Category: Construction news

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.

Corrections for a Bad Day

In the BreakingNews email blast yesterday there were several glaring errors or confusions that should be corrected. Sometimes the desire to get news out means having less details than you’d like but that was pretty sloppy. My apologies.

There are actually six contractors competing for the CM role at RIDC’s 65,000 sq. ft. robotics research facility in Lawrenceville. In addition to Volpatt, A. Martini and Franjo, proposals will be taken by Landau, Continental and TBI Contracting tomorrow. West Penn’s $20 million NICU project has not moved past the proposal submissions from Jan. 27. Some half-dozen contractors submitted proposals, including A. Martini, PJ Dick, Mascaro, Massaro and Turner. No word on the next step. The Tata Consulting Services building proposals were just going out to CM’s; the wording in the email sounded like CMU was taking proposals yesterday.

 

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.

Oxford Makes More News

Oxford Development closed today on the sales of its 1.1 million square foot flagship office, One Oxford Centre in downtown Pittsburgh. San Francisco-based Shorenstein Properties is the new owner of One Oxford, which should expect to see some significant renovations during the next year or so.

One Oxford Centre - 01The sale brings back the memory of one of the biggest gambles taken on commercial real estate in Pittsburgh. When Eddie Lewis pushed ahead with construction of One Oxford in 1980, the project was 100% speculative. The building opened at the end of a deep national recession and the beginning of the collapse of steel manufacturing in Western PA. It was a tribute to Lewis’ optimism and tenacity that the project succeeded. Many developers in other cities met with disaster on similar projects at that time.

Oxford is in the midst of a flood of development activity in Pittsburgh as 2016 begins. Construction on the Hub at 3 Crossings is about to begin as work is well underway on the 2555 Smallman Street office building.

The developer selected A. Martini & Co. this week as contractor for its 99-unit Craft Place Apartments in Oakland.

What I Saw in Monaca

One of the disappointments of 2015 for the construction and development business was Shell’s further deferral of a decision to proceed with the investment in an ethane cracker in Monaca. The final decision was long rumored to have been made in December, pending final approval from board or shareholders or someone. It now looks as though no announcement will come before April (and several involved with the job don’t expect anything prior to June); however, if all jobs on hold were as active as this, construction would be a very lucrative business.

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This is what I saw from Route 18 on a gloomy January 13 trip past the site. A photo can’t begin to represent just how much that half-mile stretch of riverfront and hill side has changed over the past year. For those unfamiliar with Frankfort Road, the area to the right of the road pictured above rose steeply until the Mascaro/Trumbull Energy Services team began moving 7 million yards of dirt. You can get some idea of the change by focusing on the small area of existing hillside that remains to the right of the car in the photo. What isn’t shown is the massive site to the north (left) of Route 18 where the plant will be built. The other important piece of information not captured is the beginning of the site work at the I-376 interchange just a few hundred yards ahead. Or the 200-plus cars parked in the workers’ lot.

As I’ve been tipped off about the project, the relocation of Route 18 has been the key milepost for which I was told to watch. That I-376 interchange work is a sign that the highway work is imminent. Corporate realities may be keeping Shell from announcing or deciding to green light the project but the activity suggests very strongly that it will. In Potter Township, officials say that Shell and its EPC’s are still coming in with new work and they speculate that April is when they will hear for sure. I’m getting numb to the speculation by this time but I can say that a trip to Monaca will renew your optimism about the prospects of the project.

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.

First Look at 2015 Results

With permit data collected for 11 months and most of the bidding follow up done, we’re estimating that the nonresidential contracting for 2015 will be up significantly, from $2.69 billion in 2014 to $3.31 billion for 2015. The biggest chunk in that gain was in heavy industrial projects. Even with a depressed gas price and downsizing in that sector, there were still hundreds of millions spent in processing and infrastructure.

Housing construction came in surprisingly close to the activity in 2014, closer than any year going back to 1995. The total number of dwelling units (new construction only) should come in right around 5,000, with more than half of those being apartments and less than 40% being single-family detached homes.

Architectural backlogs remain high, an indication that 2016 should be on a par with 2015. No announcement about the Shell project appears to be happening soon – with rumors that the decision is being delayed another six months. That may slow some of the commercial market west of town, as may the rising vacancy numbers in the south and west suburbs. Recent federal budget action will be good for the heavy and highway sector, which should see more than $2.5 billion bid and see more even distribution of projects bidding during the year.

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State College High Under Budget

The long-awaited State College High School project bid Wednesday afternoon and came in under Massaro CM Services’ budget at $116,996,100. Lobar Construction from Mechanicsburg was the low general at $70,755,000. Most of the low bidders were from the Lancaster/Harrisburg area with only Bob Biter Electric as a local contractor that was a low bidder. Few Pittsburgh area firms bid the job and those bids were 10% or more above the low bid. See the full results.

The project is likely to be the biggest K-12 project in the state for a while and the bidding showed that. Bidding on Thomas Jefferson High School will present an interesting counterpoint to see how aggressively the school builders bid that $76.3 million job in mid-January.

Also in State College, Clayco has the first phase of the $173 million East Residence Halls renovation and new North Residence Hall out to bid, due Dec. 22. View details at the PBX.

In contracting news, Continental Building Systems was awarded the $8.5 million Fairfield Inn & Suites at McCandless Crossing. DGA Construction started work on the $20 million, 149-unit Cosmopolitan Apartments by Ross Park Mall. There is no confirmation from any parties involved but it’s reported that the Mascaro/Trumbull Energy Services/PJ Dick team will build the 900+-car parking garage at the Monaca cracker, should the project proceed.

Rumors about the cracker continue to circulate. Within the past three days I’ve been told that announcement will be made Dec. 10, Dec. 14 and at least 90 days from now. Shell’s word on progress is that evaluation continues with no schedule for an announcement. The mystery continues.

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(Left) Lou Gilberti from the Carpenters, Seubert’s Jay Black and Burchick’s Dave Meuschke mingle at the MBA’s Excellence Awards nominee event.

The Master Builders’ announced the nominees for its 2015 Building Excellence Awards at an event on Nov. 18. You can read about the projects here. Winners will be announced at the Feb. 25 Evening of Excellence.

Bidding a Project the Right Way

On Nov. 18, the West Jefferson Hills School District board will authorize the bidding of their $76.3 million new high school. The school district, architect and construction mgr. have created a schedule and bidding method that really makes sense. For that reason it stands out in our industry.

First, the documents are set to be available the day after the board approves the bid date. Second, the bid date will be Jan. 12, meaning the owner isn’t expecting that the industry will ignore the holidays to bid its job. But beyond the reasonable lead time, the architect and CM have set a pre-bid meeting for Dec. 8 and asked for all RFI’s by Dec. 16. That gives bidders two weeks (plus the Thanksgiving holiday) to review the documents before the pre-bid, then allows another week for RFI’s. The architect has committed to reply to all RFI’s by Dec. 29, meaning that the major addenda will be issued two weeks before bid date. That also means that answers will be waiting for contractors once they return from the holiday downtime.

This project was going to get everyone’s full attention regardless of how smoothly the bidding process went but showing respect for the industry’s time during this time of year is extraordinary and should yield dividends down the road. Let’s hope other owners follow the example.

A sidebar discussion at the Allegheny Conference’s commercial real estate luncheon Friday yielded news that Oliver Hatcher Construction had started work on the 316,000 sq. ft. spec warehouse for Ashley Capital Group at the FIP.20151113_105213_resized Buncher should be starting work on an 82,000 sq. ft. warehouse at Findlay Industrial Park sometime later this winter

The park’s developer, Imperial Land Co. said that there were other users interested in lots at the park, as well as at smaller sites in Imperial Land’s new Westport Woods. The entry road for that is shown on the photo at left.

Continental Building Systems has started construction on the next flex office at Pittsburgh International Business Park, a 62,000 sq. ft. fifth building branded as Building 400. Continental was also selected to build the retail shops at the Siena at St. Clair. The 87,000 sq. ft. building will house the complementary retailers at the center anchored by Whole Foods.

Apartment Market Insight

Thursday morning’s joint NAIOP Pittsburgh/Master Builders’ Association program on the hot multi-family market was surprisingly informative. Surprising because there has already been so much talk about the apartment market that I didn’t expect anything new. The panelists – Oxford’s Steve Guy, IRR’s Paul Griffith, First Niagara’s Kris Volpatti and PJ Dick’s Eric Pascucci – lived up to expectations, however, and gave some different insight.

Pascucci provided a better look at what drives costs on multi-family projects and offered suggestions for planning so that developers could meet the critical June 1 shopping date. Volpatti and Griffith gave an inside look at what makes lenders and appraisers happy – and nervous. These two were especially helpful in looking out at the 3,900 units coming online in 2016-2017 to forecast some rent softening until absorption caught up.

Steve Guy talked about Oxford’s appetite for developing apartments based upon some very stark changes in demographics and renter preferences that they had observed after the housing crisis. Guy especially stressed the strong demand in the urban core and fringe. He also noted that while lenders may be growing more cautious, there was no shortage of investors anxious to add equity to an apartment deal.

Lots of comments followed the program. Perhaps the most interesting was from Chapman’s Steve Thomas, who said he came into the program thinking his company should build some more apartments and left feeling he should sell the ones he owns.

Panelists (left-to-right) Kris Volpatti, Steve Guy, Paul Griffith and Eric Pascucci.
Panelists (left-to-right) Kris Volpatti, Steve Guy, Paul Griffith and Eric Pascucci.

Some project news: Trumbull Corp. was awarded the $164 million CSVT Bridge in Union County. Black & Veatch was selected as EPC contractor for the new $500 million Tenaska Westmoreland plant in South Huntingdon Twp. Fort Willow Development selected PJ Dick Inc. to build its $25 million Fort Willow Apartments, a 191-unit complex in Lawrenceville. The Western Westmoreland Municipal Authority is set to award contracts for its $23.9 million Brush Creek WWTP on November 16. Chivers Construction from Erie is the low bidder.