Last week ended on a sad note with word that Pat Navarro had passed away. Navarro led his family’s business to be one of the region’s top three or four contractors during the ’60’s and 70’s. He also provided the training ground for a handful of executives who have gone on to run or own contractors since, including Glen Gates and Mark Davis from BRIDGES and Joe Burchick from Burchick Construction. Burchick reflected on Navarro’s legacy in the Post-Gazette’s obituary.
On the construction front, A. Martini & Co. was chosen as CM at Risk for the $30 million vertical addition at the Indiana Regional Medical Center. Mascaro was successful in landing the fit-out of the 40th-42nd floors of the USS Tower for UPMC Health Plan. Among the RFP’s currently out there now are the Meadville Medical Mall project, for which Landau, Massaro and PJ Dick are putting in proposals, and the $3 million Washington Plaza Apartment renovation. Faros Properties has asked Massaro, MBM and Rycon for proposals.
With site work underway on the $80 million medical mall in Wexford, Highmark selected Massaro Corp. as the general construction contractor for the 173,000 square foot building. Limbach was selected for the mechanical. The bids from earlier in the month were over budget and a number of alternates were examined. In the end Highmark chose the company that was low bidder in the first place.
Work on the foundations should be underway by Mosites. With the building shell and MEP’s let, there will still be interior and specialty packages to follow from CM Astorino. Travelers along the Wexford Flats should see a building beginning to take shape by Labor Day.
With some of the high-profile projects that have or will bid in May/June – Highmark’s new $100 million Wexford Medical Mall, Chevron’s $250 million regional HQ, Turner Construction’s $60 million Gardens at Market Square – it would be natural to assume that the market will take a bit of a breather until after the July 4th holiday. That does not appear to be the case.
Prequalification is being done for the 360-unit Southpointe Town Center apartments, which will be developed by GMH Capital Partners in conjunction an office building and 2 parking garages. The total project should reach $60 million. The final approval of the Highmark/West Penn Allegheny deal will mean some relocation of executives running the new Allegheny Health Network, reportedly to 2 floors of the Alcoa Business Services Center. Major renovations to Highmark’s Penn Avenue Place offices are in the works.
On the subject of healthcare, remember that both the major hospital systems in the region have fiscal years that end June 30. WPAHS still has an enormous backlog of deferred maintenance and upgrades – at least $1 billion – needed to become competitive with UPMC facilities. And UPMC had several hundred million dollars in the pipeline that were shelved this winter. Neither has announced any sort of ramping up but July has historically meant new projects.
UPMC’s partnership with Altoona Hospital has produced a project in the early stages of planning. WTW Architects has been hired to design a $14 million, 100,000 sq. ft. outpatient facility in Altoona.
The Frick Museum made a splash in the local papers this morning with a story about their $15 million expansion, for which Loysen + Kreuthmeier is the local architect and Turner the construction manager.
Most of the news coming out of the hospitals of late has been negative and the prospects for hospital construction have certainly been that way for several months one project moving ahead is the 100-space Luna Parking Deck in Shadyside for UPMC. The $18 million job is due June 6. UPMC has asked Mascaro, Massaro, Mosites, PJ Dick & Turner for bids. You can see details at the Builders Exchange http://www.pbe.org/ipin/ProjectDetail.asp?txtPID=2012-00D0. Highmark’s medical mall in Wexford is apparently over budget but there are efforts to VE the project so that construction can stay on schedule.
On a different front, there was an interesting panel discussion of financing conditions for commercial real estate at NAIOP’s monthly meeting this morning. The takeaway was that earnings pressures are pushing underwriting standards to be looser. Veteran lenders Jack Shelly of Dollar Bank and Claudia Steeb of HFF both expressed concern that lenders were beginning to ‘stretch’ to make deals happen – just like in 2006-2007. Given the underbuilding of 2009-2011, a swing to the loose credit side probably wouldn’t create the crash we experienced at the end of 2008 but few bankers thought we’d be talking about loose credit again in 2013.
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.
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.
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.
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.
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:
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.
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.