Category: Construction news

Involta, NRG Energy Plant Move Ahead

Iowa-based Involta announced the groundbreaking for its new 40,000 square foot data center to be built in the Northpointe Business Park in Armstrong County. The center will be anchored by UPMC, which has been pursuing a variety of constructoin or leasing options for data center over the past year or so. The design and construction will be handled by Rinderknecht & Associates from Cedar Rapids.

Bids will be taken on Wednesday, Oct. 19 for the new $60-70 million district energy plant being developed by NRG to serve PPG Paints Arena, Mercy Hospital and the Uptown/Lower Hill neighborhood. The bidders are Mascaro, PJ Dick, Stevens and Frank Lill & Sons.

Cannon Design’s construction management group landed the CM contract for Grove City Area School District’s $29 million addition and renovation (about 79,000 square feet of each) at the Hillview Elementary School. Eckles Group is doing the design.

UPMC Stays Active

After reducing capital spending on construction somewhat during the past two years, UPMC is revving back up. This week AIM Construction was selected to do the construction management for the $30 million Presbyterian Hospital HVI project. UPMC also awarded a contract to Massaro Corp. for the $5 million renovation to one patient floor, 5G at Presbyterian Hospital. Turner Construction was awarded a $2.3 million contract for renovations to the HVI unit at UPMC Passavant. Another renovation project, the $6.5 million Hill Building went out to bid to Massaro, Mascaro, Landau, Rycon, Gilbane, AIM, & Turner.

In other hospital construction news, Wheeling Hospital is working through value engineering with Landau and Volpatt on its $20 million-plus continuing care unit.

Today’s jobs report suggests that the US economy continues to expand. Employers added 156,000 jobs in September. The Bureau of Labor Statistics revised the July numbers downward to 252,000 and the August numbers upward to 167,000. More important than the headline numbers is the improvements in the underlying workforce. Wages rose 2.6% year-over-year; hours worked were up again; and 444,000 people were added to the labor pool, which pushed unemployment back up to 5%. Since last September, over three million more people have joined the workforce. That’s nearly triple the 1.2 million who were added through immigration, although still not enough to offset retirements.

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MBA President Steve Massaro (4th from left) addresses the crowd gathered to celebrate the 10th anniversary of BreakingGround on Oct. 6.

Better Economic News

This morning’s report from the Bureau of Labor Statistics (BLS) showed employers added 255,000 jobs in June, growth that was almost 50% higher than expected. Adding to the good news was an upward revision of the June growth to 292,000 and May’s to 24,000 from 11,000. BLS also reported that 400,000 more people joined the workforce, which left the unemployment rate at 4.9%. Wages maintained the 2.6% growth rate year-over-year.

BAsed on the July estimate, the U.S. economy added an average of 182,000 jobs per month through the first seven months of 2016 and 202,000 monthly since July 2015.

The growth of jobs doesn’t immediately jibe with the fact that GDP growth seems stuck below 2% over the past six to nine months; however, when you consider that productivity growth has actually fallen during that time, the added payrolls make sense. During recessions people work more hours for the same pay, either out of fear for their jobs or because their employer cuts staff. Productivity drops as the economy recovers, especially as oppoprtunities to leave overworked positions arise.

All this is good news if you are an employee, especially when you consider that wages are probably still on a rising trajectory. The dark cloud in that silver lining is the reality that upward wage pressure – espeially when significant numbers of unemployed are rejoining the workforce – signals the end of slack in the economy. Recessions don’t necessarily follow these kinds of developments but a recovery like this one is getting long in the tooth.

Construction news is slow in August and this year is no exception. Nonresidential starts topped $2.8 billion through July and the forecast of $3.4 billion for the full year looks conservative at this point. Westmoreland Community College selected Turner Construction as CM-Agent for its $42 million campus expansion program. In a surprising move, Carnegie Mellon pulled the plug – at least for now – on its 425,000 square foot Gateway Project.

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.

June Jobs: Not Such a Surprise

Friday’s June jobs report was not the surprise that business media made it to be. Employers added 287,000 new hires in June, according to the Bureau of Labor Statistics, which was well above the 175,000 consensus estimate, but the long-term trend is a strong one and the big jump in June was merely a reversion to the mean. It’s also not a surprise that the trend continues to move lower as economic expansion reaches its eighth year.
Within the report were two noteworthy items. First, the categories of employment that grew the most were higher-paying sectors like IT, education and health services and professional services. Second was the continued growth in wages. Pegged only one-tenth percent higher in June compared to May, wages were nonetheless 2.6 percent higher year-over-year. That represents healthy growth over price inflation and a steady – if unspectacular – trend upward over the past year.
job creation history
In project news, Turner Construction was selected by the RIDC to perform preconstruction services for a 65,000 square foot commercial building planned for Almono in Hazelwood. Dick Building Co. was awarded the 104-room, $12 million Hotel Indigo proposed for Second Avenue.

Some Small Project Updates

Tuesday’s bid results for the new playing fields at Pitt’s Trees Hall were very tight. The bids were for the largest piece of the $12.5 million upgrade. The 3 lowest bids were:

Mosites:    $8,377,222

PJ Dick:    $8,400,000

Mascaro:    $8,495,000

City Works Restaurant was awarded to A. Martini & Co. The $2.5 million buildout will take 10,750 square feet in 2 PPG Place. Martini was also successful in landing the $2.2 million tenant improvement for Eckert Seamans, which is renewing its lease for 89,500 square feet in USSteel Tower.

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Massaro Corp. broke ground last week on the $13.7 million UPMC Hampton ambulatory center. Photo courtesy IKM Inc.

RIDC is in the process of selecting a pre-construction manager to help with the planning of its 65,000 square foot first building at Almono in Hazelwood. Vertical construction won’t occur until late 2016 or 2017.

 

 

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.

Milhaus, ANSYS, Shell Making News

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.

 

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.