Category: Regional construction

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.

11802358_6_img_5557
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.

Could It Be Amazon?

A trip by the airport yesterday revealed a major dust cloud pluming up from the Chapman Westport development. After stopping by the project site, I found a massive excavation job being undertaken. A little digging around at Findlay Township’s offices uncovered applications by Chapman Properties for four items to be acted upon at the July 26 planning commission meeting. Those actions included the subdivision of 427.4 acres, including the creation of an 84.6 acre parcel, labeled Parcel A. There is also the application for approval of a land development on that parcel that involves construction of a 1,015,740 square foot warehouse/office, along with a 48,000 square foot building on another parcel.

That’s not a typo. There are two commas in that warehouse square footage.

Last week’s Pittsburgh 2Q2016 Industrial Market Report by Newmark Grubb Knight Frank alluded to a million square foot user in the market without naming the company. It would seem that user has landed. Tony Rosenberger, Chapman’s president, politely acknowledged that Chapman was planning a 48,000 square foot spec building – known as 110 Building – and that Foley Excavating was doing a major dirt job to prepare for the expansion of the Westport park. Beyond that, he had no comment on the construction or the applications to Findlay Township. Of course, I would have been shocked if he had.

There aren’t that many million-square-foot users out there. Civic leaders have speculated about those kinds of companies following the Shell cracker as downstream manufacturers; but with the plant’s opening date set for “early next decade,” it seems unlikely that a related plant would be getting underway now. The proximity of the site to GE Plastic’s new facility gets the imagination spinning but, again, it seems unlikely that GE could have created enough economic activity in six months to have spawned a million-square-foot neighbor. The most likely user at Westport is Amazon, especially since Dick’s Sporting Goods announced today that it was building its big distribution center in Conklin, NY.

When Amazon signed the lease for 250,000 square feet in Crafton back in Summer 2014, logistics experts talked about the “Amazon effect” that would attract other big distribution and fulfillment companies. But at the time, the brokerage community talked about the deal as being a search for 250,000 to 300,000 sqaure feet with future need for a million or more. That’s the size that is typically associated with Amazon Robotics’ fulfillment centers, which employ as many as 1,000 people.

Perhaps the end user will be revealed at the Findlay Township planning commission meeting, although that wouldn’t be necessary for the review or approval. In some ways, it could be even better if it’s another big company, since it would make Pittsburgh that much more attractive to kindred businesses. Chances are it won’t be a secret long.

Optimism Returns

Yesterday I was on a panel speaking about the impact of the Shell cracker project on the regional construction industry at the Northeast Petrochem Conference in Pittsburgh. It was very interesting to see how another industry is reacting to the project. Construction and real estate players have been awaiting the final investment decision for at least a year but it turns out so have all the players in the petrochem industry. Shell Chemical’s exec in charge of the Appalchian region, Ate Visser, spoke about an hour before our panel. Let’s just say the room cleared out quite a bit after he finished.

What we learned from Visser was actually nothing really new. He mainly used the time to speak about the lag between the FID three weeks ago and the start of construction. From what I could tell, the delay won’t actually stop construction at the site but will slow down the execution of contracts already in place and extend the preliminary work being done.

The most interesting presentation was from a process engineer who explained a lot of chemical details about the cracker to a glazed-over crowd. The upshot was that he predicts there will be another intermediate chemical processing plant or two built in the region, the kind that takes the byproduct chemicals that aren’t converted to polyethylene or other plastics. His estimate of these kinds of plants was in the $4-5 billion range.

Even without factoring in another petrochemical plant, here’s how the Shell project is showing up in my intermediate forecast:

nonres forecast chart

All of the talk of the petrochem opportunities left the attendees in a real upbeat mood. They aren’t the only ones apparently. The MBA pre-released its Commercial Contractors Condition Index for the second quarter, which was above 2.5 (out of 4) for the first time in its four-year history. The big driver was a huge jump in optimism about business projections for the coming year. Don’t think that is a coincidence, following just a week or two after Shell’s announcement. The better news out of the C3 Index was that the backlog reading was up significantly too.

The Shell Game

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.

Catching Up with Work Underway

There is a noticeable lull in bidding – not out of character with Memorial Day – and prospects are for a slow summer before a promising run up to 2017 later this year. Election year uncertainty seems to be setting decisions back but architects and engineers remain very busy. Until that backlog of designed projects breaks free, work will be potential rather than backlog.

Following up some of the projects that recently bid, Chartiers Enterprises awarded MBM Contrcting the contract for the new $2.5 million facility for Atlas Wholesale in Carnegie. Pitt selected Allegheny Construction Group for renovations to Cost Sports Center, part of a $5.3 million program. Al Neyer Inc. is building a 20,000 square foot addition to DeBro America at the California Technology Park.

Groundbreaking May 25
Groundbreaking was held by Eden Christian Academy for its new 25,000 square foot classroom building being built by BRIDGES & Co. in Ohio Township.

UPMC is reported to be working with Massaro Corp. and Rycon Construction to select the contractor for the new $12 million Hampton Ambulatory Care Center. Mosites Construction is preparing to start work on a $7.5 million expansion of St. Alexis Church & Catholic School in Wexford. Jendoco Construction is working on the budget for the $3.5 million addition to Desmone Architects office in Doughboy Square.

Hotel Projects Continue to Proceed

Another sector of the market making lenders nervous is hospitality. Here again, the news isn’t taking hold in Pittsburgh. Alphabet City owner Tony Dolan has taken a plan to the city to add five stories to a building on Reedsdale Street to create a 130-room hotel. Just a few blocks away, Matthew Shollar is proposing to convert the former Burns White building on Isabella Street into a hotel. Both of those sites are just a few blocks from where Oktober Development is planning to convert the former ARC Building into hotel use.

Across the Allegheny River, new boutique hotels at the former Kaufmann’s flagship store – also planned by Shollar – and at the Granite Building are stuck on financing. It will be interesting to see if either, or any of those proposed for the North Side, get enough lender or investor interest to come to fruition.

The pace of suburban hospitality projects has slowed but in Cranberry, the construction still goes on. With the Marriott Town Place topping off in Cranberry Springs, Summit Development and Nittany Cranberry Inn LP have proposed a 101-room Best Western at the site. Bear Construction will build the project. Creative Real Estate is hammering out final details with Franjo Construction for the proposed 116-room Homewood Suites to be built at the Village of Cranberry Woods near Franklin Road. The 124-room Wood Spring Suites hotel is well under construction in the township as well.

In other project news, Volpatt Construction was awarded a $2 million contract to renovate St. Peter Parish on the North Side. The Exel Logistics/Wesex Construction team is about to start construction on a 260,000 square foot warehouse for Phillips Respironics in East Huntingdon Twp. near New Stanton. Berlin Packaging is reported to be near an agreement to lease all of the 250,000 square foot spec warehouse that Al Neyer is developing at Clinton Commerce Park in Findlay Twp.

 

Changes at AHN Slow Construction

The new administration at Allegheny Health Network has put a number of projects that had been out for proposal on hold at least temporarily. As many as a dozen projects at AHN facilities, including Forbes Regional, Allegheny General, West Penn, Allegheny Valley and Jefferson Hospital, as well as some medical office buildings, were being priced but most have not proceeded. Interviews for the $20 million NICU project at West Penn – which received a $9.1 RACP grant – have not occurred, although the project is reported to be going ahead. With new CEO Cynthia Hundorfean taking the reins in February, it’s not surprising that capital spending would be evaluated. It’s unfortunate for the construction market that the evaluation comes when there was a meaningful flurry of activity.

The Benter Foundation selected Jendoco Construction as contractor for the $3 million renovation of its offices in the Benedum Tree Building. The design/build team of Mascaro/R3A was selected to do the second pahse of the work at The Program for Offendors. The project is the expansion of into another roughly 60,000 sq. ft. of the former Keystone Plumbing Building in Homestead to accomodate about 230 beds for female offendors. MBM Contracting was awarded the $1 million Canonsburg Hospital nursing unit renovation. CMU is taking CM proposals on the Tata Consulting Services Building (TCS) from MAscaro, Mosites, PJ Dick, Rycon and Turner; aand architectural proposals from Skidmore Owings Merrill, SHoP and Bohlin Cywinski Jackson. RIDC is interviewing Volpatt, Franjo and A. Martini & Co. for the 65,000 sq. ft. new Lawrenceville Technology Center. That’s the $12 million new center for robotics research that will further accelerate the research on robotics and automated vehicles that is going on in conjunction with CMU and private companies like Uber, Google, Ford and Tesla.

Wrapping Up the Week

There was news this week about the new UPMC South hospital being proposed. The new 300,000 square foot, $100 million+ hospital will be located off Route 51 on Lindsay-Snyder Drive in Pleasant Hills. UPMC is going through the process of getting zoning approvals and having CannonDesign begin drawings. The process of getting a CM on board will take place after the approval process is finalized.

Burchick Construction was chosen for the $3 million buildout for Oculus at Schenley Place. Winco Development hired Massaro Design Build for its new Route 28 North Business Park, which will have 3 buildings totaling 141,100 sq. ft. in phase 1. The $26 million Chartiers Valley Middle School went out to bid, due February 24. Allegheny Health Network has a number of projects out for CM proposals, including the $9 million NICU at West Penn Hospital. RIDC has asked A. Martini & Co., Franjo and Volpatt to submit proposals for the new 65,000 sq. ft. building at the Lawrenceville Technology Center. The Betner Foundation is taking final proposals and interviewing Jendoco and A. Martini next week for its $3 million buildout at the Benedum Trees Building.

Low Bids on Thomas Jefferson

Continuing the trend seen at South Fayette and several other public projects over the past few months, bids on the new Thomas Jefferson High School came in substantially under the published budget last week. Nello Construction was the low bidder on the largest contract, the $42 million general construction. According to the PA Builders Exchange, the other low bids were:

HVAC:  Ruthrauff/Sauer – $8,600,000

Plumbing:  A. J. Demor & Sons – $3,259,000

Electrical:  Kirby Electric – $8,380,000

Fire protection:  Preferred Fire Protection – $915,000

Food Service Equipment:  Commercial Appliance – $769,862

The $63.9 million total was more than $12 million under the budget that was approved at West Jefferson Hills School District’s Act 34 hearing. That gives the district room to put alternates in place that might add more value to the project. The competitive price also allays the fears of those concerned that the school district’s Project Labor Agreement would limit competition. While the PLA clearly kept some non-union K-12 bidders from competing, the market conditions more than made up for any limited bidding. School districts and government agencies that can get projects to the street over the next 60 days are likely to find similar bidding conditions. With labor trending tighter as 2016 proceeds, market conditions are likely to shift significantly as the spring unfolds.

In private sector news, Carnegie Mellon made a quick decision, choosing Rycon Construction on Friday as construction mgr. for its $13 million Hamerschlag Hall Maker project. The finished space will allow innovative ideas to be fabricated within a few hundred yards from where the innovators are doing their research and development, using 3-D printing to fabricate new products. CMU will be putting the new 40,000 square foot Tata Consulting Services Building out for CM proposals later this week. Excavation for the $107 million Tepper Quad has been ongoing for about a month. PJ Dick should be ready to take bids on the main packages for Tepper later this spring.

Turner started work before the year ended on the new 54,000 sq. ft. space for JLL in the Tower Two-Sixty office tower that Millcraft Investments is completing. Massaro has started construction on the $20 million, 144-room Residence Inn in Oakland. PJ Dick is taking bids on the first phase of the Mill at Second Avenue apartments that Walnut Capital is developing.