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.

190124_BW 1+2_View 1 (WO SIGN)

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.

Advertisements

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.

topmuni2018-4

 

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.)

20190115_111832

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!

1

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.

Office Prospects Remain Strong

This morning’s Employment Situation Summary showed that the U.S. labor market remained unusually strong in November. While the headline of 155,000 jobs was off from what economists were expecting, the overall data on the employment situation was positive. Wages grew at a 3.1 percent rate, although workers saw a slight decrease in hours. Workforce participation and total unemployed was even with October’s data. Unemployment was steady at 3.7 percent. Taken in concert with the November Job Openings and Labor Turnover Survey, the number of open positions still exceeds those looking for work by one million.

Forecasts of job growth have been off by about 40,000 jobs each of the last four months – both overestimating and underestimating every other month – which highlights the difficulty of predicting monthly changes in the economy, especially late in the business cycle. Other indicators show the economy starting to slow, and the lack of available workers should bring the average monthly growth in jobs down to between 120,000 and 140,000 in 2019. In Pittsburgh, there are fewer signals of a slowing economy. The race to replace retiring Baby Boomers will hold back the total number of employed persons in Pittsburgh but the sources of job growth remain robust.

Construction projects continue to advance in anticipation of continued growth. Developers continue to be optimistic about the office market. Earlier this week Oxford Development brought forward its plans for the first building in 3 Crossings 2.0, the $13.5 million, 110,000 square foot Stacks at 3 Crossings. Rycon Construction is the general contractor. Innovation Center Associates broke ground on a 90,000 square foot Class A spec office at Innovation Ridge, which will be designed and built by Al. Neyer.

image

The new spec office at RIDC Innovation Ridge. Rendering by Al. Neyer.

Massaro Corp. was selected for the $11.8 million Greater Pittsburgh Food Bank project. Allegheny Construction Group has started on the $7 million first phase of the grower/processor facility for Penn Health Group in Lemont Furnace. Sunrise Assisted Living has put a $7 million expansion of its McCandless facility out to bid. According to the PBX the bidders are Burchick, PJ Dick, Rycon, Sota and Sun Coast.

No Holiday Slowdown Yet

Apparently owners didn’t get the memo about the construction industry slowing down between the holidays. For all the publicity about the cracker, UPMC and AHN, and the airport modernization, it is the $10-$50 million projects that are really making this construction market boom. One experienced BD executive told me this week that their calendar had 6 RFPs and 3 interviews on it by the end of the first week in December.

Bids went in Wednesday for Buchanan Ingersoll’s TI at its new 120,000 square foot home in the Union Trust Building. A. Martini, Mascaro, Massaro,Shannon and Wyatt bid. Greater Pittsburgh Food Bank is interviewing Jendoco, Landau, A. Martini, MBM, PJ Dick, and Massaro on Nov. 27 for its $11.8 million project. The $45 million Palumbo Center renovation is out for competitive GMP proposals to Jendoco, Mascaro, Massaro, PJ Dick and Rycon. Conemaugh Hospital has its $35 expansion project out for proposals to Butz, Mascaro, Massaro, PJ Dick and Rycon. Conemaugh also broke ground on its $22 million outpatient center in Ebensburg. Massaro Corp. is the contractor.

Allegheny County Airport Authority has reached a short list for interviews on the three major contracts out for proposals. The second A/E services contract – covering the 3,500-car garage, ground transportation center (GTC) and rental facilities – was narrowed to Michael Baker Jr., TranSystems Corporation Consultants and WSP USA Inc. Two separate contracts for CM Agency services are being considered. The short list for the first – including the 632,000 sq. ft. new landside terminal and renovations of the existing airside terminal – includes PJ Dick/Hunt AECOM and Turner/Baker. The second contract covers the scope of work in the second AE services contract above. The teams short-listed are Hill/WSP/MEC, JMT/SAI Engineering/HNTB and Turner/Parsons. According to the RFP, the Airport Authority is not considering awarding CM contracts for both scopes to the same CM team.

Trade bidding on a number of the major projects is also active. Concrete bids are being taken by Yates Construction on the $150 million new Childrens Hospital at WVU Medicine. Mascaro awarded the MEP contracts on the $350 Vision and Rehabilitation Hospital at UPMC Mercy to Ruthrauff Sauer/SSM and Lighthouse Electric.

Millcraft selected the Yates/Massaro team as CM for the Esplanade, its $300 million mixed-use development on the North Side. Rycon Construction was awarded the $32 million Fifth/Clyde residence hall by CMU.