Bureau of Labor Statistics released information on February’s producer price index (PPI), which showed construction outpacing the overall inflation rate by a considerable amount. Year-over-year (y/y) the PPI for all finished products was up 2.8%. For construction the PPI increase for final demand rose 3.5%.
The AGC’s Ken Simonson noted spikes (note: no declines) in a number of categories. “Materials important to construction that had notable one- or 12-month price changes include diesel fuel, down 2.0% in February but up 38% y/y; lumber and plywood, up 4.4% for the month and 13% y/y; aluminum mill shapes, 2.9% and 12%, respectively; copper and brass mill shapes, -0.9% and 10%; gypsum products, 7.2% and 8.0%; and steel mill products, 2.3% and 4.8%. Among services important to construction, the PPI for truck transportation of freight rose 0.6% for the month and 5.6% y/y.”
In local construction news, CMU’s $45 million Health & Wellness Center – a renovation of Skibo Hall – has gone out for RFP to Jendoco, Mascaro, Mosites, PJ Dick, and Rycon. Construction of a temporary helipad is getting underway as the first phase of the $21 million emergency department renovation. MBM Contracting is the project’s CM. Stantec is the architect. And nearly 20 years of trying, word is that the $40 million Shannon Transit Village is moving forward. The 152-unit apartment with ground floor retail and a 375-car garage is being developed by Jim Aiello (JRA Development) and built by Mascaro Construction. A schedule for construction is not set, however.
This morning’s Bureau of Labor Statistics report on February’s job creation blew the doors off the forecast. Employers created 313,000 jobs in February, at least 100,000 more than expected. It’s a reflection of small business confidence in the economy and a reaction to the lower business taxes. Here in Pittsburgh, construction keeps getting a boost from the rapid growth in tech jobs.
Rycon Construction was awarded the $7.9 million fit-out for Argo AI, one of Uber’s competitors in the autonomous vehicle game, which is going into 3 Crossings. Dick Building Co. got a contract for about $1 million in renovations for a company called Robotany at the M. Berger Industrial Park in South Side. Robotany grows greens hydroponically and is expanding to put robotics to work planting, feeding and harvesting. Turner is reported to have the $120 million Pitt/UPMC Immune Transplant and Therapy Center, the conversion of the former Ford Building in Shadyside.
In more conventional construction news, Franjo Construction was awarded the $7 million A & L Motors BMW dealership in Monroeville. A permit was issued in McCandless to A. Martini & Co. for a $32 million McCandless Senior Living, being developed by CA Ventures at McCandless Crossing. Burns & Scalo Real Estate has its 150,000 sq. ft. , $34 million Riviera Office Building out to subcontractors for bid. And the $700 million UPMC Heart and Transplant Hospital at Presbyterian is going out for CM proposals (along with the UPMC Hillman Cancer Hospital) to four teams: Clark Construction/Dick Building Co., Massaro/AECOM, PJ Dick/Whiting Turner and Rycon/Skanska.
In the Spring edition of DevelopingPittsburgh, there was an error in the feature article, p. 14. The quote from Mike Coonley should read, “When we have the opportunity we will still put our hat in the ring. We don’t have a lot of available buildings or but we do have lots of sites.” Armstrong County EDC has 20- and 12-acre pads along with several other smaller lots at the 925-acre Northpointe business park. West Hills Industrial Park, at the intersection of SR28 and 422, has 185 acres with multiple sites available.
Bid boards have gotten very full very quickly for Pittsburgh contractors. Much of the work on the streets is small private stuff but there are a few meaty projects, with the prospects of some big projects (UPMC Presbyterian and Shadyside Towers, CMU Skibo Hall, $75 million Altoona High) coming out within the next month or so. Among the projects being bid, the $43 million City’s Edge Apartments in the Lower Hill have gone out for competitive GMP proposals to PJ Dick, Rycon, Mosites.
The Murdoch Building, a 95,000 square foot office and retail building being built by Mascaro, broke ground this month. Fairchance Construction is about to start work on a 138,000 square foot expansion of COE Distributing at the Franklin Commercial Park in Fayette County, being developed by J D & D Enterprises. Dick Building Co. has started work on a new 42,000 square foot Rahal Land Rover/Jaguar dealership in North Strabane Twp. outside Washington PA.
Dick Building has started sitework on Rahal Land Rover/Jaguar in Washington, PA.
In economic news, the Census Bureau reported that GDP growth was only 2.6% in the fourth quarter, a mild disappointment compared to expectations. For perspective, however, that pace of growth (which was the annual rate too) is an improvement over 2016 and about what could be realistically expected given the shortage of workers. It’s also worth noting that this is the first of three estimates. By the time the final estimate is reached in 2 months, the final figure may hit the 3% that economists expected.
The unusually cold weather made for a slow start to the 2018 construction season. Bidding activity has been slow out of the gate too, but the momentum is building. There is news on a couple of large projects people have been keeping an eye on. Siemens Corp. is taking bids on early packages at the $600 million combined cycle plant at Hatfield Ferry in Green Co. Wesex Corp. has started work on the first building at Castlebrook’s million-square-foot industrial park in Big Beaver/Koppel area in Beaver County. The building is a 400,000 square foot warehouse called the Fairlane Distribution Center. Allegheny Health selected the Gilbane/Massaro team to build its new $200 million new hospital in Wexford. At Slippery Rock University, DGS selected the team of Mike Coates Construction, Renick Bros. and Blackhawk Neff to negotiate a final agreement for the new $22 million performing arts center at Miller Auditorium. In other commercial real estate starts, Jendoco Real Estate started work on Building 200 at Settlers Cabin Business Park.
News on the economy has been very good to start the year. The government reported that 148,000 new jobs had been created in December, marking the 75th straight month of job gains. Pittsburgh’s job market remained in growth mode in November. The Department of Labor reported that 16,500 new jobs were added from November 2016 to 2017, a gain of 1.4%. Unemployment dropped to 4.8%.
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.
Friday’s report on first quarter GDP was well below economist’s forecasts but hardly a surprise or disappointment (not sure how those two things can be true but…). When you dig into the details you see that without construction spending, the economy would have actually contracted in the first quarter compared to the fourth quarter of 2016. The overall GDP growth number was 0.7 percent but big gains in residential construction (0.5 points) and non-residential investment (1.1 points) added 1.6 points to the growth. The rest of the economy dragged GDP down 0.9 points. Within the non-residential investment number, which includes all business investment, spending on non-residential construction was up 22.1 percent. That means that without construction, the non-residential investment number would have been flat or worse.
Today’s announcement on March construction showed that the first quarter of 2017 was up 4.9 percent over the first quarter of 2016. The $1.218 trillion in spending is the highest on record. The trends represented in the number were consistent with past months. Commercial construction was up 12.7 percent. Public construction was down 6.5 percent.
St. Clair Hospital’s $75 million expansion and renovation project has gone out for CM proposals to PJ Dick, Mascaro, Massaro/Yates, MBM, Mosites, Rycon, and Volpatt. Pittsburgh Theological Seminary selected Jendoco Construction for precon services on its $10-12 million library project. Volpatt Construction landed the $2.35 million Victoria Hall SIM Lab for the University of Pittsburgh. Rycon Construction is about to start work on the first phase of the $2.8 million Assumption Hall renovation at Duquesne University. Bids are due May 4 for the 21,000-plus sq. ft. buildout for global diagnostics/life science company Perkin Elmer at 250 Industry Drive. Bids are being taken by Neyer, Rycon and Turner.
Pete Dozzi Memorial Service
The family of Peter C. Dozzi invites you to join them on Friday, May 5, 2017 at the Duquesne University Power Center (Charles J. Dougherty Ballroom) 600 Forbes Avenue, Pittsburgh, PA 15282 for a memorial celebration and luncheon beginning at 11:00 a.m. Brief remarks will be presented at 12:30 p.m. Please confirm your attendance by email firstname.lastname@example.org.
One of the concepts that the Federal Reserve’s FOMC dicussed in its March meeting was that of “soft data” compared to “hard data” in assessing the economy. With inflation rising again and the labor markets tight, the Fed will raise rates slightly at least three time this year, but the Committee made interesting observations about the actual state of the economy versus the perception.
Soft data is the more frequently-updated economic information that is the result of surveys, like consumer and business confidence or business hiring plans. The surveys of this kind – like the University of Michigan’s Consumer Confidence Index – have soared since the election on the expectation that a Trump Administration would lower taxes and regulatory burdens. Thus far, the administration has struggled but consumers and business owners have reflected little of this in their responses.
At the same time, hard data – like government employment or GDP estimates – is showing that the economy is performing pretty much like it has since the Obama Administration and Congress figured out how to play nicely after the 2013 government shutdown debacle. A look at the figure below shows how this spread between data and emotion looks.
Bidding/contracting news is limited. One K-12 project of note is out to bid, the $14 million Todd Lane Elementary School addition/renovation in Center Valley School District. Massaro has the $2.6 million Johnstown Flood Museum project out to bid, due April 26. Mistick Construction is taking bids on the $30 million Eighth & Penn apartments and Elford Inc. has started construction on the $40 million, 274-unit Village at Cranberry Woods apartments. In Erie, E. E. Austin has been selected as CM for the $110 million Allegheny Health Network renovation of St. Vincent Hospital.