The bidding activity to kick off 2017 has not been spectacular but there are more projects going out than at this time last year. More importantly, there are more projects getting underway or being awarded than at the same time in 2016. Without any building permit research for 2017 yet there are already nearly $200 million in starts or contracts awarded, an indication that January’s volume will far exceed that of the past few years. The key to a strong 2017 will be that owners maintain this newfound level of economic confidence and keep the flow of projects coming. The stop-and-start nature of 2016 – particularly the lull in late spring and post-Labor Day – played havoc with contracting businesses last year.

The industrial sector of the market continues to shine. Construction has started on an 80,000 sq. ft. warehouse that Buncher is building in Findlay Industrial Park. Chapman Properties is starting work in its 74,000 sq. ft. flex building at 110 South Campus Drive at Chapman Westport. Al Neyer Inc. is close to a deal for a 200,000 sq. ft. warehouse in Jackson Township, north of Cranberry. Castlebrook Development is edging forward with plans for 900,000 sq. ft. of distribution near the I-376 and PA Turnpike interchange in Beaver County. Much of this spec activity is being driven by the expansion of retail fulfillment services (e.g. Amazon, Zappos, etc.) into the Pittsburgh market.

There is real momentum for healthcare construction also. UPMC has asked for architectural proposals for its proposed 200,000 sq. ft. ophthalmology building at the UPMC Mercy campus. The hospital has not announced its decision about its South Hills expansion but is reported to be looking at two separate developments, one near the site announced earlier in the Pleasant Hills/Route 51 corridor and one near its Children’s Hospital south satellite in South Fayette. Most of the hospital projects being contemplated will have little construction impact in 2017, although contracting in the fourth quarter should be robust.

And the news in the Downtown office market continues to be good. Citizens Bank announced that it will be staying put in 525 William Penn Place and sees the location as a growth driver. The company’s 150,000 sq. ft. lease was seen as a source of anxiety by the commercial real estate community as recently as last year. Cleveland-based Stark Enterprises announced that it had agreed to buy the former Frank & Seder store building (AKA 441 Smithfield Street) from Oxford Development, thus ending the plans for a 28-story new office at 350 Fifth Ave. The transaction continues the trend of purchases in the Central Business District by companies from outside Pittsburgh.