Category Archives: Regional construction

Hospitals and Jobs

Both the major Pittsburgh hospital systems have signaled an increase in spending in 2017 and the push has really begun throughout the market. Proposals are due Friday for CM services on the $111 million UPMC Hamot patient tower. RFP’s went to PJ Dick/E. E. Austin, Mascaro, Massaro/Gilbane, Turner and Whiting/Turner. RFP’s for the $75 million St. Clair Hospital project are due out by next week and RFP’s for the new 280,000 square foot, $180 million UPMC South Hills hospital at South Fayette’s Newbury Market should follow right behind. You can read more about the hospital construction market in the March/April BreakingGround digital edition.

In other project news, BRIDGES & Co. was awarded the $4.5 million expansion of Prominent Fluid Controls Building 2. Massaro Corp. was selected for a $5 million renovation project by UPMC at the Kaufman Medical Building in Oakland. Pittsburgh Theological Seminary is taking proposals from Facility Support Services, PJ Dick, Jendoco and Mosites for renovations to its library, a project in the $10-12 million range. Corcoran Jennison is taking bids April 15 for the 2nd phase of the Oak Hill neighborhood, the 140-unit Brackenridge Apartments. The contractors bidding the $24 million phase are Arcon Construction, Fairchance, Graziano, Jendoco, Mistick and PJ Dick/Waller.

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Employment growth since 2013 has been well below February’s 10,000-job pace.

The Department of Labor released its estimates of metropolitan job growth in February and Pittsburgh came in below the benchmark average of two percent, with 10,000 more jobs than in February 2016. That’s a 0.9 percent bump; not great but four times the average annual gain for 2014-2016. The forecast is that the rejuvenation of the gas business will be a booster – rather than a drag – for the tech and finance job growth in Pittsburgh this year.

Campus Advantage Moves Ahead

After months of pricing the new $40 million Campus Advantage student apartments at 3407 Forbes Avenue have a contractor. Rycon Construction was selected this week to build the project, which includes 197 apartments and 489 beds.

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In other project news, Mosites Construction was awarded a contract for $3 million in renovations to Blackington Hall, Buckhorn Lodge and Sunset Lodge at Pitt-Johnstown. A. Martini & Co. is building out Rocky Patel’s BURN Cigar Bar on the North Shore. Penn State awarded PJ Dick a contract for a $5 million parking garage expansion at its Erie campus.

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A. Martini & Company’s Katie Stern (left) and Mike Larson-Edwards flank Katey Andaloro from Jendoco at the MBA YC Kickoff at Olive or Twist.

 

 

A Final Look at 2016

Our research at the granular level is about completed for 2016 data and it appears we underestimated the housing market a bit and had the non-residential market pretty close. For the latter, the final number for non-residential/commercial contracting in 2016 was $4.13 billion. That’s the highest number since Tall Timber (or the Pittsburgh Construction News before it) has tracked going back to 1995. In that number is about $1.9 billion for natural gas processing plants, the Tenaska combined cycle power plant and the Shell cracker progress. That leaves a lot less for the mainstream commercial construction industry.

Residential ended a bit higher than expected. Single-family detached home construction finished up more than expected, as did the apartment market (although the latter was off more than 10%). The final numbers are below:

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2017 is shaping up to be a surprising year for higher ed construction. Overall the category is depressed compared to the volume of most of the past decades. PASSHE schools will again have about $65 million to share, leaving few significant projects. Private colleges are facing some real challenges too but those in the region have some nice projects in the hopper. Yesterday’s announcement from Robert Morris about its $50 million new convocation center/practice gym is one of a dozen or so throughout the footprint. PJ Dick will be building that project (although they are not one of the funders, as the PBT reported). There are plans for a new building at W & J; a $25 million STEM facility at Westminster; a new $15 million field house at Grove City; several new buildings at CMU (Tata Consulting, ANSYS and the planning for a new science building); and Pitt should be looking for its team for the $100 million new building at the Syria Mosque. That’s not bad for a segment in tough straits.

Mall Closings Shouldn’t Surprise

Today’s announcements from Sears, K-Mart and Macy’s were headline news around the country but the closings are really “dog bites man” news. The ever-growing share of online shopping is a five-year story that has left retailers struggling to find the right mix of bricks-and-mortar vs. online retailing. Research has shown that retailers that do both well get more money from shoppers than those that just do one or the other well. I don’t envy any company trying to figure that out, especially since the landscape is constantly shifting.

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Macy’s Ross Park Mall store was one that escaped closing.

Pittsburgh was left relatively unscathed by the closings, with only a few malls in outlying areas affected (although you have to wonder about the wisdom of closing Beaver Valley Mall stores at this point). On the upside for the region, it seems that Pittsburgh is on the radar for fulfillment centers, which is the upside of retailing these days. Several of the big warehouse leases signed in the past 6 months have been for online fulfillment and the prospect of Amazon as the user for the million-square-foot warehouse at Chapman Westport remains strong. One of the many companies scrambling to get into this business is Macy’s, which is converting some of its big closed stores into fulfillment centers. Perhaps that fate awaits one of the two stores announced for closure in metro Pittsburgh.

Look for this industrial market niche to be a hot – if not huge – property type over the next few years. FedEx Ground has invested significantly in facilities over the past decade but expect to see it, and its competitors, try out new ways to get products to consumers quicker. Amazon’s arrival will signal to others, like Zappos and Wayfair, that Pittsburgh is a viable next-step market. With the industrial demands that will come from Shell’s cracker and related industries, warehousing will be a steady source of millions of square feet of new construction between now and 2025.

The Millennials Are Coming!

Yesterday, the apartment finder and research firm ApartmentList published its findings on the movement of the Millennial generation over the past decade. Austin, Charlotte, Houston and Seattle were the top four cities for growth in population of people between the ages of 25-35 and Pittsburgh ranked 14th, which seemed to be a surprise to ApartmentList. Between 2005 and 2015, the number of residents of metro Pittsburgh in that age range grew 7.1%. During the same time, median income grew 6.8%. One stat that separated Pittsburgh from the pack was the lower rate of decline in home ownership among 25-35 year olds. The home ownership rate fell nationally by 7.4% but only by 4.5% in Pittsburgh.

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The data supports the trend showing Pittsburgh’s median age declining to 33 years old and also underscores the competitive advantage of Pittsburgh’s lower cost of home ownership.

Updating some projects, commuters driving down Smallman Street should see Turner Construction starting work on the $19 million, 133-room AC Hotel near the Convention Center. Turner also appears to have been successful on the $30 million administrative buildings package at Shell’s cracker plant in Monaca, although that contract has not been confirmed.

Allegheny Health Network awarded Mascaro the $3 million Esophageal Lung Institute project at West Penn. UPMC awarded AIM Construction the $6 million Hill Building renovation. A. Martini & Co. was selected to do the $2.2 million build-out of Industrious’ co-working space in PPG Place. Pitt selected Massaro for its $3 million renovation to the Cathedral of Learning’s 14th floor.

Some Developments in the News

Earlier this week developers Walnut Capital brought plans to the city for the conversion of 162-164 Fort Duquesne Blvd. into office and roughly 70 apartments. The $30 million project will be built by PJ Dick Inc. Strada is designing now and construction is expected in the spring.

Spring bidding is expected on the next phase of the Providence Point senior community in Scott Township, near Heidelberg. TEDCO Construction is the construction manager/agent for the owner and will bid the $40 million-plus project in packages, including a general package.

Late this month, it’s expected that the RFP will go out for CM services for the $100 million expansion of St. Clair Hospital.

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Want to have as much fun as these lawyers? Don’t miss the PA Builders Exchange’s Annual Cocktail Party on November 11 at the Rivers Casino. Get tickets at the PABX website

 

 

A Truly Bizarre Decision

On Monday, Judge Timoth Patrick O’Reilly rendered a head-scratching injunction in Allegheny County Court of Common Please, one that will cost Jefferson Hills taxpayers a bunch of money.

The prime plumbing contractor on the project, Wheels Mechanical, filed to have the sanitary and storm sewer portions of the site contract removed from the general contractor’s scope of work and assigned to the plumbing contract. Wheels claimed including the site utilities in the site package was a violation of the PA Separations Act. In assigning the scopes of work, Turner Construction decided to include the site utilities in the site work because of the extensive work (roughly 160 acres) and the advantage to the overall scheduling of sequencing the installation of the utilities at the time the cut and fill was done.

During three days of testimony, little evidence was brought that clearly showed how this kind of separation of scopes is done. There is ample precedent for both approaches. What wasn’t shown was any evidence that the inclusion of the site utilities with site work was in any way intended to circumvent the Separations Act, especially since the delivery method included nine separate contracts.

Finding for Wheels Mechanical, Judge O’Reilly rendered the opinion that the school district and CM had “willfully” violated the Separations Act. This language makes it more difficult for appeals and stays of the judgement prior to the appeal. That counts because O’Reilly gave Turner 10 days to get prices from Nello Construction on a credit for removing the site utilities and a bid from Wheels for the addition to its scope.

I am a proponent for abolishing the Separations Act. But in this case, the problems with the decision go well beyond the Separations Act. First, there was a Project Labor Agreement in place, which means that jurisdictional disputes were to be decided by the method agreed to in the PLA. That means the judge should not have heard the case.

More glaring is the timing of this claim. Wheels was a bidder on the project, meaning that it attended pre-bid meetings, reviewed the bidding and contract documents for months prior to bidding and signing contracts. A reasonable judge should have asked why the claim wasn’t brought forward then or during any of the months before this phase of construction reached a critical point. Wheels is an experienced K-12 contractor. The scopes of work weren’t too confusing, nor is this the first time Wheels has had the plumbing contract on a project where the general construction contractor had the site work assigned to its scope. It is likely the first $73 million project that this occurred on, I’m sure, which may have added motivation.

There was time to redress the “violation” during bidding and contract evaluation. The time lost and additional money that will be spent (if the work is priced the same as was carried in the bid, this will be the first project in recorded history) by Jefferson Hills will be punitive to the taxpayers and the students. Observers noted that Judge O’Reilly asked a number of questions during the proceedings that betrayed a lack of understanding about construction. His decision confirmed that.