Category: Regional construction

The Chevron Project etc.

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Yesterday’s announcement that Chevron had closed on the rumored Roy Johns Montour Run Road site and the KMart brought public attention to a project that has been tracking towards construction for three-quarters of a year. The requirements that had been bandied about in the real estate community were for a campus of 250,000 sq. ft. all the way up to one million sq. ft. That would put the project ultimately at about the same size as the Westinghouse corporate campus, which cost about $300 million all in (of course that took a few phases & a few years). The Chevron project has been going through design at HOK’s Houston office & the RFP for construction mgt. services is to be released imminently to 6 contractors or teams of contractors. I would expect Turner, PJ Dick, Mascaro, Massaro, perhaps Gilbane, Walsh & some national players teaming with some of the local generals.

The public bid market has picked up surprisingly for May. Considering that there was very little in the way of meaty projects out in the late winter this may be the shot for 2013. Most of those projects are outside the city, including the site package for the $80 million Ag Sciences Building at WVU.

Among the projects awarded recently (although not all are inked) Mascaro was selected to build a new $5 million residence hall at Pitt Bradford and the $70 million Village Green Apartments. MBM Contracting was chosen for a $1.2 million clinical project at Weirton Hospital & $15 million expansion at Excela Healthcare in Westmoreland Co. The latter project won’t start until later this year. Nello was selected to do the expansion & renovation at Memorial Park Church in McCandless.

One of the big projects announced at Southpointe II last year is breaking loose. The Ansys Corp. HQ and the accompanying spec office building that Burns & Scalo is developing is going through the design/build process with Clayco Construction from St. Louis. Bids for the early packages are out right now. Site work is expected to start in June with steel arriving in Sept. – assuming all is in budget.

End of Week Tidbits

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For those wondering what the big earthmoving job is that you can see from I-79 at the Cranberry exit, construction has started on the first of two 63,000 sq. ft. office buildings that Landmark Properties is developing on Dutilh Road. L. S. Fiore Inc. from Altoona is the general contractor. On the North Side, Dynamic Building Co. has been given the nod to build the 150-room Fairfield Inn that Kratsa Properties is planning to go behind their Springhill Suites on General Robinson St.

The general trades package of the Highmark Medical Mall in Wexford has gone out to bid to Landau, Mascaro, Massaro, PJ Dick & Rycon. Although the overall project will probably cost about $80 million, this package has been pared back to less than a full shell & core package, likely $8 million or so.

More Project Information

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Rycon Construction is the successful contractor on UPMC Childrens Hospital’s new $13 million Bridgeville satellite hospital in South Fayette Twp. Massaro Corporation’s CM Division was selected by Fox Chapel Area School District to act as the construction manager for its $80 building program. Oxford Development is seeking approvals from the URA to change its planned office project at 2900 Sidney Street in South Side Works to a 171-unit apartment building. Oxford is teamed with PJ Dick on the construction.

It’s Not That Bad

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I got several calls from local news outlets within the last 10 days following McGraw-Hill’s press release showing $38 million in new construction contracts in February, a huge drop from last year’s $70 million or some such thing. Like many in the industry I have been puzzled at the lack of construction activity in light of our region’s economic vitality and the activity level of architects and engineers, however this data seemed completely shocking. It turns out there is a good reason: it’s not remotely accurate.

The City of Pittsburgh’s permits alone totaled $40 million plus for non-residential construction in February and most of the region’s construction takes place outside the city. Even with less than half the data entered into the Tall Timber database the February totals exceed $100 million. In fact, the YTD totals at the end of the 1st quarter probably won’t be far off the $440 million during that period in 2012 and may be a bit higher.

A lot of the design activity from summer/fall 2012 is getting into the pipeline now. Their is still a sweet spot for contractors who can compete effectively for 30,000-40,000 sq. ft. buildings, which are still popping up in the natural gas supply chain. In the Mon Valley several projects like that are out or coming out to bid shortly, including new buildings for Waukesha Pierce, Duquesne Light and Gardner Denver. A new 35,000 sq. ft. facility for Scientific Drilling is out to bid to Dynamic, Nello, New Belle & TBI.

Massaro Corp. Construction Management group has the $35 million Henderson Health & Human Development Building bid package #3 out due May 1 and a $63 million expansion and renovation project for the Ohio Facilities Construction Commission that is part of the consolidation of the Northcoast Behavioral Healthcare Campus between Cleveland and Youngstown, due on May 2.

Construction is still slower than it should be and will be for as long as their is uncertainty about healthcare reform or interest rates or Federal spending. 2013 will not be the year of the turnaround but it’s also not going to be the year the bottom dropped out.

Friday’s News

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The morning started off with some good macroeconomic news for the U.S. market. The Labor Dept. reported that 236,000 jobs were added in February, well above the 160,000 forecasted by economists. Construction, primarily home building, was an improved category, with 48,000 new jobs. You can read Marketwatch’s report on the new hiring at http://www.marketwatch.com/story/us-economy-adds-236000-jobs-in-february-2013-03-08-81034917?dist=beforebell

Hiring was expected to be dampened by the blizzards, concern about the sequesters and the 2013 tax increases. Instead, employers seemed to power through, bringing the unemployment rate down to 7.7%. That’s the lowest since Dec. 2008.

In another national development, the Federal Reserve’s stress test of the 18 largest banks found only Ally (the former GMAC) couldn’t withstand the hypothetical nine-quarter scenario with an unemployment rate of roughly 12%real GDP declining by around 5% and equity prices falling by more than 50%. While that is good news, banks as a category are still behaving with much more caution than the economic state implies. Cost cutting has increased for even the healthiest banks – like PNC- and that makes me worry about what banks see on the horizon or what they know about their own balance sheets that we don’t.

Getting to the regional construction scene, there was news from two of the bigger projects being planned for hospital construction. Highmark is pre-qualifying contractors for the building packages of its $100 million medical mall in Wexford. RFQ’s were sent to virtually every contractor with hospital experience. Responses will be interesting since the project is apparently going to bid to at least separate general, mechanical and electrical contractors. Mosites Construction was awarded the foundation package for the 174,000 sq. ft. building.

WVUH selected Yates Construction from Mississippi to act as CM for their $140 bed tower addition, part of a multi-phase $250 million expansion of the South Tower of Ruby Hospital.

CM proposals have also been requested from Continental, Mascaro, Massaro, PJ Dick and TEDCO for the conversion of a portion of the Oliver Building downtown into a 240-room hotel. The project should run in the $30 million range.

Hospital News

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Depending on your point of view the hospitals have been a hot project type in recent weeks. On the upside, the West Virginia University Hospital system interviewed 4 contractors/teams Feb. 22 for a big phase of its South Tower expansion. The candidates for this $140 million +/- package were teams from  Gilbane, Massaro, PJ Dick & Yates. There doesn’t appear to be a shoe-in or inside track team and the WVUH was expected to make a decision this week.

Highmark has the foundations and structural steel packages out for bid for its $100 million Wexford medical mall. After taking bids for these packages, Highmark and Astorino and said to have a general construction package for the remainder of the project. Contracts were let earlier for some site prep and utilities.

Now for the bad news. The federal deficit/budget/sequestor fiasco is way overblown for its true impact on the economy – at least in the short term. With the fiscal year 40% gone, the actual reduction in spending for 2013 is going to be less than 1% of the total discretionary spending. For the Pittsburgh economy, however, the impact is more direct in that the NIH research grants that are in the crosshairs are vital to UPMC’s research. That hospital system isn’t the only one effected of course, but it’s the one with a $250-300 million capital budget that has been put on ice. The $394 million CIS project at Shadyside Hospital is the biggest victim, although it appears that the 1,000-car parking garage will go forward as a hard bid within a month or so. Projects like the $40 million St. Margaret’s expansion or the $100 million-plus Magee expansion have ben shelved. Apparently any human resources for these have been pulled off the projects. Plans for the $70 million Mercy energy plant have been put on hold for 6 months or so. The FY2013 budget was already scaled back compared to recent years so this latest development is unwelcome for firms doing business in the healthcare sector.

The one significant project moving ahead is the $18 million Children’s Hospital outpatient facility in South Fayette Twp. Bids will be taken on March 21 from Landau, Mascaro, Massaro, MBM, PJ Dick & Rycon.

The potential loss of grants is one of three hits UPMC took recently. The hospital was somewhat prominent in last week’s Time article about the costs of healthcare, which was critical of executive pay and called out UPMC’s top exec among the non-profits. Competition in the insurance and hospital sectors were also highlighted as reasons why UPMC’s income over expenses shrank significantly in the first half of their fiscal year.

These pullbacks pose a challenge for Turner Construction, which had been selected to do pre-construction as CM for the CIS/Shadyside garage projects with the expectation that work would start later this year.

Have a Coke (Battery) or Two

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Just when you thought that the steel industry was in deep freeze again comes word of a thaw. The global recession has put a big dent in the business but there is apparently some boost in demand for coke or the industry sees it as a good time to capitalize its coke production assets.

Arcelormittal is beginning the contracting for a $50 million re-opening and upgrade of the former Koppers coke plant in Monessen. Graycor is rumored to have been awarded the quencher with contracts for the remaining work pending.

USSteel is reportedly ready to commit the resources needed to complete the modernization/replacement of the Battery D at the Clairton works. The company completed the construction of the $500 million Battery C last year. No word on if an EPC firm has been contracted or when construction might start.

In the public construction arena, the lingering influence of the Rendell administration’s east-oriented capital programs is still being felt in the bidding market. The distribution of professional service RFP’s has been more balanced since Gov. Corbett took office but the lag time for design and the more restricted flow of projects in the pipeline means that what is out to bid now reflects the bias to the east. A check of the current bidding opportunities at DGS shows that the project listed that is furthest west is a roof replacement in the Mechanicsburg area.

It’s fortunate then that there is one large public construction project out to bid now in western PA, the $50 million new combined junior/senior high school for Armstrong Co. School District. The history of this project is not very encouraging, however, since a similar project has been on the boards of several architects since the late 1970’s. Uncertainty about whether there will be enough support from citizens to back the board’s decision to proceed doesn’t seem to be dampening interest. As of this morning 13 contractors were reported pursuing the estimated $25 million general package.

A project that should be moving ahead later this spring is the 1,000 Luna parking garage that is the next piece in the UPMC Shadyside Hospital master plan. The garage should be somewhere in the neighborhood of $20 million and will help ease parking and congestion at the hospital. The garage was previously part of the Center for Innovative Science project that was awarded to Turner Construction but a select group of contractors will be asked to bid instead.

Looking at the broader picture a few weeks into 2013, there is continued improving economic news and growing anecdotal evidence that the pipeline of work is building. Hiring has picked up at engineering and architectural firms, which have been responding to noticeably more RFP’s since Oct/Nov of last year. Very little suggests that a surge is set to occur that will help build contractor backlogs during the next 90 days or so but unless macroeconomic factors push owners/developers to put projects on hold in the spring, the second half of 2013 should see a significant increase in construction.

Quattro Office Contactor Selected

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Quattro Investments LP selected Clayco Construction last week as the design/build contractor for its two-building, 416,000 square foot development at Southpointe. The development partner managing the project is Burns & Scalo Real Estate Services, which had previously announced the signing of Ansys to a 186,000 square foot build-to-suit corporate headquarters as half of the Quattro project.

Clayco is a national contractor/construction manager that specializes in design/build delivery. While they have not been active in Western PA over the years, the company has worked on a few large projects, notably the new headquarters for Eaton Corp. at Cherrington in Moon and the massive Dick’s Sporting Goods warehouse at the I-70 Industrial Park near Smithton. Both projects were built more than a decade ago, so subcontractors will have to re-familiarize themselves with Clayco before the bidding and construction gets underway later this summer on the $60 million project.

Almost Heaven…for Hospitals

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It would be inaccurate to describe the hospital market as slow in Western PA but for 2013 the opportunities may be less plentiful than in recent years. For the near term the hospital activity is in West Virginia.

The region’s biggest system, UPMC, will be concentrating on the new $394 million CIS project in Shadyside and after investing heavily in OR’s, ER’s and a new energy plant for the past couple years, UPMC will have fewer of the $20-$50 million jobs going.

The Highmark/WPAHS entity – in whatever form it ultimately takes – will also have a few big projects but will not be the booster rocket that the hospital construction market hoped just yet. The $80 million Wexford medical mall should go out in late spring and the smaller Monroeville facility should be out to bid in February. Highmark’s investment in Jefferson Hospital will bring a few projects too but the biggest action right now is even further south.

WVUH has put their Ruby Hospital south tower expansion project out to a ‘select’ group of firms for a construction management proposal. The RFP will lead to pre-construction and a GMP for the work on the $130-ish million tower core and shell later this year. The list of contractors includes almost 20 firms making up 11 teams, with some contractors flying solo while most teams pair a local and national player. Those proposing include G. A. Brown (the only WV firm), Landau, Gilbane, Massaro, Turner, Mascaro, Whiting-Turner, PJ Dick, Hunt, Manhattan, McCarthy, Skanska and a few others. The proposals are due in a couple of weeks.

Skanska was selected by Preston Memorial Hospital to build their new $35 million facility in Kingwood. It’s hard to imagine a project that size even interesting a firm Skanska’s size just three or four years ago but it’s a sign of the times that they edged out another national firm, Turner, to get this gem.

New Year’s News

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There were a few interesting pieces of news from the first few days back after the holidays. While most of us were shaking off the cobwebs from the better part of two weeks off, the folks at Industrial Scientific made a decision on the construction manager for their new $40 million, 330,000 sq. ft. new campus in Robinson Twp. They selected Mascaro Construction to build the new facilities, which should get started this summer.

Starting work now is developer Oxford Properties, from Atlanta, on their $45 million City Vista Apartments in Green Tree. The 272-unit project will sit on the hillside below Parkway Center.

The pre-Holiday bidding activity helped lift the spirits of many – especially about the prospects for 2013 – but a key confidence measure shows that not everyone felt the cheer. The Master Builders’ Commercial Contractor Condition Index (C3 Index) was released on Friday and it showed a slight decline in the outlook of the region’s largest contractors. The C3 Index is a quarterly survey of the owners of the MBA’s 32 contractor members, which asks about their grade for the coming quarter and queries their grade on bidding and backlog conditions. Contractors gave the market a C- or 1.73 score out of a possible 4. That’s down from the 1.79 grade the group gave the third quarter.