Category: Regional construction

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.

benchmarks 2016-1

More Jobs and Who Might Be Renting All Those Apartments

Friday’s jobs report excited the markets again, as November’s expansion of 211,000 new jobs surprised analysts for a second straight month. In addition to the higher-than-expected November number, the Bureau of Labor Statistics revised both October and September – which was weaker – upwards by 35,000 jobs. Within the report, big gains in construction and retail offset declines in mining/logging (which is the category covering oil/gas drilling).

job creation history

 

 

 

A report from the Census Bureau on December 2 gave updated estimates of the number of people aged 25-35 who live in Allegheny County. Census used five years of estimates to show the change in population for that age range. The results are surprising and upbeat for the region’s apartment owners, since about 70% of that demographic group are renters.

While the Census report shows the percentage of those under the age of 35 as roughly unchanged in the U.S. since 2010 (6.8 percent are 25-29; 6.6 percent are 30-34), the data shows that the share of Pittsburgh’s population in those age ranges has jumped over the past five years. Those living in Pittsburgh who are 25-29 now make up 10.9 percent of the population, while 7.9 percent of the people living in Pittsburgh are 30-34. The same research showed an increase of .06 percent for that age group living in Allegheny County. In real numbers, that means roughly 9,000 more people of prime renting age live in metro Pittsburgh today than in 2010.

In project news, G. M. McCrossin was the low general/mechanical bidder on West View Water’s $61 million Baden treatment plant. Temple University released its $190 million library for bid. UPMC is looking at options for a new data center, including existing secure facilities and design/build proposals for new centers from teams that include Holder Construction, Whiting-Turner and PJ Dick as construction managers.

(From left) Bill Taxay, Brian Walker and Angelo Martini Jr. having fun at NAIOP Pittsburgh's holiday party Dec. 3.
(From left) Bill Taxay, Brian Walker and Angelo Martini Jr. having fun at NAIOP Pittsburgh’s holiday party Dec. 3.

 

 

 

 

 

 

 

 

 

 

 

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.

IMG_20151118_162154196
(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.

More Apartments and Jobs

Two groundbreakings in the last two weeks bring another 331 multi-family units into the Pittsburgh housing market.

Cranberry developer Larry Dorsch and Morgan Management started work on the 149-unit Cosmopolitan at Ross Park, the first new apartment project in Ross Township in decades. The high-end units will be located on the southern access road of the Ross Park Mall at the Cheryl Drive intersection of the McKnight Park East office complex.

Willow Street Associates and Walnut Capital celebrated the start of their Foundry on 41st, a $35 million, 182-unit project being built by PJ Dick. The complex will be between Willow Street and the Allegheny River at 41st Street in Lawrenceville.

The Foundry is an example of the strength of the housing market in the city of Pittsburgh. New Urbanism is often cited as the driver behind the boom (relatively speaking) of the Pittsburgh apartment market. There’s some truth to that, especially in the Downtown market, but the biggest drivers in the city’s multi-family growth have been East End jobs (CMU, Google, UPMC) and the arrival of new product that hasn’t been offered. Where the real impact of urban attraction has shown up is in single-family homes. Pittsburgh has had the third-highest total of new single-family homes. Counting townhomes for sale in with single-family detached units, the number of new homes in Pittsburgh soars above all other communities.

Topmuni2015-3

For housing growth to be sustained there will have to be job growth, of course. Friday’s jobs reports looked spectacular, with 271,000 new jobs created in the U.S. in October. There are reasons to be calm about the results. First is the fact that October’s jump only levels out the declines in September and August, bringing the three-month average to 188,000. That’s not terrible, especially for late summer, but the moving averages show a flattening of the growth curve. Reinforcing that trend is the pattern of revisions.  Because of its methodology, the Bureau of Economic Analysis adjusts the previous two months data as results come in after the reporting month, so this report showed small downward revisions to September and August. More important than the size of the revision is the downward trend. In growing markets, the lagging data tends to add to the previous estimates. The opposite is true in slowing markets. Data from the summer on is suggesting that the arc of the job growth into 2016 will be flat rather than higher, probably averaging closer to 175,000 jobs than 200,000.

US Construction Prospects Brighten

Yesterday’s news from the AIA underscores how strong the demand for new construction is throughout the US. AIA’s Architectural Billings Index (ABI) for June rose to 55.7, the highest level since 2007. The survey of firms indicates that 55.7% saw billings rise in June, an unusually high number.

The four-month trend for billings and inquiries is sharply higher.
The four-month trend for billings and inquiries is sharply higher.

A dive into the numbers shows that it’s institutional and government projects that are leading the way, with commercial real estate development also above 50. One noteworthy change was a decline to 47 for firms engaged in multi-family projects, an indication that planning for apartments may finally be cooling. As an indicator, the ABI is a reliable forecasting tool for the 9-12 months forward.

In project news regionally, the design/build team of Mascaro/Tetra Tech was selected by Penn State for its $6.6 million Ag Digester & Dairy Barn. PSU also short-listed Barton Malow, Gilbane, Turner and Whiting-Turner for its $100 million Chemical-Bio Engineering Building. Horizon Properties was selected to redevelop the former Star Theater into a town center in South Fayette Township. The state of WV selected alternates that made Paramount Builders the successful contractor on the $33.2 million State Office Building #3 in Charleston. Oxford is working with Massaro Corp. to build its $20 million, 146-unit Emerald on Centre apartments in East Liberty.

Construction Ramps Up in Second Quarter

Owing to continued demand for apartments and the start of a number of long-awaited projects, construction activity in the first six months was up significantly in metropolitan Pittsburgh. Commercial and institutional construction jumped 24.3% to $1.38 billion from January to June. Residential construction was up 31% year-over-year, with 2,380 units started in the first half of 2015.

Within the residential segment, the increase in units started was all in the multi-family market, which had 1,488 units started compared to 843 for the same period in 2014. Because of lot shortages and continued regulatory pressures on development lending, construction of single-family detached homes remains depressed below the level of potential demand.

Along with apartments, hotels remain a hot property type. Fairchance Construction started work on an $11 million Hilton Garden Inn in Moon Township. Dynamic Building was selected as contractor on a $10 million Towne Place Suites by the Grove City Outlets.

Bear Construction has started work on the new 25,000 facility for Tri-State Supply outside Washington PA. Rycon has begun site work for the new Dick’s in Greenwood Plaza in Butler. PJ Dick has started the preliminary work on Google’s 66,000 sq. ft. space in Bakery Square 2.0. In State College, Clayco Corp. is taking proposals on the design-assist mechanical and electrical packages for the first phase of the $170 million East Residence Halls project.

Dog Days of Summer

One of the more deceptive characteristics of the market in summer of 2015 is the bidding activity. For general contractors, the activity is slow, maybe slower than normal; but there is action taking place in the next tiers down the food chain. Within the past 60 days there has been a marked shift in the subcontractor bidding environment, a shift that bears watching if you’re an owner.

Subs and suppliers are busier. In part this is due to the releasing of projects that had been delayed over the past year or so, or had a general on board while designs were being completed. There is also the reality that the skilled labor force is nearing full capacity. Within the majority of the trades, the halls are empty. One other consideration is that the Pittsburgh market may finally be shifting like the rest of the country to delivery methods other than design-bid-build. And subs have been bearing more of the burden of this extended slowdown, carrying an unfair share of project costs because of longer (meaning slower) pay cycles and increased administrative expense. There will be some hay-making while the sun shines.

Any or all of these factors will move the focus of the bid market from generals to subs and specialty contractors. The evidence of this is in higher prices and less participation. More than a few generals have expressed the sentiment that the latter is a reality now, especially when it comes to budgeting. Owners that haven’t brought a project to the market in six months or more may find it a very different environment. It may be too early to declare it a seller’s market but construction is no longer the buyer’s market that has existed since 2009.

For those looking ahead to big bidding opportunities, the PA Builders Exchange reported this morning on an $81 million new treatment plant for West View Water (with a general package over $40 million) that should bid in the fourth quarter. Check out the details at http://tinyurl.com/oq6qnz6. On the commercial side, Milhaus Development selected Strada Architecture and Rycon Construction as the team for its $100 million redevelopment of the 12-acre site west of the 40th Street Bridge in Lawrenceville.

Mid-June Buzz

There has been a surprising amount of buzz surrounding the news that Shell closed on the land that on which it proposes to build an ethane cracker. I think that’s a sign of how thirsty we are for news about the decision. From the standpoint of the decision to proceed, the closing is kind of a non-event. Shell can still decide against the project for the time being or walk away and sell the property to someone else.

The bigger news about the cracker is that the needed permits are reported to be in hand. I assume that means that there has been informal word given, since it seems unlikely that DEP would have granted approval without someone announcing it. This, if true, is a big deal because it removes virtually all obstacles to the decision. Shell still wants to prove the long-term sustainability of the gas supply (something of a no-brainer) and then agree to invest in Monaca instead of other capital projects. So far, any guesses I’ve heard about when the final call will be are just that: guesses.

The last few weeks have seen the start of a bunch of small projects that have been around for a while. Village Theater Co. chose A. Martini & Co. to build it $2 million new theater in Sewickley. That’s the third new building to get underway in Sewickley this month. Oberg Industries awarded W. K. Thomas & Associates the contract to build its 67,000 sq. ft. expansion. Chapman Properties is getting ready to start construction on a new 23,575 sq. ft. Skyzone trampoline center in Monroeville.

In news of more companies entering the Pittsburgh market, Reynolds Construction opened an office in the RIDC O’Hara. The new office is located at 634 Alpha Drive, Suite 1100, Pittsburgh, PA 15238. The Pittsburgh office will be led for now by company President Jeff Merritt.

Some Long-Awaited Starts

Waukesha Pearce Industries awarded the construction of its new $8 million, 45,000 sq. ft. facility to New-Belle Construction. The high-bay building will be used to service and distribute WPI’s heavy gas engines, being used by the natural gas industry. The building was designed by Desmone Architects.

Uber selected Continental Building Systems as construction manager for the build-out of its new 53,000 sq. ft. space in Lawrenceville.

TBI Contracting is starting construction on two new buildings in Sewickley village. The first is a 10,000 sq. ft. commercial building that will house a new Crazy Mocha on the ground floor. The second is the Vanguard Village office, a 30,000 sq. ft. spec building being developed by Forbes Trail Development and PWA Real Estate.

Those commuters creeping up or down Greentree Hill will soon see the the new Greentree Primary Care Center II coming out of the ground. Burns & Scalo Real Estate is developing the 44,000 sq. ft. GPCCII as a spec building for healthcare users.

Rendering of GPCC-II by DLA+ Architecture
Rendering of GPCC-II by DLA+ Architecture