As the year winds down we’ve done the first estimates for the total construction and the big factor in 2016 was heavy industrial/energy work. The total non-residential construction volume for 2016 is $4.07 billion, the highest level of activity since 2000. Hidden in that number is about $1.3 billion from just three jobs: $580 million Tenaska Westmoreland combined-cycle power plants; the $500 million Revolution cryogenic gas processing plant in Burgettstown; and about $300 million in construction at the Shell petrochemical site in Monaca. Because of the Shell project, volume in this sector will be extraordinarily high for the next three years as well.
Brian Chlop, Eric Starkowicz and Jason Sigal enojy the YC Holiday Party, which raised $4,000 for the Lemieux Foundation and 200 toys for Toys for Tots.
In commercial construction, Massaro Corp. is finalizing the GMP for the $50 million Campus Advantage apartments in Oakland. UPMC announced its $111 million Hamot Hospital expansion. The first phase of that project is $10 million of relocations for users in Hamot’s professional building. Building Systems Inc. is doing relocations in the hospital and Massaro Corp. is handling relocations in non-hospital sites. Burchick, F. J. Busse and Landau are putting in proposals today for a new $4.5 million Mars Library. Zamagias Properties has asked Continental Building Co., PJ Dick, Massaro and Rycon for proposals Jan. 10 on its 26-unit Sewickley Lofts, a high-end condo project being built in Sewickley’s village.
Hope the year has been prosperous and 2017 will be better. Happy Holidays!
Design-build bid packages for the 300-bed plus student residence facility at CCAC Boyce’s campuses should be put out to bid shortly. PennDOT has issued a $45 million package for the Airport Busway.
PJ Dick was selected by Concord Hospitality to build the new $40 million Hyatt at the Pittsburgh Athletic Association site in Oakland. UPMC awarded Mascaro the contract for renovations to five floors of the Shadyside Hospital patient tower, a $25 million-ish project. Mosites Construction was selected as construction manager for the new $12 million Ansys building at Carnegie Mellon University. BCJ is the architect on the team.
Affordable Care Act and the UPMC/HIghmark battle have had a negative effect on the healthcare construction market in Pittsburgh. Hospitals have been struggling with figuring out lower reimbursements and the casualties from the insurer/hospital wars. Healthcare construction was a major contributor to the overall construction market in Pittsburgh so the jump in activity over the past few weeks is encouraging.
Rycon Construction was awarded the $6 million first phase of the UPMC Jameson Hospital modernization in New Castle, where UPMC ultimately expects to spend $70 million over a period of years. PJ Dick was awarded the West Penn NICU project, which is in the $15-$20 million range. Bids are being taken from Massaro, Mascaro, PJ Dick, Turner, Rycon and Walsh on the $30 million Presbyterian Hospital cardiovascular renovation and the Shadyside Hospital patient room upgrade is also out. Waters Senior Living awarded Continental Building Systems its $27 million Warrendale facility. Wheeling Hospital is taking bids on a $20 million continuing care facility from Landau, Colainni, Mascaro and Volpatt.
I thought I would wait 24 hours after the announcement of the final investment decision by Shell to let the newspapers have at it before a follow up post. Yesterday’s news was certainly good for the regional economy and helpful for the recruiting and training efforts that will go into attracting labor. It also wasn’t that big a surprise.
As we reported last week, Shell has been moving more publicly in recent months, even talking openly about the Monaca project (which Shell refers to as the Pennsylvania chemical project) in its earnings call. Wesex has begun site preparation for a 200,000 square foot warehouse for C. J. Betters Enterprises that will be leased to Shell for storage. Shell has also leased land from Betters in Aliquippa that will be used for parking and overflow from the plant construction.
The players in Monaca once the plant gets started – and construction is continuing to proceed, regardless of the 18-month timeline given to the press – are Bechtel as the main EPC entity, along with Babcock & Wilcox for the plant itself and McCarl’s.
Shell’s announcement wasn’t the only big news in Pittsburgh’s energy market yesterday. Westinghouse announced it had secured agreements (although not signed contracts yet) to build six nuclear power plants in India. Westinghouse has received other contracts for plants around the globe, a signal that fears about nuclear plants are abating. After a bid employment build ten years ago, followed by a right-sizing through layoffs and attrition, Westinghouse’s new contracts should spur new hiring. Having subleased one of its buildings to PPG and vacated at least two off campus buildings, Westinghouse will find its space pretty tight if many new hires occur. That could be a nice boost to the Cranberry office market, which is beginning to show signs of life again.
Milhaus Development has given notice-to-proceed to Franjo Construction for the first phase of its Arsenal Terminal mixed use development. Franjo still needs to finalize a GMP for the $40 million, 250-unit apartment complex, which will be the first part of what shuold be a $120 million investment. Even with the growing supply of apartments entering the market, Arsenal’s proximity to the Strip and Oakland make the project’s prospects for success better than average.
In Oakland, another tech-related development is moving ahead at Carnegie Mellon. CMU and simulation software designer, ANSYS, announced a partnership that will include a 30,000 sq. ft. new building on campus.
While of course no one will confirm or deny it, Aliquippa-based C. J. Betters Enterprises is rumored to have inked a deal to do a 200,000 square foot build-to-suit warehouse for Shell.
The first quarter of 2016 marked the first that there were no apartment complexes started in three years. At the national level, the apartment market has begun to slow. Lenders are growing very leery of the property type. Absorption in Pittsburgh is slowing. Multi-family has become overbuilt. Those are the headlines. It seems that developers aren’t reading the headlines.
One of the experts concerned about the pace of development is Paul Griffith, president of Integra Realty Resources. His firm forecasts that multi-family construction needs to slow below 500 units for the next 18-24 months for absorption of new units to catch up. The average for the past three years has been above 2,000 units of new apartments. In a recent conversation, however, Griffith noted that requests for appraisals on new deals have not slowed. The activity in the bidding market reflects that.
The most ambitious project in the city is Milhaus’ plan to redevelop the Arsenal Terminal complex just west of 40th Street in Lawrenceville into at least 625 units. The first phase of that project is about 300 units (to be built in 70-75 unit increments) and the $38 million project is being priced by Continental, Franjo, Mistick, PJ Dick and Rycon. Also bidding is the 300-unit South Hills Village Apartments in Upper St. Clair. Mascaro, Mistick, Dynamic and Rycon are bidding the $43 million project. Massaro has been taking bids on its $85 million, 326-unit Empire project in Oakland. In the on deck circle are the first phases of the Riverfront apartments, being developed by NRP Group at the Buncher site in the Strip, and the Station Square West apartments that Forest City/Trammel Crow are proposing. Each is about 300 units. Given the scope of these projects, the apartments won’t hit the market until late 2017 or early 2018.
These 1,500 units are less than one-third of the 4,800 units in the design/development pipeline at the moment.
Plunging tax receipts, state budget disasters, PlanCon moratoriums and attempts at PlanCon reform have all been wet blankets on what was once a staple of the construction industry: the K-12 school market. What was once regularly a $300-$500 million/year opportunity fell to $100 million or less after the recession. The market is still very thin by historic standards but the return of big projects has made K-12 one of the growth sectors of 2016 thus far.
Throught the first three months of 2016, K-12 contracting volume is way up over 2015. At $146 million, contracting is more than ten times what it was in the first quarter of 2015.
Most of the volume in K-12 has come from just a few projects: the $67 million Thomas Jefferson High, $25 million South Fayette High and $34 million Ringgold Middle School jobs. The $25 million Chartiers Vally Middle School project is awaiting award of contracts and nnother $49 million Chartiers Valley High project is out-to-bid. Also bidding now is the $10 million Bentworth High and the new $22 million Rogers Elementary in Shaler is about to be released to bid.That’s $230 million from a half-dozen or so projects.
The problem for K-12 is those projects more or less make up the market in 2016. There will be other work but the total for 2016 will probably not top $300 million. With PlanCon effectively shut down the past year, there will be fewer projects on the street in 2017. That’s why prices have been dirty low, even in a K-12 bubble.
In project news, Mascaro was the low general on the re-bid of the $42.7 million Brush Creek Water Pollution Control Plant in Cranberry Township. Mascaro was also low on the first round and their bid of $35.9 million is expected to be awarded at the May 5 supervisors meeting. Franjo Construction was identified as the successful bidder on the 116-room Homewood Suites at the Village of Cranberry Woods. TBI Contracting is preparing to start work on n 80,000 sq. ft. and 45,000 sq. ft. two-building expansion of Callery Industrial Park.
Late last week there was word that Shell had put the Monaca cracker on hold until February 2017. The project was one of several affected by a corporate capital budget cut that will result in a slowdown of the construction of the project in Monaca. Contracts will go ahead for work that was bid but the schedule will slow to reduce the cash flow impact in 2016.