Has the Market Turned Again Already?

Just as the summer slowdown had convinced all of us that the potential for a recovery in construction in 2012 was lost, there is an upswing in the contracting market heading into the Labor Day holiday. It seems way more likely that this is a last-minute flurry to get projects underway before the weather turns than a shift in the market but for now it’s a welcome change.

What makes me optimistic is that the commercial developers are behind some of the work and as a group, they are seeming more optimistic about 2013. Developers are positive thinkers by nature – no matter how much they grouse about conditions – but this shift is probably coming from the continued increase in leasing activity and interest from users of all shapes and sizes. Again, these conditions have existed all year without signaling a new building cycle so this may be a fleeting phenomenon. For the short-term it is at least better to have a temporary uptick than none at all.

Among the bigger projects making progress, Bakery Square II received word of a $2 million grant to assist with infrastructure, etc. in its East Liberty/Shadyside development. There are other state and federal monies in the pipeline that will be needed to close the gap on the $120 million mixed-use project but the developers still hope to break ground in 2013. UPMC selected PJ Dick to build its $35 million sports medicine facility and Penguins practice arena in Cranberry Twp.  Martini was awarded two facilities at Excela in Greensburg and Latrobe that will be more than 250,000 sq. ft. And Horizon Properties put out the retail Building 100 at Southpointe Town Center, a $15 million, 120,000 sq. ft. project. The bidders invited are BRIDGES, Continental, Franjo, Nello, Neyer, PJ Dick and Rycon, a somewhat mixed list.

Similarly mixed lists exist for a couple of $ million jobs, the new Salvation Army facility (BRIDGES, Continental, Rycon, Sota) and the 430 Shady Avenue residences (BRIDGES, Franjo, Martini, Nello). Also in the $2-$4 million range are bids for the Heart/Vascular Center at UPMC Passavant and the shell space for Aquion Energy, a 300,000 sq. ft. leasehold for RIDC at the former Sony plant in New Stanton.

Construction opportunities in the public sector are dwindling or smaller. Several good opportunities are about to hit the streets at WVU or its hospital, including two $30 million projects for which contractors recently pre-qualified. Landau was the low bidder on the $10.9 million Law Building at WVU, with Massaro at $11.3 million and Yarborough at $11.5 million. There are several other smaller projects at other West Virginia colleges out as well. Here in the Pittsburgh market, the re-bid of the $35 million Laurel Highlands school is the only public highlight at the moment.

Election season starts in earnest after Labor Day. If the uncertainty of the outcome has been hindering investment, things shouldn’t pick up much more before November and the year will be shot. Sometimes the drone of negativity, like has been the backdrop all year from politicians, can get to be white noise that developers drown out. If that is the case there may be the fourth quarter surge that will lift backlogs. That would be a welcome development but not one I’d bet on just yet.

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