Have a Coke (Battery) or Two

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

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

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

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.

A Follow Up to the Tidbits

Friday’s pre-holiday post listed the tight bid results from WVU’s $25 million Student Health/CPASS project, on which only $20,000 separated low bidder March Westin from PJ Dick. The university took little time in selecting alternates that the competitive bidding made affordable and notified PJ Dick that they intend to award the project to them.

Some Loose Ends Before the Holidays

Like someone flipped a switch, the general demeanor of the industry has turned somewhat more positive since the beginning of January. There are a lot of positive indicators for 2013, although after the last two years I think we should wait to see how things pan out. One thing that does not seem to be bothering regional businesses too much is the ‘fiscal cliff’. Most construction related businesses seem to understand that business will go on even if there are higher taxes. The shock value of the cliff seems to have worn off.

As everyone is turning off the lights for Christmas there are still some tidbits worth noting.

WVU opened bids yesterday afternoon on their Student Health/CPASS building to find some very competitive numbers. From the low bidder to the high was a 2.5% spread and the gap between first and second was 8/100 of a percent (that’s .0008). The results were:

cpass results

PJ’s news from yesterday wasn’t all bad. Seton Hill selected PJ Dick as construction manager for their $15 million project. Another intersting news item from yesterday was the rumor that USSteel was going to extend their lease for a couple more years, pushing back any decision about construction of a new corporate campus.

Another WVU job on the radar is the $8 million Arts Museum project, for which the university approved a short list for bidding in January. The approved contractors are Whiting-Turner, PJ Dick, Rycon, Massaro, Turner, Mascaro, Landau, March Westin and Mosites.

Something New Brewing at Iron City

It will be much later in the decade before we know if the redevelopment of the old Iron City Brewery will have gone ahead as presented earlier this week, but at least there is now a clear idea of where the program is going.

The master plan done by DLA + Architecture is pretty ambitious, with over 500,000 sq. ft. of commercial space plus the potential for more residential in that space. There will also be a 930-car garage. What struck me was that it seems to have a similar approach to blending new and old as the way Bakery Square has developed. I’m sure many Pittsburghers will feel that the city can’t absorb another $100 million urban commercial development but those that feel that way are locked in the old paradigm.

The breakdown of space planned for the Iron City Brewing project
The breakdown of space planned for the Iron City Brewing project

Looking at Dennis Astorino’s rendering of the completed development you certainly get a sense of place like at Bakery Square or South Side Works, but the location makes me believe the project has a good chance. For one thing, Bakery Square seems to have two things really working well for it: (1) It’s becoming a relief valve for the overcrowded Oakland market. Several of its major tenants are extensions of CMU or Pitt research and East Liberty is surprisingly close; and (2) the retail component is serving the neighboring communities way more than the employees of Bakery Square. For example, Urban Active has 10,000+ members, even though the total employment at Bakery Sq. is around 1,000.

3-D rendering of the Iron City Brewing redevelopment. Rendering by DLA+ Architecture.
3-D rendering of the Iron City Brewing redevelopment from the viewpoint of Polish Hill. Rendering by DLA+ Architecture.

Iron City Brewing’s location is almost equidistant between the Strip District, Oakland and the booming part of Lawrenceville. It’s also just a few blocks from the revitalized Bloomfield main drag. Oh, and there’s a new hospital just up the hill. Given the growth and redevelopment of Lawrenceville, relatively little has been added in the way of lifestyle amenities.

More commercial and lifestyle development will be successful in the Lawrenceville/Bloomfield sub-market. If the Cargnoni’s have the financial strength and will to aggressively go ahead (and there’s nothing to suggest otherwise), I like the chances for the Iron City project.

Front Page Real Estate News

For those of us in construction, a big story is always front page stuff but for the rest of the world not so much (they are more interested in politics, economy or other non-essential information). So when 2 stories break on the same day that actually get on the evening news or the front page of the paper, that’s a big deal. Yesterday was such a day.

The hot commercial real estate news was the sale of EQT Plaza to Highwoods Properties. The sale is the second landmark property the Raleigh-based Highwoods has purchased downtown. Like with PPG Place, the price for EQT has kept the bar high. The local media outlets are even calling it a hot market. Highwoods paid $99.2 million for the 616,000 sq. ft. EQT Plaza or $161/sq. ft. That’s $2 more than their price for PPG. EQT comes nearly full, however, compared to the roughly 20% vacant PPG – at the time anyway.

The other hot story yesterday was the rumored NVR acquisition of Heartland Homes. NVR representatives were allegedly at Heartland’s Lawrence PA headquarters. Whether that or the acquisition rumor is true remains to be seen. NVR is the parent of Ryan Homes and the acquisition would leave the company with the 2 largest builders in the region, effectively giving them about a 40% market share.




And the Winner Is

The Advanced Engineering building at WVU was one of the projects alluded to in this blog earlier in the week as drawing lots of inteest from Pittsburgh contractors. Bids opened at 3:00 today and Massaro Corp. was the low bidder at $32.7 million. The published budget was slightly lower than that so there may or may not be an issue with the awarding of the contract.

As the results below show, there was a competitive bunching among the three low bidders and fairly uncompetitive numbers from Turner and Whiting-Turner. Both of those firms are also pre-qualified to bid the CPASS job that came out for bid Wednesday. It will be interesting to see how or if they react to these results on the later bid.

Almost Heaven (Almost Pittsburgh)

The Pittsburgh market seems to be suffering from the same post-election/pre-fiscal cliff  blues as the rest of the nation but 90 minutes to the south things are hopping.

West Virginia University and its related institutions are as active as any owner in the western PA market at the moment; and Pittsburgh contractors have taken notice. Today the $30 million Student Health/CPASS project went out to bid to six pre-qualified contractors (KBR, March Westin, Massaro, PJ, Turner, Whiting-Turner) with bids due on Dec. 20. Tomorrow the $30 million Advanced Engineering Building job bids to Massaro, Mascaro, PJ, Turner, Walsh and Whiting-Turner.

Two WVU projects were recently awarded to Pittsburgh generals. Landau was awarded the $11 million Law Library and MBM Contracting was selected to build the $15 million Rosenberg Family House at WVUH. That’s the first building in the $250 million WVUH South Tower Expansion project, which is expected to go forward with a $80 million phase next spring/summer.

Also related to WVU is the $70 million University Place development, a privately-funded student housing complex that is being proposed by Morgantown’s Paradigm Development. WVU will be the major tenant. The contractor is Turner Construction, from you know where.

The university also has its $7.5 million Art Museum project out for RFQ to qualify general contractors on Nov. 27. The price tag on that one should attract even more Pittsburgh generals. With metro Pittsburgh sliding towards a slow end to 2012 – even with a huge pipeline of projects in the works – the relief valve that WVU is providing is quite welcome, although the local contractors may not agree.