House Republican Leader Mike Turzai announced yesterday that he would put a highway funding bill up to a vote next week to help Gov. Corbett fulfill his pledge to work on the state’s aging infrastructure. Turzai is not in favor of Senate Bill 1, which failed to get House action in June, but he indicated that what he would put forward for a vote would be in the neighborhood of the $2.5 billion the Senate approved.

The highway and transit improvements that such a bill would cover will still actually be inadequate to the maintenance and repairs needed but $2.5 billion will help keep the amazing economic progress that has been achieved in Western PA from eroding. Such an infusion will also allow highway contractors a chance to keep employment levels growing.

As an example of the current conditions, only one significant PennDOT project is out to bid in the western half of the state at the moment, the $15-20 million Route 28 widening at the I-579 interchange. September-October is typically a time when a number of major projects are lined up for winter starts.

The $17 million WVU baseball stadium has been short-listed. Design/build proposals will come from Astorino, PJ Dick, Gilbane and Mascaro.

In the pipeline, engineering/construction firm Burns & McDonnell was in the region during the past couple weeks pre-prequalifying contractors for the construction of a natural gas processing plant for Williams that will be located in southwestern Mercer County. The project is reported to be somewhat smaller than the Houston plant but should still be in the hundreds of millions in construction eventually. PPG Industries announced yesterday that it will take 120,000 sq. ft. in the empty Building 4 on Westinghouse’s campus in Cranberry Woods to consolidate the headquarters of its coatings business. The company has also been planning an expansion of its research facilities in Harmar, a project rumored to be in excess of $15 million.

For many months now the shortage of houses for sale has been pushing home prices up at double-digit rates. That’s a good thing for homeowners but a bad thing for home buyers. Such conditions usually presage a boom in new construction, since the lack of inventory makes buyers look to other alternatives. For a number of reasons – little lot inventory, limited spec house financing, nervous builders, etc. – the new construction has not taken off. That seems to have changed in quarter two.

Housing starts for the first six months saw permits for more than 2,800 new units. That’s an 85% growth pace and a volume that hasn’t been seen since 2007. The trend suggests that 5,000 units will start by year’s end. Multi-family starts are up almost 159% over 2012. Single family starts are on pace to exceed 2,600 units, up 36% through June 30.

Non-residential contracting reached $1 billion in the second quarter, bringing the year-to-date contracting totals to more than $1.4 billion. The pace of activity has quickened considerably as summer began and the forecast for the full year is for more than $3 billion total starts.

Indiana Regional Medical Center short-listed Alexander Building Systems, A. Martini & Co., Quandel and Turner for its $30 million addition. Massaro Corp. was selected as the general for the $4.5 million Armstrong Hospital emergency room.

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.

There is one significant positive hanging over the U.S. economy that could help un-stick the seemingly endless no-growth cycle that has gripped business: the housing market recovery. Unlike the overall U.S. market, the housing market in Pittsburgh does not have to bounce back from falling prices and is showing remarkable consistency across a number of metrics.

For more than six months the prices of houses sold and the number of homes sold have remained solidly up more than 10% year-over-year. That’s an unusual level of consistent growth, especially since the sales took place in periods of both higher and lower seasonal activity.

The third quarter also showed a consistent trend in the year-over-year growth in new construction. Through nine months there were a total of 2,396 new dwelling units started compared to 2,155 during the same period in 2011, an increase of 11.2%. The increased activity was constant whether the construction was traditional detached single-family homes and attached or multi-family units, with each cohort up between 10-12%. Permits were issued for 1,393 units of detached dwellings compared to 1,264 in 2011 and for 1,003 attached units this year compared to 891 last year.  A breakout of the top areas for construction is below.

While there is growing evidence that financing conditions are normalizing so that buyers can buy, the dwindling supply of lots will keep a broader housing recovery from spreading into 2013, although the construction of multi-family apartments will boom for at least the next 18 months.

If the developers stick to their plans there will be another 1,000 units started in large multi-family projects before the year ends in Green Tree and Southpointe. This is good news but the volume will skew the perception of the total market in Pittsburgh if that occurs. Should the activity unfold in that manner the total housing starts for 2012 will approach or exceed 4,000 units, a level not seen since 2006. On one hand the volume reflects the pent-up demand for housing in the region, but to more accurately judge that a true housing recovery is underway you should focus on the single-family detached market.