Some Construction News

Last week’s jobs data helped put a happier face on the state of the overall economy. The comments from a Shell executive about the signing of 10 third-party agreements for supply and product from the proposed ethane cracker also should add optimism to the business outlook in the region; however the bidding activity remains very light, even for June.

The highlight of this week’s bid board is the addition and renovation to the Fox Chapel Golf Club. FCGC has invited BRIDGES, Franjo, Jendoco, A. Martini & Co., Mascaro, MBM & Volpatt to bid the $6 million, 12,000 sq. ft. addition, which also includes a similar amount of renovation. MIllcraft is reportedly interviewing Mascaro, Massaro, PJ Dick, Mosites and Turner in follow-up to an RFP for the redevelopment of the former Saks Fifth Avenue site.

Harrison County Board of Education awarded Landau a $2.5 million contract for work at the Simpson Elementary. Volpatt Construction was selected to renovate the Hamburg Theater, the first phase of the City Theater’s $7 million capital project on the South Side. A. Martini & Co. was selected by Excela Healthcare to act as the design/build contractor for a $9 million renovation to Frick Hospital’s entrances. Work is beginning on the emergency entrance. Excela also gave Martini the green light to do site work and access road construction for its $20 million-plus new ambulatory center in Latrobe.

April Jobs Rebound

PA’s Dept. of Labor & Industry released employment data for April on May 28 and the results were surprisingly positive for Pittsburgh. Employers in the seven-county Pittsburgh region increased hiring by 22,300 jobs in April, and the unemployment rate declined from 5.8 to 5.6 percent. More encouraging was the fact that some 3,900 people were added to the ranks of those looking for jobs.

The number of people employed in the metro area also jumped 20,000 in April, reaching a new record high for employment in Pittsburgh. The note of caution in this good report is that the magnitude of the gain is probably a reflection of the pent up demand from the cold winter, rather than purely from economic growth. As an indicator of that, construction employers added 7,800 jobs or 35 percent of the total gain. It’s also worth noting that April saw larger than average increases in employment in 2012 and 2013 that weren’t maintained throughout the remaining months of those years.

Growth in the industrial and manufacturing sectors continue to be robust, both for jobs and for new construction. Chapman Properties has taken advantage of that growth and is starting work on two new smaller buildings of roughly 30,000 sq. ft. The developer is building for NOV Gas in its Leetsdale park and is getting the first building underway in the Chapman Commerce Park in Findlay with a building for RPC Tubing.

Also in the Parkway West, Continental/Chaska has leased up the third building in the Pittsburgh International Business Park and is doing early planning for another.

The new owners of the Parkway Center are promising major renovations of the shell buildings to upgrade those offices in Green Tree. Given the size of the buildings, such renovations should top $10 million, exclusive of any tenant improvements.

Ferchill Development is exploring an expansion of its Heinz Lofts to repurpose additional food storage space into more apartments. The developer is working with Marous Brothers in the early stages.

In bidding/contracting news, Trumbull was low on the $80 million Turnpike roadway and bridge work between the Hampton and Harmar exits. R. D. Stewart was successful on the $6.6 million Laurie Ann West Community Center in O’Hara Twp. Vendrick Construction was low on the $8.7 million Butler County Human Services Building. Poerio Construction will begin construction on a new 7,000 sq. ft. branch for PNC Financial Services in Murrysville.

CSX & Dick’s Moving Forward

A couple of major projects and a major lawsuit are in the news.

The PA Supreme Court ruled on April 17 that the lower courts were in error in ruling that the Bricklayer’s Pension Fund had standing to file a Mechanics Lien for the non-payment of obligations from a subcontractor. The case involved an insolvent masonry sub that owed pension payments that related to hours worked on specific projects. Although the owner – in this case Erie developer Scott Development – had no contract with the Bricklayer’s union, the Pension Fund had sought to assert lien rights to get the payments that the defunct masonry contractor owed. The Supreme Court ruled that the pension fund could not extend its relationship with the masonry contractor to assume the same rights to lien a property. The decision removes a level of uncertainty for project owners.

On a less convoluted front, two projects that had been previously announced are moving along in the process of hiring a contractor.

Fee proposals are being taken from Mascaro, PJ Dick and Walsh Construction for the expansion of Dick’s Sporting Goods. The project was announced last year as an expansion of at least 180,000 sq. ft.

CSX is prequalifying contractors for the first phase of the $50 million intermodal yard the company has proposed for the McKees Rocks/Stowe Township area. As many as a dozen heavy/highway contractors are involved in the pre-qualification, including local firms Brayman Construction, Joseph B. Fay, Lane, Mascaro, Mosites and Trumbull Corp., along with national contractors. CSX intends to short list and select later this spring.

Massaro was the low bidder on the WVU Law School renovation at $1,529,000. Lombardi Development bid $1,585,500; Mascaro bid $1,598,000; Volpatt was at $1,610,000 and Landau at $1,616,000.

More Project News

Some results and follow up to recent bids and request for proposals:

  • Jendoco was selected by Penn State for the $8 million Michael Baker Building at the Beaver Campus. Construction isn’t expected until 2015.
  • Pitt selected AIM Construction to renovate the Scaife Hall 7th floor labs in Oakland.
  • Facility Support Services was low on the $4 million Lawrence Hall classroom and auditorium renovation at Pitt.
  • Mascaro Construction was selected as CM for the $8 million Hamburg Hall renovation at Carnegie Mellon
  • Developer Wilstro Enterprises announced plans for a $5 million adaptive re-use of the former whiskey distillery on McKean Street near Station Square into the 13-unit Whiskey Barrel Flats condos. Sota Construction will do the work, which is expected to start in the fall.

Weather Dampens First Quarter

Buyers still outstrip sellers in the residential market but the first quarter totals for housing permits in metro Pittsburgh aren’t reflecting upward pressure on new construction, even with an increased number of new subdivisions coming on line.

Permits for new single-family detached homes totaled 409 from January through March in Allegheny, Beaver, Butler, Fayette, Washington and Westmoreland Counties. There were 228 units of attached and multi-family housing started during the same period. Most of those units were townhomes or other for sale property. Only 74 units of rental apartments got underway.

Totals for housing and nonresidential construction in 2004:1.
Totals for housing and nonresidential construction in 2004:1.

The brutal winter weather for construction made it difficult to generate new construction business; however, so it’s impossible to judge whether there has been an unexpected slowdown in the residential market or just a deferment of growing demand until spring and summer. My bet is definitely with the latter. The cold weather and snow kept traffic very light for all kinds of home shopping, according to the region’s leading realtors. Fewer home buyers toured new construction sites in winter 2014 compared to last year. Even those builders who reported having sales activity say that the construction for new contracts was delayed. More than 900 units of apartments are in for permit approvals in April so it’s possible that the catch up could occur by May or June.

Cold weather affected the start of nonresidential projects as well, but the impact was more muted. The nonresidential segment of the market is predominantly renovation work, so weather has less impact. In fact, for the first quarter of 2014 contracting rose slightly, up 2.5 percent to $491.2 million.

After a brisker March, bidding has fallen off steeply in April. The $29 million Freeport Middle School is out to bid, due May 9. Contractor PJ Dick will be bidding a couple of the projects it landed in 2013: the packages for the $34 million Eastside Transit Center and the new office 216,000 sq. ft. building at Bakery Square 2.0.

Contractors Getting More Optimistic-ish

The Master Builders’ Association announced its Commercial Contractors’ Condition Index (C3) on April 10 and the results were a bit surprising given the winter slowdown. Using a 4.0 grade point system, the MBA contractors gave the industry a solid ‘C’ grade of 2.12. That’s the highest quarterly grade in the two-year history of the C3 Index. View the press release at:

The drags on the index were the lower backlog levels and the lower sentiment about the current business conditions – including low margins. Pushing the grade up from the previous quarters was the increased bidding activity during the past 60 days. My experience is that most contractors tend to judge how things are going by how busy their bid board is and this quarter seems to confirm that suspicion. Several contractors even expressed that they were being more selective in what they were bidding.

One mini-segment of the market that is seeing a boom is the food storage/logistics industry. Gordon Foods is under construction on its 450,000+ sq. ft. warehouse in the Findlay Business Park. As we reported recently, Paragon Foods is taking design/build proposals for a $12 million warehouse in Lawrenceville. And Aldi’s is going through the approval process on a 110,000 sq. ft. expansion of its warehouse at the Victory Business Park in Saxonburg. A. M. King from Charlotte, NC will build that project.

To follow some other projects that recently took proposals, Sewickley Porsche hired A. Martini for its dealership addition; Baker Hughes also selected Martini to handle the expansion of its Clarksburg, WV facility; Ohio Valley Hospital awarded Franjo Construction the contract for renovations to its Hattman Building.

Amazon is Looking

The Pittsburgh Regional Alliance held its annual “Winsday” luncheon March 26 and announced that the number of expansion or new business “wins” in 2013 rose 12% to 302. The PRA looks at capital expenditures and development that results in a new business starting or attracted to the region or an expansion. Within the various business sectors, manufacturing had the most wins, 65 compared to 59 in 2012. The information technology sector was second, with a leap to 51 wins vs. 33 in 2012.

There are a couple of big commercial real estate projects happening. Master developer Buncher Co. is looking to qualify apartment developers to handle the construction of the first residential portion of its riverfront project in the Strip District. The first 100 units or more will be developed at the 21st Street access point to the site. Online retailer Amazon is reportedly looking for 250,000 sq. ft. for later in 2014. Amazon’s requirements will limit the number of opportunities available in Pittsburgh but the more interesting note about its entry into the market is the potential for growth. If Amazon grows its fulfillment/logistics needs as it has in other regions, a facility that is three or four times as large should be expected inside five years.

In the competitive bid market, one interesting project out this week is a major mechanical/electrical infrastructure project at Verizon’s Seventh Street office Downtown. The complete list of invited contractors and subcontractors on the roughly $20 million project is at the Builders Exchange but the generals invited are Allegheny, Burchick, Jendoco & Martini. Paragon Foods is taking design-build proposals for a $12 million cold storage warehouse in Lawrenceville.

UPMC selected PJ Dick as the contractor for the deconstruction of the old Childrens Hospital. PJ was also reportedly selected as CM for the Tepper School but Carnegie Mellon has made no announcement.

Tying Up Loose Ends for the Week

The two national construction reporting services reported unsurprising data on starts in February this week. With slightly more weather disruption than in January, February was a difficult month for construction. Both Reed Construction Data and McGraw-Hill reported construction down 3% from January and from February 2013.

Locally, Massaro Corp. succeeded in landing a pair of projects that had been requesting proposals a week or so ago. Carlow chose Massaro for its $11.8 million expansion and UPMC awarded the company the enabling work at the old Children’s Hospital/Presbyterian Hospital site. Massaro and PJ Dick are the finalists for the deconstruction of the remaining piece of Children’s.

Projects Are Blooming

With spring 24 hours away, there is finally some action on some of the construction projects that have been bid over the past few busy weeks.

The colleges are leading the way, lining up work for the summer break. Turner appears to be the successful bidder on Duquesne’s $4.5 million Black Box Theater addition to the Pappert School of Music. TEDCO is the successful bidder on Pitt’s $4 million Chevron Science Center 13th floor renovation. Grove City College selected Landau as the contractor for the $1million MAP West Hall renovation.

Mascaro Construction was the low bidder on the $16.8 million renovations to Building 770 at the WV Regional Tech Park in South Charleston. And Village Green has finally identified Rycon as low bidder on its $30 million Morrow Park City apartments in Shadyside.

A. Martini & Co. was awarded two jobs: selected as the CM for the first phase of Crown Communications new $20 million campus as Southpointe and for the new $7.5 million Connected Health building in Wexford.

Final Thoughts – Week of March 10

This was a slower week in the news but according to estimators around the region, bidding remains brisk. Interviews are today for the CM role for the new Tepper Business School at CMU. Carlow is taking proposals for a +/- $12 million expansion from Jendoco, Martini, Mascaro, Massaro and PJ Dick. Excela has requested design/build proposals from Martini and MBM for a renovation at Frick Hospital to create a medical mall-type space to the $8 million Excela Square.

This morning’s Post-Gazette has a story about Shell’s continued efforts to focus its capital expenditures. The article implies that the efforts make the ethane cracker decision less certain but offers little support for the theory. The basis of the story seems to be Shell’s CEO comments about the company. Shell is publicly traded so you have to read any public CEO’s comments through that prism. The concern he expressed was about their dry gas assets in the Marcellus. The ethane supply for the cracker has been proven from the wet gas deposits here in western PA and the Utica Shale formation, which is very accessible in Beaver and Lawrence Counties. There’s still plenty of wiggle room for Shell to opt out or defer but the activity – particularly the assemblage of adjacent properties that have been purchased by the energy giant – suggests that dirt will be moving this year.