for Apex International in Alta Vista Business Park. The contractor is also working on a 38,000 square foot facility in Alta Vista for Nine Energy Services. Mistick Construction was selected for the $10-20 million renovations to the Fairfax Apartments and Webster Hall in Oakland. DiMarco Construction has started work on its new 29,000 square foot headquarters in Elizabeth, PA.