THE MAGAZINE OF THE MASTER BUILDERS’ ASSOCIATION OF WESTERN PENNSYLVANIA
NOVEMBER/DECEMBER 2015
Vibrant Downtown
What’s Next?
Profile: The Tower
at PNC Plaza
Regulations Are
Driving Up Costs
Third Quarter Results
Master Builders’ Association
of Western Pennsylvania, Inc.
SAVE the DATE
The Construction Industry Evening of Excellence
is a night that celebrates the brilliant and unparalleled design and construction industry. This event unites
the firms and individuals that are developing our region with a commitment of excellence in each and every
construction project. This commitment to excellence will be on display during the event as the winning projects
in the MBA’s Building Excellence Awards program will be announced.
Thursday, February 25, 2016
5:00 to 9:00 P.M.
Heinz Field East Club
Event includes two drink tickets and
strolling buffet. For ticket information,
please call the Master Builders’
Association at 412.922.3912,
email info@mbawpa.org
or visit www.mbawpa.org.
Event details to be posted first on the Evening of
Excellence group on LinkedIn. To locate the group type the
following in a search on LinkedIn: Evening Of Excellence.
See you on February 25th
at the Evening of Excellence
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2015
Contents
PUBLISHER
Tall Timber Group
www.talltimbergroup.com
Cover image:
The Tower at
PNC project
team.
Photo courtesy
PJ Dick Inc.
EDITOR
Jeff Burd
412-366-1857
jburd@talltimbergroup.com
PRODUCTION
Carson Publishing, Inc.
Kevin J. Gordon
ART DIRECTOR/GRAPHIC DESIGN
Carson Publishing, Inc.
Jaimee D. Greenawalt
CONTRIBUTING EDITORS
Anna Burd
CONTRIBUTING PHOTOGRAPHY
Tall Timber Group
Renee Rosensteel
Jan Pakler Photoography
Connie Zhou Photography
ADVERTISING DIRECTOR
07
R EGIONAL MARKET
UPDATE
11
N ATIONAL MARKET
UPDATE
Karen Kukish
412-837-6971 kkukish@talltimbergroup.com
MORE INFORMATION:
BreakingGround is published by
Tall Timber Group for the Master
Builders’ Association of Western
Pennsylvania, 412-922-3912 or
www.mbawpa.org
Archive copies of
BreakingGround can be viewed
at www.mbawpa.org
No part of this magazine may be
reproduced without written permission
by the Publisher. All rights reserved.
15
WHAT’S IT COST?
54
L EGAL PERSPECTIVE
Can they really make us sue
them there?
57
M BE/WBE SPOTLIGHT
Gerard Associates Architects
60
T REND TO WATCH
The housing market is on the
verge of a shift…again.
16
F EATURE
Envisioning Downtown:
What’s next?
65
30
P ROJECT PROFILE
The Tower at PNC Plaza.
46
F IRM PROFILE
Tri-State Reprographics.
51
F INANCIAL PERSPECTIVE
Regulations are pushing up costs
on a variety of fronts.
I NDUSTRY
& COMMUNITY NEWS
71
A WARDS & CONTRACTS
74
F ACES & NEW PLACES
80CLOSING OUT
J eremy Waldrup
CEO Pittsburgh Downtown
Partnership
This information is carefully gathered and
compiled in such a manner as to ensure
maximum accuracy. We cannot, and do
not, guarantee either the correctness of
all information furnished nor the complete
absence of errors and omissions. Hence,
responsibility for same neither can be,
nor is, assumed.
Keep up with regional construction and
real estate events at
www.buildingpittsburgh.com
BreakingGround November/December 2015
3
LEADING THE INDUSTRY...
KEYSTONE ELECTRIC CONSTRUCTION
SCHULTHEIS ELECTRIC / T.S.B. INC.
LANCO ELECTRIC, INC.
TJR ENTERPRISES, INC.
DAGOSTINO ELECTRONIC SERVICES, INC.
PRECISION ELECTRICAL CONTRACTORS
SARGENT ELECTRIC COMPANY
LIGHTHOUSE ELECTRIC COMPANY
MILLER ELECTRIC CONSTRUCTION, INC.
BRUCE & MERRILEES ELECTRIC COMPANY
FERRY ELECTRIC COMPANY
HANLON ELECTRIC COMPANY
CASTEEL CORPORATION
CHURCH & MURDOCK ELECTRIC, INC.
HATZEL & BUEHLER, INC.
T.P. ELECTRIC, INC.
FUELLGRAF ELECTRIC COMPANY
DONATELLI ELECTRICAL SERVICES, INC.
MARSULA ELECTRIC, INC.
BLACKHAWK-NEFF, INC.
HOFFMAN ELECTRIC COMPANY
HIGH VOLTAGE MAINTENANCE
YATES BROTHERS, INC.
R.E. YATES ELECTRIC, INC.
MILLER INFORMATION SYSTEMS
STAR ELECTRIC COMPANY, INC.
KIRBY ELECTRIC, INC.
NEWCO ELECTRIC COMPANY
DAVID W. JONES COMPANY
BECA ELECTRICAL CONTRACTORS ASSOC.
WE POWER PITTSBURGH
...THE NATIONAL ELECTRICAL CONTRACTORS ASSOCIATION
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Publisher’s Note
E
ver go to a dinner party where there is that guy that
kills the party by getting in a loud argument? I was that
guy one time about 15 years ago (my wife may actually
recall other times but I’m at a loss.) The incident didn’t
actually kill the party but it also didn’t help our hosts
out any. By coincidence, the subject of the disagreement was the
focus subject of this edition of BreakingGround: life Downtown.
One of our neighbors at the time shared my enthusiasm for a
good debate. There was another guest who was my neighbor’s
business partner and also liked a good argument. We were
debating the merits of public funding for the Plan B stadiums
and the civic responsibilities of the Rooneys and the Pirates. We
also engaged in a discussion about the prospects for Downtown
Pittsburgh, which was less than vibrant at the time. A fourth
gentleman decided to enter the fracas to interject his negative
opinions about Downtown and to assert that no one would ever
live in Downtown Pittsburgh until there were lots of shopping
and a grocery store. I did not respond to this viewpoint gently.
Mayor Tom Murphy had gone to the political mat to wrangle
the funds for the Plan B deals and he was passionate about
revitalizing the Fifth/Forbes corridor, but I believed he was also
dead wrong about his theory that retail would attract residents.
I mentioned that to the party guest in a fashion that was, shall
we say, full of enthusiasm. Also volume. He quickly retreated to
the other end of the dinner table and informed the hosts that I
was nuts. He wasn’t expressing disagreement with my position;
he was expressing the opinion that I should be locked away. My
wife, as you might imagine, was mortified.
Setting aside the social faux pas, the passage of time has
validated my point. I’m not sure where the idea started that
people wouldn’t move into an urban setting unless there was
retail but the theory doesn’t hold up. Our understanding of what
drives urban living has deepened in recent years but even in
1999 the city fathers should have known that urban dwellers
want access to lifestyle amenities and culture, not necessarily
retail. And retailers aren’t in the business of speculating where
rooftops might pop up when selecting sites. They want the
rooftops there first. Think of it this way: WalMart or Home
Depot didn’t drop stores at Crider’s Corners in 1985 in the
hope that Cranberry Township would grow. It took about 5,000
new homes and ten years or so of a boom before the retailers
made the commitment. Those same dynamics apply to city
neighborhoods as well.
Maybe the question that should have been asked at the time
was what kinds of retailers or grocery store would be expected
to move into a town of less than 4,000 people that was sixtenths of a square mile in size? Of course the better question
would have been why aren’t people moving into Downtown?
My feeling was that people weren’t moving into Downtown
Pittsburgh in great numbers because there weren’t places for
them to move. It took the financial crisis to create an atmosphere
so fertile for apartments and recognition that Pittsburgh had
it going on to get some momentum for developing scale in
housing options in Downtown. Prior to that, development
Downtown was pretty limited, with a handful of small loft
projects and a couple of new apartment or condo buildings.
And it’s hard to know if the Encore, Penn Garrison or 151 First
Side would have gone forward without Eve Picker’s willingness
to convert some of the old “sliver” buildings into lofts when
conventional wisdom advised against it.
What really opened the gates for new housing Downtown
was the financial problems of government. Being broke kept
Pittsburgh’s mayors from awarding more millions in fees to
planners and developers (usually from outside Pittsburgh,
of course) and allowed developers (usually local) to grow the
housing stock organically based upon their own assessment
of demand and risk. The Commonwealth couldn’t justify
maintaining an office building and Millcraft’s Rivervue took its
place. The former Alcoa headquarters didn’t work as a home
for government-related agencies and was sold to make way
for more apartments and offices. Government couldn’t afford
to lead development – not that it ever should – and was much
more effective in a role of supporting it instead. I think there’s a
lesson there.
Once the free market took over, the pace of development
Downtown quickened. When I moved back to Pittsburgh in
1991 after eight years away, much was the same in Downtown as
it had been in the late 1970s. There were fewer people working
Downtown and not much life there; and that remained the status
quo for another 15 years. Over the past eight years, however,
life in Downtown has done a 180-degree turn. Think about
Fifth Avenue or Market Square or the hundreds of students
roaming around the Boulevard of the Allies or Third Avenue.
Literally dozens of mostly-empty buildings have had their end
uses completely changed and become full. Restaurants in the
Cultural District are full on Tuesday evenings. Some 2,000
more people live there. Companies are able to attract talented
workers because they are located Downtown.
Living and working in the center of town isn’t for everyone. All
over the U.S. there has been a revitalization going on in urban
centers and Pittsburgh has joined the list. Pittsburgh’s two
biggest job creators are headquartered in Downtown so the
trend should only continue. With two rivers, three major league
stadiums and lots of night life for entertainment, it’s hard to
figure what took so long for Pittsburghers to take a shine to the
place again. I guess we just had to get out of our own way.
Jeff Burd
BreakingGround November/December 2015
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REGIONAL MARKET UPDATE
For construction-related companies, the die is pretty well cast
for the year by the end of the third quarter. For industry observers, third quarter results give a similar clarity to how the
year is going to end, but with an eye towards how the trends
are indicating the coming year will go. By most measures, the
data for 2015 shows increased activity and the solidification of
three major trends that will color how 2016 goes.
The trends that are driving construction are: multi-family,
midstream/downstream energy and commercial real estate
development. In the case of multi-family development, the
pipeline activity portends surprising legs for what is a fouryear phenomenon. For the latter two trends, the pipeline of
projects (including pipeline projects) is growing, creating an
environment with even more construction activity into 2017.
First, the data. Nonresidential contracting experienced a robust quarter, with contracting volume of more than $1.4 billion. Through three quarters of 2015, nonresidential contracting was at $2.8 billion, which was 45.8 percent higher than the
same period in 2014.
The biggest drivers of volume have been
industrial projects, primarily gas processing
facilities, bridges and dams and multi-family
complexes. Office construction, especially
flex office, was up year-over-year, as was
hotel construction. Two major categories,
healthcare and education, experienced
lighter-than-average contracting volume.
That has been the case for nearly two years.
Housing also saw a significant increase in the third quarter,
in both single-family and apartment starts. New single-family
home permits still lagged the number of permits issued during January-to-September 2014, but the deficit declined to
4.9 percent – or 73 units. Apartment starts jumped to 1,556
units, an increase of roughly 40 percent over 2014. The total
housing market surged 18.2 percent, to 3,584 units.
The increase in single-family housing is especially positive, if it
represents the beginnings of a permanent uptick. New home
construction in Pittsburgh has not recovered to pre-recession
levels, even though the economy in the region has more than
bounced back. Housing starts actually began to slow in Pittsburgh two years prior to the mortgage crises because of dwindling lot supply. The lack of available financing and developer
risk aversion kept new development from picking back up in
the first half of the decade. During the past two years, subdivision entitlement has increased and the activity in July through
September is an indication that inventory is finally swelling.
With new and existing home prices rising in Pittsburgh more
rapidly than the national average and a shortage of supply
relative to demand, the growing lot inventory will provide a
relief valve for the housing market.
Construction and design in the industrial sector continues to
swell, especially in the energy and power segment of that
market. Information from those close to the Royal Dutch Shell
decision-making process is that the decision to proceed has
likely now been made but will require approval from Shell’s
board of directors at its December meeting. There was no
indication from the main engineering and contracting entities as of early November, however, it was reported that the
enormous pilings package had been released for fabrication
and proposals were taken for the parking garage on the site.
Unlike other portions of the more than $100 million in contracting that has occurred, these packages go beyond the
so-called “ready work” and would not be needed unless the
plant goes ahead.
Absent an announcement about the ethane cracker, indicators like bid packages serve as news for what will be a catalyst for the downstream gas market. Users continue to inquire
about sites for facilities that would either be customers of
Shell’s or would support the plant.
Among those projects advancing ahead of an official announcement to proceed is the 252,000 square foot first warehouse in the second phase of the Clinton Commerce Park
in Findlay Township. That phase will also include a 230,000
square foot second warehouse. Several miles to the south,
New home construction was ahead of 2014 levels through three
quarters. Source, Pittsburgh Homebuilding Report.
Ashley Capital is preparing to start construction on a 316,000
square foot distribution center at the Findlay Industrial Park
being developed by Imperial Land Co. And within a mile of
the Shell site, Millcraft Investments has closed on the land to
build a 107-room Home 2 Suites by Hilton, the first of two
hotels the developer plans in the Monaca area.
Despite difficult conditions for the oil and gas companies, the
midstream activities in the Marcellus and Utica remain heavy.
The low commodity price has been a drag on shale gas development but the bigger problem for producers in the Appalachian Basin is the lack of infrastructure to deliver gas to
all its potential markets. That lack of processing and pipeline
network causes producers to sell the natural gas at a discount
of as much as 50 percent below the hub price.
Consolidation in the midstream market led to the acquisition
of the two biggest players working in Western PA’s midstream
BreakingGround November/December 2015
7
Construction Manager and Constructor
for the Renovations and Restorations
to the historic Union Trust Building
facilities construction, MarkWest and Williams. While the integration of mergers has likely slowed down activity, capital
spending on processing and distribution in Western PA will
be several billion dollars in 2015.
The Mascaro Advantage
The enormity of the midstream and downstream potential
is one of the major reasons the Mascaro family joined with
Australian engineering company Monadelphous to form
Monaro LLC. The independent company will pursue opportunities to build pipelines and other infrastructure facilities needed by the companies exploring the Marcellus and
Utica shale play.
Among those opportunities are the $2.5 billion Mariner
pipeline, which will transport ethane to the Gulf Coast and
NGLs to the terminal in Philadelphia and New Jersey to facilitate exporting; and Kinder Morgan’s Cochin Marcellus
Lateral Extension, linking the Western PA gas fields to the
Sarnia, MI and Chicago terminals and plants.
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One burgeoning sub-sector of the energy market that is
percolating towards Western PA is gas-fired electricity
generation. In response to increased regulatory burdens
on coal-fired generation plants, operators are building new
plants that run on natural gas or converting some of the
coal-fired facilities to natural gas. The prevailing technology is combined cycle generation, which uses waste heat
from one generating cycle to supplement and reduce the
amount of gas needed to make steam for turbines. Combined cycle plants use less energy to generate the same
amount of electricity and are using a fuel that is cheaper
and more plentiful. Over the past year or so, more than a
dozen such plants have been on the drawing boards for
sites between the Susquehanna and eastern Ohio. Within
the last month or two, several projects in the 14-county
southwestern Pennsylvania footprint have moved closer to
construction.
On the most imminent of the projects, the 950-megawatt
Tenaska Westmoreland plant in South Huntingdon Township, an engineering-procurement-construction (EPC) firm
was selected. Kansas City-based Black & Veatch will be
completing design and putting bid packages out this winter. Black & Veatch is also the EPC on the co-generation
plant in Moundsville, WV. In Cambria County, Competitive
Power Ventures has proposed a 980-megawatt combined
cycle plant ten miles north of Johnstown in Jackson Township. That project is in the early stages of planning. The full
spectrum of utility and environmental approvals has to be
received, but CPV anticipates operating in 2019.
NRG Energy has already navigated most of its regulatory
hurdles for the conversion of its 325-megawatt West Pittsburgh plant near New Castle. The company had originally planned to shutter the coal-fired facility but will invest
roughly $200 million to switch to natural gas.
www.mascaroconstruction.com
www.mascaroconstruction.com
8
www.mbawpa.org
Uncertainty about the healthcare market continues to limit
capital spending on hospital projects but the region’s two
major health systems are both increasing their activities.
Allegheny Health Network has undertaken a $40 million mechanical infrastructure renovation at Allegheny General Hospital. Bystanders can observe the structural steel to support additional air
handlers being placed on the roof of the Snyder Pavilion. Further
improvements to the building systems at AGH will complete the
project. According to Dick Thompson, AHN’s senior facilities executive, the health system is exploring several areas where it has
little or no presence and feels patient demand would support
new facilities. Thompson noted that there were three or four locations of interest but the strategic analysis of the projects was in
progress. Any new construction that would result from the study
would not occur until 2016 or later.
UPMC is likewise looking at its massive footprint to determine
what services are needed and what facilities should provide those
services. UPMC’s capital budget for 2015-2016 is roughly $200
million, most of which will be invested within its existing hospitals.
One new project that is advancing is a 40,000 square foot medical office/outpatient facility on Route 8 in Hampton Township that
IKM is designing. UPMC expects to present its plans for municipal
approval before year’s end.
ing Foundation, and Walnut Capital remain in the running for the
450,000 square foot mixed use project. CMU’s other major project, the $100 million Tepper School of Business broke ground
on October 30. Bid packages should go out in November and
December. PJ Dick is that project’s construction manager.
Although architects continue to report high design volume,
market sentiment among contractors is less bullish. The Master
Builders’ Association’s C3 Index showed improvement in three
categories – business climate, bidding activity and backlog –
that usually dictate how firm owners view the market; however,
the contractors dropped their grades for their projections
enough that the overall index fell. The MBA’s director of community outreach, Jon O’Brien, noted that each of the C3 surveys
in the third quarter have always shown negative scores for future
prospects, suggesting that the seasonal slowdown may be influencing the results. BG
The Carnegie Mellon gateway project announced in late summer has advanced to a short list of three development teams.
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BreakingGround November/December 2015
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NATIONAL
MARKET UPDATE
however, only two more opportunities to do so exist. It will
not be until November 18 that the discussions and decisions
made at the October 27-28 FOMC meetings become public.
Through three quarters of 2015, construction at the national level has grown robustly. Data from all sectors of the construction industry shows higher activity, dramatically higher in
some sectors. Even those construction categories that reflect
consumer confidence continue to show strong growth over
2014. If there are real threats to the U.S. construction economy the evidence is only manifest at the fringes of the market.
Whether or not the FOMC chooses to bump rates in October,
December or later, the arc of increases that will follow is certain to be very gradual. Given the Fed’s continued concern
about the fragility of the economy and the fact that interest
rates in many global markets will remain at or below zero, it’s
unlikely that U.S. rates will rise more than one percent until
2017. A good benchmark to follow will be how gross domestic
product (GDP) trends. The correlation between GDP and the
ten-year Treasury note has historically been very close. Given
the forecast for GDP growth for 2016, there seems to be little
chance of the ten-year T-bill consistently yielding more than
three percent until 2017. Should GDP rise to three percent or
higher, the strength of the economy will more than offset any
rate hike concerns.
When allowed to operate free of stimulation or regulation, the
construction market is an excellent barometer for the overall
economy. Homebuilding reflects the confidence of the consumer in his or her job and the prospects for future financial
security. Commercial construction expands when the number
of workers increases or the demand for goods and services
requires more shops or warehouses. Leisure and business travel increases in a
healthy economic environment and more
hotels and recreational facilities follow.
Even public construction could be an
indicator, as more and fatter paychecks
mean higher tax revenues and more capital spending (alas, government has long
ceased to operate with fiscal logic).
Taking all that into account, the yearover-year growth for construction should
be seen as a referendum on the U.S.
economy. Businesses and consumers are
voting for growth with their wallets; yet,
there are plenty of cautious signals about
this point in the business cycle.
Perhaps the most-watched sign about the
direction of the economy is the impending decision by the Federal Reserve Bank
to raise interest rates. The rate increase
itself is virtually inconsequential. No one
expects any increase to be greater than
25 basis points and even that quarter of a
percentage in borrowing costs is already
baked into lending and investing. The significance of the rate
increase is that it would mark the final milepost in the Fed’s
belief in a full recovery from the Great Recession and should
be the first step towards the normalization of rates.
Most economists were expecting that the Federal Open Markets Committee (FOMC) would have raised the money-trading rate by 25 points in summer 2015, likely in the August
meeting. The correction in the stock markets and the further
weakening of the global economy – notably in the Chinese
economy – were enough for the rate doves to persuade the
FOMC to stay the zero-interest course. After the August meeting, a survey of the 17 FOMC members revealed that a strong
majority of 13 believed an increase should occur in 2015;
NAHB/Wells Fargo Housing Market Index surveys builders
and realtors about new home sales and traffic in the current
month. Source NAHB.
Lower rates are good for construction. Commercial real estate competes with mid-range bonds like the ten-year Treasury or corporate bonds for investors. Low rates allow current
projects greater margin of error for performance. Low rates
will also help mitigate whatever damage could exist from the
refinancing of poorly performing ten-year loans that will be
maturing in 2016 and 2017. In the current environment, even
long-term debt is commanding historically low interest, meaning that 30-year mortgages and municipal bonds are historically cheap to finance construction.
BreakingGround November/December 2015
11
tors: slowing growth in China and
emerging nations; continued contraction of businesses involved in
oil and gas exploration; and the
relative strength of the dollar, which
hurts exports of American-made
products. Both the strong dollar and
cheaper energy have salutary effects
on the economy, meaning that economic health may not be judged
completely by growing output.
Most macroeconomic signals are still positive heading into
the fourth quarter, although few forecasts for GDP growth
are expecting more than a 2.5 percent increase. These muted forecasts are being weighed down by three major fac-
Among the varied indicators of a
slowdown are declines in manufacturing output and employment,
and slower job creation. But the
best indicators of manufacturing
are still positive, if slowing. The ISM
non-manufacturing index was still
well above even, at 56.9, indicating that expansion would continue.
Although the pace of growth was
slower, non-manufacturing backlogs
and new sales grew again in September. Job growth in August and September was 136,000 and 142,000 respectively. That marked the first two-month increase below 150,000
since May-June 2012 but the drags on job growth were tied
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2015
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to cutbacks in limited sectors – such as energy – that are
expected to be temporary. Jobless claims remained below
300,000 for the longest stretch since 1973. Payroll processor
ADP reported consistent job growth in the private sector,
with August and September at 186,000 and 200,000.
It’s likely that the labor
market is the key reason
for the strength in current
construction volume but
the weakening around the
edges of the economy is
beginning to have an effect. Even within the ADP
National Employment Report there were signals
that the recovery is hitting
its peak. In September, more than half the total jobs created were at companies of 500 or more and only 37,000 jobs
were added at small businesses. Compare that to the mix in
August 2014, where the 230,000 new jobs created were split
almost evenly between small and medium businesses, with
only 5,000 jobs coming from large corporations. Negative
economic indicators like the global slowdown are not appearing in current contracting volumes but rather in longerterm signals.
In its October 16 Friday Market Insight, real estate service
giant Newmark Grubb Knight Frank reported that industrial
space absorption had declined in the third quarter, falling to
42.6 million square feet. That’s seven million square feet less
than a year earlier. The weak dollar and weaker global demand are softening the need
for warehouse space. During
the third quarter, completions
also outstripped absorption, a
sign that new industrial construction will slow in the coming quarters.
Most macroeconomic signals
are still positive heading into the
fourth quarter ...
Another forward-looking indicator is the AIA’s Architectural
Billings Index (ABI). The ABI
had been robust since spring
but dropped to 49.1 in August, meaning more firms saw declining billing than increasing in August. The nature of architectural practice tends to create more volatile billings than
other professions, as most architectural firms are small and
increases in time spent on construction administration, for
example, can lead to a natural decline in the overall billings.
Given the earlier increase in billings – an indication that more
was being designed – there is some likelihood that billings
will dip for a month or two; however, the performance of the
ABI going into the winter will be a strong indicator for 2016.
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BreakingGround November/December 2015
13
Until such time that weakness spreads further into the economy, construction is hitting on all cylinders.
Construction spending in September reached a seven-year
high of $1.094 trillion, 0.5 percent higher than the August rate
and 14 percent higher than September 2014. August’s spending was the highest level since March 2008 and the year-overyear growth rate was the fastest since January 2006. Yearover-year growth was significant in most segments. Private
nonresidential construction spending increased 15 percent;
private residential rose 17 percent; and public construction
showed a 9.4 percent increase. The rise in public construction is rooted in the low levels of spending in 2014. Since the
recovery of construction began, private and public spending
have been on divergent trends and the variance has become
more pronounced over the past 12 months.
Notable changes within segments of nonresidential construction were a 58 percent increase in manufacturing plants, owing
to major projects in chemical and transportation equipment
plants, an 8.8 percent drop in energy spending, and a 28 percent rise in office construction. Highway construction was up
seven percent. Single-family home construction spending was
14 percent higher and residential improvements were up 17
percent.
Data on new home starts was similarly robust. U.S. Census Bureau reported on October 20 that housing starts hit 1.2 million
units annually in September and revised the activity in August
upward to 1.13 million units. September starts were 17.5 percent higher than September 2014. An 18.3 percent increase in
multi-family starts drove the increase.
Building permits for new homes slipped five percent in September to 1.1 million units, foreshadowing a slowdown in
growth in the coming months. Like with September starts,
the decline in permits came from a steep drop in permits for
apartments. At the same time, another indicator of the housing market hit a ten-year high. The National Association of
Homebuilders/Wells Fargo Housing Market Index (HMI) registered a 64 in October, the highest reading since September
2005. The HMI survey looks at sales and traffic for new homes,
which has proven to be a reliable indicator of buyer sentiment
in the short term.
As the fundamental drivers of both residential and nonresidential construction show continued growing demand that is
ahead of supply, the most relevant concern for 2016 will be
the national election. Conventional wisdom holds that nothing happens during a presidential election year but you only
need look at 2008 or 1996 to see that the construction economy can move significantly in either direction during a presidential campaign season, even if there are no major policies
that depend on one party or another winning. At this point in
the business cycle it will be better for construction in 2016 if
supply and demand move the market instead of politics. BG
14 www.mbawpa.org
WHAT’S IT COST?
Rising competition for fewer workers could change that trend
in 2016 or 2017.
Reports from three research firms and the Bureau of Labor
Statistics (BLS) showed that prices for construction products
and materials remained below the overall rate of inflation
while costs for labor rose at a faster pace through the first
nine months of 2015. The impact of competition for labor and
materials are likewise having opposite effects.
The competition for skilled workers has begun to offset the
stagnant or declining costs of materials, according to consultant Rider Levett Bucknall. The firm reported on October 2
that its 12-city Comparative Cost Index survey showed that
“the national average increase in construction cost was approximately 1.15 percent” from April through June. Rider Levett Bucknall tracks the bid cost of construction, including the
overhead and profit of the general and specialty contractors,
in addition to labor and material costs. The U.S. year-over-year
increase was 5.3 percent, up from 4.3 percent a year earlier.
The October 14 BLS report showed that the producer price
index (PPI) declined 0.7 percent in September and 1.1 percent during the prior 12 months. The PPI for final demand
construction rose 1.8 percent compared to September 2014.
Within the major nonresidential building categories yearover-year increases were fairly consistent with the overall inflation rate. Increases ranged from 0.2 percent for healthcare
construction to 1.8 percent for schools, 1.9 percent for warehouses and industrial buildings, and 2.4 percent for offices.
Taken together, the reports paint a portrait of an industry
where improved construction volumes are allowing labor to
demand higher wages and contractors to increase their margins, while the prices for materials and building products remain under pressure from poor global conditions. BG
Declines in energy costs from earlier in the summer
and from last September held prices for most materials at or below the overall inflation level. The PPI
for inputs to construction declined 1.3 percent, with
energy falling 13 percent. As could be expected,
prices for diesel fuel dropped 11 percent from August to September and 44 percent year-over-year.
Stronger U.S. construction activity was overshadowed by slower global demand for many major materials, pushing steel mill products down 15 percent;
copper and brass down 14 percent; aluminum down
12 percent and lumber and plywood down 11 percent. The only materials showing gains significantly
above inflation were flat glass at 3.6 percent and cement at 6.3 percent.
Securities analyst Thompson Research Group (TRG)
reported the results of its monthly survey of building products firms, finding that manufacturers have
been unable to hold onto price increases imposed
earlier in 2015. Here again, downward pressure from
poor overseas markets caused manufacturers of steel
studs, insulation, roofing and drywall to give back
price increases that were between five and 15 percent. Most manufacturers surveyed expected to reinstate price increases early in 2016. The persistence of
those increases will again hang on how well demand
from markets outside the U.S. fares.
Competition for labor in the U.S. is experiencing the
opposite dynamics. Labor is a factor that is independent of overseas markets except to the extent
that immigration is encouraged or discouraged. The
Construction Labor Research Council reported that
local union wage and benefit agreements negotiated from January through September 2015 averaged 2.5 percent increases for the first year and 2.6
percent for the second and third years. Since 2011,
the trend has been that multiple-year increases have
remained mostly flat with the first year’s increase.
BreakingGround November/December 2015
15
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16 www.mbawpa.org
A
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The last decade has seen the fortunes of Downtown
Pittsburgh improve dramatically. Two new office
towers have been built. More than 1,000 new apartments or condominiums have been built. Relatively
small public investments have been leveraged to
reinvigorate moribund properties and amenities,
like Market Square, into vibrant pieces of the Downtown lifestyle.
As a neighborhood, Downtown has been developing and growing just as any other desirable neighborhood. Attempts to revive the neighborhood
succeeded only after more residents moved into
Downtown. Lifestyle amenities prospered as more
households were formed Downtown.
There’s even a new school and grocery store. There
really isn’t any magic formula that worked a miracle cure. But unlike any other urban neighborhood,
Downtown has some distinct advantages in Pittsburgh. Investments that were made for the public
good in the 1990s created a cultural district that is
a draw seven days a week. All of Pittsburgh’s major
sports teams play their home games at the fringe of
Downtown. And hundreds of thousands of workers
come into that neighborhood every day to work,
bringing economic opportunity to the businesses
that are established there.
BreakingGround November/December 2015
17
F
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R
E
The Forbes Avenue entrance for the proposed Point Park University Playhouse. Rendering by Westlake Reed Leskosky.
Use courtesy Point Park University.
It’s not possible to point to one tipping point that changed the
trend in Downtown, although there are some clear milestones
that seemed to be points of departure from the previous norm.
Some of those, like the renovation of Market Square and the Fifth
Avenue buildings that adjoin it, were transformational. Others,
like the development of a Fairmont Hotel, validated the depth of
the market in Downtown.
As we move into the second half of the decade, there are signs
that the momentum is fading and that another phase of the revitalization is underway. The keys, just as they were in 2005, will
be jobs and residents. A hot office market is facing some headwinds over the next couple of years and the health of Downtown’s
employers or potential new employers will determine how the
18 www.mbawpa.org
market turns. And after an extended period of new residential
development, particularly that which repurposed many outdated
commercial buildings, there are questions about whether the demand is deep enough to draw another thousand or more people
to live Downtown, or whether development on the fringes will
supersede Downtown living.
Working Downtown
For all the surprise registered by long-time Pittsburghers over the
growth of residential units in Downtown, it’s the office market that
is actually the outlier when compared to other cities. Pittsburgh
was unusual in that very few of its citizens lived in its Central Business District (CBD). There was no reason to think Pittsburghers
F
E
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Development of new housing Downtown spiked since 2010.
wouldn’t move Downtown other
than the status quo a decade
ago. On the other hand, the office vacancy rate in Downtown
Pittsburgh had been stuck on
high for much of the previous
decades since the last of six
high-rise buildings were completed. Prior to 2007, at least,
there was little on the horizon to
predict that space would soon
be at a premium but Downtown
Pittsburgh’s office market started to outperform almost every
comparable U.S. market.
The things that spur growth – new business attraction, employment growth and population growth – hadn’t happened in Pittsburgh since the early 1990s. When there were employment-driven development spurts, the new construction and leasing activity
was suburban, in places like Cranberry and Southpointe.
Vacancy rates in the CBD were still stuck in the high teens when
the recovery from the Great Recession began. Within five years,
that rate had declined to nearly ten percent in the commercial
Class A buildings. Including the owner-occupied buildings, vacancy was closer to five percent. How did such an improvement
occur? More jobs and less space.
According to the U.S. Bureau of Labor Statistics, there were
roughly 25,000 more office-using jobs in Pittsburgh in 2014 than
in 2005, with about 15,000 of those jobs being added since the
recovery started after 2009. If you are generous with the space
requirements for those new jobs – say 200 square feet per person
– that means job creation accounted for 3,000,000 square feet of
office space since 2009. Of course, that’s an MSA-level number,
which means that a significant amount of that space – perhaps
even a majority – ended up in suburban developments like the
new Westinghouse campus or Southpointe. Other factors had to
be at play.
One significant factor was the adaptive re-use of existing older
office buildings that were functionally obsolete. Part of the symbiosis of Downtown’s resurgence has been that demand for new
residential space – which would have been impossible to meet
only with new construction – could be met by taking dysfunctional space and converting into a better use.
Gerald McLaughlin, executive managing director for Newmark
Grubb Knight Frank’s Pittsburgh office, notes that over three million square feet of office space Downtown has been converted
into another use over the past five years. McLaughlin points out
that that space would have been very difficult to make useful to
meet the needs of the modern office user.
“Back in the day, office buildings had smaller floor plates. Many
had no HVAC system when they were built and the windows and
column spacing were wrong for modern offices,” he says. “It’s
very tough to make Class B office into competitive Class A space.
There was a lot of Class B space for which the highest and best
use wasn’t office anymore. What’s great for Pittsburgh is that a
BreakingGround November/December 2015 19
lot of that space that was empty and an anchor around the market’s neck is now some
pretty neat space.”
The majority of those conversions have
been to residential usage and the variety of
the buildings is broad. The projects run the
gamut from offices that were modern structures of the 1950s and 1960s, like the former Alcoa and Bell Atlantic headquarters,
to the many “sliver” buildings that have
been converted along Penn and Liberty Avenue. On the southern side of Downtown, a
lot of the buildings taken off the office rolls
have been converted to student housing
and classroom space for Point Park University, which has become the third largest land
owner in Downtown behind PNC Financial
Services Group and the Pittsburgh Cultural
Trust.
Over the years, Point Park added 18 buildings and only one of those, the George
Rowland White Dance Studio in 2008, was
built new in the last 50 years. The pace of
acquisition picked up after an Urban Land
Institute study – funded by the Heinz Foundation – created a vision of the campus as
the so-called Academic Village. Point Park
took on a number of buildings that dated
back a century and were functionally obsolete as office. Many of the buildings had
architecture worth preserving. The market
got to keep the beautiful architecture while
shedding space that wasn’t performing.
The equation of new jobs and fewer buildings helps explain how the occupancy numbers went up but it doesn’t fully answer
the question of how the office market got
so tight and Downtown got so much more
vibrant. It would be hard to imagine Downtown 2015 without the real catalysts, UPMC
and PNC.
Two of the Commonwealth of Pennsylvania’s largest employers, UPMC and PNC
each made decisions about locating their
headquarters that had regional implications
and each decision took the region’s wellbeing into account as part of the process.
UPMC now leases almost 1.1 million square
feet at 600 Grant Street and the Heinz 57
Center. The majority of those are at 600
Grant Street. While many people in the region may find it odd to see the UPMC letters on top of the iconic home of US Steel,
it’s worth noting that the healthcare com-
20 www.mbawpa.org
pany now occupies 23 full floors (and part of a 24th) while the
original occupier could make do with six or seven. It’s hard
to imagine the Downtown office market as bullish during the
past few years with over 900,000 square feet more available
in Pittsburgh’s priciest office tower.
With the occupancy of The Tower at PNC Plaza underway,
PNC will have spread out to almost four million square feet
by 2016. Even with One and Two PNC Plaza vacating while
the two buildings undergo systematic renovation over the
coming four or five years, the banking giant will still make up
about ten percent of the total space in the CBD.
PNC is the owner of the two office towers built in the past
decade but its importance is less in the occupancy than in
the commitment to Downtown as its home. Most of PNC’s
footprint is owner-occupied – although its leases at 600 Grant
Street and 20 Stanwix aren’t insignificant – so the bank’s
growth didn’t have much impact on the vacancy rate, but it
has impacted the psyche of Downtown businesses. The influx
of people has added well-paid shoppers and diners. Anecdotal evidence is that many of its employees that are new
to Pittsburgh are choosing to live where they work, absorbing many of the new apartments. Moreover, the selection of
Downtown for a new and one-of-a-kind headquarters sent
the signal that Pittsburgh corporations could do well and not
leave town. That was a boost of confidence for the business
community.
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What PNC has also done by locating Downtown and assimilating its acquisitions here is create a flow of new talent into
the city. With its design choices – proudly choosing to build
the greenest headquarters in the world – PNC is also using
its real estate as an asset for enhancing its employees’ lives
and careers. Its buildings are part of its talent attraction and
retention strategy. The key to the health of the office market
of 2020 may well lie in the ability of other businesses to do
the same.
The office market in Downtown has some headwinds in its
future. Several of its larger buildings will have some significant vacancy by 2017. Development in the Strip is expanding
the envelope of the CBD and attracting tenants that might
have rented Downtown. There will be more competition for
tenants as space becomes more available. The softer market
will be good for tenants and brokers, and should create more
movement and construction projects, but more vacant space
is a threat to the virtuous cycle of increasing rents that the
market is experiencing.
Gerard McLaughlin
Executive Managing Director
gmclaughlin@ngkf.com
“There is definitely upward pressure on rents. We see it in
every deal,” asserts Steve Guy, Oxford Development’s CEO.
“Business owners understand there’s a higher quality to buildings in the CBD. There’s the convenience, amenities and access to most public transportation. Also, rents are actually inflationary right now because tenant improvement allowances
are higher.”
Louis Oliva
Executive Managing Director
loliva@ngkf.com
www.ngkf.com
210 Sixth Avenue, Suite 600
Pittsburgh, PA 15222
T 412.281.0100
BreakingGround November/December 2015
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Higher rents make office buildings more
profitable and more attractive to buyers
and investors. The trend of recent years
is the reason we see Downtown buildings
selling to investors from out-of-town and
foreign countries. But higher rents also allow landlords to make improvements and
upgrade systems that are older. To keep the
rent growth trend intact, more employers
will have to be attracted to the CBD. That
means there will need to be a motive to
paying a premium to be in Downtown.
The point is often raised that Pittsburgh’s
rent is a relative bargain for companies relocating from other U.S. cities. Rents in major
cities like New York, Washington DC or San
Francisco are two or three times the average rate for Class A in Pittsburgh’s Downtown. But Jeffrey Ackerman, managing director for CBRE in Pittsburgh, rejects that
argument. “There are also small and medium-size markets, like Cleveland or Kansas
City, where rents are $25 per square foot,”
he reminds. “Someone coming from one of
those cities would certainly flinch at $40.”
Of course, the same holds true for Pittsburgh companies based in the suburbs.
With the exception of the East End, rents
outside of Downtown are in the $20 to $25
per square foot range in even the best locations. Long-term leases in that range can
support new development in the suburbs
but rents will need to increase to $35 to $40
to make new construction work Downtown,
where Steve Guy sees a $75 to $100 per
square foot construction premium.
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“I think rents have to grow to where we’re
getting Downtown to what rents are in
Oakland or Shadyside are, with new construction getting $35 or more,” Ackerman
says. Asked what would boost demand for
Downtown office so that rents rose more
quickly and tenants were willing to pay a
premium to be there, Ackerman responds,
“More urbanization, more hotels, retail and
entertainment. We’re moving in that direction. It just needs to be that much more attractive so that companies feel they need
to be there because their employees want
to be there. If it becomes about attracting
talent, that will make the difference.”
Ackerman says that foundation of the successful development in the East End has
been the technology-based companies
that are attracted to Carnegie Mellon and
22 www.mbawpa.org
The addition of The Tower at PNC Plaza and Tower
Two-Sixty (center) will bring more activity to the Forbes
Avenue corridor into Market Square.
“Street level is the number one issue. We need to
improve the streets if we’re going to continue to
improve Downtown,” says Guy. “Things are moving in the right direction but the CBD has issues
with deteriorating infrastructure. Public transit has
to improve to make the streets more pedestrianfriendly, which is one of the reasons people want
to be in the urban fringes. The litmus test is can
a young woman walk down any street at any time
of day and feel comfortable. Downtown living has
been wonderful but we need more to create the
vibrancy.”
Vacancy rates have drifted up slightly since reaching 8 percent
in 2012 while rents continue to climb.
University of Pittsburgh. The attraction Downtown will have to be
based more on a lifestyle and most feel that Downtown is on the
right track but not quite at the destination yet.
Improving the street-level experience has become
one of the Peduto Administration’s top priorities for Downtown.
Mayor Peduto announced in March that the city was committed
to investing $35 million – of which $32 million would go to capital
projects – over the next five years to upgrade infrastructure.
At the same conference, Mayor Peduto announced the formation of Envision Downtown, which has the mission of activating
BreakingGround November/December 2015 23
public/private funds to undertake dozens of small but meaningful
projects that will improve the public experience Downtown over
the next few years. The executive director of Envision Downtown,
Sean Luther, says the goals of the organization are practical not
academic.
“Envision Downtown was born out of talks between the Hillman
Foundation and the City of Pittsburgh about how to improve the
experience of being Downtown and how to capitalize on the
great things happening there,” Luther explains. “It’s not a planning exercise. We are trying to find existing plans and kick start
them into action. Our thought is that we will initiate long-term
planning at some point but the mission is action.”
The first of those plans is already in action. The Strawberry +
Smithfield project involves a repaving of Smithfield Street between Seventh and Oliver, which is underway, and improvements
for transit riders on Smithfield and Sixth Street. The latter involves
widening the sidewalk on Smithfield by six feet to create a “platform“ for riders, including installing a bus shelter. Pedestrian improvements on Strawberry Way will follow in a second phase.
Envision Downtown also commissioned Denmark’s Gehl Studio
to perform the Public Spaces + Public Life Survey. “We want a
better understanding of how Pittsburghers use public space and
a quantitative study of how public resources should be used.”
Luther uses Market Square as a hypothetical case for how the
study might quantify the needed projects.
“Instead of saying Market Square is successful because it’s pretty,
we want the study to say Market Square is successful because
2,000 people eat lunch there every day and if we had 500 more
seats it could be even more successful,” he says.
Living Downtown
When the Encore and 151 First Side were built in the mid-2000s,
many experts – including one or two of the developers – expressed the opinion that these might be the last of the projects
that would add to the inventory Downtown. The feeling was that
absorption would be saturated once those properties were stabilized. Rather than representing the peak of the housing push
Downtown, the construction of the Encore and 151 First Side
were actually the early phase of the wave.
Within the Golden Triangle, growth of population has spiked
during the decade of the 2010s, as has the construction of new
units, not surprisingly. While annual totals aren’t available, Census Bureau data shows that population has jumped over 80
percent since 2000 and more than 28 percent from 2010 to
2014. Based on the average residents per dwelling unit historically, there will be over 6,000 residents in the Golden Triangle
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when the current crop of planned apartments and condos is
completed.
Since 2010, 1,027 units have been completed or are under construction, bringing the total number of multi-family units to 2,722
once construction is completed. There are another 596 units
proposed in the pipeline in the Golden Triangle, which will bring
the total inventory to 3,318 when the decade ends. Including the
Strip District, Lower Hill District and North Shore, Greater Downtown has 4,752 units of multi-family but has another 3,730 under
construction or in the pipeline.
During the first months of 2015, there was a dip in the occupancy
level to 90.8 percent as more than 350 new units entered the
inventory in the latter months of 2014. Absorption of those units
picked up in spring, as happens with suburban apartments as
well, and occupancy moved back towards the 95 percent level
that existed prior to the new units coming online. In fact, many of
the metrics used to measure Downtown living are running more
and more in line with how residential real estate behaves throughout the region.
According to the Pittsburgh Downtown Partnership’s (PDP) 2015
State of Downtown Pittsburgh report, sales of condos in the
Greater Downtown rose 17 percent in 2014, with the average sale
price rising 3.6 percent. The average price per square foot rose
Mt Lebo Office Ad:Layout 1
10/1/13
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slightly more, jumping 4.8 percent to $246.88 per square foot.
That marked a cumulative 21 percent appreciation in the square
foot price since 2010.
Demand for living Downtown is driven by convenience and lifestyle. The foundation of New Urbanism is the desire to be in a
live-work-play environment that is all within walking distance or
within a convenient public transit commute. The compact size of
Downtown Pittsburgh and the access to its light rail system aligns
it with those goals very well. The fact that a few of the region’s
biggest employers are also Downtown adds to the convenience.
But while the CBD and its fringes are suited to those desiring an
urban experience, the demographics of Pittsburgh’s Downtown
residents aren’t in line with the norms in other major cities. Empty
nesters are the largest demographic cohort embracing Downtown living in cities comparable to Pittsburgh. In most U.S. downtowns, the rents are among the highest in the city and so the
financial barrier is higher for younger adults. Pittsburgh’s demographics should align well with the norm. We have a high share of
Baby Boomers living in the suburbs and a high share of suburban
dwellers who were raised in the City of Pittsburgh before moving
out. The reality, however, is somewhat different.
Far and away the largest demographic group living in Downtown
is the 20-29 year-old cohort, which makes up 31 percent of the
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residents. Even more surprising is the fact that those 15-19 (16.3
percent) and 30-39 (14.7 percent) make up a larger share than
the 50-59 year-olds (11.4 percent). In fact, all of the young adult
age groups comprise a larger share of the Downtown population
than those that are predominant in other cities.
Perhaps the reason that Downtown is appealing to younger
adults is the surprising fact that rents are lower there than in other desirable urban neighborhoods. After slipping this past winter, the average rent rose to $1.86 per square foot in Downtown
this summer. While that reflects a healthy leasing environment
and strong demand – and is some 50 percent higher than just
a few years ago – that rate is still 20 to 30 cents per square foot
below the rents in the new properties in Shadyside, East Liberty
or the Strip District. That may seem an indicator of demand that
is slightly lower than in those neighborhoods but it also means
there is room for growth if more upscale product comes into the
market.
The lower average rents aren’t slowing down development thus
far. While the starts of the recent half-decade won’t be matched
again, there are still projects in the hopper. Philadelphia-base PMC, which
is wrapping up the Alcoa
building, has plans for 200
Ross Street and has an interest in other properties.
Kossman
Development
announced 200 units of
apartments to be built
on the upper floors of its
building at Forbes Avenue
and Stanwix Street. Todd
Palcic has proposed converting the Hartley Rose
Building on First Avenue
into multi-family. Several
other smaller projects have
been proposed, including Millcraft Investments’
plan for up to 77 condos or
apartments above the new
350 Oliver project at the
former Saks site. Trek Development is a partner in a
50-unit apartment planned
for two adjoining buildings
at 711-713 Penn Avenue.
What will turn into another big round of development will be
the re-boot of the housing plans of the Pittsburgh Cultural Trust.
Originally a master plan of townhouses and apartments called
RiverParc, the project was awarded to Concord Eastman in 2006.
Plans for 700 units plus parks and retail were never fully developed and the project floundered when the housing crisis hit. Now
the development is being re-considered with the expectation of
going back out for proposals by private entities in 2016.
Unlike other older cities, Pittsburgh’s Downtown population is weighted
heavily towards the 20-29 year-old demographic group. Source: Pittsburgh Downtown Partnership State of Downtown Pittsburgh.
At 750 units, the new development is still ambitious and would
add significantly to both the inventory and variety of the housing stock in Downtown. In the original plan, several blocks of
townhomes or other high density “city homes” were planned
that would have a different character than stacked apartments.
Residents of those homes would leave their dwellings at street
level, without having access to amenities like the gyms and
community areas that the newer apartments offer residents.
The vibrancy and amenities would have to be the street level
life of which Steve Guy and Sean Luther speak.
BreakingGround November/December 2015 27
The Outlook
What has occurred in Downtown Pittsburgh over the past ten
years was not part of a well-conceived plan. It’s not that Pittsburgh’s politicians or advocacy leaders like the PDP didn’t envision a vibrant 24-hour Downtown; but rather that the elements
and projects that made a difference weren’t part of any plan that
was put forward. And there were a few.
Rather than having retailers like Lazarus or Lord & Taylor draw in
residents, it took the failure of that strategy to open up the opportunity for Millcraft to convert the Lazarus store into offices and
condos. That opened the door for the developer to finally make
something out of the lower Fifth Avenue corridor, which opened
the door for the renovated Market Square to have 24-hour customers, which opened the door for…well you get the picture.
Those successes may lead to a formal plan by the city or some
government entity somewhere down the line but thus far the best
playbook has been to let private investment decide what will
work in the market. Millcraft is a good example of private money
investing in what it perceives the market wants. The driver behind
its development of Downtown housing was seeing the success
of the product in other cities. That the idea didn’t have tons of
support in Pittsburgh didn’t deter the developer. In fact, Lucas Piatt, Millcraft’s CEO,
developed the mantra that “if people aren’t
laughing at you and calling you crazy, you’re
doing the wrong thing.”
The next place that people seem to be considering too crazy to succeed is the 28-acre
Lower Hill development. The project is off
to a slow start, with delays in the construction of the US Steel headquarters and the
on-again, off-again agreements between
the Penguins and the Hill’s resident groups.
At the same time, the project is 28 clean
acres adjacent to the business district, an
NHL arena and a Division 1 university. That’s
way more amenities than most developments get to have at the start. As the Lower
Hill project begins to unfold, the definition
of Downtown will probably expand.
On another side of Downtown, the Strip
District is already seeing a boom in development. Oxford’s 3 Crossings has been successful at attracting 150,000 square feet in
office tenants with only 50,000 square feet
under construction. The 300-unit apartment
called The Yards has 1,000 inquiries prior to
the opening of a leasing office. When development of Buncher’s riverfront property begins in 2016 with another 300-unit apartment
complex, the missing link between Downtown and the Strip will start to fill in earnest.
As for getting the premium in rent that users
pay for being downtown in other cities, there
will need to be a compelling business case
made that doesn’t appear to exist in 2015.
Perhaps that case will be for talent attraction
and retention as space like The Tower at PNC
Plaza comes on line. But as for getting extra
rent for the proximity or “coolness” factor,
that is a tough sell.
“If it was going to happen it would have happened already,” says McLaughlin. “That’s a
big differential. It’s tough for corporations to
28 www.mbawpa.org
tell their shareholders that they are going to pay a premium for a
Downtown Pittsburgh location. For a 100,000 square-foot user,
that’s a million bucks from the bottom line.”
As a destination that talented workers will demand, Downtown
may reach that status if there is success in marrying transit infrastructure to the expanded limits of what the PDP calls Greater
Downtown. If you can catch a bus that stops at the 3 Crossings’
Hub or the Produce Terminal and ride to an office on Grant Street
in five minutes or jump on a train at Gateway Center and be home
in five minutes at your stop at Centre Avenue
and Crawford Street, there will be a level of
connectivity that will draw people into an expanded Downtown the way Tom Murphy envisioned 20 years ago.
Sean Luther sees the establishment of Envision Downtown as emblematic of that persistence continuing.
“It indicates that the leaders aren’t willing to declare victory and
move on,” he asserts. “They want to continue to invest in infrastructure and businesses to build upon the successes of the
past.” BG
Before Pittsburghers can celebrate a vision of
the Downtown in 2030, we’ll have to navigate
to 2020 first and the way ahead isn’t necessarily a clear path to higher rents and unfettered
profits. There will be challenges.
The roughly 1.6 million square feet that could
be coming available as 600 Grant Street and
525 William Penn Place see users leave has
already created anxiety about the market in
2017. Without backfilling the space ahead of
lease expirations, those potential holes could
up the vacancy rate from eight or ten percent
to the mid-teens. Such a change would create pressure on rents, which would in turn
put pressure on financing and even dampen
investor interest; however, it’s important to remember that those spaces aren’t empty yet.
Users can be found in the interim and having
inventory isn’t a terrible thing. After all, Pittsburgh’s Class A vacancy rate going into the
last recession was above 15 percent and what
followed wasn’t at all bad.
“It may take four years to absorb that space
but it will happen,” predicts McLaughlin. “I
think people are beginning to look at an urban environment as a positive thing. There
was a time when people were looking to
get out of urban centers because of crime or
whatever but today the life in Downtown is
coming back.”
Pittsburgh has seen life in Downtown come
back. Not all ideas of how to bring life back
were good ones but there was persistence
from the leadership and the development
community that defied what seemed to be
reality. That defiance of the seemingly inevitable got the grants and subsidies that made
projects happen. Ultimately, the persistent
won the day.
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BreakingGround November/December 2015 29
Project Profile
30 www.mbawpa.org
Project Profile
The Tower
at PNC Plaza
At the beginning of October, employees began moving into The Tower at
PNC Plaza, the new corporate headquarters for the PNC Financial Services
Group (PNC) on Wood Street between
Fifth and Forbes avenues. Move in will
continue into January into the $400
million, 800,000 square foot headquarters that took five years to plan and
build, consuming roughly 4.8 million
man hours in the process.
Construction started on The Tower in
Fall 2012 with the demolition of the
buildings on Wood Street and the side
streets but planning for the project had
begun well ahead of construction. PNC
was one of the banks that managed the
financial crisis the best and had been
growing steadily as the economy recovered. Major acquisitions and expansions brought new people to the company and its existing properties weren’t
adequate.
“We needed space Downtown for continued growth. The buildings we were
primarily in, which were One and Two
PNC, were of the age where they really needed to be renovated,” explains
Gary Saulson, executive vice president
and director of corporate real estate for
PNC. “We’re a more international company so it made more sense to have a
large headquarters building where we
could consolidate people and save
money.”
The decision to build a new headquarters involved much more than just
planning for space and function. PNC
had developed a culture built around
its sustainability and its prominent
role in the revitalization of Pittsburgh.
The corporation recognized its future
success was going to be based on its
ability to attract and retain talented
people. These basic tenets informed a
three-pronged approach to design and
decision making. The planning process
rested on three pillars: PNC as an energy responder, workplace innovator
and community builder.
From the beginning of the process,
which essentially started as 3 PNC Plaza
was wrapping up, the aim was to build
the greenest building in the world. As
it turned out, that ambition would be
multi-faceted.
BreakingGround November/December 2015
31
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Project Profile
“I think every time we build a building we try
to do a little bit better than we did before. We
built PNC Place in DC, which was LEED Platinum,
and we attracted a major tenant because they
wanted to be in a LEED Platinum building,” Saulson says. “Last year we sold that building for the
highest sale price in DC history. When we put the
team together, we really wanted to put together
an all-star team. Quite frankly when I said I wanted this to be the greenest building in the world,
the response was: does it have to be? But my
view is that if you don’t set your aspirations high
you’ll never get there.
“I think every time we build
a building we try to do a
little bit better than we did
before. We built PNC Place
in DC, which was LEED
Platinum, and we attracted
a major tenant because
they wanted to be in a LEED
Platinum building,” Saulson
says. “Last year we sold that
building for the highest sale
price in DC history.
“I think we have to dream higher and we have to
dream better. We’re building buildings to stand
the test of time, to be here for 100 years. We
need to build buildings where employees thrive
if we want to be the employer of choice. Most
people build buildings to look at; we build buildings to look out of.”
The chandelier-like beacon in The Tower’s lobby is actually made of LED
lights that display information about the weather and the building’s performance. Photo courtesy PNC Financial Services Group.
Architect Gensler and Managing Director Doug Gensler had
been working with PNC for a decade, designing its LEED-Certified branches as well as the office buildings that had been built.
PNC brought in Buro Happold from London because of its experience with ultra high performance buildings around the world.
Saulson says that PJ Dick was brought in because of the great
experience they had working together on 3 PNC, which gave him
confidence that PJ was the right construction manager for the
ground-breaking new building.
The team set about researching and planning what the world’s
best-performing building would look like. The process involved
extensive research and travel around the world. Thousands of
ideas were generated and PNC wanted every one of them tested.
BreakingGround November/December 2015 33
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Project Profile
Doug Gensler and his team had
worked on other groundbreaking
projects and, of course, had a comfort level with PNC. The challenge in
taking on a project like The Tower
was to push the envelope without
creating a building that didn’t work.
The design motto was using the
building to drive performance.
“One thing that was available and
important for all of us was that
there was a schedule and a budget,” notes Gensler. “That allowed
the team to have certain guard rails
to ensure that the ideas being explored, not only achieved the ambitions of extraordinary sustainable
performance, proved a platform for
exceptional employee experience
and client experience, and delivered
Cafeterias and small cafes (shown above) are located on floors without
Neighborhoods. Photo courtesy PNC Financial Services Group.
Design and programming decisions were made within the context of PNC’s three major objectives for The Tower. Image courtesy Gensler.
a building that PNC and City of Pittsburgh would be proud of, but
that it also met the schedule and budget parameters.
”We didn’t push them to innovation that’s untested,” Gensler
continues. “The systems that come together are a unique ecosystem of pieces but each one of them has been tested and evaluated on other projects throughout the world so that we could
either talk to people that were currently operating them today or
actually go physically see how they perform today. I’d say its leading edge thinking, leading edge systems, not untested bleeding
edge stuff.”
“We’re risk-takers but everything we do we test and verify,”
agrees Saulson. “We looked at literally thousands of things.
Some things we did; some things we didn’t do. Some things
didn’t make sense.”
Performance took on a number of facets. There was the obvious
energy performance but PNC was as concerned about the employee experience. Planning The Tower involved analyzing thousands of factors – some of which were pretty arcane – that would
impact the employee’s experience as an occupant of The Tower.
BreakingGround November/December 2015 35
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“The way we look at buildings is a little different than a lot of owners because we literally go
through the cycle of an employee’s life at work,”
says Saulson. “When an employee arrives at
work, what do they do? They walk through the
lobby. They go through security. What kind of
experience will they have at security? What kind
of security system are we going to put in? What
kind of experience are they going to have on the
elevator? We literally go through their whole day.
I will tell you that these are probably the nicest
bathrooms in Pittsburgh. A lot of these things
you can do without spending extra money. You
just have to be thoughtful about it.”
An example of that thoughtfulness is the elevator. On most elevators the Door Open and Door
Close button look very similar and are located
close to one another. That makes it surprisingly
difficult to react appropriately when you need to
hold the door for an incoming rider.
“One’s brain cannot process the information fast
enough. You’ve probably been in the position of
trying to open the door for someone and can’t
figure out how to do it,” chuckles Saulson. “We
went to the elevator company and said we wanted the Door Open like four or five times bigger
than Door Close and we wanted it to be on the
left side, far away from all the other buttons. And
it is. My guess is this is going to become a standard. There are a number of things we did like
that which we know haven’t been done before.”
Another example is the layout of the bathrooms.
“We designed the sink with the hand dryer above the sink so you
can wash your hands and dry your hands without dripping water
across the floor. And every bathroom door opens out,” Saulson
explains. “You have to think about that. That was a thoughtful,
very deliberate decision. There are hundreds of thousands of decisions like that that we went through and made in order to make
a building more employee-centric.”
Perhaps the best-known of the employee-centric features of the
building will be the two-story spaces that connect two floors,
which PNC calls the Neighborhoods. The spaces are designed,
says Gensler, to encourage PNC’s employees to mingle or collaborate with others on projects. There is recognition of the benefit of
socializing and the value of a space away from the private office to
take a laptop and work. To those ends, each floor with a Neighborhood has no kitchenette and each floor with a kitchenette has no
Neighborhood. Instead, a staircase in the Neighborhood connects
the floors. And each floor has a conference room, known as the Inner Circle, which Haworth manufactured exclusively for The Tower.
It was important to PNC that The Tower also fit into the community. That meant holding numerous meetings with Downtown
Photo by Connie Zhou Photography. Use courtesy Gensler.
neighbors – both residents and businesses – to get input on the
design as it developed. Integration with the community, both
physically and relationally, was one of the three pillars upon which
decisions about The Tower were based.
“I will tell you that this is probably the most transparent building anywhere in Pittsburgh. The financial industry is not known
to be transparent. We built a transparent building deliberately,”
Saulson says.
The driving features of the building’s physical performance are a
vertical solar shaft that creates convection through the building
up to a massive solar chimney and the double glass wall of the exterior. The Tower’s exterior wall is actually two glazed curtain walls
which control the thermal properties of the envelope and activate
the flow of fresh air. PNC wanted to have that natural ventilation
be the heart of the building’s performance.
“We did a thermodynamic study of Pittsburgh - 365 days a year,
24 hours a day – and looked at pollen count, pollution, humidity,
air temperature and a variety of other factors,” notes Saulson.
“We say that we’ll be able to naturally ventilate the building 42
percent of the time. I actually think we’ll be naturally ventilating
the building more than 42 percent of the time because on summer mornings in the early hours before employees arrive at work,
BreakingGround November/December 2015 37
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Project Profile
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There is a light called
a “good day indicator”
that tells employees
that the outdoor
environment is within
the tolerances for
bringing in outdoor
air. On those days,
shoebox-shaped
windows – nicknamed
“poppers” – open
hydraulically on the
exterior wall of the
building.
we’ll be able to naturally ventilate the
building and cool it down. When every
other office building in Pittsburgh would
have its air-conditioning on we’ll be naturally ventilating. The Tower is designed
to be 50 percent more energy-efficient
than a conventional office building.”
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At the top of The Tower is a massive
skylight, tinted black and angled to optimize the absorption of the sun’s rays.
Beneath the glazing is a plenum space
above a black-coated concrete slab angled similarly to the skylight a few feet
above it. This plenum space will be hot
even on the coldest days. In fact, a test
in January of 2013 showed the temperature to be in the 90s.
There is a light called a “good day indicator” that tells employees that the outdoor
environment is within the tolerances for
bringing in outdoor air. On those days,
shoebox-shaped windows – nicknamed
“poppers” – open hydraulically on the
exterior wall of the building. This allows
fresh air to enter the 30-inch cavity between the outer and inner exterior walls.
Vents are located at the bottom of the
inner glass wall that let fresh air into the
building’s interior. PNC employees have
the option of opening a five-foot sliding
door to increase the air flow.
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the discretion to open the doors on
the inner wall on so-called “good
days” but there are provisions for
keeping the envelope sealed when
outside conditions don’t allow for
natural ventilation. Contacts on each
door tell the building engineer which
doors have been opened and must
be closed. “For the employee, that
will be a bad day,” jokes Saulson.
The Tower’s air is conditioned
through convection without the use
of variable air volume boxes. In a
conventional design, The Tower
would have thousands of VAV boxes moving air throughout the interior. Buro Happold’s design for The
Tower utilizes the solar chimney to
heat air at the top of the building.
During warmer periods, the hot air
vents through the top of the building, drawing cooler air in from the
outside and up the solar shaft as it
warms. In colder conditions, the solar chimney is used to preheat air
that is circulated back into the building by fans.
Hot weather air-conditioning is done
with chilled beams, which are pipes
in the ceiling that use chilled recycled water to cool the individual offices similar to how radiant heating
warms a space.
The complexity of the mechanical
solution and the building’s systems
impacted nearly every specialty contractors’ scope. PJ Dick’s project executive, Walter Czekaj, has decades
of experience and was the senior
executive on the construction of the
CONSOL Energy Center. This project presented dozens of new challenges to him.
“One thing I had never built was a
project with a solar shaft. The solar
shaft runs from the fourth floor right
up through to the top of the building,” Czekaj explains. “Each shaft
is 400 square feet and it has to be
built so that there is absolutely no
air leakage. Easley & Rivers (the core
and shell drywall subcontractor) was
required to seal and test the shafts
every five floors to make sure there
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BreakingGround November/December 2015 39
Project Profile
The two-story Neighborhood offers space for informal work or
socializing. Photo courtesy PNC Financial Services Group.
were no leaks. That’s not so bad when you’re doing the first one
and you have a base on the fourth floor and have to go up to nine
and put a ceiling in to test it; but when you’re doing [floors] 20
to 25 and you have all those floors below you, the shaft is pretty
substantial and it becomes much more challenging. E & R did a
great job.”
As can be imagined, the building’s systems were of particular
complexity for the project’s mechanical and electrical contracting
teams, which were led by McKamish Inc. and Lighthouse Elec-
Each floor has a conference room known as the Inner Circle.
Photo courtesy PNC Financial Services Group.
tric. To begin with, the coordination of the multiple trades within
the building’s systems was extraordinary. To optimize water flow
through the system, the engineers encouraged the use of 45 degree fittings where possible, which made the elimination of clashes a little more difficult. Then too, the automated nature of one of
the mechanical system’s key elements – the poppers – depended
on nearly silent electric motors.
“The uniqueness of the exterior curtain wall system was more
difficult to design, fabricate and construct than I think anyone
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Project Profile
house Electric. “We had motors that
had to work with the curtain wall system but you weren’t supposed to see
any wires. We certainly learned a lot on
this project.”
Part of the indoor park located on the 28th floor of The Tower.
Photo courtesy PNC Financial Services Group.
“One thing that was probably more
difficult than we expected it to be was
the MEP coordination,” says Turconi.
“Our BIM guys, led by our BIM manager, Matt Baker, were remarkable and I
mean the whole BIM team of us, Lighthouse, McKamish and Preferred Fire
Protection, did a great job getting everything to fit.”
expected,” offers Jeff Turconi, PJ Dick’s president. “Those challenges certainly put schedule pressure on the job. The number
and complexity of those windows that popped had never been
done before. It looks simple when those windows go out but there
are six separate motors on each and if they’re not exactly in synch
the windows bind up. So the energy and the pulses have to be
synched perfectly for those windows to go in or out properly.”
The PJ Dick key team members also included Bob Meadway as
general superintendent, Dean Marraccini as MEP coordinator,
Matt Wetzel as senior project manager, Jeff Thorla doing contract
administration, Bob Simpson as fitout superintendent, and Wes
Erskine as exterior wall “guru.” There were many other project
engineers, safety personnel, assistant superintendents, project
coordinators and administrators that rounded out the PJ Team.
“You wouldn’t think that the mechanical system would impact
the electrical so much,” notes Todd Mikec, president of Light-
Both Turconi and Czekaj point to the logistics of the project as an
ongoing challenge. The tight site limited access to the project for
BreakingGround November/December 2015 41
Project Profile
Natural ventilation will result from
convection as the hot air within the
solar chimney rises and draws in outside air from the “popper” windows.
Image courtesy Gensler.
Site logistics were complicated by the fact that
there were ongoing and upcoming projects in
close proximity to the building throughout the
project. And Czekaj noted that keeping the
neighbors happy was a full-time concern.
suppliers. Vertical transportation was very difficult, as subcontractors and suppliers vied for access to the single tower crane that
ran almost around the clock. “We had over 2,500 people work on
the project and we probably peaked at 650. To get that number
of people up through the building and get materials delivered, it
was challenging,” says Czekaj.
“Maybe the biggest challenge of the entire
project was timeliness of deliveries because for
some things PNC would delay their decisions
for as long as possible so that they could ensure that they were getting the latest technology,” recalls Czekaj. “Because of the lengthy
duration of the project, if PNC had made their
decisions early in the project products or technology could have been outdated before it
was actually installed. The timeliness of when that would get approved, when it would get here and when it would have to get
onto the floor was critical. The team did a great job communicating and managing this process successfully.”
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Project Profile
Czekaj notes that the team, Mike Gilmore, senior vice president
of construction services, and John Robinson, director of development services for PNC, was easy to work with. “That was what
was good about it. You could trust that if you gave them the date
for certain decisions, they made them on or before that date
because they had good people that understood that it had to
happen if we were going to keep everything on track.”
we planned the heck out of the thing. We planned it well. We
had a good schedule, a realistic budget and had very good subs
that knew what they were doing.”
It’s ironic, however, that when asked about problems during the
construction of The Tower, Czekaj doesn’t have much to offer.
“Construction went pretty much as planned. There were some design issues that changed some of those plans but from a construction and sequencing point of view everything went pretty well.”
The Tower at PNC Plaza was turned over on schedule and under
budget. The contract was structured so that PJ Dick delivered
a guaranteed maximum price with a contingency prior to construction. As complex as the project was, a significant portion of
the contingency will be returned to the owner when the project
closes out.
“The form of it is all about performance. When we talk about
performance we really want to make sure that we recognize that
it’s not just energy performance but it’s also the performance of
the people and the performance of the building as a contributor
to its context,” Gensler states. “Often times buildings are designed and selected based upon an image of a building. I think
at the end of the day every move on this project was extraordinarily intentional and rationalized around supporting the strategic goals of this project. The floor plate, the top, the articulation
of the mass was all about delivering a piece of architecture that
strives to deliver on its promise for the employees, for the city,
for the environment.”
“The real pat on the back goes to the team – Walt and the gang
– because we managed our way through that complex project
with fewer problems and issues than what we might have on a
more traditional project,” notes Turconi. “I think it was because
Jeff Turconi believes all the time spent planning was how such a
complicated project became a successful one. While he knows
that the same planning effort doesn’t go into all projects, he
wonders what the industry might be like if it did.
From Great Beginnings
Doug Gensler seems especially proud that the completed
building met the goals that were set at the start of the planning
process.
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BreakingGround November/December 2015 43
Project Profile
Photo by Connie Zhou Photography.
Use courtesy Gensler.
PROJECT TEAM
The PNC Financial Services Group...............................................Owner
PJ Dick Inc..................................................... Construction Manager
Gensler.................................................................................... Architect
Buro Happold..........Structural-Mechanical-Electrical Engineer
Paladino & Co.......................................... Sustainability Consultant
McKamish Inc.............................................................HVAC-Plumbing
Lighthouse Electric.................................................................Electrical
Preferred Fire Protection.............................................Fire Sprinklers
Kalkreuth Roofing & Sheet Metal............................................... Roofing
A. C. Dellovade Inc.......................................... Exterior Metal Panels
Automated Logic Contracting Services.................. Building Controls
Century Steel Erectors..................................................Steel Erection
Easley & Rivers Inc........................................... Core & Shell Drywall
Franco Associates....................................................................Masonry
Giffin Interior & Fixture Inc....................................................Casework
Noralco Corporation..................................... Demolition-Excavation
Permasteelisa North America Corp............... Curtain Wall-Windows
Peter J. Caruso & Sons................................................ Asphalt Paving
Schindler Elevator Corp.......................................................... Elevators
T. D. Patrinos Painting & Contracting......................................Painting
Wyatt Inc............................................. Fireproofing-Tenant Drywall
Wright Commercial Flooring.................................................... Flooring
44 www.mbawpa.org
“Do we try to plan every project?
Do we try to have good solid GMP
with a reasonable contingency?
Do we try to have good subs with
good collaboration with the design
team?” asks Turconi. “Yes. It’s the
simple, tried and true formula for
success. Unfortunately, it doesn’t
always happen for many and varied
reasons. When I think of some other
projects that really worked - CONSOL Arena, UPMC East, 3 PNC,
Bakery Square - all those pieces are
there: getting the team together
early, working closely with the design team, having a good budget,
planning it completely, having a
realistic schedule, having the right
contingency, an owner that understands the importance of making
timely decisions and bringing the
right subs on. Why do we wonder
why those jobs go well?” he laughs.
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PROUD TO BE PART OF THE TEAM AT
The Tower at PNC Plaza
To Gary Saulson, the biggest accomplishment was in managing the
complexity of what is a one-of-akind building.
“This is something that nobody’s
ever dealt with before. That’s why
communications among the team
members was so important. There
were weekly project meetings and
there were frequent sub-group
meetings so there was an engineering meeting, a constructability meeting and so on. We really encouraged
an ongoing dialogue so if you had
an important issue you didn’t wait
for the meeting,” he says.
TWO TITLES
ONE INDUSTRY
Gensler agrees. “The mindset was
set at the very beginning that we
are in this as a team. We’re going to
innovate together. It was not about
pushing risk to anyone in particular.
It was about acknowledging that
the aspiration for this project was
very high. We knew that it would
take a great team working together
to make that happen.” BG
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BreakingGround November/December 2015 45
Firm Profile
Jacob’s son Robert ran the business from
1956 until 1990, moving the company to
Fifth Avenue and then to the 900 block
of Penn Avenue for almost 30 years. TriState was well-positioned to serve the
construction industry during those years,
when major construction projects required mountains of blueprints.
“W
e’re not 100 percent sure exactly which way the business is
going to grow. Everyone gets
a say in which way we should go.” George
Marshall is speaking of a strategic planning
process he and his staff at Tri-State Reprographics are in the middle of completing in
fall 2015. But he may well have been speaking of the state of things in 1990, when he
took over as president of the company.
In 1990, the blueprint reproduction business was undergoing a
sea change, as computer aided design (CAD) was ushering in digital technology. Marshall began to lead the company just in time
to make some key decisions about the direction of the company
that would mean investing and discerning where new business
opportunities might be. Today, the dramatic decline in hard-copy
plan and spec printing has left the reprographic industry looking at diversification even harder. It’s Tri-State’s good fortune that
Marshall and his vice president, DJ McClary, have been working
at diversification long before it was such an imperative.
Marshall’s grandfather, Jacob Marshall, started the business as TriState Blueprinting in 1942 with two other partners, one of which
was a silent partner named Michael Baker Jr. The company’s first
project was an air strip designed by Baker. In 1947, Baker had
become preoccupied with his growing engineering firm and
parted ways. At the same time, the other two partners split, leaving Marshall with the printing and reproduction business. For the
next six decades and through three generations, Tri-State would
be a fixture Downtown for the architecture and construction community in Pittsburgh.
46 www.mbawpa.org
Turner Construction was one of the firm’s
best customers dating back to when
the contracting giant opened an office
in Pittsburgh. Tri-State also handled reprographics for Mellon Stuart Co. When
Pittsburgh’s economy was beginning to
decline in the early 1980s, Tri-State found
itself busier than ever handling the blueprinting for all three skyscrapers – One BNY Mellon (then Dravo Building), One Oxford
Centre and PPG Place – rising during the first stage of Renaissance II. Several years later, Tri-State was swamped with the reprographic needs of CNG Tower, One Fifth Avenue Place and the
Federated Tower.
At the end of the 1980s, Tri-State landed what was the largest
construction job undertaken in the region, the new Pittsburgh International Airport. George Marshall oversaw that project, which
saw Tri-State set up a full printing shop at the airport site to handle the millions of sheets of reproductions that would be done
during the billion dollar project.
That wave of work set the company up well for the transition in
leadership but the industry was changing dramatically in the early
1990s, causing George Marshall to evaluate the direction of the
company. Marshall made the decision to invest in digital, large
format color printing and plotting to keep up with CAD technology. It was a decision that kept Tri-State in the game and has paid
dividends to this day.
“Obviously with CAD and digital print solutions coming into play,
that was when the biggest changes occurred,” recalls Marshall.
“We jumped into digital pretty early, in 1990. I always referred to
it as being on the bleeding edge. We were always very profitable
as blueprinters but trying to find our feet in the digital environment was a whole different world. It was about buying into other
peoples turnkey solutions to be able to provide services to your
existing clients.
“That meant joining new associations, investing in plotters. That
meant finding different talent to run those new plotters,” he continues. “You couldn’t get your regular guys who ran the blueprinters. When we stepped into it we went to electrostatic printers
right out of the gate, the big colors machines.”
“Everybody had to find a way to make money again,” remembers McClary. “I was at another printer at the time. The blueprinting machines were all paid for so it was just money coming out
the back. Nobody wanted to put $100,000 into a machine with a
maintenance contract.”
Firm Profile
DJ McClary (left) and George Marshall at Tri-State’s Strip District shop.
George Marshall, with the support of his father, chose to be one
of the companies that invested
in new equipment. Marshall figures he has been through four
different full color printing technologies since he went all in for
color in the early 1990s. As each
of those technologies emerged,
new additional capabilities also
emerged that Tri-State could use
for its clients.
The company became experts at
scanning and organizing documents. Tri-State developed and
still maintains an online plan room
Developing its full color
capabilities has led to other
opportunities for Tri-State. The
company has ventured into
signage and graphics, which often
takes it out of its mainstream
industries and introduces the firm
to new customers.
that its clients use to manage and
distribute documents. The online
plan room has been used of late as
a collaboration site. While the company was navigating its way through
the changes in the industry in the
1990s and 2000s, its people were
becoming experts at much more
than just reproducing plans and
specs.
“When we went in to compete on
CONSOL the interview was more
about what the people were going to do for them than what the
machines we have or how many
we have lined up for them,” recalls
BreakingGround November/December 2015 47
We Are Building
412-942-0200
rayjr@volpatt.com
www.volpatt.com
University of Pittsburgh Benedum Hall
LEED Gold, Core & Shell
Delivering quality construction since 1991 in the
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48 www.mbawpa.org
Firm Profile
Improved scanning technology has helped Tri-State diversify its client base and
deepened the level of service it provides for its clients.
McClary. “They were looking for a crew that was going to spend
their eight hours a day managing the documents. It ended up
with me going to the prebid meetings and sitting at the table to
say that any documents go through PJ Dick and Tri-State, so we
had the communication there. The printing was there and it was
abundant as the project went along but it was just a byproduct of
what they were really looking for, which was the document management for the full project.”
graphics,” explains Marshall. “It can be as simple as a magnetic
sign that you peel off your door or as complex as doing a paint
change for a Mercedes, where you wrap an entire vehicle to
change the color of the vehicle. We’re getting other work too.
Because of our relationship with Rycon, when they came up with
digital wall covering that had to go on some of the JC Penney
stores they were renovating, we did the installation of all the digital wall coverings for all the Penney stores in the Pittsburgh area.”
Improved scanning technology has helped Tri-State diversify its
client base and deepened the level of service it provides for its
clients. With its document management expertise, Tri-State can
help companies and organizations who need to more effectively
document their activities or files over a long period of time, for
example. One of those recent customers is the Pittsburgh Cultural Trust, which had Tri-State scan every promotional flyer for the
Three Rivers Arts Festivals from 1962 up to the present. Tri-State
scanned each in full color and created a searchable database of
more than 50 years of acts and sponsors.
Marshall seems energized by the prospects for the future, even
in light of the uncertainty in the reprographics industry. He reluctantly reduced his staff from eight to six recently to retain the
people he felt were embracing the changes and had the skill sets
needed to operate in today’s environment. Along with that staff,
Marshall and McClary have been plotting the new course and
strategies Tri-State will employ.
Developing its full color capabilities has led to other opportunities for Tri-State. The company has ventured into signage and
graphics, which often takes it out of its mainstream industries and
introduces the firm to new customers. McClary points out that
the new services are valuable to their existing customers too. The
signage capabilities allow Tri-State to strengthen its relationship
with the AIA, doing the signage for all of the AIA’s events as a
partner/sponsor.
“Contractors need site signage and vinyl banners, so we’re doing
a lot of that,” he says. “Architects need presentation boards. It
feels like they are doing more than they ever did. They need full
color boards that they use to sell to the customer. And we did
everything for the AIA Design Awards, more than 40 boards and
the signage for the event.”
Marshall has invested in the equipment and people to develop
the capacity to function as a full-blown graphics design shop.
Tri-State has also gotten onto the
preferred vendor list for the movie
industry that is shooting in Pittsburgh with increasing frequency,
providing graphics and signage for
backgrounds and props. Again, the
diversification both adds to their client base and adds to their ability to
help their existing clients.
“We continually invest in technology. That’s one of the things
we’ve done over the years. I don’t want to say machines replace
people, but they do replace people,” Marshall notes. “The printing technology today, one guy can do what it took two-and-onehalf people to do, and still do other things. That’s something that
we’ve recently made a conscious effort identifying exactly where
we’re going to grow our business and how we’re going to grow
our business and we’re involving everybody on staff. It’s all about
their input too. I want them to say here’s what I’m seeing and help
guide the direction we’re going to go.
“At the end of the day the people are our key assets. It’s what is
going to separate us from our competition at every turn. From
how we interface with a client on the outside to how we run the
project on the inside.”
Even though the character of his business has shifted from plans
and specs to an ever-broadening spectrum of graphic services,
Marshall expects that Tri-State will be deeply involved with architects, engineers and contractors.
Company Facts
Tri-State Reprographics, Inc.
“We can help Rycon Construction,
for example, if they need a bunch
of new decals done for hard hats
or if they bought a new box truck
and we do the lettering for the side
of the box truck or do the vehicle
2934 Smallman Street
Pittsburgh, PA 15201
412-281-3538
www.tsrepro.com
DJ McClary, Vice President
dmcclary@tsrepro.com
“I see tons of work to be had in the
AEC community. I think on the
scanning and archiving of documents, that’s where DJ really excels. That’s his baby. We definitely
see the world of color, signage and
graphics growing,” Marshall predicts. “Eventually, plans and specs
will be a shrinking market for repro
firms. We’ll continue to diversify
and offer different services to help
our existing customers. There’s still
relevant work to be done and it’s
not disappearing in the immediate
future.” BG
BreakingGround November/December 2015 49
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Financial Perspective
Regulations and Technology Are Pushing Costs Higher
As contractors build backlog and concerns grow about a
tight labor supply, there is increasing conversation about
the impact on construction costs in the next few years.
However, costs have been rising for several years now, in
spite of intense competition, because of regulations and
advances in technology that raise first cost.
Increasing costs are the result of a number of incremental bumps across several parts of the project scope. Most
of these incremental changes
come from changes in regulations or codes that govern
safety, environmental impact or
energy efficiency. The growing
acceptance of green building is
at the root of a number of the
changes, as suggested standards have become codified,
and the upside of those regulations has been that upfront cost
increases result in significant operating cost savings over the life
of the building. Other changes
have meant to ensure human
safety or environmental protection but created unintended
cost consequences.
are required or incented to use better, more expensive
equipment. An example of this kind of standard upgrade is
the implementation of the Montreal Protocol on Substances That Deplete the Ozone Layer. Originally agreed to in
1987, the Montreal Protocol created a timeline for reducing
and eliminating the use of hydrochloroflourocarbons, including R-22 refrigerant. The key dates in the accord were
2013 and 2015. This part of the agreement is impacting
air-conditioning equipment manufacturing now.
The implementation of the
Montreal Protocol won’t
eliminate older equipment
from the built environment
but the diminishing inventory
of refrigerant and replacement
parts will limit the options
for building owners trying
to get the longest life from
outdated equipment.
Regulations and codes affecting the building’s HVAC system
have probably had the biggest
impact on project costs. As the
International Building Code (IBC) has been updated to include higher standards for energy efficiency, mechanical
systems are being driven by increasingly more efficient
equipment. Improvements in equipment efficiency have
come from innovation by manufacturers, which carries a
research and development cost. Manufacturers who can
gain a bit on the energy efficiency of their competitors can
charge a little more until the field catches up.
The IBC includes energy standards – based on AHRAE
90.2 – and an International Energy Code. Whenever these
codes are updated to reflect improved standards, owners
“We’re in the final stage of
implementing the Montreal
Protocol. Manufacturers are no
longer allowed to make R-22,”
explains Jamie White, partner
at LLI Engineering. “You can
buy surplus R-22 on the market but you can’t make it. As
of January 2016, you won’t be
able to make replacement parts
or condensers either.”
The implementation of the
Montreal Protocol won’t eliminate older equipment from the
built environment but the diminishing inventory of refrigerant and replacement parts will
limit the options for building
owners trying to get the longest
life from outdated equipment.
And the inability to replace
components will mean replacement of HVAC equipment
rather than repairs. That will begin to impact renovation
costs almost immediately.
Equipment isn’t the only area that is being affected by the
increased efficiency standards. An important component of
a building’s mechanical system is the control package. As
digital controls have become more sophisticated, it’s possible to lower energy usage and operating costs by controlling the portions of the building being conditioned and
limiting the use of heating or cooling to times when buildings are occupied. Controls can make Chevrolet HVAC
BreakingGround November/December 2015
51
equipment perform like a Cadillac. In the case of a highly
engineered system, the automated controls will drive actions
that will save millions of dollars. Such complicated controls
come with a complicated price.
breakers were designed to protect the wire downstream.
Now we realize that electricity goes through multiple breakers and what happens is affected by how those devices interact,” he says.
“We see increases in the controls package,” remarks Dave
Casciani, vice president of estimating for McKamish Inc.
“Controls used to be maybe five percent of the total for our
bid. Now it’s 15 or 20 percent of our total sometimes.”
In conjunction with a construction project, the arc study is
part of the electrical contractor’s scope of work. The studies aren’t cheap and often lead to repairs or changes to the
systems. LLI Engineering has conducted six-figure studies for
600 Grant Street and for Verizon, the latter of which resulted
in $1 million in repairs. Repairing electrical systems in those
buildings made conditions safer for thousands of occupants.
Casciani explains that controls tend to be a higher share of
the HVAC bid when the building is more complex – as in
the case of The Tower at PNC Plaza – or when the project is
a smaller renovation in a mechanically-intense environment,
like a clinical remodeling in a hospital. When a specialty
subcontract goes up by ten or 15 points in a subcontracting package that is already a big part of the project – like
the HVAC portion – that increase can add significantly to the
overall cost. For example, on a mechanical package that’s $1
million – which is not a terribly large project – the increased
scope of the controls work can add about three percent to
the overall cost.
Changes to another large piece of the project – the electrical
construction – have also resulted from energy saving technology and regulation. Sensors and communications components of the HVAC controls can be part of the electrical
contractor’s scope of work. Advances in lighting technology
have made a huge impact on the operating costs and energy
usage in buildings. Light-emitting diode (LED) technology
was a preferential choice just a few years ago. Advances in
LED lighting have made its use widespread. The positive impact on the performance of the building has made the choice
to use LED much easier but the cost is still an upcharge.
Todd Mikec, president of Lighthouse Electric, has seen costs
increase, but feels the climate is being driven more by innovation and choice than by regulation.
“Some of it is owner-driven. There are certain building codes
that relate to energy efficiency that are driving costs up but
those costs come back around on the back side in operating
cost savings for the owner,” Mikec points out. “Many of the
fixture and equipment prices are coming down too. Now all
of a sudden you have ten people selling LED fixtures or occupancy sensors and the competition is bringing prices down.”
There is also new fire safety regulation related to the electrical system. The National Fire Protection Association has had
success integrating arc flash and breaker studies into the National Electrical Code. An arc flash is light and heat produced
when an electrical arc heats up sufficiently to make some part
of the electrical circuit fail. Controlled electric arcs can be
useful (think arc lamps or arc welders) but arc flash blasts can
be dangerous. A blast resulting from a 480v system failure
would have the equivalent of nearly a pound of TNT.
White explains that better understanding of the hazards of
arc flashes has led to additional consulting. “In the past,
52 www.mbawpa.org
Improvements in the operations of key systems to reduce
the energy usage or environmental impact of the building
have paybacks. Energy-efficient buildings are more desirable
to tenants and there is evidence that high-performing buildings occupy quicker and command higher rents. The property owner also gets a building that costs less to operate,
often paying back the additional investment in a few years.
These facts have been part of the green building sales pitch
– along with a sense of civic responsibility – for decades.
When performance-enhancing factors become regulations,
owners have to change their thinking, much as owners did
when fire sprinklers were mandated or accessibility standards
went into effect.
For better or worse, costs caused by regulation get passed
on to occupants and the occupants are generally better off
for the changes brought by the regulations.
Adding fire sprinklers to high-rise offices added significantly
to the cost of the construction but no one would dream of
occupying an office without sprinklers today. The cost of
sprinklers is just another component of the pro forma that
works over time. Energy efficient HVAC equipment will pencil out over time as well. There will be a way to cost-justify
any regulated improvements over time.
Perhaps the upside of the escalation of first costs due to the
mandates of constructing better buildings will be a change in
focus for building owners from first cost to life-cycle cost.
That kind of perspective would make products more desirable that are more durable or improve a building’s performance. Increased demand for innovative products tends to
create more innovation. That’s something that the construction industry could use more of. BG
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BreakingGround November/December 2015 53
Legal Perspective
Can They Really Make Us
Sue Them There?
By Chad Michaelson and Lauren Zdunek
As more out-of-state owners, developers and contractors set
their sights on the Western Pennsylvania market, local parties
increasingly are being asked to sign construction contracts
that are governed by the laws of another state, or that require
disputes to be resolved in courts located outside of Pennsylvania. These “choice of law” and “forum selection” clauses
limit the out-of-state party’s exposure to unfamiliar laws and
protect it from being forced to litigate on the opponent’s
home turf. Such arrangements are common and enforceable,
in recognition of the fact that the courts should not interfere
with agreements freely reached between parties capable of
understanding the impact of their decisions. But contracting
parties sometimes fail to recognize the impact of agreeing
to these provisions, or lack the bargaining power to put up
a fight. As a result, they can be in for quite a surprise when
they need to pursue a claim in courts that may be located
thousands of miles away.
In many commercial transactions, there is no clear answer as
to which state’s law should apply, or where disputes should
be resolved, and the allocation of these risks can be a subject of intense negotiation. But when a contract involves the
construction of improvements to real property, there is an
obvious connection to the state in which the real estate is
located and it is reasonable to conclude that disputes should
be resolved in the place where the work is being performed.
This common sense approach is followed in most form construction contract documents, which typically choose the law
of the place where the project is located. Moreover, many
states have passed laws voiding contractual clauses that require project disputes to be litigated in a different state, recognizing that there is a compelling public interest in resolving
construction disputes in the place where they arise.
Pennsylvania is one of the states that has passed such a law.
Section 514 of Pennsylvania’s Contractor and Subcontractor
Payment Act (“CASPA”) states: “Making a contract subject to
the laws of another state or requiring that any litigation, arbitration or other dispute resolution process on the contract
occur in another state, shall be unenforceable.” According
to CASPA, a “contract” is “an agreement, whether written or
oral, to perform work on any real property located within this
Commonwealth.” Based on the plain language of the statute, it would appear that any contracts for construction performed in Pennsylvania must be governed by Pennsylvania
54 www.mbawpa.org
law, and that any disputes arising from these projects must
be resolved in Pennsylvania.
contract for the supply of goods, not a contract for construction, and therefore was not subject to CASPA.
The reality, however, is quite different. Although the legislative intent behind this statute seems clear, the Pennsylvania
courts have refused to apply it so broadly. On two separate
occasions, the Superior Court of Pennsylvania has been faced
with this issue and has found that Section 514 of CASPA does
not operate to void a forum selection clause.
Construction disputes between parties from two different
states often end up in federal court, and those courts are
equally reluctant to enforce CASPA’s prohibition on forum selection clauses. For reasons beyond the scope of this article,
the federal courts are not bound to apply Pennsylvania law
to determine whether to enforce a forum selection clause.
Therefore, federal courts will enforce forum selection clauses
agreed to in arms-length negotiations unless there are exceptional circumstances that would justify invalidating the
parties’ choice of forum.
For example, in a case decided in 2008, the Superior Court
held that Section 514 only applies to invalidate a forum selection clause if the plaintiff is relying on CASPA to recover
for non-payment. That case involved a contract for the construction of a building in Pennsylvania, but the contract included a provision requiring that any lawsuits be brought in
Ohio. After construction was completed, the roof began to
leak. The owner claimed this defect was covered by a twoyear warranty, but that the contractor had refused to correct
the problems.
The owner filed a lawsuit in Pennsylvania claiming that the
contractor had breached the construction contract as well as
violated certain implied warranties. The owner also brought
claims under Pennsylvania’s Unfair Trade Practices and Consumer Protection Law, alleging that the contractor had engaged in fraudulent and misleading conduct. The contractor moved to dismiss the complaint on the grounds that the
contract required that any disputes be resolved in the Ohio
courts. Because the lawsuit involved a contract for construction in Pennsylvania, the owner argued that the contract’s forum selection clause was unenforceable under Section 514
of CASPA.
The Superior Court held that Section 514 did not apply because the owner’s claims did not arise under CASPA. The
court recognized that, when read in a vacuum, the language
of Section 514 would seem to apply to any contract for construction in Pennsylvania. But the court found that the legislature’s primary purpose in enacting CASPA was to provide
for timely payments to contractors and subcontractors. Because Section 514 was part of CASPA, the court held that it
should not be read to apply to claims unrelated to payment.
Consequently, the Superior Court held that the forum selection clause was enforceable and that the owner was required
to pursue its claims in the Ohio courts.
In another notable case, a contractor performing work in
Pennsylvania rented equipment from a supplier located
in Ohio. The rental agreement included a forum selection
clause that required claims to be arbitrated in Ohio. When
the contractor failed to pay, the supplier initiated arbitration
in Ohio and obtained an award against the contractor. The
supplier then filed an action in Pennsylvania to enforce the
award against the contractor. The contractor resisted, arguing that the clause allowing the supplier to pursue the original arbitration action in Ohio violated Section 514 of CASPA.
When the case reached the Superior Court, it held that Section 514 did not apply because the rental agreement was a
In a recent case, the United States District Court for the
Middle District of Pennsylvania decided that a forum selection clause requiring litigation to be commenced in Missouri
was enforceable when contained in a subcontract for work
to be performed in Pennsylvania. The contractor argued that
Section 514 of CASPA rendered the forum selection clause
invalid, but the court disagreed. The court found that CASPA
should not trump an unambiguous forum selection clause
absent compelling public policy interests to the contrary. Although the Pennsylvania legislature’s enactment of CASPA
suggests that there exists a public policy in favor of resolving
these kinds of disputes in Pennsylvania, it does not appear
this argument will provide sufficient justification for a federal
court to ignore the parties’ chosen forum.
While all of this would suggest that a party agreeing to a forum selection clause may be stuck litigating in another state,
there is a notable exception. If a party has the right to file
a mechanics’ lien, that proceeding must be commenced in
Pennsylvania. There are two reasons for this. First, because a
mechanics’ lien is tied to the property and not to the parties
involved, it is the location of the property and not the parties’ choice of forum that governs. Second, Pennsylvania’s
mechanics’ lien law prohibits the parties from agreeing to
an advance waiver of their lien rights, except in very limited
circumstances. Applying a forum selection clause to prevent
a party from filing a lien in Pennsylvania would operate as an
impermissible waiver, and a forum selection clause should
not impact a party’s right to pursue a mechanics’ lien.
Given the courts’ reluctance to apply Section 514 of CASPA
to anything other than a payment dispute, it is likely these
clauses will be enforced. Therefore, it is important that contracting parties consult with counsel to understand the impact of these choice of law and forum selection clauses. If
not, you might be in for a surprise down the road.
Chad Michaelson is a partner at Meyer, Unkovic & Scott
LLP and member of the Business Litigation and Construction Law & Litigation groups. He can be reached at cim@
muslaw.com. Lauren Zdunek is an associate and member of
the Litigation and Resolution Group and can be reached at
laz@muslaw.com. BG
BreakingGround November/December 2015 55
Strengthening Pittsburgh,
Building Excellence
Call us to learn about new properties
under development.
724.942.4200 • Fax: 724.942.0829 • www.specifiedsystems.com
56 www.mbawpa.org
Brad Kelly
412.697.320
MBE/WBE Company Spotlight
GERARD
ASSOCIATES
ARCHITECTS
Dawn DiMedio is the managing partner and minority
owner of Gerard Associates Architects. She’s had an
unusual career path for her profession in that she hasn’t
worked for another firm. Perhaps that is why her respect
for the firm’s history and her partner, Jim Gerard, is so
obvious.
“I think it’s important to note that I run into senior
architects all the time who tell me they worked for Ed
Gerard,” says DiMedio. “They still refer to Jim’s dad to
this day.”
and save a little money, but it really worked out.
At that time the work was really good and I was
put in a position in a small firm and I got access
to everything from day one. We were doing work
at Duquesne University and Southpointe was just
starting to go, which gave us the chance to design
our first couple buildings there.”
DiMedio got to see how long-term relationships
benefitted an architectural firm. Working with clients like
Duquesne University, Horizon Properties and the Church
of Latter Day Saints brought repeat business in the
door. The comfort level that she got on a personal level
with those clients made it easier to serve them and to
accomplish the work efficiently. Gerard Associates had
a diverse base of private clients, with some local public
projects.
The firm was founded in 1958. Jim Gerard received his
degree in architecture from what was then Carnegie
Tech and served four years in the Air Force, intending
to join his father’s firm after that stint. The day after Jim
returned from the service, Ed suffered a heart attack.
The heart problems slowed him down and Jim took
over the firm from his father five years later.
DiMedio was raised in the Baldwin suburb of Pittsburgh
and was entering her fourth year at the University of
Syracuse when she was hired by Gerard Associates as
an architectural intern for the summer of 1996. After
graduation the following spring, Gerard contacted her
to fill an opening full time in 1997. Less than ten years
later, she became a partner in the firm and the majority
owner. She says that such a move wasn’t necessarily in
her plans but the environment at Gerard Associates and
the work offered great experience for someone starting
a career.
“By the time I was 25, I was working on $10 million jobs.
That really is unheard of,” she remarks.
“I was the oddball at Syracuse. Most of the architectural
students there were true East Coasters,” she says. “But
no one stays in Syracuse. Once I graduated it seemed
like the natural thing to do, come home at least for a bit
Metso Minerals headquarters at Southpointe II, designed by
Gerard Associates Architects. Photo by Alexander Binder,
Gerard Associates Architects, L.L.C.
By the time Gerard felt the need to take on a partner
that would ultimately acquire the firm he and his father
had built, he was very comfortable with DiMedio as his
choice.
“She’s very bright and very hardworking. She knows
where she’s going,” Gerard says. “We all have to accept
the fact that we’re eventually not going to be around.
BreakingGround November/December 2015 57
management role. She says the
biggest surprise she has had
was discovering that managing
the firm was a full-time job.
I was looking for someone who
I thought would carry on the
tradition, the kind of practice
that we’ve had. It’s going to
change but we both subscribe
to the same philosophy as to
how the practice should run,
how we should deal with our
clients.”
The
foundation
of
that
philosophy seems to be that
design is a problem-solving
undertaking. The problemsolving process comes up in
conversation with DiMedio
repeatedly and it’s clear that is
a driving principle in the firm.
“I can’t say that when I signed
up at 18 that I thought it would
Duquesne University Chapel, designed
by Gerard Associates Architects. Photo
by Alexander Patho Photography.
“There’s always that human
nature thing of thinking that
I can do it better if I just do
it myself but then you have
people who are relying on you
to truly be a manager and you
have to find something else
within yourself, a certain ability
to communicate what you
need and how you want things
done,” she observes. “It’s a
combination of factors that –
you fight them a little along the
way – as you accept them and
get better at them, you find
yourself five years down the line
“I can’t say that when I signed up at 18 that I thought it would be a lifelong
endeavor but when I got to Syracuse and the problems were put in front of
me as a freshman, I felt like I was in my real house,” she recalls. “I had the
academic and basic artistic skill set to survive but I think the really great thing
about Syracuse was the skilled problem solving. I thrived on it.”
be a lifelong endeavor but when I got to Syracuse and
the problems were put in front of me as a freshman, I
felt like I was in my real house,” she recalls. “I had the
academic and basic artistic skill set to survive but I think
the really great thing about
Syracuse was the skilled
problem solving. I thrived
on it.”
The partners say that
their natures complement
each other well. DiMedio
admits to being more
likely to react vocally to a
situation, while Gerard is
more apt to listen. Both
still share responsibility for
the finished design that the
firm produces, although
Gerard has more time to
work on the boards with
DiMedio taking on the
58 www.mbawpa.org
and you have changed. Things that seemed so hard three
years ago seem more matter of fact now. No matter what
you do or how old you are whenever you experience that
evolution from technician to management you have to
evolve with it.”
Company Facts
Gerard Associates Architects
410 Fort Pitt Commons
445 Fort Pitt Boulevard
Pittsburgh PA 15219
412/566-1531
Dawn Danyo DiMedio, AIA LEED AP BD+C
dddimedio@gerardassociatesarchitects.com
www.gerardassociatesarchitects.com
One of the changes in the
firm came when DiMedio
saw opportunities to take its
portfolio to the public sector
more. As technology has made
it more efficient to respond to
requests for proposals, Gerard
Associates has pursued more
public commissions. DiMedio
started getting work with the
Redevelopment Authority of
Washington County, which
has blossomed into a 15-year
relationship. The firm has
been successful selectively
pursuing
Department
of
General Services work and has a current contract with
the Housing of Authority of the City of Pittsburgh. It has
not, however, pursued K-12 school work.
“That [K-12] market is very overhead-heavy. You have to
be paying staff or consultants to be managing people
and politics,” notes DiMedio. “That’s not really good
business for architecture or what we want to be spending
our days doing. It’s just a different animal.”
Earlier this year, Gerard Associates made a physical
move that was symbolic of the course the firm is charting.
A small firm of seven, Gerard Associates picked and
designed space that could intentionally function for a
much larger number of people. DiMedio says that the
firm needs to add a project architect at the moment but
that there is also a need to recruit principal-level talent
as Jim Gerard nears the end of his career. Whenever he
chooses to step away, the continuity of the firm seems
assured.
viscerally to what the client says. You really want to know
about the problem at hand, what the client wants, what
the client needs, and the context. Put that all together.
Then you draw.”
That problem-solving mantra is why DiMedio thinks the
firm has survived for 60 years.
“First of all we’re not going anywhere,” she says.
“Although we have moved off Fourth Avenue,” interjects
Gerard about the firm’s long-time former address.
“When people do have a problem, they come to us,”
DiMedio continues. “That probably means we’ve been
able to solve it more times than not. That’s important.
That’s allowed us to maintain that very diverse client
base.” BG
“When it comes to the mantra of the firm, we adopted
this many years ago: listen, think, draw. We think that’s
very elemental and it says it all,” says DiMedio. “It speaks
to our nature as problem-solvers. We don’t want to react
RAM Acoustical is Proud to Partner with the Beaver
Area Heritage Foundation’s “in progress”
Beaver Station Cultural & Event Center’s restoration.
Gateway to Beaver: This is a photograph of the 2-acre campus of Beaver Station as it
appeared almost a hundred years ago. Then as now, this was a show place for all of
Beaver County, and served as the Gateway To Beaver.
When completed, Beaver Station restoration will comprise:
Currently being restored to its original grandeur, the waiting room will be transformed
into an elegant 2,500 sq. ft. 1897 Events Center.
The Station’s 6,000 sq .ft. lower level Cultural Center will house the Beaver Area Heritage
Museum’s growing Collections & Research Center along with a branch of Sweetwater Center for the
Arts and the Beaver County Genealogy & History Center.
RAM Acoustical retains the charm of the
original archways & stained glass windows.
Beaver Station & Cultural Center will provide a diverse array of upscale cultural and
community activities for all ages, and become a go-to destination within the regional market.
The high box-beam ceiling has
been restored to the exact
original historical structure.
BreakingGround November/December 2015 59
Trend to Watch
c
c
c
c
c
Unconventional Housing Trends
Are Leading to Big Changes in
the Market
Economic cycles roll over every seven to ten years. It’s been
that way in the American economy at least since the industrial revolution changed how people worked and where
they lived. The many growth-and–recession cycles have an
impact on housing – usually because a downturn has an
impact on the availability of credit – but by and large the
housing market is steady. It takes a truly unusual economic
change to make a big impact on housing.
The Great Depression was one such traumatic event, as was
the post-World War II Baby Boom and flight to the suburbs.
Some 60 years later, loose government credit policy created an unprecedented housing bubble and then a crisis
unlike any since the Depression. The economic and regulatory aftermath of the financial crisis of 2008 was a seismic
shift for the housing industry and the American homeowner. Against that economic backdrop, a young generation
entered adulthood with very different expectations for how
housing would serve their lives. This combination of unusual conditions created a housing market that has defied conventional rules of supply and demand since 2010 and has
set the stage for some unconventional trends for the 2020s.
What prevails in the U.S. today is a boom market for apartments and a supply of existing homes for sale and lots
to build that is well short of the demand. Looking at the
demographic makeup of America in the coming decade
gives you an indication that this housing market will remain
unconventional in the 2020s. It’s not difficult to see government policy intervening again to serve political needs,
nor it is hard to envision a generation of young Americans
moving – perhaps reluctantly – back to the suburbs to raise
their children. As the scars of the mortgage crisis fade and
new imperatives emerge, a new housing boom is a distinct
possibility.
Whatever happens at the national level, it is more likely
than not that Pittsburgh will feel the effects more than it did
60 www.mbawpa.org
c
during the 2000s. In fact, the housing market in Pittsburgh
has mirrored the unconventional U.S. conditions rather than
returning to its steady normalcy.
In metropolitan Pittsburgh, during the time period that the
Great Recession impacted the housing market most (20082012), there were an average of 1,811 new single-family detached permits per year and an average of 1,266 attached
or multi-family units. Traditional single-family construction
made up 58.8 percent of the starts, which was roughly comparable to the 63.7 percent share for single-family during
the years 2000-2005. But the boom in apartments since
2012 has changed the market share dramatically. In 2013,
only 36 percent of all dwelling units started were singlefamily detached and last year the share only grew slightly,
to 40.4 percent. Through the first three quarters of 2015,
the share of single-family has declined again to 36.9 percent. Rather than running counter to the national trend,
Pittsburgh’s housing market is in lockstep with it.
While some bankers and builders are beginning to worry
about apartments getting overbuilt, there is evidence that
demand for housing is still growing and may actually still be
outstripping supply.
Demand for the apartments that were and are being built
is coming from both empty-nesters and Millennials drawn
to the city. It’s also coming from an influx of new residents
drawn to the tech and energy jobs being created in the
region. Developer Walnut Capital reports that roughly 70
percent of its renters in its Walnut on Highland and Bakery
Living projects are new residents to Pittsburgh. If jobs are
being added and single-family homes aren’t, apartments
become the alternative. If the job creation numbers are accurate, this apartment boom still has legs.
The existing housing stock in metropolitan Pittsburgh correlates one-to-one with the number of jobs, at around 1.07
million. It’s logical that one job would result in one new
household. With that metric understood, the 11,000 new
jobs in 2014 should have created demand for 11,000 new
dwelling units, a figure that is more than twice the 4,873
units started. Job creation is up roughly 20,000 year-overyear, yet only 3,451 units have started thus far in 2015.
There isn’t a one-to-one relationship of jobs and housing
The maturation of
Millennials, retirement
of Boomers and
increasing number of
Hispanic Americans
will drive household
formations and
housing trends over
the next 15 years,
according to two
national associations.
starts in any given year, of course, but
over the course of five years or so, the
correlation should be true. Instead of
that being the reality, there is a significant shortfall in new housing for the
jobs created.
Some 3,900 units are coming online in
the next two years, with more than 5,000
additional apartments in the pipeline.
That will put stress on the apartment
market if the number of renters isn’t
also growing. It’s clear that regional
job creation is the key to how long the
multi-family boom lingers. Whether the
upward trend in rents and supply continues or softens for a few years while
inventory is absorbed, the factors influencing the housing mix in the coming
decade should keep demand for apartments strong, even as demand for single-family homes resurges.
Discover The Blue Book Network
The maturation of Millennials, retirement of Boomers and increasing number of Hispanic Americans will drive
household formations and housing
trends over the next 15 years, according to two national associations.
The Mortgage Bankers Association
(MBA) expects between 13.9 million
and 15.9 million of additional households will be formed by 2024. The
MBA report, titled “Housing Demand:
Demographics and the Numbers
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BreakingGround November/December 2015 61
New construction of single-family homes has yet to recover to the levels seen during the
early-1980s recession. Demographic trends forecast a bigger surge in the coming three
years. Source: U.S. Department of Commerce, Wells Fargo Economics.
Behind the Coming Multi-Million Increase in Households,” predicts that
household formation and expected related housing demand will be driven
largely by Hispanics, Baby Boomers and
Millennials. The MBA predicts that this
new market will be one of the strongest
prolonged housing markets in history,
demanding between 1.5 million and
1.7 million new units over the next nine
years. That’s a huge increase in demand
compared to the 820,000 units averaged annually since the 2008 crisis.
Steadily gaining in demographic influence, minority Americans are expected
to impact the market for rentals, according to the Urban Institute (UI).
Over the next decade, a greater share
of household formations will be minorities, whose history is skewed towards
renting rather than home ownership.
The UI predicts that a majority of the 22
million new households (13 million vs.
nine million homeowners) formed in the
U.S. between 2010 and 2030 will move
into rental housing. That would continue
a downward trend that is 15 years old.
Home ownership has declined precipitously from 66.2 percent in 2000 to 63.6
percent in 2013, although the most re-
62 www.mbawpa.org
cent data has shown a modest uptick to
63.7 percent.
As might be expected, Baby Boomers
will impact the market dramatically, as
that generation retires and ages. The
MBA forecasts an additional 12.3 million
to 12.9 million new households for those
over 65 years old. By 2030 the Urban Institute predicts that 12.2 million people
over the age of 65 will be renters, more
than twice the number in 2010. The upshot is that there will be demand for 2.5
million more apartments than normal
during the next decade.
Urban Institute also predicts that within
the minority demographics, Hispanic
Americans will have the largest share of
household formations. The MBA forecast is for an increase in household formations by Hispanics of more than five
million units. As Hispanic and minority
voters become more influential in electoral politics, Urban Institute expects
to see public policy enacted that eases
credit for increased home ownership
for minorities, which have a wealth gap
from non-minority borrowers. Such policies would spark more demand for new
homes.
BreakingGround November/December 2015 63
35 now at 5.3 percent and the average rent
rising another 6.1 percent over the past year,
the disdain for buying homes may have been
financial rather than attitudinal.
The desire to attract Millennials is one of the
motivations behind the shift in office design,
a nod to the supposedly more collaborative
nature of younger workers. CBRE’s study of
the work habits and desires of the changing
workplace found that the youngest generation
of workers had very similar attitudes about private space, informal collaboration, social media, and even time spent in formal meetings.
CBRE was led to conclude that while Millennials may be more accustomed to collaboration
and open space, their thinking about what is
ideal is not going to differ from the preceding
generations. That suggests that Urbanism may
lose its appeal when MIllennials begin worrying more about PTO than their own lifestyle.
There is a hazard in predicting the future. Most
obvious is the fact that any forecast is ultimately a guess based on some analytical foundation. Too often, anecdotes get heavier weight
than data or logic. Biases form from anecdotes
that can cloud your judgment. Regardless of
your biases, it’s a good rule to pay attention to
demographics. It’s hard to buck those trends.
You only need to look back as far as the Clinton-era and
Bush-era policies to make credit more available to a wider
group of borrowers to see the impact that government intervention in mortgage policy can have. Fannie Mae has
already expanded the number of mortgages it will buy with
three percent down payment and Fannie’s CEO, Timothy
J. Mayopolis, has pressed for reducing the premium mortgage insurance payments for borrowers with less than 20
percent equity. Should easier credit meet more rapidly increasing household formations, demand for homes would
skyrocket.
Perhaps nothing may boost demand for traditional singlefamily living than the normal maturation of those currently
between the ages of 18 and 35. What we call the Millennial
generation is the largest demographic cohort in U.S. history, meaning its influence could eclipse that of its parents.
Their disdain for home ownership – whether it’s a cultural
or financial phenomenon – has been a driver of multi-family
demand. The looming question is how this generation will
respond to becoming parents.
Over the past few months, the home ownership rate for
those under 35 has jumped a full percentage point, from
34.8 to 35.8 percent. With unemployment for those under
64 www.mbawpa.org
As an example, in the early 1970s, when a large
share of the Baby Boomers were in their prime
renting years, the U.S. saw the largest multifamily construction boom in its history. Then,
in the late 1970s, when rising numbers of Baby Boomers hit
their 30s and they began buying houses in larger numbers,
the U.S. saw the largest single-family construction boom of
any time until the mid-2000s.
It’s hard to imagine any generation less likely to settle down
into suburban life than the Hippies of the alternative lifestyle 1960s, yet that was the way things turned out. Human
nature is tough to fight. If the next generation entering its
child-rearing years reverts to form, look for another period
of suburban sprawl. BG
&
INDUSTRY
COMMUNITY
NEWS
AIA/MBA Joint Committee Celebrates 50 Years, Honors Rittelmann
The AIA/MBA Joint Committee marked its 50-year anniversary
with a champagne toast at the AIA Design Awards Gala on October 22. The committee also used the occasion to announce
the 2015 James Kling Fellowship Award, which was awarded
posthumously to Dick Rittelmann FAIA, retired partner at Burt
Hill (now Stantec). The Kling Fellowship is awarded annually to
the design or construction professional who most exemplifies
the spirit of collaboration between architect and contractor.
Justin Hough from PJ Dick announces Dick Rittelmann’s
selection as the James Kling Fellowship award winner.
Former and current members of the AIA/MBA Joint Committee
join to celebrate the group’s 50th anniversary at the AIA Design
Awards Gala.
Retired AIA/MBA Joint Committee members Doug Schuck (left)
and Ted Frantz with AIA Executive Director Anne Swager.
(From left) David Wells from Radelet McCarthy Polletta, Craig
Stevenson from James Construction, Point Park’s Elmer Berger
and James Construction’s John Zang.
BreakingGround November/December 2015 65
Landau Honors Paul Slowik,
Raises $18,500 for
Passavant Hospital
Landau Building Company changed its annual Customer Appreciation Shoot to honor
architect Paul Slowik, who passed away in
June. The Paul Slowik Memorial Shoot was
held on September 25 as a charitable event
to benefit the Passavant Hospital Foundation,
an organization in which Paul was very active.
His father, Bill Slowik, designed the original
Passavant Hospital and Paul was the fundraising chair for the Foundation’s Legacy of Caring Awards. Through the efforts of dozens of
donors and sponsors the Paul Slowik Memorial Shoot raised $18,500.
Joyce Slowik (left) with Jeffrey Landau and Passavant Hospital Foundation CEO Fay Morgan at
the Paul Slowik Memorial Shoot, hosted by Landau
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A panel including (left-to-right) First Niagara’s Kris
Volpatti, Oxford’s Steve Guy, Paul Griffith from
Integra Realty Resources and PJ Dick’s Eric Pascucci
presented an update on multi-family development
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68 www.mbawpa.org
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McKamish’s Dave Casciani and wife Gini (left),
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Visit www.crewpittsburgh.org for
details and more information!
forms to Membership Director, Jessica Jarosz, at jjarosz@century-realty.com.
2016 Sponsorship Opportunities
Now Available
CREW Pittsburgh would like to thank all of our 2015
sponsors. Special thanks to the following sponsors:
Each sponsorship level provides you with the
opportunity to manage your financial support,
while ensuring that your company is recognized as
a leader in advancing the achievements of women
in commercial real estate. For more information,
contact Mimi Fersch, Sponsorship Director,
at 412-303-2500 or mfersch@firstam.com.
Diamond Sponsor - Meyer, Unkovic & Scott
Gold Sponsor - Tall Timber Group and First American Title National
Commercial Services
Silver Sponsor - Integra Realty Resources Pittsburgh, NAIOP,
Reed Smith and Massaro Properties, LLC
Bronze Sponsor - Elmhurst Company, LP
70 www.mbawpa.org
&
AWARDS
CONTRACTS
Nicholson Construction recently completed emergency repair work to an unstable pier supporting a bridge on Interstate 65 for the Indiana Department of Transportation.
These repairs enabled a 37-mile section of the highway’s
northbound lanes to be reopened after a four-week closure.
The highway was in the process of being rehabilitated and
widened when the pier was damaged by steel piles driven
into the water tight ground below it. The pier began to settle and eventually rotated ten inches. Nicholson developed
a design-build solution that used micropiles to transfer the
loads to more stable soils and low mobility grouting to fill
voids and make the upper subsurface layer denser.
for the Sisters and include sleeping rooms, kitchen, common areas, restrooms, meeting space and a chapel. The
project is expected to begin in 2016 and the architect is
McLachlan Cornelius & Filoni Architects.
A. Martini & Company was the successful contractor for the
renovations to the Shadyside Commons on Amberson Avenue. Strada Architecture LLC is the architect for the $1 million project.
Volpatt Construction has started work on the new John P.
Murtha Center and alterations and additions to the Engineering and Sciences Building. The $18 million project
involves a new 7,400 square foot building for the Murtha
Center, renovation and a 1,700 square foot addition to the
Engineering and Sciences Building and renovation of the
Krebbs Hall Physics Lab. IKM Inc. is the architect.
Excela Healthcare awarded a contract to A. Martini & Co. for
its cardiology department on the third floor of the Medical
Arts Building at the Westmoreland Hospital in Greensburg.
The architect is Image Associates.
A. Martini & Co. was selected for the tenant fit-out for Webb
Law at One Gateway Center. This 11,000 square foot project
consists of buildout of three different pods on the 13th floor.
This is the third project A. Martini has completed for Webb
Law and it is expected to be completed in the first quarter
of 2016. The architect for this project is Strada Architecture.
After successfully completing the renovation of Crown
Castle’s corporate headquarters building at Southpointe, A.
Martini & Co. is gearing up to start the final phase of the
project. This phase consists of 13,439 square feet of private
office space and open cubicles, multiple conference rooms
and new finishes to the existing main lobby. The phase also
includes a 7,100 square foot addition for a full service cafeteria adjacent to the space being renovated. The architect
is Astorino|CannonDesign.
A. Martini & Co. was selected by the Daughters of Holy
Mary of the Heart of Jesus in Steubenville, Ohio to build
its new Convent, Marian Fountain of Living Faith Novitiate.
This 32,000 square foot project will provide a new residence
A. Martini & Co. was recently selected by Allegheny Health
Network to assist in some upgrades at Forbes Hospital to
prepare for a CT Scan Replacement, which A. Martini will
install. The upgrades include structural steel support under
the area, along with lighting upgrades and structural ceiling
upgrades to accommodate the equipment being installed
in the space. IKM Inc is the architect on this project.
Volpatt Construction was the successful contractor for renovations to the OR Suites and finishes at Allegheny Health
Network’s Canonsburg General Hospital. VEBH Architects
designed the $750,000 project.
One year after its completion, dck worldwide’s project, The
Mall at University Town Center in Sarasota, was named the
2015 “Best Retail Development, Florida” by the International Property Awards. dck is proud to have constructed
this $315 million two-level, 860,000 square foot world-class
fashion and dining destination for the Taubman Company. dck worldwide attended the ribbon cutting for the South
Range, Grow the Army (GTA) project at Schofield Barracks,
Oahu, Hawaii. dck completed this project, which consisted
of four bundled design-build contracts that were critical for
the future of the Schofield military community as many units
were scattered on base in overcrowded and aging facilities.
This $144.8 million project was the largest contract awarded
to date by the USACE Honolulu District. dck logged more
than 950,000 hours on this project over a three-year period
while maintaining a great safety record.
BreakingGround November/December 2015
71
dck worldwide had a groundbreaking ceremony in September for the en Hance Park apartment complex in downtown Phoenix, Arizona. dck is the general contractor for this
59,000 square foot, 49-unit condo project. Burchick Construction was the successful contractor on the
Animal Friends’ new 21,000 square foot, $5 million Wellness Center in Ohio Township. The architect for the project
is IKM Inc.
Il Pizzaiola selected Burchick Construction as contractor
for its new restaurant location in the Warrendale Crossings
shopping center in Marshall Township. Fukui Architects is the
designer for the project.
DDR Corp awarded Rycon a $13 million construction management contract for the expansion of a Dick’s Sporting
Goods in Cincinnati, Ohio. FRCH is the architect on the project which is slated for completion by October 2016.
Rycon’s work continues on The Block at Northway (formerly
Northway Mall) in Pittsburgh’s North Hills. The shell space of
the Container Store, Saks Off Fifth and Nordstrom Rack are
currently underway.
A $1.2 million renovation of Long Run assisted living facility
is underway by Rycon’s Special Projects Group. The 11,500
square foot project will consist of interior upgrades through-
72 www.mbawpa.org
out. Designed by Image Associates, the work is scheduled
for completion in March 2016.
CBRE and Starwood Capital Group selected Rycon’s Special
Projects team to complete several projects at Liberty Center.
The work, totaling $3 million, is either in progress or set to
begin. The six-month lobby renovation will consist of upscale
finishes and a new Starbucks is being constructed in a space
near the lobby.
Rycon’s Special Projects Group is renovating a salt storage
facility at UPMC Passavant. The 5,000 square foot project is
scheduled for completion by early December.
University of Pittsburgh awarded a contract to Rycon Construction for the renovations to Mervis Hall First Floor Library.
Strada Architecture is the architect for the $750,000 project.
PJ Dick was selected by Fort Willow Development to provide
Construction Management at Risk services for Fort Willow,
a 191-unit apartment complex in Lawrenceville. Rothschild
Doyno Collaborative is designing the project, which involves
construction of a new six-story apartment building.
Landau Building Company began renovation work at UPMC
Passavant Cranberry Medical Office Building. Renovations
to the OB/GYN suite began the first week of October and
will be complete by early December. Exam rooms will be
added and updated. Radelet McCarthy Polletta is the
architect.
Landau Building Company began renovations of the Fifth
Floor Nursing Unit as well as renovations to a CT suite on
the 2nd floor at Ohio Valley Hospital located in McKees
Rocks, PA. Work includes upgrades to the medical surgical
areas and renovations to the CT Room. This project began early October and will be completed in approximately
three months. Stantec is the architect.
Landau Building Company is renovating four offices in
Building 1943 at Allegheny Valley Hospital located in Natrona Heights, PA.
Landau Building Company was awarded the UPMC St.
Margaret’s $3.3 million Emergency Power Upgrades. Stantec is the architect.
Landau Building Company completed renovations to the
Sarah Heinz House, located in Pittsburgh, PA. The locker
room and kitchen floors were replaced, installing trench
drains and new ceramic tile in the men’s and women’s
locker rooms. Repairs were made to the boiler room steam
plumbing, the bathrooms were upgraded, and the existing
VCT flooring was replaced with new quarry tile. In addition, work also included installation of air condition units as
well as repainting a portion of the facility. Rothschild Doyno
Collaborative was the architect.
Marks-Landau Construction, a subsidiary of Landau Building Company finished interior renovations to United Hospital Center’s Physician’s Office Building in Bridgeport, West
Virginia. The remodeled space is a fit-out for new clinical
and office functions for ENT, Audiology, and Gastroenterology. The 16,000 square foot project began in April earlier this year.
Facility Support Services was awarded the $1.2 million
Revel + Roost tenant fit out, located at Tower Two Sixty at
the Gardens at Market Square, Pittsburgh. FSS is providing general construction services for this complete fit-out
package of raw shell space. This project is scheduled to be
complete in January 2016.
Ohio County Board of Education awarded a $7.1 million
contract to Nello Construction Co. for the renovations to
Ritchie Elementary School in Wheeling, WV. The architect
is M & G Architects & Engineers.
Mascaro Construction was the successful contractor on
the TrueFit tenant buildout at the Union Trust Building.
The architect for the 13,330 square foot space is Strada
Architecture. BG
BreakingGround November/December 2015 73
BY DAY
WE BUILD HISTORY
FACESEW
N
PLACES
BECOME OUR NEXT PARTNER
IWEA
Ironworker Employers Association
www.iwea.org • 412.922.6855
Iron Workers Local Union No.3
International Association of Bridge,
Structural, Ornamental, and
Reinforcing Ironworkers - AFL-CIO
www.iwlocal3.com
800.927.3198 F: 412.261.3536
Clearfield
74 www.mbawpa.org
Office Locations
Erie
Pittsburgh
Nicholson Construction Company is expanding its West Coast operations with
the opening of an office in California.
Led by Regional Manager Matt Johnson,
the new location is on Magic Mountain
Parkway in Valencia. Nicholson’s most
recent high-profile projects in California
include secant pile walls and grouting at
the San Francisco MUNI Central Subway;
and diaphragm walls and tiebacks at the
Transbay Bus Ramp and Tower.
Eugene V. Bucci and Frank W. Falciani,
MBA, LEED® AP, CCM were named executive vice presidents for dck worldwide.
Rycon Construction’s Special Projects
Group added Eric Holzer as project engineer. Eric graduated from the University
of Pittsburgh with a degree in mechanical engineering.
Rycon’s Casework & Millwork Division
has added Shelby Meyers as an administrative assistant.
Jim Tomko has been hired at Rycon as
a senior project manager in the Building
Group. He received a mechanical engineering degree from the University of
Pittsburgh and has 30 years experience.
Rycon’s Atlanta Division added assistant
project manager, Andrea Laney. She received a bachelor’s degree from the University of Buffalo as well as an associate’s
degree from Cazenovia College. Andrea
has over 25 years of industry experience.
In early October, Rycon’s headquarters
relocated two blocks to Oxford Devel-
opment’s 3 Crossings in the Strip District. Rycon is the
anchor tenant occupying 25,000 square feet of the new
2501 Smallman Street office building which was designed by WTW Architects.
Facility Support Services recently opened an office in
Virginia Beach, VA to better serve its clients in southeastern Virginia, North Carolina, and the Delmarva
Peninsula. This is FSS’s third office location in the MidAtlantic region.
Jessica Scalo has been named the new director of marketing for Scalo Incorporated, serving all Scalo Companies. Scalo will be responsible for determining the optimum marketing mix in order to develop and manage
promotional campaigns, public relations, tradeshows,
sponsorships, electronic media, and other communications programs.
Patrick D. Shirey has joined the Oakmont office of R.A.
Smith National as an ecologist and project manager.
Shirey’s academic background and work experience in
stream ecology, restoration ecology, environmental history and natural resources law broadens and strengthens the experience of R.A. Smith National’s existing
team of ecologists and water resources engineers.
Timely,
Accurate &
Targeted
Communication
Is how your project will get the
right attention at the right time.
John Robinson has joined PJ Dick Inc. as director of
development, design-build.
Katz Ferraro McMurtry P.C. (KFMR) joined professional
services firm CliftonLarsonAllen (CLA), effective November 1, 2015. KFMR’s team of 30+ establishes a CLA
Pittsburgh presence, and will remain in its current location to continue to serve clients locally and nationally.
Shawn Fox joined Schneider Downs & Company as
director of real estate.
Chad Hanley, P.E. has been promoted to western region
manager of water and wastewater services at Herbert
Rowland & Grubic Inc. Hanley earned his bachelor’s
degree in geo-environmental engineering from Pennsylvania State University and is a registered professional
engineer. He has 17 years of experience in water and
wastewater infrastructure projects, including the planning, permitting design, and construction phases. He
has worked for HRG in its Pittsburgh, PA, office for nine
years, serving as a staff professional and project manager
before being promoted to his current management role.
KU Resources Inc. named Logan Lowanse environmental technician. Lowanse was a teacher’s assistant in the
Chemistry Department at California University of PA
prior to his hiring. He graduated Summa Cum Laude
from California with a degree in environmental sciences
and a minor in chemistry. BG
The PBX is where companies turn to place
their construction projects in front of the market,
utilizing the region’s most comprehensive
information system.
Make sure you’re working with
the right partner throughout the
project life cycle.
Projects in Planning
Actively Bidding Projects
Low Bids & Awards
To learn more contact Karen Kebler,
412.922.4200 or email: Karen@pghbx.org
Pittsburgh Builders Exchange
1813 North Franklin Street
Pittsburgh, PA 15233
BreakingGround November/December 2015 75
I. U. O. E.
LOCAL 66 • CONTRACTORS • DEVELOPERS
TO BUILD A BETTER FUTURE IN ENERGY
AND PIPELINE CONSTRUCTION
What can Local 66 do for you?
For over 100 years Local 66, in partnership with our
employers, has been committed to providing Qualified
and Competent Operating Engineers. For Local 66, meeting
your short and long term employment needs is a priority.
The Operating Engineers lead the nation in pipeline training.
The best trained, most capable work force. Professional tradesmen and
tradeswomen have received the specialty training needed to meet the complex
challenges of your project.
Service you can count on. We’ll work with you to answer any questions or solve
any problems at your convenience.
Smart business know-how. You’ll benefit from our years of experience and a
proven track record we bring to the job.
Bottom-line, dollar-for-dollar value. Value is bringing the highest professional and
performance standards to your job site- from the beginning of a project to its
completion. We at Local 66 are committed to being the premier value provider of
operating engineers in the region.
I.U.O.E. Local 66 Headquarters
111 Zeta Drive
Pittsburgh, PA 15238
Ph (412) 968-9120
www.iuoe66.org
76 www.mbawpa.org
Learn more about
NAIOP in the western
Pennsylvania tri-state region
at naioppittsburgh.com
or 412-928-8303.
NAIOP, the Commercial Real Estate Development
Association, is the leading organization for developers,
owners and related professionals in office, industrial
and mixed-use real estate. NAIOP provides
unparalleled industry networking and education, and
advocates for effective legislation on behalf of our
members. NAIOP advances responsible, sustainable
development that creates jobs and benefits the
communities in which our members work and live.
For more information on how you can develop
connections with commercial real estate through NAIOP,
visit us online at www.naiop.org or call 800-456-4144.
Training Tomorrow’s
Workforce Today
Sheet Metal
Mechanical
Power
Spiral
DEDICATED TO INTEGRITY
AND CUSTOMER COMMITMENT
IN ALL WE DO — ALWAYS.
· Duct Systems
· Plate Products
· Air & Water Balancing
· Fabrication Services
· HVAC
· Plumbing
· Process Piping
· Service
· Pipe Fabrication
· Design Build
· Nuclear HVAC
· Air Systems Products
Equipment
· Duct Fittings &
· Specialty Metal
Accessories
Fabrication
· Gripple Hanger Systems
· ASME NQA-1 Program
182,311
workers
strong
Low
Taxes
SSM Industries Inc. • 3401 Grand Avenue • Pittsburgh PA 15225
T: 412-777-5100 • F: 412-771-1118
HARRISBURG
PITTSBURGH
PHILADELPHIA/NEW JERSEY
LATROBE
www.ssmi.biz
Pad
Ready
Sites
Multiple
STEM
Education
Initiatives
Big Capabilities.
Personal Connections.
When it comes to your business,
we look at the big picture. And
we never forget the importance
of a personal relationship. With
our wide range of accounting and
advisory services, you can count
on us to deliver day after day.
To learn more,
visit schneiderdowns.com
Gennaro J. DiBello, CPA
gdibello@schneiderdowns.com
Eugene M. DeFrank, CPA, CCIFP
edefrank@schneiderdowns.com
78 www.mbawpa.org
724.830.3061
westmoreland
countyidc.org
WCIDC Board of Directors:
Charles W. Anderson
R. Tyler Courtney
Ted Kopas
MBA Membership
MBA OFFICERS
M. Dean Mosites
President
Mosites Construction Company
Steven M. Massaro
Vice President
Massaro Corporation
Anthony F. Martini
Treasurer
A. Martini & Company, Inc.
Jack W. Ramage
Secretary/Executive Director
Master Builders’ Association
BOARD OF DIRECTORS
Joseph E. Burchick
Burchick Construction Company, Inc.
John C. Busse
F.J. Busse Company, Inc.
Todd A. Dominick
Rycon Construction, Inc.
Domenic P. Dozzi
Jendoco Construction Corp.
James T. Frantz
TEDCO Construction Corp.
Thomas A. Landau
Immediate Past President
Landau Building Company
Michael R. Mascaro
Mascaro Construction Company, L.P.
Clifford R. Rowe
PJ Dick Incorporated
Raymond A. Volpatt, Jr. P.E.
Volpatt Construction Corp.
Fred Episcopo
MICA President
Wyatt, Inc.
REGULAR MEMBERS
AIM Construction, Inc.
Allegheny Construction Group, Inc.
Michael Baker, Jr., Inc. Construction
Services Group
A. Betler Construction, Inc.
Burchick Construction Company, Inc.
F. J. Busse Company, Inc.
dck worldwide LLC
Dick Building Company
PJ Dick Incorporated
Facility Support Services, LLC
FMS Construction Company
James Construction
Jendoco Construction Corp.
Landau Building Company
A. Martini & Company, Inc.
Mascaro Construction Company, L.P.
Massaro Corporation
McCrossin, Inc.
Mosites Construction Company
Nello Construction Company
Nicholson Construction Co.
RBVetCo LLC
RJS Construction Consulting, LLC
Rycon Construction, Inc.
Spartan Construction Services, Inc.
STEVENS
TEDCO Construction Corp.
Turner Construction Company
Uhl Construction Co., Inc.
Joseph Vaccarello Jr. Inc.
Volpatt Construction Corp.
Yarborough Development Inc.
ASSOCIATE MEMBERS
A.C. Dellovade, Inc.
A. J. Vater & Company, Inc.
ABMECH, Inc.
Advantage Steel & Construction, LLC
Alliance Drywall Interiors, Inc.
Amelie Construction & Supply, LLC
Amthor Steel, Inc.
Brayman Construction Corporation
Bristol Environmental, Inc.
Tom Brown, Inc.
Century Steel Erectors Co., Inc.
Clista Electric, Inc.
Cost Company
Cuddy Roofing Company, Inc.
D-M Products, Inc.
Dagostino Electronic Services, Inc.
Douglass Pile Company, Inc.
Easley & Rivers, Inc.
EMCOR Services Scalise Industries
Joseph B. Fay Company
Ferry Electric Company
William A. Fischer Carpet Co.
Flooring Contractors of Pittsburgh
A. Folino Construction, Inc.
FRANCO
Fuellgraf Electric Company
Gaven Industries
Giffin Interior & Fixture, Inc.
Richard Goettle, Inc.
Guinto Schirack Engineering, LLC
Gunning Inc.
Hanlon Electric Company
Harris Masonry, Inc.
Hoff Enterprises, Inc.
Howard Concrete Pumping, Inc.
Independence Excavating, Inc.
Kalkreuth Roofing & Sheet Metal, Inc.
Keystone Electrical Systems, Inc.
Kirby Electric, Inc.
L&E Concrete Pumping Inc.
Lighthouse Electric Co., Inc.
Limbach Company, LLC
Luca Construction & Design
Marsa, Inc.
Massaro Industries, Inc.
Master Woodcraft Corp.
Matcon Diamond, Inc.
Maxim Crane Works, LP
McKamish, Inc.
McKinney Drilling Company
Mele & Mele & Sons, Inc.
Menard USA
Minnotte Contracting Corp.
Moretrench American Corp.
Nathan Contracting LP
J. J. Morris & Sons, Inc.
Noralco Corporation
Paramount Flooring Associates, Inc.
T.D. Patrinos Painting &
Contracting Company
Phoenix Roofing, Inc.
Pittsburgh Interior Systems, Inc.
Precision Environmental Co.
RAM Acoustical Corp.
Ruthrauff | Sauer, LLC
Sargent Electric Co.
Schnabel Foundation Co.
Specified Systems, Inc.
Spectrum Environmental, Inc.
SSM Industries, Inc.
Swank Associated Companies, Inc.
Wayne Crouse, Inc.
W.G. Tomko, Inc.
Wellington Power Corp.
Winjen Corp.
Wyatt, Incorporated
AFFILIATE MEMBERS
84 Lumber
Aerotek, Inc
All Crane Rental of PA
Alliant
American Contractors Equipment Co.
American Contractors Insurance Group
American Institute of Steel Construction
AmeriServ Trust & Financial Services Co.
AON Risk Services of PA Inc.
Apple Occupational Medical Service
Arnett Carbis Toothman, LLP
Associates in Rehabilitation
Management, Inc.
Babst | Calland
Baker Tilly Virchow Krause
BDO USA, L.L.P.
The Blue Book Building
& Construction Network
BlueLine Rental, LLC
Blumling & Gusky, L.L.P.
R.J Bridges Corp.
Bronder & Company, P.C.
Bunting Graphics, Inc.
Burleson, LLP
Burns & Scalo Real Estate Services
Cadnetics
Case | Sabatini
Chartwell Investment Partners
Chubb Group of Insurance Companies
Civil & Environmental Consultants, Inc.
Clark Hill
Cleveland Brothers Equipment Co., Inc.
Cohen, Seglias, Pallas, Greenhall
& Furman
Computer Fellows, Inc.
Construction Insurance Consultants, Inc.
Construction Risk Solutions, LLC (CRS)
Culligan of Sewickley
Dickie McCamey & Chilcote PC
Dingess, Foster, Luciana, Davidson
& Chleboski, LLP
Eckert Seamans Cherin & Mellott
ECS Mid Atlantic LLC
Edwards APQM
Enterprise Fleet Management
FDR Safety, LLC
First National Bank of Pennsylvania
Forta Corporation
The Gateway Engineers, Inc.
HalenHardy, LLC
The HDH Group, Inc.
Henderson Brothers, Inc.
Hill Barth & King, LLC
Howick LTD.
Huntington Insurance, Inc.
Huth Technologies, LLC
Image 360
KFMR/CliftonLarsonAllen
Karpinski Engineering
Langan Engineering
& Environmental Services
Law Offices of David A. Scotti, PC
Liberty Insurance Agency
Liberty Mutual Surety
Lytle EAP Partners/Lytle Testing Service, Inc.
m/design
Maiello, Brungo & Maiello
Marsh, Inc.
Merrick & Company
Meyer, Unkovic & Scott, LLP
Mobile Air, Inc.
Mobile Medical Corporation
Morgan Stanley Wealth Management
Multivista
Picadio Sneath Miller & Norton, P.C.
Pietragallo Gordon Alfano Bosick
& Raspanti, LLP
Pittsburgh Mobile Concrete, Inc.
Port of Pittsburgh Commission
Precision Laser & Instrument, Inc.
PSI
R. A. Smith National, Inc.
Reed Smith LLP
The Rhodes Group
Henry Rossi & Company
Saul Ewing, LLP
Schnader, Harrison, Segal & Lewis LLP
Schneider Downs & Co., Inc.
Seubert & Associates, Inc.
Shore Corporation
Steel Built Corporation
Steel Structural Products
Steptoe & Johnson PLLC
Travelers Bond & Financial Products
Tucker Arensberg, P.C.
UPMC Work Partners
VEBH Architects
VEKA, Inc.
Wells Fargo Insurance Services
of PA, Inc.
Wilke & Associates, LLP
Willis of PA, Inc.
Zurich NA Construction
BreakingGround November/December 2015 79
Closing Out
What’s Next for Downtown Pittsburgh?
By Jeremy Waldrup
I
n cities around the world, people are rediscovering urban
centers and this renewed interest has manifested itself in
many ways in our Downtown. I have been in Pittsburgh
for four years now and the Downtown environment has
changed dramatically, with more than 60 projects announced
in just the last year and a half. The restaurant scene is booming
with a new restaurant opening every few weeks and our commercial corridors are seeing redevelopment after years of neglect. Wood Street, bookended by large investments from Point
Park University and the vibrant Cultural District, is now seeing
the completion of The Tower at PNC, a major investment which
opened in October. This investment, coupled with the Forbes
Avenue reconstruction along with the new Tower Two Sixty/ Hilton Gardens and Piatt Place, is creating a corridor with a perfect
mix of new and old. Small boutiques and restaurants, large office towers and residential structures are breathing new life into
a corridor that has been in transition for the last decade. So, with
over $2.1 billion dollars in investment in Downtown Pittsburgh
over the last five years, it leaves one to wonder, what’s next?
Well, one of most interesting ways that Downtown will evolve
over the next few years will be how new development will reconnect Downtown to adjacent residential neighborhoods
and commercial districts. For years the Golden Triangle which
is naturally bound by three rivers has also been walled off by
highways, parking lots, and commercial corridors with failing
infrastructure. This has discouraged short walks that connect
Downtown to gems like the Central Northside and Strip District,
effectively isolating Downtown Pittsburgh from its neighbors.
Thanks to the recently launched North Shore connector, the addition of transportation options like Healthy Ride bike share, and
more people living and working in and around Downtown, we
are seeing growth in the number of office workers, sports fans
and visitors who are walking and biking to, from and all around
Downtown. With much of the new development happening on
the periphery of Downtown, this reconnection is going to occur much faster, rejuvenating historic commercial corridors and
creating new ones, ultimately bringing new residents into quaint
communities and creating enclaves of residential activity along
streets that haven’t seen investment in decades. Our job will be
to ensure that this renewed interest leverages the charm and
character of the existing neighborhoods, encourages integration and supports the growth and development of existing businesses while welcoming new businesses and residents that seek
to enjoy the benefits of a walkable urban community. This reconnection will be significant on Penn Avenue and Smallman in the
Strip District, Centre Avenue in the Hill District and the Fifth and
Forbes corridors in Uptown providing a range of housing opportunities that are not available in the central business district.
We’re also starting to see changes in the public realm. Through
Envision Downtown, a new initiative in collaboration with the
Mayor’s Office, we are working to fast-track improvements that
advance
mobility and livability in
Jeremy Waldrup
Pittsburgh’s central
neighborhoods
by making it safer and more convenient for everyone to get to,
through and around a beautiful Downtown. This is no simple
task but a critical component in what I believe will make Downtown and our region more competitive in the years to come.
Take for example, our sidewalks and streets, one of the largest public assets in Downtown but an often overlooked and underappreciated component of the Downtown environ. Through
Envision Downtown, we are beginning to look at other ways we
can enhance the city streets and are piloting the expansion of
one of the busiest bus stops in Downtown. These changes will
provide more space for riders to queue, new shelters to protect
transit users and, in partnership with the Port Authority, real time
transit information for users at this stop. We are also working to
ensure that one of my favorite aspects of Downtown, our historical architecture, is preserved and renewed through our Paris to
Pittsburgh program. This program, supported by Colcom Foundation has directed over $5.5 million in private and philanthropic
investment to support outdoor dining and façade improvements
in 77 projects. These enhancements coupled with investments
in public space will work to allow pedestrians to more easily
navigate this busy corridor and provide a more retail friendly
environment for the businesses that front the street. We hope
this work will allow us to better allocate public space, craft a
more pedestrian friendly environment, encourage greater use of
public transit, create safer streets and improve the overall built
environment in Downtown.
We believe investments in public infrastructure will pay off in
significant ways. A recent report by Smart Growth America and
Cushman & Wakefield stated that companies are choosing to
move to downtown locations because downtowns project innovation and collaboration and allow companies to take advantage
of the triple-bottom line –the social, environmental and financial
motives of the company. We know that recruiting and retaining
talent is one of the most critical functions of any successful business and, now more than ever before, workers want access to
walkable communities, public transit and a host of other amenities right outside their door.
Downtown Pittsburgh has made significant strides over the past
decade and a concerted effort to enhance our streetscapes will
help support continued development. Retail, restaurants, and
a more vibrant residential life will continue to attract a diverse
workforce leading to the sustained growth of Downtown and
supporting the development of our region for generations to
come.
Jeremy Waldrup is CEO of the Pittsburgh Downtown
Partnership.
setting the
performance
standard
2012 Building Excellence Award Winner
Photo by Massery Photography
Burchick Construction is a performance-driven provider of quality construction and
construction management services. Our dynamic approach to management made the
difference to BNY Mellon when it needed to strip and repaint the complete exterior of the
54-story BNY Mellon Center in 18 months during constantly changing weather conditions.
Call us today.
One Call. One Source. Complete Satisfaction.
Burchick Construction Company, Inc. • 500 Lowries Run Road • Pittsburgh, Pennsylvania 15237
Telephone: 412.369.9700 • Fax: 412.369.9991 • www.burchick.com