Opportunities in a Quiet Market

The bidding market has slowed noticeably as July 4th approaches but there are still opportunities, especially for the subs and suppliers.

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Rendering by Desmone Architects of the Doughboy Square II expansion.

Last week the city gave Desmone Architects approval for a $7 million expansion of its Doughboy Square offices. Jendoco Construction will be the contractor and is awaiting final drawings to price. A little further up Butler Street, the Capuchin Friars gave the nod to Rycon Construction for a new $11 million, 55,000 square foot residence and assembly building.

Burchick Construction was awarded the $28 million 135 Jamison Lane expansion for Bechtel Plant Machinery in Monroeville. AIM Construction was awarded an $8 million renovation to the 6th floor operating rooms at Butler Memorial Hospital. Franjo Construction was awarded the $7 million, 100,000 square foot Robinson Township CubeSmart Self-Storage by Johnson Development Associates. Zamagias Properties selected PJ Dick to build the $6 million, 26-unit Sewickley Lofts.

Artech Group is the owner’s rep taking proposals from A. Martini & Co., Enfield  Builders, Rycon Construction, Volpatt Construction and Wohlsen Construction for the $20 million Laurel Valley Treatment Center in New Florence, PA. In the public market, DGS is taking bids on the $20 million Miller Auditorium at Slippery Rock University. Massaro CM Services put the $12 million Acmetonia Elementary School out for separate prime bids. The Builders Exchange has more details.

Healthcare Project Updates

Yesterday’s announcement by Highmark and Allegheny Health Network about the expansion of its cancer treatment added another significant project to the list of major hospital projects. In addition to the expanded partnership with Johns Hopkins, AHN reported that it would be building a new academic cancer institute at the Allegheny General Hospital campus, as well as suburban cancer treatment centers.

The AGH facility is to be a 59,500 square foot expansion with significant related renovations to the hospital. Costs for the project could top $50 million. The development of suburban centers are part of the overall healthcare trend to move treatment into the communities where patients live. AHN explained that these centers will be removed from the AHN system hospitals themselves, which will also receive renovations to upgrade cancer treatment facilities. Estimates of the capital spending for this cancer initiative are $150 million. Work is scheduled to start on the AGH facility by end of year. The target for completion of the overall cancer institute expansion is the 2019 expiration of the AHN/UPMC Hillman Cancer Institute agreement. No architects or contractors have been engaged for the specific projects, although IKM Inc. has been involved with AGH’s institutional master planning.

In other hospital construction news, PJ Dick was chosen as construction manager for St. Clair Hospital’s $80 million expansion. The agreement covers preconstruction services that will be done during the next year.

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Members of CREW Pittsburgh gather at Local on East Carson Street after the chapter’s Escape the Room teambuilding events on June 13.

Tight Bids and Pension Reform

Although there is a little bit of a seasonal lull in bidding as June begins, there is plenty of activity in the Pittsburgh construction market. The brighter prospects, however, haven’t materialized in the public hard-bid market yet. Two projects that bid this week illustrate the market well. First, in the heavy/highway sector, Golden Triangle was low on the Airport Authority’s bid to replace Deicing Pad C at the airport. At $21,934,890, the low bidder was 0.5% under the next bidder. Canon-Mac took bids on its high school that saw Lobar Inc. (from Dillsburg/Mechanicsburg area) get low at $9.3 million, a little more than 1% below the third bidder. Both projects were well under the published budget. Public spending shows no signs of significant increase through 2018, meaning the market should stay tight. How that changes in a tightening labor market remains to be seen.

A public pension reform law went to the governor for signing today. It’s gratifying to see both sides of the aisle collaborating on this critical issue, but the finished product trims only $1.4 billion from the pension outlay over the next 20 years. It does shift more of the risk of pension shortfall to pensioners instead of taxpayers but leaves unanswered the question of how to manage the $60 to $70 billion unfunded pension balance that exists. That means that school districts and the Commonwealth will continue to have pension costs drag against capital investment.

In project news from Harrisburg, the General Services Administration is taking RFP’s on the $150 million federal courthouse now. Closer to home, the Pittsburgh Parking Authority has apparently short-listed three development teams – Oxford/PJ Dick, Millcraft/Mosites and Davis/Mascaro – for its 1,000-car 9th & Penn garage replacement/mixed-use development. Shannon Construction is working as general contractor for the announced $7 million renovation of the Arts Institute building on Boulevard of Allies. 

Pittsburgh’s Other Big Project Isn’t in Pittsburgh

As the Shell Franklin project in Monaca gets underway in earnest, with the expectation of having 1,000 workers on site at year’s end, another major manufacturing project has already passed that milestone. In Berkeley County, WV, Fluor Corp. is building the new Tabler Station plant for Proctor & Gamble. The plant will be 1 million square feet under roof and involves a $500 million investment for its first phase. Workforce is going to peak at 1,500 this summer, according to P & G. Because of conditions in the DC/Baltimore market, the Tabler Station project is having a bigger impact on Pittsburgh-area contractors than the aforementioned Shell cracker.

That’s in part due to the fact that Bechtel and Great Arrow Builders are inclined to self-perform much more of the project than originally hoped. But DC-area contractors have also thus far been too busy in their own backyard to show as much interest in the P & G plant, which is located less than 3 hours southeast of Pittsburgh off I-81. Thus far, trade packages have been awarded to Pittsburgh-area contractors Mascaro Construction, Mosites Construction, McKamish Inc., Lighthouse Electric and Yates Construction, which has been working within the region at WVUH Ruby Hospital (and teaming with Pittsburgh contractors). Kinsley Construction from York has also landed a building. None of the packages have been large to date but expectations are that as the contracting continues throughout this year and next that multiple regional contractors could end up with $25-50 million in volume. For some of Pittsburgh’s contractors working on the project, that kind of volume could affect how they respond to projects in their own backyard.

In other project news, St. Clair Hospital short-listed PJ Dick, Mascaro and Yates for interviews this week for its $80 million expansion. The team of NEXT Architecture and Franjo Construction are working on Uber’s expansion into an additional 90,000 square feet in the Crucible Building in The Strip. The City of Pittsburgh Planning Commission OK’d 3 major office projects this week: Murland’s 90,000 square foot office on Forbes Avenue (to be built by Mascaro); RDC’s 105,000 square foot office on Smallman at 12th Street; and the $9 million repurposing of the former Art Institute’s building on the Boulevard of Allies, which M & K Wilkow is developing.

The PA Dept. of Labor released April employment data that showed Pittsburgh’s employment rose by 5,900 jobs from March and unemployment rose from 5.1% to 5.3%. Unemployment was down significantly when compared to April 2016, when the percentage of unemployment was 5.8%. Some of the decline is, unfortunately, a result of a shrinking workforce but there is also an upward trend that is positive. CBRE released an analysis of employment growth last week that showed that job growth has reached 0.45% since October 2016 and 0.71% since January. CBRE cited gains in restaurant/hospitality, financial services and especially in technology. The chart below shows that job growth in scientific research and development in Pittsburgh has far outpaced the rest of the U.S. over the past three years. Let’s hope this trend holds.

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The Midstream Booms

After a quiet first quarter the gas midstream investment is roaring again. The industry is building capacity to process natural gas in the western Washington County and eastern Belmont County areas to create hub of sorts. MarkWest is building the Harmon Creek Gas Processing Plant in Smith Township near Burgettstown. The plant will process 200 million cubic feet per day in a cryogenic operation and 20,000 barrels per day in its fractionation process. Based on similar projects, the construction should run $250-275 million. Bids for early packages are due May 31.

The plant will be close by the 400 MCF Revolution plant being constructed by Energy Transfer Partners, as well as a handful of compressor stations. Among those are ETP’s Joffrey compressor, the Gibraltar Compressing Station being built by TEK Construction for Columbia Gas, MarkWest’s Down Home, Imperial and Cibus stations. EQT is in the approval process for a large 21,400 HP compressor in Union Township, called the McIntosh Compressing Station. The cost of that project should run $85 million or more.

Millcraft Investments announced this morning that the new construction at 350 Oliver – the former Saks site – would be a 70-unit condo called The Lumiere, rather than the Moxie Hotel that was previously proposed. Millcraft and its co-developer, McKnight Realty, selected Mosites Construction to build the $35 million project.

Oxford Realty services announced that it is leasing spaces in a 28,000 square foot retail building – called The Junction – to be built adjacent to the Hyatt House at the Liberty and Baum intersection in Shadyside. The building is being developed by the Voelker Family and Sierra Associates. Construction is scheduled for fall.

West Allegheny School District awarded contracts on its $5 million high school pool addition and renovation. Yarborough Development will be the general contractor.

 

Construction Heating Up With the Weather

Work started recently on the foundations for the $21 million Carnegie Science Center expansion. Turner Construction is the CM. Allegheny Construction Group also started work on the first phase of the major renovation of the Rivewalk Corporate Center and Terminal Building that McKnight Realty is developing on South Side. According to the Builders Exchange Franjo was awarded the contract for a new 44,000 square foot flex building Oxford is developing at 250 Industry Drive in North Fayette Township.

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Indovina Associates Architects’ rendering of the expanded Carnegie Science Center.

Proposals are due this week for the $75-80 million St. Clair Hospital expansion. The parking garage piece of the program has been awarded to Carl Walker Construction. The U.S. Army Corps of Engineers has moved the first project of the $98 million C-17 Bed-down at the 911th Airlift to the active stage. The RFP should go out before Memorial Day for the $18 million program to modernize three hangars. A $36.6 million upgrade to the taxiways and ADAL fule system will follow and a new $44 million 2-bay hangar will be let after that. All three contracts should be inked by end of September.

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Two sophisticated men of the construction industry (Dan Delisio and Anthony Martini) enjoy live music at Six at NEXT, hosted be NEXT Architecture on May 11.

Unemployment Dips

According to Pittsburgh Today, unemployment fell in March from 5.6% to 5.1% over the past 12 months. The bad news was that there were more than 10,000 fewer people in the labor force compared to March 2016. That’s an indication of the power of the demographic challenge facing Pittsburgh over the next five years.

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On the national scene, yesterday’s report on new unemployment claims found 238,000 new claims were filed in the last week, the lowest in 17 years. The national unemployment rate is now 4.5 %

In project news, UPMC selected Turner Construction as CM for the $111 million Hamot patient tower in Erie. Construction is expected next year. CM selection is expected in a few months for the $100 million-plus UPMC South and for the $150 million-ish UPMC Mercy Ophthalmology center.

University of Pittsburgh has been bidding flurry of projects recently. Allegheny Construction Group was low on two projects last week. Allegheny was low on the Frick Fine Arts at $309,000 (although an alternate could flip the job to Facility Support Services) and on the 7500 Thomas Blvd. print shop at $548,500, edging out Rycon at $552,000.