The story that started leaking out Thursday afternoon – that UPMC was abandoning its plan to locate a $220 million hospital at Newbury in South Fayette – should not be misconstrued as a negative sign about the healthcare construction market. UPMC is re-thinking its five-year capital plan but still expects to invest $900 million over the next five years. Thus far, the decision to scrap the South Fayette facility has not altered plans to build the Vision Institute on the Mercy campus, expand Children’s Hospital or build some sort of new facilities in the South Hills. And construction to meet pent-up demand is booming in other healthcare facilities
UPMC is still continuing its investment at the former Jameson Hospital in New Castle and building the $111 million tower at UPMC Hamot in Erie. The Allegheny Health Network is taking design/build proposals for a new 30,000 square foot cancer center in Butler from Jendoco, Graziano, Mosites, Mascaro, Allegheny Construction and A. Martini & Co. AHN is also bidding a 30,000 square foot, $16 million cancer center at the St. Vincent campus in Erie. PJ Dick, Turner and Austin are known to be bidding that project.
Representatives from the city, county, Oxford Development and Argo AI (among others) were present for Tuesday’s announcement that Oxford’s Riverfront West building would become Argo’s headquarters. Rycon Construction has started work on the building.
Massaro CM Services put three State College Area School District elementary school projects out to bid, due October 10. The budget for the projects is $55 million and the district is taking bids on each or all three combined. The bids should be a good early barometer for how competitive it will be in the K-12 market as contractors build backlog for 2018.
Most years, the Labor Day weekend brings the realization that the building year is starting to wind down and there follows a flurry of activity. This year that realization either came early or else just the flurry. From amongst the RFP’s for CM services that have been bouncing around, Pitt selected PJ Dick to build its $26.5 million life sciences building at UP-Greensburg campus. PJ was also successful on the $16 million Vincentian Sisters’ independent living facility in McCandless. In Erie, AHN awarded a contract to Massaro Corp. for a fast-track renovation to its 40,000 square foot birthing suites.
This morning, the Census Bureau released two of its monthly economic indicators, both of which showed the economy to be helathy and steady. Construction spending in July hit $1.2 trillion, an increase of 1.8 percent over July 2016. Government data on employment growth was announced this morning also. Non-farm payrolls grew by 156,000 jobs in August. That was below the expected 170,000 jobs forecasted by economists but still a healthy increase given the tight labor supply. Since January 2017, job creation has averaged 177,000 monthly. That’s a sign of employer health and optimism, especially in light of how late in the business cycle the U.S. economy is.
To be clear from the outset, multi-family construction in Pittsburgh pales in comparison to most major cities (or even Columbus). Our boom of 3,227 units started in 2013 would be an average month in Houston or LA. But, compared to an average of 731 units annually for the previous 15 years, 2013 (and the last three years) have seen a surge in apartment construction.
Like in the rest of the country, lending and investing appetite for multi-family has cooled in Pittsburgh. Rents have stopped growing. Vacancies are rising. This is very normal following a time of increased construction and, in fact, the occupancy levels have been ticking up again in recent months. What is interesting is that senior living is picking up where apartment development dropped off. Since the start of 2016, almost $300 million in new senior living projects (representing about 900 units) are under construction.
Graziano has started construction on the 128-unit Residence at Whitehall project (pictured below) and Lecesse Construction is building the $30 million expansion of the Friendship Village campus in Upper St. Clair. Work is well underway on Continental’s project, The Waters in Marshall (plans are moving for one in Peters as well). Approvals have been received to start the $23 million Stonecrest of Pittsburgh in McCandless, which will be built by BRIDGES & Co.
Rendering by Graziano Development & Construction
In project news, CORE Realty is taking bids from subcontractors on the 174-unit apartment, The Chatham Center, a $20 million-plus conversion of eight floors of One Chatham Center. DGS selected Mascaro Construction, Renick Brothers, Shipley Plumbing and Westmoreland Electric as the best-value team for the $43.8 million Tippin Gym project at Clarion University. A. Martini & Co. landed the $3 million Fogo de Chao restaurant in the Oliver Building. Turner was selected for the $5 million Bio-Tech Vivarium renovation at Pitt’s Second Avenue research facility. UPMC is in talks with CMs for its major projects at South Fayette, Jefferson Hills and UPMC Mercy and Children’s campuses. Construction manager J. E. Dunn is in the process of qualifying contractors for the trade packages on Trinity Hospital’s $60 million new bed tower in Steubenville.
For all the talk about the impact of the ethane cracker Shell is building, there hasn’t been much of an update on the construction in the press. If you have driven by it this summer you may not notice much of a difference, at least to the naked eye, but there is significant progress nonetheless. A massive concrete pour is well underway. Champion Concrete’s batch plant up the Ohio is producing non-stop and there are more than 200 ironworkers on site to handle the rebar tying for what is the pad for the billion dollar process plant to be floated up river from the Gulf of Mexico. The site will see mostly horizontal construction in 2017 but construction of related buildings will begin in about a year. Right now Great Arrow Builders has a package that includes and administration building and medical/fire station facility totaling about 84,000 square feet out-to-bid, due Aug. 18. A lab building was also just released to bid Sept. 14.
There was an interesting spotting of an autonomous research vehicle on McKnight Road last week that is not an Uber car. The Ford pictured below uses different Lidar/capture technology than Uber’s. Since Ford is a billion-dollar investor in Argo AI, I assume this is one of their vehicles. No announcement of where Argo intends to locate its 120,000 +/- first offices has been made yet.
In other project news, BRIDGES & Co. was awarded the $12 million Northland Heights senior living facility, which is the conversion Hamister Development is undertaking of a former hotel on McKnight Road. PJ Dick’s special projects group started construction on the $3 million Keystone Shooting Center in Marshall Township. Massaro was awarded the $4 million Mercy Hopsital central sterile facility. Massaro was also selected as the CM for the $26 million AGH Cancer Institute project. IKM was chosen as the architect.
Thursday the Parking Authority chose the Davis Companies’ team for the development of the 9th and Penn corner Downtown. The plan is for 185 condos and commercial/retail integrated into a 900-plus-car garage. The Authority chose Davis over competing proposals from Millcraft and Oxford Development. The proposal from the latter apparently involved an mid-rise office tower similar to the one Oxford had proposed for 350 Fifth Avenue and involved a 250,000 square foot tenant that needed construction to start immediately.
Rendering by AE7 Architects
AHN short-listed the competitors for construction management of the $25 million cancer institute at AGH to Mascaro, Massaro, PJ Dick and Rycon. Mid-Atlantic Capital is taking final bids from P2 Contracting and Franjo Construction for the build-out of Stonehaven Brewing & Restaurant, a $4 million renovation of the former Spaghetti Warehouse. CDC is reporting that Dinsmore & Shohl picked A. Martini & Company for its $2 million tenant improvement at 6 PPG Place.
Earlier this week Burns & Scalo Real Estate announced its plans for a 150,000 square foot office – called The Riviera – in the Pittsburgh Technology Center. That office park is getting an interesting boost from the new Hotel Indigo that is under construction.
Rendering of The Riviera by NEXT Architecture.
City Planning Director Ray Gastil believes that the hotel will bring a change in dynamics to the PTC and spark development of other types of properties. The city’s planning commission is looking at two other projects of interest this week. Walnut Capital submitted plans for a $6 million renovation to a former car dealership building at Craft Place and the Boulevard in Oakland. PJ Dick is the project’s contractor. And Matthews International revealed its plans to add 18,000 square feet and renovate its North Side headquarters. Turner Construction is the CM for Matthews.
In project news, Massaro Corp. was awarded the $3 million new entry at UPMC Presbyterian University Hospital and the Mercy Hospital ERC behavioral health projects. UPMC will have the economic impact report for its $180 million UPMC South presented to South Fayette Township supervisors tonight. Proposals for the CM services should go out after the township approves the project later this summer.
University of Pittsburgh is taking proposals from Mascaro, Turner, A Martini, PJ Dick, Volpatt, and Rycon on its new $26.5 million life sciences building at the Greensburg campus. St. Clair Hospital will release its $10 million-ish physical plant building for bids again by the end of the month.
The recent North American Petrochemical Construction Conference was held in Pittsburgh a couple weeks ago and there were plenty of pronouncements about the beginnings of the plastics and chemicals industries building out in Pittsburgh. The problem was there were few specifics to support the assertions. Maybe I’m still accustomed to the other shoe dropping but without some logical argument as to why the industries should locate strategic manufacturing assets here, I was unmoved by the PR coming out of the conference.
This morning came news that Thai-based PTT had exercised its option to buy the 168-acre site on the Ohio that has been proposed for construction of a second ethane cracker in the Marcellus/Utica region. The site was the Burger First Energy power plant and has been getting a demo and cleanup that JobsOhio has funded to the tune of $14 million. PTT had auditioned Fluor and Bechtel last year to provide preliminary engineering and budget estimates, with the intention of making a final investment decision in January 2017. Instead of pulling the trigger, PTT deferred the decision until late 2017. That was a cause for concern, although Shell delayed their FID several times and still moved ahead.
This morning’s news is another bit of affirmation that inertia for the petrochemicals industry is building in the Appalachia. Understand that a $13.8 million land buy won’t assure that PTT makes the FID soon or even goes ahead with the project, but it’s comforting news nonetheless. You can read the Pittsburgh Business Times story here.
Contractors seem to be comforted by Pittsburgh’s market conditions since the first quarter. The Master Builder’s Association’s C3 Index – a reading on commercial contractors’ sentiment about the market – showed big improvement in the second quarter. The MBA’s Eric Starkowitz released the C3 Index on July 1 and reported that a significant increase in backlogs had raised expectations about the future.
One significant project that has made news in the plastics industry is Ensinger Plastics’ expansion. After South Strabane Township officials hamstrung Chapman Properties’s development of Southport, where Ensinger was to locate, the manufacturer shifted plans and will add 214,000 square feet at its existing North Strabane location. The construction cost should still be in the $20 million-plus range. Ensinger is taking bids from Franjo, Bear Construction and Fairchance Construction in mid-July.