The unusually cold weather made for a slow start to the 2018 construction season. Bidding activity has been slow out of the gate too, but the momentum is building. There is news on a couple of large projects people have been keeping an eye on. Siemens Corp. is taking bids on early packages at the $600 million combined cycle plant at Hatfield Ferry in Green Co. Wesex Corp. has started work on the first building at Castlebrook’s million-square-foot industrial park in Big Beaver/Koppel area in Beaver County. The building is a 400,000 square foot warehouse called the Fairlane Distribution Center. Allegheny Health selected the Gilbane/Massaro team to build its new $200 million new hospital in Wexford. At Slippery Rock University, DGS selected the team of Mike Coates Construction, Renick Bros. and Blackhawk Neff to negotiate a final agreement for the new $22 million performing arts center at Miller Auditorium. In other commercial real estate starts, Jendoco Real Estate started work on Building 200 at Settlers Cabin Business Park.
News on the economy has been very good to start the year. The government reported that 148,000 new jobs had been created in December, marking the 75th straight month of job gains. Pittsburgh’s job market remained in growth mode in November. The Department of Labor reported that 16,500 new jobs were added from November 2016 to 2017, a gain of 1.4%. Unemployment dropped to 4.8%.
The construction industry lost one of its quiet leaders December 7. Dwight Kuhn passed away at home yesterday. Dwight was a fixture in the industry and one of the rare people who was willing to stay in the background. He was also one of the classic American success stories. Dwight married his high school sweetheart, Kathy. He joined Jendoco Construction right out of school, at age 18, and worked for them for 44 years, retiring as president in 2013. Dwight was a big part of the successes Pete Dozzi had building Jendoco and served Tom Murphy and Dom Dozzi well until he retired.
I was fortunate to have a weekly conversation with Dwight when I owned the Pittsburgh Construction News. We shared information about what was on the streets and I was always happy (and surprised) when I could tell Dwight something he didn’t know. I was also lucky to be around the process when Jendoco was working through getting Scott Hall at CMU. I think it was the last project Dwight worked on at Jendoco and it was kind of a classic Dwight Kuhn job. Even though he was president of the company at the time, Dwight oversaw the many estimates and his knowledge of what was on the campus and underground at CMU, and his ability to put a building together in his head, was invaluable to getting the project out of the ground. Ralph Horgan and his team at CMU still tell stories of how Dwight sketched out solutions to problems they didn’t know existed while the building was being designed.
The way the industry changed over the past 30 years drove Dwight as crazy as the rest of us but I never saw him take a bad day out on anyone. He was a nice guy and I think that mattered to him. My day always got better when Dwight called and I’m going to miss him. I got to see him last at the GBA’s annual gala, where his son Michael received an award for service to the industry. He knew that his illness wasn’t going to give him a lot more time on this Earth – and he wasn’t happy about that – but he accepted what was going to come and was grateful for what he had – a great family and great friends. My option that night was to work the room like a good networker or sit down and have a drink with my friend Dwight. That was an easy call to make.
By mid-December the bidding calendar is usually pretty blank most years. The volume of year-end activity isn’t significantly higher in 2017 but, with what we know is in the hopper, there are a number of plum opportunities on the streets.
On the small but interesting side, bids are being taken from A. Martini & Co., Franjo and Rycon for the 20,000 square foot TI for Delphi Automotive in RIDC Park in O’Hara. Based upon similar fit-outs of their autonomous vehicle competitors, this project won’t be a multi-million job for the winner; but with Delphi’s growth plans, it won’t hurt to get positioned as their contractor. Franjo parlayed a couple small projects for Uber into tens of millions in construction over the past couple years.
Poole Anderson, Franjo and BRIDGES are among the contractors pricing the $30 million Crossings senior living community Smith Packett has planned for Indiana Township. The project has 154 units of independent and assisted living, plus 40 memory care beds. A similar project, the Salina of Cranberry, is being budgeted at the Village of Cranberry Woods. That senior community is being developed by the Formation Group from Atlanta. When these two projects start construction, some $250 million in senior living apartments will be underway in metro Pittsburgh
Another combined cycle power plant is nearing construction in the region. The 1,000 MW, $600 million Renaissance Energy Center will be built by APV at the Hatfield’s Ferry site near Carmichaels in Greene County. Siemens is reported to be the EPC on the project. In the commercial sector, the $13 million Tryp Hotel is close to starting construction. Franjo Construction is the contractor on the adaptive re-use of the former Washington Elementary on 40th Street.
AHN has narrowed the competition for its new Wexford hospital to Turner, Massaro/Gilbane and Rycon/Yates. A decision is expected before the holidays.
A lot has been made about the boom in hospital construction over the past month (and for good reason). It’s worth noting that very quietly the energy and power industries have been in the midst of a boom of similar proportions. Work is underway at the new $893 million Hickory Run Energy Center outside New Castle, a combined-cycle power plant being developed by a consortium led by Tyr Energy, with Kiewitt Power Constructors as the EPC. Kiewitt is also the EPC on the CPV 1050MW combined-cycle plant located outside Johnstown, a $700 million gas-fired plant that should be under construction for the next 2 years. Work should wrap up in 2018 on 2 other plants, the $780 million Tenaska Energy project in Westmoreland County and the $900 million Lordstown plant in OH. The Lordstown project is phase one of two. Not far from Lordstown, near Wellsville, a $1.1 billion combined-cycle plant is going through the final planning stages. That plant is known as the South Field Energy Station.
All of these projects are a result of the economics and proximity to the shale gas in the Appalachian region. That plentiful supply is also one of the reasons Shell is building its cracker in Monaca. To meet the ethane demands of the petrochemical industry, midstream developers are underway with 2 more gas processing plants near Burgettstown. Energy Transfer Partners is about a year into the $1.5 billion Revolution plant and MarkWest should soon start construction on the Harmon Creek plant, which should run at least $500 million. While little is written about these projects, the demands for labor are significant. Similar gas processing plants built over the past decade have consumed more than 100 electricians and 200 steamfitters. Those are big numbers in a region with a tight labor market.
While the bidding market is quiet ahead of the holiday, the hospital market is making some noise. AHN has been moving ahead with several of its cancer centers. The most recent to be lined up is the center planned for the Forbes Regional campus in Monroeville. Rycon Construction was awarded that 60,000 sq. ft., $20 million facility. PJ Dick was selected to build a smaller facility, a 30,000 sq. ft. cancer center, at the St. Vincent campus in Erie. AHN has also issued the RFP for its new $200 million+ hospital in Pine Township, adjacent to the Wexford Wellness Pavilion. Proposing on that project are Mascaro/PJ Dick, Massaro/Gilbane, Turner, Whiting-Turner and Rycon/Yates.
South of Pittsburgh, WVUH awarded a contract to Mosites Construction for the $6 million fitout of the 8th floor at the Ruby Hospital Tower. In non-hospital news, CMU is taking proposals from Jendoco, Landau, Mascaro, PJ Dick and Rycon on renovations to Posner Hall and Warner Hall. The projects combined will be roughly $22 million. Trammel Crow broke ground on the $60 million Station Square Apartments. The 310-unit complex will be built by Rycon Construction. Bids will be taken from A. Martini & Co., Landau, Nello, Volpatt and Waller Construction on a renovation of First Presbyterian Church in Washington, PA.
Earlier this afternoon UPMC announced its own major capital program. The centerpiece of the $2 billion expansion will be the UPMC Heart and Transplant Hospital at Presbyterian, a 620-bed, 940,000 sq. ft. tower in the heart of Oakland, which could run $1 billion or more. UPMC also announced an expansion of the Hillman Cancer Center at UPMC Shadyside. That will be a 240,000 sq. ft. patient tower and 160,000 sq. ft. outpatient facility, likely a $250-300 million project. The final project announced was the UPMC Vision & Rehabilitation Hospital at Mercy, a 300,000 sq. ft., $200 million new facility. IKM, CJL Engineering and Mascaro Construction are reported to be working on the design/constructibility of this hospital. These projects are in addition to the $200 million+/- UPMC South Hills facility and the expansion of Children’s Hospital, neither of which has timetables announced.
What wasn’t announced was a renovation of the Ford Motor Building in Shadyside, which the Post-Gazette and Business Times reported as part of UPMC’s plan earlier this week. That building is not part of UPMC’s plan but is being studied by the University of Pittsburgh for possible use.
Coupled with AHN’s announcements, the boom in healthcare construction means that there will likely be at least 4 hospital projects – and as many as 6 – over $150-200 million under construction in 2019.
CMU and RIDC made an announcement yesterday that the Advanced Robotics for Manufacturing Institute and the Manufacturing Futures Initiative would take about 60,000 square feet of the 94,000 square foot first building at the Mill 19 building at Hazelwood Green. Mill 19 is the creative re-use of the last remaining mill structure at the former J & L Steel works (now also formerly known as Almono). This lease wasn’t exactly a well-kept secret but it is one more piece of economic good news for Pittsburgh, especially given that ARM’s main goal is to spin out technology that will result in other new companies. Construction of the core and shell for the building will be done by Turner Construction, which is also doing preconstruction for the CMU tenant improvements.
In Lawrenceville a similarly-named project is getting underway. PJ Dick is starting construction on Mill 41, a 75,000 square foot office building being developed by Fort Willow on the site of a former mill. At the Shell plant in Monaca, Bechtel awarded Turner Construction the $9-10 million rail buildings package that bid last spring. One week after AHN announced its major capital program, the hospital system is taking proposals from Graziano, Jendoco, Landau, Rycon and Turner for a 60,000 square foot, $20 million cancer center at the Forbes Regional campus in Monroeville.
This morning’s announcement from Allegheny Health Network is but the latest in a string of major construction project announcements over the past few months. Unlike some of the other, however, the AHN projects should be moving quickly. For contractors trying to maintain capacity (and build backlog) ahead of the growing wave of construction coming in 2018 and beyond, that’s welcome news.
The details: a new 160-bed hospital will be built in Pine Township next to the Highmark Wellness Pavilion in Wexford. That project, which should run $300 million, is slated to start in mid-2018. AHN expects to put out RFP’s for design and construction management within a few weeks. AHN also announced a partnership with Emerus, a Dallas-based developer/operator of “micro-hospitals” to build community hospitals throughout the AHN footprint. There will be four such micro-hospitals initially, one each in the north, south, east, and west suburbs. In other similar markets, Emerus facilities have been in the 40,000 square foot range.
The AHN program amounts to a $700 million expansion of its facilities. Some of that expansion includes projects already awarded, including the new cancer center in Butler, which was awarded to the design/build team of Mascaro and Stantec.
Another wave that is building is the follow on to Shell’s cracker, under construction in Beaver County. Multiple plastics companies have been in the market looking for sites for new manufacturing plants of between 60,000 sq. ft. and 150,000 sq. ft. At Starpointe, near Burgettstown, Scannell Properties has begun work on a 507,000 sq. ft. distribution center, which is rumored to be for Shell. ARCO/Murray National Construction is building that facility. In other logistics news, Al. Neyer has begun construction of a 220,000 sq. ft. Class A distribution center in Jackson Township near Zelienople and a major retailer is reported to be looking for a site for a million sq. ft. distribution center in Western PA.
In other project news, Carnegie Library of Pittsburgh awarded a contract to Massaro Corporation for its $3 million Carrick Branch. Landau Building Co. was selected by WVUH for the $3 million Ruby Hospital OR. PennDOT awarded Beaver Excavating an $87 million contract for the next phase of the Southern Beltway.
After putting forth two dawdling bills to update Pennsylvania’s building code adoption process, the legislature moved like lightning yesterday to unexpectedly pass House Bill 409 (read the bill here.) The bill had only one “nay” vote but that shouldn’t be viewed as an indication of its quality.
Neither proponents nor opponents of the bill were thrilled about it. HB409 was necessary because PA continues to use the 2009 code, a version which would no longer be supported by the International Code Council (ICC), and because its adoption process was terribly broken. PA’s Uniform Construction Code (UCC) is adopted by a review committee that is politically-appointed and has rules that make revising and adopting the updated ICC provisions onerous. HB409 sets rules about adoption of the 2015 and some of the 2012 standards, and helps to fix the rules for adopting future revisions. There are problems. The legislation extends the mandatory review of the UCC from every three years to 4.5 years. The ICC updates building codes every three years, meaning PA can ignore ICC updates until the succeeding update is halfway completed. In two cycles, PA will be three versions behind again. HB409 also continues the mandate that no municipality (except Philadelphia) may opt to adopt higher standards in lieu of the UCC.
It’s important to remember that the UCC is not a best practices document. Building codes are minimum standards. In the case of life safety, you would hope that those minimum standards are more rigorous than, say, the standards that UCC has for energy; but the code is something less than cutting edge. Because of PA’s ponderous process, the current UCC – 2009 standards – includes processes and technologies that were in place when the review for 2009 began in 2006. That means technology entering the market in the past decade doesn’t meet PA codes. HB409 will help with that but the next mandated review will be in 2022 so technology developed since the 2015 review process began in 2012 won’t be included until it is a decade old.
For Pittsburgh, the worst part of the legislation is that it denies municipalities the option to adopt newer codes. Because of Philadelphia’s overwhelming lobbying and political clout, that city won exemption; but Pittsburgh did not. Many of Pittsburgh’s commercial buildings are already being built and renovated to standards that far exceed PA’s UCC but the city misses out on the opportunity to codify higher standards for energy, water and life safety. Reaching a middle ground gets legislation passed (and there’s very little of that going on) but it doesn’t move the Commonwealth forward.
Very little project news: Penn State selected Clayco as design/builder for its $35 million West Campus Parking Garage at the Hershey Medical Center campus. Allegheny Health Network selected the Mascaro/Stantec team to design and build its $15 million, 30,000 square foot cancer center in Butler.
The story that started leaking out Thursday afternoon – that UPMC was abandoning its plan to locate a $220 million hospital at Newbury in South Fayette – should not be misconstrued as a negative sign about the healthcare construction market. UPMC is re-thinking its five-year capital plan but still expects to invest $900 million over the next five years. Thus far, the decision to scrap the South Fayette facility has not altered plans to build the Vision Institute on the Mercy campus, expand Children’s Hospital or build some sort of new facilities in the South Hills. And construction to meet pent-up demand is booming in other healthcare facilities
UPMC is still continuing its investment at the former Jameson Hospital in New Castle and building the $111 million tower at UPMC Hamot in Erie. The Allegheny Health Network is taking design/build proposals for a new 30,000 square foot cancer center in Butler from Jendoco, Graziano, Mosites, Mascaro, Allegheny Construction and A. Martini & Co. AHN is also bidding a 30,000 square foot, $16 million cancer center at the St. Vincent campus in Erie. PJ Dick, Turner and Austin are known to be bidding that project.
Massaro CM Services put three State College Area School District elementary school projects out to bid, due October 10. The budget for the projects is $55 million and the district is taking bids on each or all three combined. The bids should be a good early barometer for how competitive it will be in the K-12 market as contractors build backlog for 2018.