Vibrant Downtown What’S Next?

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 [email protected] 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 B:8.625” T:8.375” S:7.875”

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PUBLISHER Tall Timber Group www.talltimbergroup.com Cover image: The Tower at EDITOR PNC project Jeff Burd team. 412-366-1857 Photo courtesy [email protected] PJ Dick Inc.

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 07 REGIONAL MARKET 54 LEGAL PERSPECTIVE Jan Pakler Photoography UPDATE Can they really make us sue Connie Zhou Photography them there? 11 NATIONAL MARKET ADVERTISING DIRECTOR UPDATE 57 MBE/WBE SPOTLIGHT Karen Kukish Gerard Associates Architects 412-837-6971 15 WHAT’S IT COST? [email protected] 60 TREND TO WATCH The housing market is on the MORE INFORMATION: 16 FEATURE verge of a shift…again. BreakingGround is published by Envisioning Downtown: What’s next? Tall Timber Group for the Master 65 INDUSTRY Builders’ Association of Western & COMMUNITY NEWS Pennsylvania, 412-922-3912 or 30 PROJECT PROFILE The Tower at PNC Plaza. www.mbawpa.org 71 AWARDS & CONTRACTS 46 FIRM PROFILE Archive copies of Tri-State Reprographics. 74 FACES & NEW PLACES BreakingGround can be viewed at www.mbawpa.org 51 FINANCIAL PERSPECTIVE 80 CLOSING OUT Regulations are pushing up costs Jeremy Waldrup No part of this magazine may be on a variety of fronts. CEO Pittsburgh Downtown reproduced without written permission by the Publisher. All rights reserved. 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.

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BreakingGround November/December 2015 3 LEADING THE INDUSTRY... KEYSTONE ELECTRIC CONSTRUCTION

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DONATELLI ELECTRICAL SERVICES, INC. MARSULA ELECTRIC, INC. BLACKHAWK-NEFF, INC. HOFFMAN ELECTRIC COMPANY HIGH VOLTAGE MAINTENANCE YATES BROTHERS, INC. R.E. YATES ELECTRIC, INC.

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ver go to a dinner party where there is that guy that them to move. It took the financial crisis to create an atmosphere kills the party by getting in a loud argument? I was that so fertile for apartments and recognition that Pittsburgh had guy one time about 15 years ago (my wife may actually it going on to get some momentum for developing scale in recall other times but I’m at a loss.) The incident didn’t housing options in Downtown. Prior to that, development actually kill the party but it also didn’t help our hosts Downtown was pretty limited, with a handful of small loft outE any. By coincidence, the subject of the disagreement was the projects and a couple of new apartment or condo buildings. focus subject of this edition of BreakingGround: life Downtown. And it’s hard to know if the Encore, Penn Garrison or 151 First Side would have gone forward without Eve Picker’s willingness One of our neighbors at the time shared my enthusiasm for a to convert some of the old “sliver” buildings into lofts when good debate. There was another guest who was my neighbor’s conventional wisdom advised against it. business partner and also liked a good argument. We were debating the merits of public funding for the Plan B stadiums What really opened the gates for new housing Downtown and the civic responsibilities of the Rooneys and the Pirates. We was the financial problems of government. Being broke kept also engaged in a discussion about the prospects for Downtown Pittsburgh’s mayors from awarding more millions in fees to Pittsburgh, which was less than vibrant at the time. A fourth planners and developers (usually from outside Pittsburgh, gentleman decided to enter the fracas to interject his negative of course) and allowed developers (usually local) to grow the opinions about Downtown and to assert that no one would ever housing stock organically based upon their own assessment live in Downtown Pittsburgh until there were lots of shopping of demand and risk. The Commonwealth couldn’t justify and a grocery store. I did not respond to this viewpoint gently. maintaining an office building and Millcraft’s Rivervue took its place. The former Alcoa headquarters didn’t work as a home Mayor Tom Murphy had gone to the political mat to wrangle for government-related agencies and was sold to make way the funds for the Plan B deals and he was passionate about for more apartments and offices. Government couldn’t afford revitalizing the Fifth/Forbes corridor, but I believed he was also to lead development – not that it ever should – and was much dead wrong about his theory that retail would attract residents. more effective in a role of supporting it instead. I think there’s a I mentioned that to the party guest in a fashion that was, shall lesson there. we say, full of enthusiasm. Also volume. He quickly retreated to the other end of the dinner table and informed the hosts that I Once the free market took over, the pace of development was nuts. He wasn’t expressing disagreement with my position; Downtown quickened. When I moved back to Pittsburgh in he was expressing the opinion that I should be locked away. My 1991 after eight years away, much was the same in Downtown as wife, as you might imagine, was mortified. it had been in the late 1970s. There were fewer people working Downtown and not much life there; and that remained the status Setting aside the social faux pas, the passage of time has quo for another 15 years. Over the past eight years, however, validated my point. I’m not sure where the idea started that life in Downtown has done a 180-degree turn. Think about people wouldn’t move into an urban setting unless there was Fifth Avenue or Market Square or the hundreds of students retail but the theory doesn’t hold up. Our understanding of what roaming around the Boulevard of the Allies or Third Avenue. drives urban living has deepened in recent years but even in Literally dozens of mostly-empty buildings have had their end 1999 the city fathers should have known that urban dwellers uses completely changed and become full. Restaurants in the want access to lifestyle amenities and culture, not necessarily Cultural District are full on Tuesday evenings. Some 2,000 retail. And retailers aren’t in the business of speculating where more people live there. Companies are able to attract talented rooftops might pop up when selecting sites. They want the workers because they are located Downtown. rooftops there first. Think of it this way: WalMart or Home Depot didn’t drop stores at Crider’s Corners in 1985 in the Living and working in the center of town isn’t for everyone. All hope that Cranberry Township would grow. It took about 5,000 over the U.S. there has been a revitalization going on in urban new homes and ten years or so of a boom before the retailers centers and Pittsburgh has joined the list. Pittsburgh’s two made the commitment. Those same dynamics apply to city biggest job creators are headquartered in Downtown so the neighborhoods as well. trend should only continue. With two rivers, three major league stadiums and lots of night life for entertainment, it’s hard to Maybe the question that should have been asked at the time figure what took so long for Pittsburghers to take a shine to the was what kinds of retailers or grocery store would be expected place again. I guess we just had to get out of our own way. to move into a town of less than 4,000 people that was six- tenths 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 Jeff Burd Pittsburgh in great numbers because there weren’t places for

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MEMBER FDIC With new and existing home prices rising in Pittsburgh more REGIONAL MARKET UPDATE 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 For construction-related companies, the die is pretty well cast likely now been made but will require approval from Shell’s for the year by the end of the third quarter. For industry ob- board of directors at its December meeting. There was no servers, third quarter results give a similar clarity to how the indication from the main engineering and contracting enti- year is going to end, but with an eye towards how the trends ties as of early November, however, it was reported that the are indicating the coming year will go. By most measures, the enormous pilings package had been released for fabrication data for 2015 shows increased activity and the solidification of and proposals were taken for the parking garage on the site. three major trends that will color how 2016 goes. Unlike other portions of the more than $100 million in contracting that has occurred, these packages go beyond the The trends that are driving construction are: multi-family, so-called “ready work” and would not be needed unless the midstream/downstream energy and commercial real estate plant goes ahead. development. In the case of multi-family development, the pipeline activity portends surprising legs for what is a four- Absent an announcement about the ethane cracker, indica- year phenomenon. For the latter two trends, the pipeline of tors like bid packages serve as news for what will be a cata- projects (including pipeline projects) is growing, creating an lyst for the downstream gas market. Users continue to inquire environment with even more construction activity into 2017. about sites for facilities that would either be customers of Shell’s or would support the plant. First, the data. Nonresidential contracting experienced a robust quarter, with contracting volume of more than $1.4 bil- Among those projects advancing ahead of an official an- lion. Through three quarters of 2015, nonresidential contract- nouncement to proceed is the 252,000 square foot first ware- ing was at $2.8 billion, which was 45.8 percent higher than the house in the second phase of the Clinton Commerce Park same period in 2014. in Findlay Township. That phase will also include a 230,000 square foot second warehouse. Several miles to the south, 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. New home construction was ahead of 2014 levels through three That has been the case for nearly two years. quarters. Source, Pittsburgh Homebuilding Report.

Housing also saw a significant increase in the third quarter, in both single-family and apartment starts. New single-family Ashley Capital is preparing to start construction on a 316,000 home permits still lagged the number of permits issued dur- square foot distribution center at the Findlay Industrial Park ing January-to-September 2014, but the deficit declined to being developed by Imperial Land Co. And within a mile of 4.9 percent – or 73 units. Apartment starts jumped to 1,556 the Shell site, Millcraft Investments has closed on the land to units, an increase of roughly 40 percent over 2014. The total build a 107-room Home 2 Suites by Hilton, the first of two housing market surged 18.2 percent, to 3,584 units. hotels the developer plans in the Monaca area.

The increase in single-family housing is especially positive, if it Despite difficult conditions for the oil and gas companies, the represents the beginnings of a permanent uptick. New home midstream activities in the Marcellus and Utica remain heavy. construction in Pittsburgh has not recovered to pre-recession The low commodity price has been a drag on shale gas de- levels, even though the economy in the region has more than velopment but the bigger problem for producers in the Ap- bounced back. Housing starts actually began to slow in Pitts- palachian Basin is the lack of infrastructure to deliver gas to burgh two years prior to the mortgage crises because of dwin- all its potential markets. That lack of processing and pipeline dling lot supply. The lack of available financing and developer network causes producers to sell the natural gas at a discount risk aversion kept new development from picking back up in of as much as 50 percent below the hub price. the first half of the decade. During the past two years, subdivi- sion entitlement has increased and the activity in July through Consolidation in the midstream market led to the acquisition September is an indication that inventory is finally swelling. of the two biggest players working in Western PA’s midstream

BreakingGround November/December 2015 7 Construction Manager and Constructor facilities construction, MarkWest and Williams. While the in- for the Renovations and Restorations tegration of mergers has likely slowed down activity, capital to the historic Union Trust Building spending on processing and distribution in Western PA will be several billion dollars in 2015.

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 The Mascaro Advantage 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 fa- cilitate exporting; and Kinder Morgan’s Cochin Marcellus Lateral Extension, linking the Western PA gas fields to the Sarnia, MI and Chicago terminals and plants.

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. Com- bined 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 • Family atmosphere sites between the Susquehanna and eastern Ohio. Within the last month or two, several projects in the 14-county • Hungry and smart southwestern Pennsylvania footprint have moved closer to • Building relationships construction. On the most imminent of the projects, the 950-megawatt Tenaska Westmoreland plant in South Huntingdon Town- ship, an engineering-procurement-construction (EPC) firm was selected. Kansas City-based Black & Veatch will be We do the right thing. completing design and putting bid packages out this winter. Black & Veatch is also the EPC on the co-generation We deliver great experiences. 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 Town- ship. 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 Pitts- burgh 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 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.

8 www.mbawpa.org Allegheny Health Network has undertaken a $40 million mechani- ing Foundation, and Walnut Capital remain in the running for the cal infrastructure renovation at Allegheny General Hospital. By- 450,000 square foot mixed use project. CMU’s other major proj- standers can observe the structural steel to support additional air ect, the $100 million Tepper School of Business broke ground handlers being placed on the roof of the Snyder Pavilion. Further on October 30. Bid packages should go out in November and improvements to the building systems at AGH will complete the December. PJ Dick is that project’s construction manager. project. According to Dick Thompson, AHN’s senior facilities executive, the health system is exploring several areas where it has Although architects continue to report high design volume, little or no presence and feels patient demand would support market sentiment among contractors is less bullish. The Master new facilities. Thompson noted that there were three or four loca- Builders’ Association’s C3 Index showed improvement in three tions of interest but the strategic analysis of the projects was in categories – business climate, bidding activity and backlog – progress. Any new construction that would result from the study that usually dictate how firm owners view the market; however, would not occur until 2016 or later. the contractors dropped their grades for their projections enough that the overall index fell. The MBA’s director of com- UPMC is likewise looking at its massive footprint to determine munity outreach, Jon O’Brien, noted that each of the C3 surveys what services are needed and what facilities should provide those in the third quarter have always shown negative scores for future services. UPMC’s capital budget for 2015-2016 is roughly $200 prospects, suggesting that the seasonal slowdown may be influ- million, most of which will be invested within its existing hospitals. encing the results. BG 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.

The Carnegie Mellon gateway project announced in late summer has advanced to a short list of three development teams. Wexford Science + Technology, Gateway/The University Financ-

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BreakingGround November/December 2015 9 for showing what can be done.

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PNC, Midland Loan Services and “for the achiever in you” are registered marks of The PNC Financial Services Group, Inc. (“PNC”). Lending products and services require credit approval and are offered by PNC Bank, NA, a wholly owned subsidiary of PNC. Investment banking and ◊ capital markets activities are conducted by PNC through its subsidiaries PNC Bank, National Association, PNC Capital Markets LLC, and Harris Williams LLC. Services such as public finance advisory services, securities underwriting, and securities sales and trading are provided by PNC Capital Markets LLC. Merger and acquisition advisory and related services are provided by Harris Williams LLC. PNC Capital Markets LLC, and Harris Williams LLC are registered broker-dealers and members of FINRA and SIPC. Harris Williams & Co. is the trade name under which Harris Williams LLC conducts its business. PNC does not provide legal, tax, or accounting advice. ©2014 The PNC Financial Services Group, Inc. All rights reserved. CIB RE PDF 0214-052-175097 however, only two more opportunities to do so exist. It will NATIONAL not be until November 18 that the discussions and decisions MARKET UPDATE made at the October 27-28 FOMC meetings become public.

Through three quarters of 2015, construction at the nation- Whether or not the FOMC chooses to bump rates in October, al level has grown robustly. Data from all sectors of the con- December or later, the arc of increases that will follow is cer- struction industry shows higher activity, dramatically higher in tain to be very gradual. Given the Fed’s continued concern some sectors. Even those construction categories that reflect about the fragility of the economy and the fact that interest consumer confidence continue to show strong growth over rates in many global markets will remain at or below zero, it’s 2014. If there are real threats to the U.S. construction econo- unlikely that U.S. rates will rise more than one percent until my the evidence is only manifest at the fringes of the market. 2017. A good benchmark to follow will be how gross domestic product (GDP) trends. The correlation between GDP and the When allowed to operate free of stimulation or regulation, the ten-year Treasury note has historically been very close. Given construction market is an excellent barometer for the overall the forecast for GDP growth for 2016, there seems to be little economy. Homebuilding reflects the confidence of the con- chance of the ten-year T-bill consistently yielding more than sumer in his or her job and the prospects for future financial three percent until 2017. Should GDP rise to three percent or security. Commercial construction expands when the number higher, the strength of the economy will more than offset any of workers increases or the demand for goods and services rate hike concerns. requires more shops or warehouses. Lei- sure 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 year- over-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 impend- ing 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 NAHB/Wells Fargo Housing Market Index surveys builders baked into lending and investing. The significance of the rate and realtors about new home sales and traffic in the current increase is that it would mark the final milepost in the Fed’s month. Source NAHB. 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 Mar- Lower rates are good for construction. Commercial real es- kets Committee (FOMC) would have raised the money-trad- tate competes with mid-range bonds like the ten-year Treas- ing rate by 25 points in summer 2015, likely in the August ury or corporate bonds for investors. Low rates allow current meeting. The correction in the stock markets and the further projects greater margin of error for performance. Low rates weakening of the global economy – notably in the Chinese will also help mitigate whatever damage could exist from the economy – were enough for the rate doves to persuade the refinancing of poorly performing ten-year loans that will be FOMC to stay the zero-interest course. After the August meet- maturing in 2016 and 2017. In the current environment, even ing, a survey of the 17 FOMC members revealed that a strong long-term debt is commanding historically low interest, mean- majority of 13 believed an increase should occur in 2015; ing 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 con- traction 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.

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 Most macroeconomic signals are still positive heading into and new sales grew again in September. Job growth in Au- the fourth quarter, although few forecasts for GDP growth gust and September was 136,000 and 142,000 respective- are expecting more than a 2.5 percent increase. These mut- ly. That marked the first two-month increase below 150,000 ed forecasts are being weighed down by three major fac- since May-June 2012 but the drags on job growth were tied

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12 www.mbawpa.org to cutbacks in limited sectors – such as energy – that are In its October 16 Friday Market Insight, real estate service expected to be temporary. Jobless claims remained below giant Newmark Grubb Knight Frank reported that industrial 300,000 for the longest stretch since 1973. Payroll processor space absorption had declined in the third quarter, falling to ADP reported consistent job growth in the private sector, 42.6 million square feet. That’s seven million square feet less with August and September at 186,000 and 200,000. than a year earlier. The weak dollar and weaker global demand are softening the need It’s likely that the labor for warehouse space. During market is the key reason the third quarter, completions for the strength in current also outstripped absorption, a construction volume but Most macroeconomic signals sign that new industrial con- the weakening around the struction will slow in the com- edges of the economy is are still positive heading into the ing quarters. beginning to have an effect. Even within the ADP fourth quarter ... Another forward-looking indi- National Employment Re- cator is the AIA’s Architectural port there were signals Billings Index (ABI). The ABI that the recovery is hitting had been robust since spring its peak. In September, more than half the total jobs creat- but dropped to 49.1 in August, meaning more firms saw de- ed were at companies of 500 or more and only 37,000 jobs clining billing than increasing in August. The nature of archi- were added at small businesses. Compare that to the mix in tectural practice tends to create more volatile billings than August 2014, where the 230,000 new jobs created were split other professions, as most architectural firms are small and almost evenly between small and medium businesses, with increases in time spent on construction administration, for only 5,000 jobs coming from large corporations. Negative example, can lead to a natural decline in the overall billings. economic indicators like the global slowdown are not ap- Given the earlier increase in billings – an indication that more pearing in current contracting volumes but rather in longer- was being designed – there is some likelihood that billings term signals. 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-over- year growth rate was the fastest since January 2006. Year- over-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 Bu- reau 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 Sep- tember 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 Rising competition for fewer workers could change that trend WHAT’S IT COST? in 2016 or 2017.

Reports from three research firms and the Bureau of Labor The competition for skilled workers has begun to offset the Statistics (BLS) showed that prices for construction products stagnant or declining costs of materials, according to consul- and materials remained below the overall rate of inflation tant Rider Levett Bucknall. The firm reported on October 2 while costs for labor rose at a faster pace through the first that its 12-city Comparative Cost Index survey showed that nine months of 2015. The impact of competition for labor and “the national average increase in construction cost was ap- materials are likewise having opposite effects. proximately 1.15 percent” from April through June. Rider Le- vett Bucknall tracks the bid cost of construction, including the The October 14 BLS report showed that the producer price overhead and profit of the general and specialty contractors, index (PPI) declined 0.7 percent in September and 1.1 per- in addition to labor and material costs. The U.S. year-over-year cent during the prior 12 months. The PPI for final demand increase was 5.3 percent, up from 4.3 percent a year earlier. construction rose 1.8 percent compared to September 2014. Within the major nonresidential building categories year- Taken together, the reports paint a portrait of an industry over-year increases were fairly consistent with the overall in- where improved construction volumes are allowing labor to flation rate. Increases ranged from 0.2 percent for healthcare demand higher wages and contractors to increase their mar- construction to 1.8 percent for schools, 1.9 percent for ware- gins, while the prices for materials and building products re- houses and industrial buildings, and 2.4 percent for offices. main 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 Au- gust to September and 44 percent year-over-year. Stronger U.S. construction activity was overshad- owed 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 ce- ment 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 - per cent. Most manufacturers surveyed expected to rein- state 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 negoti- ated from January through September 2015 aver- aged 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 FEATURE

TheThe ForecastForecast forfor DowntownDowntown

16 www.mbawpa.org 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 Down- town 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 mira- cle cure. But unlike any other urban neighborhood, Downtown has some distinct advantages in Pitts- burgh. 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 FEATURE

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 market turns. And after an extended period of new residential trend in Downtown, although there are some clear milestones development, particularly that which repurposed many outdated that seemed to be points of departure from the previous norm. commercial buildings, there are questions about whether the de- Some of those, like the renovation of Market Square and the Fifth mand is deep enough to draw another thousand or more people Avenue buildings that adjoin it, were transformational. Others, to live Downtown, or whether development on the fringes will like the development of a Fairmont Hotel, validated the depth of supersede Downtown living. the market in Downtown. Working 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 re- For all the surprise registered by long-time Pittsburghers over the vitalization is underway. The keys, just as they were in 2005, will growth of residential units in Downtown, it’s the office market that be jobs and residents. A hot office market is facing some head- is actually the outlier when compared to other cities. Pittsburgh winds over the next couple of years and the health of Downtown’s was unusual in that very few of its citizens lived in its Central Busi- employers or potential new employers will determine how the ness District (CBD). There was no reason to think Pittsburghers

18 www.mbawpa.org FEATURE

Development of new housing Downtown spiked since 2010.

wouldn’t move Downtown other in 2005, with about 15,000 of those jobs being added since the than the status quo a decade recovery started after 2009. If you are generous with the space ago. On the other hand, the of- requirements for those new jobs – say 200 square feet per person fice vacancy rate in Downtown – that means job creation accounted for 3,000,000 square feet of Pittsburgh had been stuck on office space since 2009. Of course, that’s an MSA-level number, high for much of the previous which means that a significant amount of that space – perhaps decades since the last of six even a majority – ended up in suburban developments like the high-rise buildings were com- new Westinghouse campus or Southpointe. Other factors had to pleted. Prior to 2007, at least, be at play. there was little on the horizon to predict that space would soon One significant factor was the adaptive re-use of existing older be at a premium but Downtown office buildings that were functionally obsolete. Part of the sym- Pittsburgh’s office market started to outperform almost every biosis of Downtown’s resurgence has been that demand for new comparable U.S. market. residential space – which would have been impossible to meet only with new construction – could be met by taking dysfunc- The things that spur growth – new business attraction, employ- tional space and converting into a better use. ment growth and population growth – hadn’t happened in Pitts- burgh since the early 1990s. When there were employment-driv- Gerald McLaughlin, executive managing director for Newmark en development spurts, the new construction and leasing activity Grubb Knight Frank’s Pittsburgh office, notes that over three mil- was suburban, in places like Cranberry and Southpointe. lion square feet of office space Downtown has been converted into another use over the past five years. McLaughlin points out Vacancy rates in the CBD were still stuck in the high teens when that that space would have been very difficult to make useful to the recovery from the Great Recession began. Within five years, meet the needs of the modern office user. that rate had declined to nearly ten percent in the commercial Class A buildings. Including the owner-occupied buildings, va- “Back in the day, office buildings had smaller floor plates. Many cancy was closer to five percent. How did such an improvement had no HVAC system when they were built and the windows and occur? More jobs and less space. column spacing were wrong for modern offices,” he says. “It’s very tough to make Class B office into competitive Class A space. According to the U.S. Bureau of Labor Statistics, there were There was a lot of Class B space for which the highest and best roughly 25,000 more office-using jobs in Pittsburgh in 2014 than 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 Av- enue. 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 Univer- sity, 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 Foun- dation – 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 Down- town 2015 without the real catalysts, UPMC and PNC.

Two of the Commonwealth of Pennsylva- nia’s largest employers, UPMC and PNC each made decisions about locating their headquarters that had regional implications and each decision took the region’s well- being 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 let- ters 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 BRIDGING 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 THE GAP. 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. Anec- Commercial real estate solutions dotal evidence is that many of its employees that are new for every need. to Pittsburgh are choosing to live where they work, absorb- ing many of the new apartments. Moreover, the selection of Downtown for a new and one-of-a-kind headquarters sent Full service, integrated real the signal that Pittsburgh corporations could do well and not estate solutions for tenants, leave town. That was a boost of confidence for the business buyers, landlords, owners, community. developers and investors around the globe. What PNC has also done by locating Downtown and assimi- lating 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 “There is definitely upward pressure on rents. We see itin [email protected] every deal,” asserts Steve Guy, Oxford Development’s CEO. Louis Oliva “Business owners understand there’s a higher quality to build- Executive Managing Director ings in the CBD. There’s the convenience, amenities and ac- [email protected] cess to most public transportation. Also, rents are actually in- flationary right now because tenant improvement allowances 210 Sixth Avenue, Suite 600 are higher.” Pittsburgh, PA 15222 www.ngkf.com T 412.281.0100

BreakingGround November/December 2015 21 Commercial Lending Higher rents make office buildings more profitable and more attractive to buyers and investors. The trend of recent years A commercial loan* from Northwest gives Loans and Lines of Credit is the reason we see Downtown buildings selling to investors from out-of-town and your business flexibility. Our fast, local approval Low Fees foreign countries. But higher rents also allow landlords to make improvements and process saves you time. Our customized plans, Competitive Rates upgrade systems that are older. To keep the rent growth trend intact, more employers low fees and competitive rates save you money. Fast Turnaround will have to be attracted to the CBD. That means there will need to be a motive to Best of all, while you’re building your business, Local Decision-Making paying a premium to be in Downtown.

Northwest is right there with you, building a Customized Financing The point is often raised that Pittsburgh’s rent is a relative bargain for companies relo- relationship that lasts. Strong Relationships cating 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 Down- town. But Jeffrey Ackerman, managing director for CBRE in Pittsburgh, rejects that argument. “There are also small and medi- 29 offices to serve you in Greater Pittsburgh um-size markets, like Cleveland or Kansas Northwest Direct: 1-877-672-5678 • northwest.com City, where rents are $25 per square foot,” he reminds. “Someone coming from one of those cities would certainly flinch at $40.” *Subject to credit approval. See Bank for details. Member FDIC Of course, the same holds true for Pitts- burgh 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.

“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, SPECIALTY CONTRACTING AND MAINTENANCE SERVICES “More urbanization, more hotels, retail and www.Limbachinc.com • (412) 359-2100 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 pedestrian- friendly, 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 Improving the street-level experience has become in 2012 while rents continue to climb. 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. University of Pittsburgh. The attraction Downtown will have to be based more on a lifestyle and most feel that Downtown is on the At the same conference, Mayor Peduto announced the forma- right track but not quite at the destination yet. tion of Envision Downtown, which has the mission of activating

BreakingGround November/December 2015 23 public/private funds to undertake dozens of small but meaningful Luther uses Market Square as a hypothetical case for how the projects that will improve the public experience Downtown over study might quantify the needed projects. the next few years. The executive director of Envision Downtown, Sean Luther, says the goals of the organization are practical not “Instead of saying Market Square is successful because it’s pretty, academic. 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 “Envision Downtown was born out of talks between the Hillman seats it could be even more successful,” he says. Foundation and the City of Pittsburgh about how to improve the experience of being Downtown and how to capitalize on the Living Downtown great things happening there,” Luther explains. “It’s not a planning exercise. We are trying to find existing plans and kick start When the Encore and 151 First Side were built in the mid-2000s, them into action. Our thought is that we will initiate long-term many experts – including one or two of the developers – ex- planning at some point but the mission is action.” pressed the opinion that these might be the last of the projects that would add to the inventory Downtown. The feeling was that The first of those plans is already in action. The Strawberry + absorption would be saturated once those properties were sta- Smithfield project involves a repaving of Smithfield Street be- bilized. Rather than representing the peak of the housing push tween Seventh and Oliver, which is underway, and improvements Downtown, the construction of the Encore and 151 First Side for transit riders on Smithfield and Sixth Street. The latter involves were actually the early phase of the wave. widening the sidewalk on Smithfield by six feet to create a “platform“ for riders, including installing a bus shelter. Pedestrian im- Within the Golden Triangle, growth of population has spiked provements on Strawberry Way will follow in a second phase. during the decade of the 2010s, as has the construction of new units, not surprisingly. While annual totals aren’t available, Cen- Envision Downtown also commissioned Denmark’s Gehl Studio sus Bureau data shows that population has jumped over 80 to perform the Public Spaces + Public Life Survey. “We want a percent since 2000 and more than 28 percent from 2010 to better understanding of how Pittsburghers use public space and 2014. Based on the average residents per dwelling unit histori- a quantitative study of how public resources should be used.” cally, there will be over 6,000 residents in the Golden Triangle

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24 www.mbawpa.org when the current crop of planned apartments and condos is slightly more, jumping 4.8 percent to $246.88 per square foot. completed. That marked a cumulative 21 percent appreciation in the square foot price since 2010. Since 2010, 1,027 units have been completed or are under construction, bringing the total number of multi-family units to 2,722 Demand for living Downtown is driven by convenience and life- once construction is completed. There are another 596 units style. The foundation of New Urbanism is the desire to be in a proposed in the pipeline in the Golden Triangle, which will bring live-work-play environment that is all within walking distance or the total inventory to 3,318 when the decade ends. Including the within a convenient public transit commute. The compact size of Strip District, Lower Hill District and North Shore, Greater Down- Downtown Pittsburgh and the access to its light rail system aligns town has 4,752 units of multi-family but has another 3,730 under it with those goals very well. The fact that a few of the region’s construction or in the pipeline. biggest employers are also Downtown adds to the convenience.

During the first months of 2015, there was a dip in the occupancy But while the CBD and its fringes are suited to those desiring an level to 90.8 percent as more than 350 new units entered the urban experience, the demographics of Pittsburgh’s Downtown inventory in the latter months of 2014. Absorption of those units residents aren’t in line with the norms in other major cities. Empty picked up in spring, as happens with suburban apartments as nesters are the largest demographic cohort embracing Down- well, and occupancy moved back towards the 95 percent level town living in cities comparable to Pittsburgh. In most U.S. down- that existed prior to the new units coming online. In fact, many of towns, the rents are among the highest in the city and so the the metrics used to measure Downtown living are running more financial barrier is higher for younger adults. Pittsburgh’s demo- and more in line with how residential real estate behaves through- graphics should align well with the norm. We have a high share of out the region. Baby Boomers living in the suburbs and a high share of suburban dwellers who were raised in the City of Pittsburgh before moving According to the Pittsburgh Downtown Partnership’s (PDP) 2015 out. The reality, however, is somewhat different. State of Downtown Pittsburgh report, sales of condos in the Greater Downtown rose 17 percent in 2014, with the average sale Far and away the largest demographic group living in Downtown price rising 3.6 percent. The average price per square foot rose is the 20-29 year-old cohort, which makes up 31 percent of the

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26 www.mbawpa.org 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.

Unlike other older cities, Pittsburgh’s Downtown population is weighted The lower average rents aren’t slowing down development thus heavily towards the 20-29 year-old demographic group. Source: Pitts- far. While the starts of the recent half-decade won’t be matched burgh Downtown Partnership State of Downtown Pittsburgh. again, there are still projects in the hopper. Phila- delphia-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 De- velopment is a partner in a 50-unit apartment planned for two adjoining buildings at 711-713 Penn Avenue. At 750 units, the new development is still ambitious and would What will turn into another big round of development will be add significantly to both the inventory and variety of the hous- the re-boot of the housing plans of the Pittsburgh Cultural Trust. ing stock in Downtown. In the original plan, several blocks of Originally a master plan of townhouses and apartments called townhomes or other high density “city homes” were planned RiverParc, the project was awarded to Concord Eastman in 2006. that would have a different character than stacked apartments. Plans for 700 units plus parks and retail were never fully devel- Residents of those homes would leave their dwellings at street oped and the project floundered when the housing crisis hit. Now level, without having access to amenities like the gyms and the development is being re-considered with the expectation of community areas that the newer apartments offer residents. going back out for proposals by private entities in 2016. 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 condos. That opened the door for the developer to finally make something out of the lower Fifth Avenue corridor, which opened What has occurred in Downtown Pittsburgh over the past ten the door for the renovated Market Square to have 24-hour cus- years was not part of a well-conceived plan. It’s not that Pitts- tomers, which opened the door for…well you get the picture. burgh’s politicians or advocacy leaders like the PDP didn’t envision a vibrant 24-hour Downtown; but rather that the elements Those successes may lead to a formal plan by the city or some and projects that made a difference weren’t part of any plan that government entity somewhere down the line but thus far the best was put forward. And there were a few. playbook has been to let private investment decide what will work in the market. Millcraft is a good example of private money Rather than having retailers like Lazarus or Lord & Taylor draw in investing in what it perceives the market wants. The driver behind residents, it took the failure of that strategy to open up the op- its development of Downtown housing was seeing the success portunity for Millcraft to convert the Lazarus store into offices and 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 con- sidering 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 Down- town 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 Sean Luther sees the establishment of Envision Downtown as em- Downtown Pittsburgh location. For a 100,000 square-foot user, blematic of that persistence continuing. that’s a million bucks from the bottom line.” “It indicates that the leaders aren’t willing to declare victory and As a destination that talented workers will demand, Downtown move on,” he asserts. “They want to continue to invest in infra- may reach that status if there is success in marrying transit infrastructure and businesses to build upon the successes of the structure to the expanded limits of what the PDP calls Greater past.” BG 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 en- visioned 20 years ago.

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 re- member that those spaces aren’t empty yet. Users can be found in the interim and having inventory isn’t a terrible thing. After all, Pitts- burgh’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 Experience ... back. Not all ideas of how to bring life back When Matters were good ones but there was persistence from the leadership and the development community that defied what seemed to be Our commitment to excellence through intelligent design, reality. That defiance of the seemingly inevi- sound project management and superior craftsmanship table got the grants and subsidies that made sets us apart from the competition. projects happen. Ultimately, the persistent won the day. www.RuthrauffSauer.com

BreakingGround November/December 2015 29 P r o j e c t P r o f i l e

30 www.mbawpa.org P r o j e c t P r o f i l e

The Tower at PNC Plaza

At the beginning of October, employ- Gary Saulson, executive vice president ees began moving into The Tower at and director of corporate real estate for PNC Plaza, the new corporate head- PNC. “We’re a more international com- quarters for the PNC Financial Services pany so it made more sense to have a Group (PNC) on Wood Street between large headquarters building where we Fifth and Forbes avenues. Move in will could consolidate people and save continue into January into the $400 money.” million, 800,000 square foot headquarters that took five years to plan and The decision to build a new head- build, consuming roughly 4.8 million quarters involved much more than just man hours in the process. planning for space and function. PNC had developed a culture built around Construction started on The Tower in its sustainability and its prominent Fall 2012 with the demolition of the role in the revitalization of Pittsburgh. buildings on Wood Street and the side The corporation recognized its future streets but planning for the project had success was going to be based on its begun well ahead of construction. PNC ability to attract and retain talented was one of the banks that managed the people. These basic tenets informed a financial crisis the best and had been three-pronged approach to design and growing steadily as the economy re- decision making. The planning process covered. Major acquisitions and expan- rested on three pillars: PNC as an en- sions brought new people to the com- ergy responder, workplace innovator pany and its existing properties weren’t and community builder. adequate. From the beginning of the process, “We needed space Downtown for con- which essentially started as 3 PNC Plaza tinued growth. The buildings we were was wrapping up, the aim was to build primarily in, which were One and Two the greenest building in the world. As PNC, were of the age where they re- it turned out, that ambition would be ally needed to be renovated,” explains multi-faceted.

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“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,” Saul- son 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 we have to dream higher and we have to dream better. We’re building buildings to stand The chandelier-like beacon in The Tower’s lobby is actually made of LED the test of time, to be here for 100 years. We lights that display information about the weather and the building’s perfor- need to build buildings where employees thrive mance. Photo courtesy PNC Financial Services Group. if we want to be the employer of choice. Most people build buildings to look at; we build buildings to look out of.” experience they had working together on 3 PNC, which gave him confidence that PJ was the right construction manager for the Architect Gensler and Managing Director Doug Gensler had ground-breaking new building. been working with PNC for a decade, designing its LEED-Certi- fied branches as well as the office buildings that had been built. The team set about researching and planning what the world’s PNC brought in Buro Happold from London because of its expe- best-performing building would look like. The process involved rience with ultra high performance buildings around the world. extensive research and travel around the world. Thousands of Saulson says that PJ Dick was brought in because of the great ideas were generated and PNC wanted every one of them tested.

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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 ex- plored, not only achieved the am- bitions 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 “We’re risk-takers but everything we do we test and verify,” that it also met the schedule and budget parameters. agrees Saulson. “We looked at literally thousands of things. Some things we did; some things we didn’t do. Some things ”We didn’t push them to innovation that’s untested,” Gensler didn’t make sense.” continues. “The systems that come together are a unique ecosys- tem of pieces but each one of them has been tested and evalu- Performance took on a number of facets. There was the obvious ated on other projects throughout the world so that we could energy performance but PNC was as concerned about the em- either talk to people that were currently operating them today or ployee experience. Planning The Tower involved analyzing thou- actually go physically see how they perform today. I’d say its lead- sands of factors – some of which were pretty arcane – that would ing edge thinking, leading edge systems, not untested bleeding impact the employee’s experience as an occupant of The Tower. edge stuff.”

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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 stan- Photo by Connie Zhou Photography. Use courtesy Gensler. dard. There are a number of things we did like that which we know haven’t been done before.”

neighbors – both residents and businesses – to get input on the Another example is the layout of the bathrooms. design as it developed. Integration with the community, both physically and relationally, was one of the three pillars upon which “We designed the sink with the hand dryer above the sink so you decisions about The Tower were based. can wash your hands and dry your hands without dripping water across the floor. And every bathroom door opens out,” Saulson “I will tell you that this is probably the most transparent build- explains. “You have to think about that. That was a thoughtful, ing anywhere in Pittsburgh. The financial industry is not known very deliberate decision. There are hundreds of thousands of de- to be transparent. We built a transparent building deliberately,” cisions like that that we went through and made in order to make Saulson says. a building more employee-centric.” The driving features of the building’s physical performance are a Perhaps the best-known of the employee-centric features of the vertical solar shaft that creates convection through the building building will be the two-story spaces that connect two floors, up to a massive solar chimney and the double glass wall of the ex- which PNC calls the Neighborhoods. The spaces are designed, terior. The Tower’s exterior wall is actually two glazed curtain walls says Gensler, to encourage PNC’s employees to mingle or collabo- which control the thermal properties of the envelope and activate rate with others on projects. There is recognition of the benefit of the flow of fresh air. PNC wanted to have that natural ventilation socializing and the value of a space away from the private office to be the heart of the building’s performance. take a laptop and work. To those ends, each floor with a Neighbor- hood has no kitchenette and each floor with a kitchenette has no “We did a thermodynamic study of Pittsburgh - 365 days a year, Neighborhood. Instead, a staircase in the Neighborhood connects 24 hours a day – and looked at pollen count, pollution, humidity, the floors. And each floor has a conference room, known as the In- air temperature and a variety of other factors,” notes Saulson. ner Circle, which Haworth manufactured exclusively for The Tower. “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 It was important to PNC that The Tower also fit into the com- the building more than 42 percent of the time because on sum- munity. That meant holding numerous meetings with Downtown mer mornings in the early hours before employees arrive at work,

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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 Commercial Interior PITTSBURGH 412-787-5800 windows – nicknamed Construction and PHILADELPHIA Exterior Wall Systems 215-492-5800 “poppers” – open www.wyattinc.com 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.”

At the top of The Tower is a massive skylight, tinted black and angled to optimize the absorption of the sun’s rays. One of the Top 10 Beneath the glazing is a plenum space Roofing Contractors above a black-coated concrete slab angled similarly to the skylight a few feet in the U.S. 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.  Committed to Safety  Focused on Quality There is a light called a “good day indica-  Dedicated to Customers tor” that tells employees that the outdoor  Building Relationships environment is within the tolerances for  Looking to the Future bringing in outdoor air. On those days, shoebox-shaped windows – nicknamed “poppers” – open hydraulically on the Proudly Serving the Eastern exterior wall of the building. This allows United States Since 1984 fresh air to enter the 30-inch cavity between the outer and inner exterior walls. Wheeling, WV | Pittsburgh, PA | Frederick, MD | Columbus, OH | Lexington, KY Vents are located at the bottom of the Pittsburgh Office ● 412-489-6351 ● www.krsm.net inner glass wall that let fresh air into the building’s interior. PNC employees have 4636 Campbells Run Road, Suite B the option of opening a five-foot sliding Pittsburgh, PA 15205 door to increase the air flow.

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PNC wants its employees to have 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 Allegheny Installations is a commercial flooring company doors have been opened and must specializing in epoxy, terrazzo and polished concrete. be closed. “For the employee, that will be a bad day,” jokes Saulson.  Terrazzo  Epoxy

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Hot weather air-conditioning is done with chilled beams, which are pipes in the ceiling that use chilled recy- cled water to cool the individual offices similar to how radiant heating warms a space. Partnership. Performance. The complexity of the mechanical solution and the building’s systems impacted nearly every specialty con- A PROVEN TEAM. tractors’ scope. PJ Dick’s project ex- A DIFFERENT APPROACH. ecutive, Walter Czekaj, has decades of experience and was the senior Avison Young’s integrated team executive on the construction of the approach to commercial real CONSOL Energy Center. This proj- estate engages deep expertise ect presented dozens of new chal- from a broad range of lenges to him. professionals across our Let us show you why organization. In a partnership, “One thing I had never built was a we’ve become the focused on your strategic business project with a solar shaft. The solar fastest growing objectives, we deliver intelligent, shaft runs from the fourth floor right commercial real up through to the top of the build- best-in-class solutions that add estate services firm in ing,” Czekaj explains. “Each shaft value and build a competitive North America. is 400 square feet and it has to be advantage for your enterprise www.avisonyoung.com 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 4 PPG Place| Suite 300 | Pittsburgh, PA 15222 | T 412.944.2130

BreakingGround November/December 2015 39 P r o j e c t P r o f i l e

The two-story Neighborhood offers space for informal work or Each floor has a conference room known as the Inner Circle. socializing. Photo courtesy PNC Financial Services Group. Photo courtesy PNC Financial Services Group.

were no leaks. That’s not so bad when you’re doing the first one tric. To begin with, the coordination of the multiple trades within and you have a base on the fourth floor and have to go up to nine the building’s systems was extraordinary. To optimize water flow and put a ceiling in to test it; but when you’re doing [floors] 20 through the system, the engineers encouraged the use of 45 de- to 25 and you have all those floors below you, the shaft is pretty gree fittings where possible, which made the elimination of clash- substantial and it becomes much more challenging. E & R did a es a little more difficult. Then too, the automated nature of one of great job.” the mechanical system’s key elements – the poppers – depended on nearly silent electric motors. As can be imagined, the building’s systems were of particular complexity for the project’s mechanical and electrical contracting “The uniqueness of the exterior curtain wall system was more teams, which were led by McKamish Inc. and Lighthouse Elec- difficult to design, fabricate and construct than I think anyone

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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.”

“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 Part of the indoor park located on the 28th floor of The Tower. mean the whole BIM team of us, Light- Photo courtesy PNC Financial Services Group. house, McKamish and Preferred Fire Protection, did a great job getting everything to fit.” expected,” offers Jeff Turconi, PJ Dick’s president. “Those chal- The PJ Dick key team members also included Bob Meadway as lenges certainly put schedule pressure on the job. The number general superintendent, Dean Marraccini as MEP coordinator, and complexity of those windows that popped had never been Matt Wetzel as senior project manager, Jeff Thorla doing contract done before. It looks simple when those windows go out but there administration, Bob Simpson as fitout superintendent, and Wes are six separate motors on each and if they’re not exactly in synch Erskine as exterior wall “guru.” There were many other project the windows bind up. So the energy and the pulses have to be engineers, safety personnel, assistant superintendents, project synched perfectly for those windows to go in or out properly.” coordinators and administrators that rounded out the PJ Team.

“You wouldn’t think that the mechanical system would impact Both Turconi and Czekaj point to the logistics of the project as an the electrical so much,” notes Todd Mikec, president of Light- ongoing challenge. The tight site limited access to the project for

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BreakingGround November/December 2015 41 P r o j e c t P r o f i l e

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.

“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 tech- suppliers. Vertical transportation was very difficult, as subcontrac- nology could have been outdated before it tors and suppliers vied for access to the single tower crane that was actually installed. The timeliness of when that would get ap- ran almost around the clock. “We had over 2,500 people work on proved, when it would get here and when it would have to get the project and we probably peaked at 650. To get that number onto the floor was critical. The team did a great job communicat- of people up through the building and get materials delivered, it ing and managing this process successfully.” was challenging,” says Czekaj.

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Czekaj notes that the team, Mike Gilmore, senior vice president we planned the heck out of the thing. We planned it well. We of construction services, and John Robinson, director of devel- had a good schedule, a realistic budget and had very good subs opment services for PNC, was easy to work with. “That was what that knew what they were doing.” 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 Doug Gensler seems especially proud that the completed because they had good people that understood that it had to building met the goals that were set at the start of the planning happen if we were going to keep everything on track.” process.

It’s ironic, however, that when asked about problems during the “The form of it is all about performance. When we talk about construction of The Tower, Czekaj doesn’t have much to offer. performance we really want to make sure that we recognize that “Construction went pretty much as planned. There were some de- it’s not just energy performance but it’s also the performance of sign issues that changed some of those plans but from a construc- the people and the performance of the building as a contributor tion and sequencing point of view everything went pretty well.” to its context,” Gensler states. “Often times buildings are designed and selected based upon an image of a building. I think The Tower at PNC Plaza was turned over on schedule and under at the end of the day every move on this project was extraordi- budget. The contract was structured so that PJ Dick delivered narily intentional and rationalized around supporting the strate- a guaranteed maximum price with a contingency prior to con- gic goals of this project. The floor plate, the top, the articulation struction. As complex as the project was, a significant portion of of the mass was all about delivering a piece of architecture that the contingency will be returned to the owner when the project strives to deliver on its promise for the employees, for the city, closes out. for the environment.”

“The real pat on the back goes to the team – Walt and the gang Jeff Turconi believes all the time spent planning was how such a – because we managed our way through that complex project complicated project became a successful one. While he knows with fewer problems and issues than what we might have on a that the same planning effort doesn’t go into all projects, he more traditional project,” notes Turconi. “I think it was because wonders what the industry might be like if it did.

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Photo by Connie Zhou Photography. Use courtesy Gensler.

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“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 WEB: www.noralco.com EMAIL: [email protected] team?” asks Turconi. “Yes. It’s the simple, tried and true formula for success. Unfortunately, it doesn’t PROUD TO BE PART OF THE TEAM AT always happen for many and varied reasons. When I think of some other The Tower at PNC Plaza projects that really worked - CON- SOL 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 under- stands the importance of making timely decisions and bringing the right subs on. Why do we wonder why those jobs go well?” he laughs.

To Gary Saulson, the biggest ac- complishment was in managing the complexity of what is a one-of-a- kind building.

“This is something that nobody’s ever dealt with before. That’s why TWO TITLES communications among the team members was so important. There ONE INDUSTRY 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.

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 NO EVENTS. JUST INFORMATION

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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. Tri- State was well-positioned to serve the construction industry during those years, when major construction projects required mountains of blueprints.

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 sky- scrapers – One BNY Mellon (then Dravo Building), One Oxford Centre and PPG Place – rising during the first stage of Renais- sance II. Several years later, Tri-State was swamped with the reprographic needs of CNG Tower, One Fifth Avenue Place and the e’re not 100 percent sure ex- Federated Tower.

actly which way the business is At the end of the 1980s, Tri-State landed what was the largest going to grow. Everyone gets construction job undertaken in the region, the new Pittsburgh In- “W ternational Airport. George Marshall oversaw that project, which a say in which way we should go.” George saw Tri-State set up a full printing shop at the airport site to han- Marshall is speaking of a strategic planning dle the millions of sheets of reproductions that would be done during the billion dollar project. process he and his staff at Tri-State Repro- graphics are in the middle of completing in That wave of work set the company up well for the transition in leadership but the industry was changing dramatically in the early fall 2015. But he may well have been speak- 1990s, causing George Marshall to evaluate the direction of the company. Marshall made the decision to invest in digital, large ing of the state of things in 1990, when he format color printing and plotting to keep up with CAD technol- took over as president of the company. ogy. It was a decision that kept Tri-State in the game and has paid dividends to this day. In 1990, the blueprint reproduction business was undergoing a sea change, as computer aided design (CAD) was ushering in dig- “Obviously with CAD and digital print solutions coming into play, ital technology. Marshall began to lead the company just in time that was when the biggest changes occurred,” recalls Marshall. to make some key decisions about the direction of the company “We jumped into digital pretty early, in 1990. I always referred to that would mean investing and discerning where new business it as being on the bleeding edge. We were always very profitable opportunities might be. Today, the dramatic decline in hard-copy as blueprinters but trying to find our feet in the digital environ- plan and spec printing has left the reprographic industry look- ment was a whole different world. It was about buying into other ing at diversification even harder. It’s Tri-State’s good fortune that peoples turnkey solutions to be able to provide services to your Marshall and his vice president, DJ McClary, have been working existing clients. at diversification long before it was such an imperative. “That meant joining new associations, investing in plotters. That Marshall’s grandfather, Jacob Marshall, started the business as Tri- meant finding different talent to run those new plotters,” he con- State Blueprinting in 1942 with two other partners, one of which tinues. “You couldn’t get your regular guys who ran the blueprint- was a silent partner named Michael Baker Jr. The company’s first ers. When we stepped into it we went to electrostatic printers project was an air strip designed by Baker. In 1947, Baker had right out of the gate, the big colors machines.” become preoccupied with his growing engineering firm and parted ways. At the same time, the other two partners split, leav- “Everybody had to find a way to make money again,” remem- ing Marshall with the printing and reproduction business. For the bers McClary. “I was at another printer at the time. The blueprint- next six decades and through three generations, Tri-State would ing machines were all paid for so it was just money coming out be a fixture Downtown for the architecture and construction com- the back. Nobody wanted to put $100,000 into a machine with a munity in Pittsburgh. maintenance contract.”

46 www.mbawpa.org F i r m P r o f i l e

DJ McClary (left) and George Marshall at Tri-State’s Strip District shop.

George Marshall, with the sup- that its clients use to manage and port of his father, chose to be one Developing its full color distribute documents. The online of the companies that invested plan room has been used of late as in new equipment. Marshall fig- capabilities has led to other a collaboration site. While the com- ures he has been through four pany was navigating its way through different full color printing tech- opportunities for Tri-State. The the changes in the industry in the nologies since he went all in for 1990s and 2000s, its people were color in the early 1990s. As each company has ventured into becoming experts at much more of those technologies emerged, than just reproducing plans and new additional capabilities also signage and graphics, which often specs. emerged that Tri-State could use for its clients. takes it out of its mainstream “When we went in to compete on CONSOL the interview was more The company became experts at about what the people were go- scanning and organizing docu- industries and introduces the firm ing to do for them than what the ments. Tri-State developed and machines we have or how many still maintains an online plan room to new customers. we have lined up for them,” recalls

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48 www.mbawpa.org F i r m P r o f i l e

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 graphics,” explains Marshall. “It can be as simple as a magnetic their eight hours a day managing the documents. It ended up sign that you peel off your door or as complex as doing a paint with me going to the prebid meetings and sitting at the table to change for a Mercedes, where you wrap an entire vehicle to say that any documents go through PJ Dick and Tri-State, so we change the color of the vehicle. We’re getting other work too. had the communication there. The printing was there and it was Because of our relationship with Rycon, when they came up with abundant as the project went along but it was just a byproduct of digital wall covering that had to go on some of the JC Penney what they were really looking for, which was the document man- stores they were renovating, we did the installation of all the digi- agement for the full project.” tal wall coverings for all the Penney stores in the Pittsburgh area.”

Improved scanning technology has helped Tri-State diversify its Marshall seems energized by the prospects for the future, even client base and deepened the level of service it provides for its in light of the uncertainty in the reprographics industry. He re- clients. With its document management expertise, Tri-State can luctantly reduced his staff from eight to six recently to retain the help companies and organizations who need to more effectively people he felt were embracing the changes and had the skill sets document their activities or files over a long period of time, for needed to operate in today’s environment. Along with that staff, example. One of those recent customers is the Pittsburgh Cultur- Marshall and McClary have been plotting the new course and al Trust, which had Tri-State scan every promotional flyer for the strategies Tri-State will employ. Three Rivers Arts Festivals from 1962 up to the present. Tri-State scanned each in full color and created a searchable database of “We continually invest in technology. That’s one of the things more than 50 years of acts and sponsors. we’ve done over the years. I don’t want to say machines replace people, but they do replace people,” Marshall notes. “The print- Developing its full color capabilities has led to other opportuni- ing technology today, one guy can do what it took two-and-one- ties for Tri-State. The company has ventured into signage and half people to do, and still do other things. That’s something that graphics, which often takes it out of its mainstream industries and we’ve recently made a conscious effort identifying exactly where introduces the firm to new customers. McClary points out that we’re going to grow our business and how we’re going to grow the new services are valuable to their existing customers too. The our business and we’re involving everybody on staff. It’s all about signage capabilities allow Tri-State to strengthen its relationship their input too. I want them to say here’s what I’m seeing and help with the AIA, doing the signage for all of the AIA’s events as a guide the direction we’re going to go. partner/sponsor. “At the end of the day the people are our key assets. It’s what is “Contractors need site signage and vinyl banners, so we’re doing going to separate us from our competition at every turn. From a lot of that,” he says. “Architects need presentation boards. It how we interface with a client on the outside to how we run the feels like they are doing more than they ever did. They need full project on the inside.” color boards that they use to sell to the customer. And we did everything for the AIA Design Awards, more than 40 boards and Even though the character of his business has shifted from plans the signage for the event.” and specs to an ever-broadening spectrum of graphic services, Marshall expects that Tri-State will be deeply involved with archi- Marshall has invested in the equipment and people to develop tects, engineers and contractors. the capacity to function as a full-blown graphics design shop. Tri-State has also gotten onto the “I see tons of work to be had in the preferred vendor list for the movie AEC community. I think on the industry that is shooting in Pitts- scanning and archiving of docu- burgh with increasing frequency, ments, that’s where DJ really ex- providing graphics and signage for Company Facts cels. That’s his baby. We definitely backgrounds and props. Again, the see the world of color, signage and diversification both adds to their cli- graphics growing,” Marshall pre- ent base and adds to their ability to Tri-State Reprographics, Inc. dicts. “Eventually, plans and specs help their existing clients. will be a shrinking market for repro 2934 Smallman Street firms. We’ll continue to diversify “We can help Rycon Construction, Pittsburgh, PA 15201 and offer different services to help for example, if they need a bunch 412-281-3538 our existing customers. There’s still of new decals done for hard hats relevant work to be done and it’s or if they bought a new box truck www.tsrepro.com not disappearing in the immediate and we do the lettering for the side DJ McClary, Vice President future.” BG of the box truck or do the vehicle [email protected]

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Regulations and Technology Are Pushing Costs Higher

As contractors build backlog and concerns grow about a are required or incented to use better, more expensive tight labor supply, there is increasing conversation about equipment. An example of this kind of standard upgrade is the impact on construction costs in the next few years. the implementation of the Montreal Protocol on Substanc- However, costs have been rising for several years now, in es That Deplete the Ozone Layer. Originally agreed to in spite of intense competition, because of regulations and 1987, the Montreal Protocol created a timeline for reducing advances in technology that raise first cost. and eliminating the use of hydrochloroflourocarbons, including R-22 refrigerant. The key dates in the accord were Increasing costs are the result of a number of incremen- 2013 and 2015. This part of the agreement is impacting tal bumps across several parts of the project scope. Most air-conditioning equipment manufacturing now. of these incremental changes come from changes in regu- “We’re in the final stage of lations or codes that govern The implementation of the implementing the Montreal safety, environmental impact or Protocol. Manufacturers are no energy efficiency. The growing Montreal Protocol won’t longer allowed to make R-22,” acceptance of green building is explains Jamie White, partner at the root of a number of the eliminate older equipment at LLI Engineering. “You can changes, as suggested stan- buy surplus R-22 on the mar- dards have become codified, from the built environment ket but you can’t make it. As and the upside of those regula- of January 2016, you won’t be tions has been that upfront cost but the diminishing inventory able to make replacement parts increases result in significant op- or condensers either.” erating cost savings over the life of refrigerant and replacement of the building. Other changes The implementation of the have meant to ensure human parts will limit the options Montreal Protocol won’t elimi- safety or environmental protec- nate older equipment from the tion but created unintended for building owners trying built environment but the di- cost consequences. minishing inventory of refriger- to get the longest life from ant and replacement parts will Regulations and codes affect- limit the options for building ing the building’s HVAC system outdated equipment. owners trying to get the longest have probably had the biggest life from outdated equipment. impact on project costs. As the And the inability to replace International Building Code (IBC) has been updated to in- components will mean replacement of HVAC equipment clude higher standards for energy efficiency, mechanical rather than repairs. That will begin to impact renovation systems are being driven by increasingly more efficient costs almost immediately. equipment. Improvements in equipment efficiency have come from innovation by manufacturers, which carries a Equipment isn’t the only area that is being affected by the research and development cost. Manufacturers who can increased efficiency standards. An important component of gain a bit on the energy efficiency of their competitors can a building’s mechanical system is the control package. As charge a little more until the field catches up. digital controls have become more sophisticated, it’s possible to lower energy usage and operating costs by con- The IBC includes energy standards – based on AHRAE trolling the portions of the building being conditioned and 90.2 – and an International Energy Code. Whenever these limiting the use of heating or cooling to times when build- codes are updated to reflect improved standards, owners ings are occupied. Controls can make Chevrolet HVAC

BreakingGround November/December 2015 51 equipment perform like a Cadillac. In the case of a highly breakers were designed to protect the wire downstream. engineered system, the automated controls will drive actions Now we realize that electricity goes through multiple break- that will save millions of dollars. Such complicated controls ers and what happens is affected by how those devices in- come with a complicated price. teract,” he says.

“We see increases in the controls package,” remarks Dave In conjunction with a construction project, the arc study is Casciani, vice president of estimating for McKamish Inc. part of the electrical contractor’s scope of work. The stud- “Controls used to be maybe five percent of the total for our ies aren’t cheap and often lead to repairs or changes to the bid. Now it’s 15 or 20 percent of our total sometimes.” systems. LLI Engineering has conducted six-figure studies for 600 Grant Street and for Verizon, the latter of which resulted Casciani explains that controls tend to be a higher share of in $1 million in repairs. Repairing electrical systems in those the HVAC bid when the building is more complex – as in buildings made conditions safer for thousands of occupants. the case of The Tower at PNC Plaza – or when the project is a smaller renovation in a mechanically-intense environment, Improvements in the operations of key systems to reduce like a clinical remodeling in a hospital. When a specialty the energy usage or environmental impact of the building subcontract goes up by ten or 15 points in a subcontract- have paybacks. Energy-efficient buildings are more desirable ing package that is already a big part of the project – like to tenants and there is evidence that high-performing build- the HVAC portion – that increase can add significantly to the ings occupy quicker and command higher rents. The prop- overall cost. For example, on a mechanical package that’s $1 erty owner also gets a building that costs less to operate, million – which is not a terribly large project – the increased often paying back the additional investment in a few years. scope of the controls work can add about three percent to These facts have been part of the green building sales pitch the overall cost. – along with a sense of civic responsibility – for decades. When performance-enhancing factors become regulations, Changes to another large piece of the project – the electrical owners have to change their thinking, much as owners did construction – have also resulted from energy saving tech- when fire sprinklers were mandated or accessibility standards nology and regulation. Sensors and communications com- went into effect. ponents of the HVAC controls can be part of the electrical contractor’s scope of work. Advances in lighting technology For better or worse, costs caused by regulation get passed have made a huge impact on the operating costs and energy on to occupants and the occupants are generally better off usage in buildings. Light-emitting diode (LED) technology for the changes brought by the regulations. was a preferential choice just a few years ago. Advances in LED lighting have made its use widespread. The positive im- Adding fire sprinklers to high-rise offices added significantly pact on the performance of the building has made the choice to the cost of the construction but no one would dream of to use LED much easier but the cost is still an upcharge. occupying an office without sprinklers today. The cost of sprinklers is just another component of the pro forma that Todd Mikec, president of Lighthouse Electric, has seen costs works over time. Energy efficient HVAC equipment will pen- increase, but feels the climate is being driven more by inno- cil out over time as well. There will be a way to cost-justify vation and choice than by regulation. any regulated improvements over time.

“Some of it is owner-driven. There are certain building codes Perhaps the upside of the escalation of first costs due to the that relate to energy efficiency that are driving costs up but mandates of constructing better buildings will be a change in those costs come back around on the back side in operating focus for building owners from first cost to life-cycle cost. cost savings for the owner,” Mikec points out. “Many of the That kind of perspective would make products more desir- fixture and equipment prices are coming down too. Now all able that are more durable or improve a building’s perfor- of a sudden you have ten people selling LED fixtures or occu- mance. Increased demand for innovative products tends to pancy sensors and the competition is bringing prices down.” create more innovation. That’s something that the construction industry could use more of. BG 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 Na- tional 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,

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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 Pennsyl- vania. 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, rec- ognizing 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 contract for the supply of goods, not a contract for construc- be resolved in Pennsylvania. tion, and therefore was not subject to CASPA.

The reality, however, is quite different. Although the legisla- Construction disputes between parties from two different tive intent behind this statute seems clear, the Pennsylvania states often end up in federal court, and those courts are courts have refused to apply it so broadly. On two separate equally reluctant to enforce CASPA’s prohibition on forum se- occasions, the Superior Court of Pennsylvania has been faced lection clauses. For reasons beyond the scope of this article, with this issue and has found that Section 514 of CASPA does the federal courts are not bound to apply Pennsylvania law not operate to void a forum selection clause. to determine whether to enforce a forum selection clause. Therefore, federal courts will enforce forum selection clauses For example, in a case decided in 2008, the Superior Court agreed to in arms-length negotiations unless there are ex- held that Section 514 only applies to invalidate a forum se- ceptional circumstances that would justify invalidating the lection clause if the plaintiff is relying on CASPA to recover parties’ choice of forum. for non-payment. That case involved a contract for the construction of a building in Pennsylvania, but the contract in- In a recent case, the United States District Court for the cluded a provision requiring that any lawsuits be brought in Middle District of Pennsylvania decided that a forum selec- Ohio. After construction was completed, the roof began to tion clause requiring litigation to be commenced in Missouri leak. The owner claimed this defect was covered by a two- was enforceable when contained in a subcontract for work year warranty, but that the contractor had refused to correct to be performed in Pennsylvania. The contractor argued that the problems. Section 514 of CASPA rendered the forum selection clause invalid, but the court disagreed. The court found that CASPA The owner filed a lawsuit in Pennsylvania claiming that the should not trump an unambiguous forum selection clause contractor had breached the construction contract as well as absent compelling public policy interests to the contrary. Al- violated certain implied warranties. The owner also brought though the Pennsylvania legislature’s enactment of CASPA claims under Pennsylvania’s Unfair Trade Practices and Con- suggests that there exists a public policy in favor of resolving sumer Protection Law, alleging that the contractor had en- these kinds of disputes in Pennsylvania, it does not appear gaged in fraudulent and misleading conduct. The contrac- this argument will provide sufficient justification for a federal tor moved to dismiss the complaint on the grounds that the court to ignore the parties’ chosen forum. contract required that any disputes be resolved in the Ohio courts. Because the lawsuit involved a contract for construc- While all of this would suggest that a party agreeing to a fo- tion in Pennsylvania, the owner argued that the contract’s forum selection clause may be stuck litigating in another state, rum selection clause was unenforceable under Section 514 there is a notable exception. If a party has the right to file of CASPA. a mechanics’ lien, that proceeding must be commenced in Pennsylvania. There are two reasons for this. First, because a The Superior Court held that Section 514 did not apply be- mechanics’ lien is tied to the property and not to the parties cause the owner’s claims did not arise under CASPA. The involved, it is the location of the property and not the par- court recognized that, when read in a vacuum, the language ties’ choice of forum that governs. Second, Pennsylvania’s of Section 514 would seem to apply to any contract for con- mechanics’ lien law prohibits the parties from agreeing to struction in Pennsylvania. But the court found that the legis- an advance waiver of their lien rights, except in very limited lature’s primary purpose in enacting CASPA was to provide circumstances. Applying a forum selection clause to prevent for timely payments to contractors and subcontractors. Be- a party from filing a lien in Pennsylvania would operate as an cause Section 514 was part of CASPA, the court held that it impermissible waiver, and a forum selection clause should should not be read to apply to claims unrelated to payment. not impact a party’s right to pursue a mechanics’ lien. Consequently, the Superior Court held that the forum selection clause was enforceable and that the owner was required Given the courts’ reluctance to apply Section 514 of CASPA to pursue its claims in the Ohio courts. to anything other than a payment dispute, it is likely these clauses will be enforced. Therefore, it is important that con- In another notable case, a contractor performing work in tracting parties consult with counsel to understand the im- Pennsylvania rented equipment from a supplier located pact of these choice of law and forum selection clauses. If in Ohio. The rental agreement included a forum selection not, you might be in for a surprise down the road. clause that required claims to be arbitrated in Ohio. When the contractor failed to pay, the supplier initiated arbitration Chad Michaelson is a partner at Meyer, Unkovic & Scott in Ohio and obtained an award against the contractor. The LLP and member of the Business Litigation and Construc- supplier then filed an action in Pennsylvania to enforce the tion Law & Litigation groups. He can be reached at cim@ award against the contractor. The contractor resisted, argu- muslaw.com. Lauren Zdunek is an associate and member of ing that the clause allowing the supplier to pursue the origi- the Litigation and Resolution Group and can be reached at nal arbitration action in Ohio violated Section 514 of CASPA. [email protected]. BG When the case reached the Superior Court, it held that Sec- tion 514 did not apply because the rental agreement was a

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56 www.mbawpa.org MBE/WBE Company Spotlight

and save a little money, but it really worked out. GERARD 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 ASSOCIATES at Duquesne University and Southpointe was just starting to go, which gave us the chance to design ARCHITECTS our first couple buildings there.”

Dawn DiMedio is the managing partner and minority DiMedio got to see how long-term relationships owner of Gerard Associates Architects. She’s had an benefitted an architectural firm. Working with clients like unusual career path for her profession in that she hasn’t Duquesne University, Horizon Properties and the Church worked for another firm. Perhaps that is why her respect of Latter Day Saints brought repeat business in the for the firm’s history and her partner, Jim Gerard, is so door. The comfort level that she got on a personal level obvious. with those clients made it easier to serve them and to accomplish the work efficiently. Gerard Associates had “I think it’s important to note that I run into senior a diverse base of private clients, with some local public architects all the time who tell me they worked for Ed projects. Gerard,” says DiMedio. “They still refer to Jim’s dad to this day.”

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 Metso Minerals headquarters at Southpointe II, designed by later, she became a partner in the firm and the majority Gerard Associates Architects. Photo by Alexander Binder, owner. She says that such a move wasn’t necessarily in Gerard Associates Architects, L.L.C. her plans but the environment at Gerard Associates and the work offered great experience for someone starting a career. By the time Gerard felt the need to take on a partner “By the time I was 25, I was working on $10 million jobs. that would ultimately acquire the firm he and his father That really is unheard of,” she remarks. had built, he was very comfortable with DiMedio as his choice. “I was the oddball at Syracuse. Most of the architectural students there were true East Coasters,” she says. “But “She’s very bright and very hardworking. She knows no one stays in Syracuse. Once I graduated it seemed where she’s going,” Gerard says. “We all have to accept like the natural thing to do, come home at least for a bit the fact that we’re eventually not going to be around.

BreakingGround November/December 2015 57 I was looking for someone who management role. She says the I thought would carry on the biggest surprise she has had tradition, the kind of practice was discovering that managing that we’ve had. It’s going to the firm was a full-time job. change but we both subscribe to the same philosophy as to “There’s always that human how the practice should run, nature thing of thinking that how we should deal with our I can do it better if I just do clients.” it myself but then you have people who are relying on you The foundation of that to truly be a manager and you philosophy seems to be that have to find something else design is a problem-solving within yourself, a certain ability undertaking. The problem- to communicate what you solving process comes up in need and how you want things conversation with DiMedio done,” she observes. “It’s a repeatedly and it’s clear that is combination of factors that – a driving principle in the firm. you fight them a little along the Duquesne University Chapel, designed way – as you accept them and “I can’t say that when I signed by Gerard Associates Architects. Photo get better at them, you find up at 18 that I thought it would by Alexander Patho Photography. 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 and you have changed. Things that seemed so hard three the problems were put in front of me as a freshman, I years ago seem more matter of fact now. No matter what felt like I was in my real house,” she recalls. “I had the you do or how old you are whenever you experience that academic and basic artistic skill set to survive but I think evolution from technician to management you have to the really great thing about evolve with it.” Syracuse was the skilled problem solving. I thrived One of the changes in the on it.” firm came when DiMedio Company Facts saw opportunities to take its The partners say that portfolio to the public sector their natures complement more. As technology has made each other well. DiMedio Gerard Associates Architects it more efficient to respond to admits to being more 410 Fort Pitt Commons requests for proposals, Gerard likely to react vocally to a Associates has pursued more situation, while Gerard is 445 Fort Pitt Boulevard public commissions. DiMedio more apt to listen. Both Pittsburgh PA 15219 started getting work with the still share responsibility for Redevelopment Authority of the finished design that the 412/566-1531 Washington County, which firm produces, although Dawn Danyo DiMedio, AIA LEED AP BD+C has blossomed into a 15-year Gerard has more time to [email protected] relationship. The firm has work on the boards with been successful selectively DiMedio taking on the www.gerardassociatesarchitects.com pursuing Department of

58 www.mbawpa.org General Services work and has a current contract with viscerally to what the client says. You really want to know the Housing of Authority of the City of Pittsburgh. It has about the problem at hand, what the client wants, what not, however, pursued K-12 school work. the client needs, and the context. Put that all together. Then you draw.” “That [K-12] market is very overhead-heavy. You have to be paying staff or consultants to be managing people That problem-solving mantra is why DiMedio thinks the and politics,” notes DiMedio. “That’s not really good firm has survived for 60 years. business for architecture or what we want to be spending our days doing. It’s just a different animal.” “First of all we’re not going anywhere,” she says.

Earlier this year, Gerard Associates made a physical “Although we have moved off Fourth Avenue,” interjects move that was symbolic of the course the firm is charting. Gerard about the firm’s long-time former address. A small firm of seven, Gerard Associates picked and designed space that could intentionally function for a “When people do have a problem, they come to us,” much larger number of people. DiMedio says that the DiMedio continues. “That probably means we’ve been firm needs to add a project architect at the moment but able to solve it more times than not. That’s important. that there is also a need to recruit principal-level talent That’s allowed us to maintain that very diverse client as Jim Gerard nears the end of his career. Whenever he base.” BG chooses to step away, the continuity of the firm seems assured.

“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. RAM Acoustical retains the charm of the The Station’s 6,000 sq .ft. lower level Cultural Center will house the Beaver Area Heritage original archways & stained glass windows. Museum’s growing Collections & Research Center along with a branch of Sweetwater Center for the Arts and the Beaver County Genealogy & History Center. 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 c

during the 2000s. In fact, the housing market in Pittsburgh Unconventional Housing Trends has mirrored the unconventional U.S. conditions rather than Are Leading to Big Changes in returning to its steady normalcy. the Market In metropolitan Pittsburgh, during the time period that the Great Recession impacted the housing market most (2008- 2012), there were an average of 1,811 new single-family de- Economic cycles roll over every seven to ten years. It’s been tached permits per year and an average of 1,266 attached that way in the American economy at least since the in- or multi-family units. Traditional single-family construction dustrial revolution changed how people worked and where made up 58.8 percent of the starts, which was roughly com- they lived. The many growth-and–recession cycles have an parable to the 63.7 percent share for single-family during impact on housing – usually because a downturn has an the years 2000-2005. But the boom in apartments since impact on the availability of credit – but by and large the 2012 has changed the market share dramatically. In 2013, housing market is steady. It takes a truly unusual economic only 36 percent of all dwelling units started were single- change to make a big impact on housing. family detached and last year the share only grew slightly, to 40.4 percent. Through the first three quarters of 2015, The Great Depression was one such traumatic event, as was the share of single-family has declined again to 36.9 per- the post-World War II Baby Boom and flight to the suburbs. cent. Rather than running counter to the national trend, Some 60 years later, loose government credit policy cre- Pittsburgh’s housing market is in lockstep with it. ated an unprecedented housing bubble and then a crisis unlike any since the Depression. The economic and regula- While some bankers and builders are beginning to worry tory aftermath of the financial crisis of 2008 was a seismic about apartments getting overbuilt, there is evidence that shift for the housing industry and the American homeown- demand for housing is still growing and may actually still be er. Against that economic backdrop, a young generation outstripping supply. entered adulthood with very different expectations for how housing would serve their lives. This combination of unusu- Demand for the apartments that were and are being built al conditions created a housing market that has defied con- is coming from both empty-nesters and Millennials drawn ventional rules of supply and demand since 2010 and has to the city. It’s also coming from an influx of new residents set the stage for some unconventional trends for the 2020s. drawn to the tech and energy jobs being created in the region. Developer Walnut Capital reports that roughly 70 What prevails in the U.S. today is a boom market for apart- percent of its renters in its Walnut on Highland and Bakery ments and a supply of existing homes for sale and lots Living projects are new residents to Pittsburgh. If jobs are to build that is well short of the demand. Looking at the being added and single-family homes aren’t, apartments demographic makeup of America in the coming decade become the alternative. If the job creation numbers are ac- gives you an indication that this housing market will remain curate, this apartment boom still has legs. unconventional in the 2020s. It’s not difficult to see government policy intervening again to serve political needs, The existing housing stock in metropolitan Pittsburgh cor- nor it is hard to envision a generation of young Americans relates one-to-one with the number of jobs, at around 1.07 moving – perhaps reluctantly – back to the suburbs to raise million. It’s logical that one job would result in one new their children. As the scars of the mortgage crisis fade and household. With that metric understood, the 11,000 new new imperatives emerge, a new housing boom is a distinct jobs in 2014 should have created demand for 11,000 new possibility. dwelling units, a figure that is more than twice the 4,873 units started. Job creation is up roughly 20,000 year-over- Whatever happens at the national level, it is more likely year, yet only 3,451 units have started thus far in 2015. than not that Pittsburgh will feel the effects more than it did There isn’t a one-to-one relationship of jobs and housing

60 www.mbawpa.org 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 Discover The Blue Book Network 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.

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 Take a peek to discover all the beneﬁ ts just for you. and 15.9 million of additional house- ConnectWithBlueToday.com holds will be formed by 2024. The MBA report, titled “Housing Demand: (844) 361-1609

Demographics and the Numbers How the Industry Connects Every Day.

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 In- cent data has shown a modest uptick to crease in Households,” predicts that 63.7 percent. household formation and expected related housing demand will be driven As might be expected, Baby Boomers largely by Hispanics, Baby Boomers and will impact the market dramatically, as Millennials. The MBA predicts that this that generation retires and ages. The new market will be one of the strongest MBA forecasts an additional 12.3 million prolonged housing markets in history, to 12.9 million new households for those demanding between 1.5 million and over 65 years old. By 2030 the Urban In- 1.7 million new units over the next nine stitute predicts that 12.2 million people years. That’s a huge increase in demand over the age of 65 will be renters, more compared to the 820,000 units aver- than twice the number in 2010. The up- aged annually since the 2008 crisis. shot is that there will be demand for 2.5 million more apartments than normal Steadily gaining in demographic influ- during the next decade. ence, minority Americans are expected to impact the market for rentals, ac- Urban Institute also predicts that within cording to the Urban Institute (UI). the minority demographics, Hispanic Over the next decade, a greater share Americans will have the largest share of of household formations will be minori- household formations. The MBA fore- ties, whose history is skewed towards cast is for an increase in household for- renting rather than home ownership. mations by Hispanics of more than five The UI predicts that a majority of the 22 million units. As Hispanic and minority million new households (13 million vs. voters become more influential in elec- nine million homeowners) formed in the toral politics, Urban Institute expects U.S. between 2010 and 2030 will move to see public policy enacted that eases into rental housing. That would continue credit for increased home ownership a downward trend that is 15 years old. for minorities, which have a wealth gap Home ownership has declined precipi- from non-minority borrowers. Such poli- tously from 66.2 percent in 2000 to 63.6 cies would spark more demand for new percent in 2013, although the most re- homes.

62 www.mbawpa.org 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 Millenni- als 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 worry- ing 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.

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 multi- family construction boom in its history. Then, You only need to look back as far as the Clinton-era and in the late 1970s, when rising numbers of Baby Boomers hit Bush-era policies to make credit more available to a wider their 30s and they began buying houses in larger numbers, group of borrowers to see the impact that government in- the U.S. saw the largest single-family construction boom of tervention in mortgage policy can have. Fannie Mae has any time until the mid-2000s. already expanded the number of mortgages it will buy with three percent down payment and Fannie’s CEO, Timothy It’s hard to imagine any generation less likely to settle down J. Mayopolis, has pressed for reducing the premium mort- into suburban life than the Hippies of the alternative life- gage insurance payments for borrowers with less than 20 style 1960s, yet that was the way things turned out. Human percent equity. Should easier credit meet more rapidly in- nature is tough to fight. If the next generation entering its creasing household formations, demand for homes would child-rearing years reverts to form, look for another period skyrocket. of suburban sprawl. BG Perhaps nothing may boost demand for traditional single- family 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 INDUSTRY COMMUNITY & NEWS

AIA/MBA Joint Committee Celebrates 50 Years, Honors Rittelmann

The AIA/MBA Joint Committee marked its 50-year anniversary posthumously to Dick Rittelmann FAIA, retired partner at Burt with a champagne toast at the AIA Design Awards Gala on Oc- Hill (now Stantec). The Kling Fellowship is awarded annually to tober 22. The committee also used the occasion to announce the design or construction professional who most exemplifies the 2015 James Kling Fellowship Award, which was awarded the spirit of collaboration between architect and contractor.

Justin Hough from PJ Dick announces Dick Rittelmann’s Former and current members of the AIA/MBA Joint Committee selection as the James Kling Fellowship award winner. join to celebrate the group’s 50th anniversary at the AIA Design Awards Gala.

Retired AIA/MBA Joint Committee members Doug Schuck (left) (From left) David Wells from Radelet McCarthy Polletta, Craig and Ted Frantz with AIA Executive Director Anne Swager. 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 fundrais- ing chair for the Foundation’s Legacy of Car- ing Awards. Through the efforts of dozens of donors and sponsors the Paul Slowik Memo- rial Shoot raised $18,500.

Joyce Slowik (left) with Jeffrey Landau and Pas- savant Hospital Foundation CEO Fay Morgan at the Paul Slowik Memorial Shoot, hosted by Landau Building Co. at the Millvale Sportsman’s Club.

We don’t follow trends... We LEED. dck worldwide has constructed more than 8.3 million SF of LEED certi ed facilities Radelet McCarthy Polletta’s David Wells (left) with Mike Klein from Blumling & Gusky at the Paul Slowik We are experts in sustainable materials Memorial Shoot. and systems 85% of our construction sta has LEED project experience

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66 www.mbawpa.org B&G Breaking Ground Ad:Layout 1 7/2/14 11:58 AM Page 1

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Joe Burchick (left) with David Swisher, Animal Friends CEO, and Mike McDonnell from IKM at the groundbreaking for the new Wellness Center.

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One of the winning teams at the MBA golf outing included (from left) Joel Whiteko from Washington Builders Supply, Ray Volpatt Jr. and VEBH’s Tom Stanko and John Reed.

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Team Mosites included (left-to-right) Tony Malanos, Dean Mosites, Mark Edgar and Attorney David Scotti.

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Rycon’s Jason Sigal, Jennifer Landau, Dustin Giffin and PJ Dick’s Tyler Bock (right) at the AGC Construction Leadership Conference.

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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 at the NAIOP/MBA meeting Oct. 22.

UPMC’s Eric Cartwright and Deanna McPeak at the GBA Emerald Evening. Photo by Green Building Alliance.

68 www.mbawpa.org LEGAL ADVICE & SOLUTIONS BEYOND MEASURE

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McKamish’s Dave Casciani and wife Gini (left), public and private sectors through the representation of: and PJ Dick’s Jeff Turconi. Photo by Green Contractors Building Alliance. Design Professionals Owners Subcontractors Sureties Vendors on all phases of the building process.

DELAWARE NEW JERSEY NORTH CAROLINA PENNSYLVANIA OHIO SOUTH CAROLINA WEST VIRGINIA CJL’s Craig Duda (left) with PJ Dick’s Walt Czekaj PITTSBURGH, PA 412.281.7272 WWW.DMCLAW.COM and Noah Shaltes. Photo by Green Building Alliance.

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70 www.mbawpa.org AWARDS&&CONTRACTS

Nicholson Construction recently completed emergency re- for the Sisters and include sleeping rooms, kitchen, com- pair work to an unstable pier supporting a bridge on In- mon areas, restrooms, meeting space and a chapel. The terstate 65 for the Indiana Department of Transportation. project is expected to begin in 2016 and the architect is These repairs enabled a 37-mile section of the highway’s McLachlan Cornelius & Filoni Architects. northbound lanes to be reopened after a four-week closure. The highway was in the process of being rehabilitated and A. Martini & Co. was recently selected by Allegheny Health widened when the pier was damaged by steel piles driven Network to assist in some upgrades at Forbes Hospital to into the water tight ground below it. The pier began to set- prepare for a CT Scan Replacement, which A. Martini will tle and eventually rotated ten inches. Nicholson developed install. The upgrades include structural steel support under a design-build solution that used micropiles to transfer the the area, along with lighting upgrades and structural ceiling loads to more stable soils and low mobility grouting to fill upgrades to accommodate the equipment being installed voids and make the upper subsurface layer denser. in the space. IKM Inc is the architect on this project.

A. Martini & Company was the successful contractor for the Volpatt Construction has started work on the new John P. renovations to the Shadyside Commons on Amberson Av- Murtha Center and alterations and additions to the Engi- enue. Strada Architecture LLC is the architect for the $1 mil- neering and Sciences Building. The $18 million project lion project. involves a new 7,400 square foot building for the Murtha Center, renovation and a 1,700 square foot addition to the Excela Healthcare awarded a contract to A. Martini & Co. for Engineering and Sciences Building and renovation of the its cardiology department on the third floor of the Medical Krebbs Hall Physics Lab. IKM Inc. is the architect. Arts Building at the Westmoreland Hospital in Greensburg. The architect is Image Associates. Volpatt Construction was the successful contractor for renovations to the OR Suites and finishes at Allegheny Health A. Martini & Co. was selected for the tenant fit-out for Webb Network’s Canonsburg General Hospital. VEBH Architects Law at One Gateway Center. This 11,000 square foot project designed the $750,000 project. consists of buildout of three different pods on the 13th floor. This is the third project A. Martini has completed for Webb One year after its completion, dck worldwide’s project, The Law and it is expected to be completed in the first quarter Mall at University Town Center in Sarasota, was named the of 2016. The architect for this project is Strada Architecture. 2015 “Best Retail Development, Florida” by the Interna- tional Property Awards. dck is proud to have constructed After successfully completing the renovation of Crown this $315 million two-level, 860,000 square foot world-class Castle’s corporate headquarters building at Southpointe, A. fashion and dining destination for the Taubman Company. Martini & Co. is gearing up to start the final phase of the project. This phase consists of 13,439 square feet of private dck worldwide attended the ribbon cutting for the South office space and open cubicles, multiple conference rooms Range, Grow the Army (GTA) project at Schofield Barracks, and new finishes to the existing main lobby. The phase also Oahu, Hawaii. dck completed this project, which consisted includes a 7,100 square foot addition for a full service caf- of four bundled design-build contracts that were critical for eteria adjacent to the space being renovated. The architect the future of the Schofield military community as many units is Astorino|CannonDesign. were scattered on base in overcrowded and aging facilities. This $144.8 million project was the largest contract awarded A. Martini & Co. was selected by the Daughters of Holy to date by the USACE Honolulu District. dck logged more Mary of the Heart of Jesus in Steubenville, Ohio to build than 950,000 hours on this project over a three-year period its new Convent, Marian Fountain of Living Faith Novitiate. while maintaining a great safety record. This 32,000 square foot project will provide a new residence

BreakingGround November/December 2015 71 dck worldwide had a groundbreaking ceremony in Sep- out. Designed by Image Associates, the work is scheduled tember for the en Hance Park apartment complex in down- for completion in March 2016. town Phoenix, Arizona. dck is the general contractor for this 59,000 square foot, 49-unit condo project. CBRE and Starwood Capital Group selected Rycon’s Special Projects team to complete several projects at Liberty Center. Burchick Construction was the successful contractor on the The work, totaling $3 million, is either in progress or set to Animal Friends’ new 21,000 square foot, $5 million Well- begin. The six-month lobby renovation will consist of upscale ness Center in Ohio Township. The architect for the project finishes and a new Starbucks is being constructed in a space is IKM Inc. near the lobby.

Il Pizzaiola selected Burchick Construction as contractor Rycon’s Special Projects Group is renovating a salt storage for its new restaurant location in the Warrendale Crossings facility at UPMC Passavant. The 5,000 square foot project is shopping center in Marshall Township. Fukui Architects is the scheduled for completion by early December. designer for the project. University of Pittsburgh awarded a contract to Rycon Con- DDR Corp awarded Rycon a $13 million construction man- struction for the renovations to Mervis Hall First Floor Library. agement contract for the expansion of a Dick’s Sporting Strada Architecture is the architect for the $750,000 project. Goods in Cincinnati, Ohio. FRCH is the architect on the project which is slated for completion by October 2016. PJ Dick was selected by Fort Willow Development to provide Construction Management at Risk services for Fort Willow, Rycon’s work continues on The Block at Northway (formerly a 191-unit apartment complex in Lawrenceville. Rothschild Northway Mall) in Pittsburgh’s North Hills. The shell space of Doyno Collaborative is designing the project, which involves the Container Store, Saks Off Fifth and Nordstrom Rack are construction of a new six-story apartment building. currently underway. Landau Building Company began renovation work at UPMC A $1.2 million renovation of Long Run assisted living facility Passavant Cranberry Medical Office Building. Renovations is underway by Rycon’s Special Projects Group. The 11,500 to the OB/GYN suite began the first week of October and square foot project will consist of interior upgrades through- will be complete by early December. Exam rooms will be

72 www.mbawpa.org 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 Na- trona Heights, PA.

Landau Building Company was awarded the UPMC St. Margaret’s $3.3 million Emergency Power Upgrades. Stan- tec 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 Build- ing Company finished interior renovations to United Hospi- tal 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 Gastroenter- ology. 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 ACES WE BUILD HISTORY F NEW PLACES

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. BECOME OUR NEXT PARTNER Eugene V. Bucci and Frank W. Falciani, IWEA MBA, LEED® AP, CCM were named ex- Ironworker Employers Association ecutive vice presidents for dck world- www.iwea.org • 412.922.6855 wide.

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 adminis- trative assistant.

Jim Tomko has been hired at Rycon as Iron Workers Local Union No.3 a senior project manager in the Building Group. He received a mechanical engi- International Association of Bridge, neering degree from the University of Structural, Ornamental, and Pittsburgh and has 30 years experience. Reinforcing Ironworkers - AFL-CIO Rycon’s Atlanta Division added assistant www.iwlocal3.com project manager, Andrea Laney. She received a bachelor’s degree from the Uni- 800.927.3198 F: 412.261.3536 versity of Buffalo as well as an associate’s degree from Cazenovia College. Andrea has over 25 years of industry experience. Office Locations Clearfield Erie Pittsburgh In early October, Rycon’s headquarters relocated two blocks to Oxford Devel-

74 www.mbawpa.org 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 south- eastern Virginia, North Carolina, and the Delmarva Peninsula. This is FSS’s third office location in the Mid- Timely, Atlantic region. Accurate & Jessica Scalo has been named the new director of marketing for Scalo Incorporated, serving all Scalo Compa- nies. Scalo will be responsible for determining the op- Targeted timum marketing mix in order to develop and manage promotional campaigns, public relations, tradeshows, sponsorships, electronic media, and other communica- Communication tions programs. Is how your project will get the Patrick D. Shirey has joined the Oakmont office of R.A. right attention at the right time. 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 strength- ens the experience of R.A. Smith National’s existing team of ecologists and water resources engineers.

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 No- vember 1, 2015. KFMR’s team of 30+ establishes a CLA Pittsburgh presence, and will remain in its current loca- The PBX is where companies turn to place tion to continue to serve clients locally and nationally. their construction projects in front of the market, Shawn Fox joined Schneider Downs & Company as utilizing the region’s most comprehensive director of real estate. information system. 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 Make sure you’re working with degree in geo-environmental engineering from Penn- the right partner throughout the sylvania State University and is a registered professional engineer. He has 17 years of experience in water and project life cycle. wastewater infrastructure projects, including the planning, permitting design, and construction phases. He Projects in Planning 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. Actively Bidding Projects

KU Resources Inc. named Logan Lowanse environmen- Low Bids & Awards tal technician. Lowanse was a teacher’s assistant in the Chemistry Department at California University of PA To learn more contact Karen Kebler, prior to his hiring. He graduated Summa Cum Laude 412.922.4200 or email: [email protected] from California with a degree in environmental sciences and a minor in chemistry. BG 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 The best trained, most capable work force. Professional tradesmen and tradeswomen have received the specialty training needed to meet the complex employers, has been committed to providing Qualified challenges of your project. Service you can count on. We’ll work with you to answer any questions or solve and Competent Operating Engineers. For Local 66, meeting any problems at your convenience. your short and long term employment needs is a priority. Smart business know-how. You’ll benefit from our years of experience and a proven track record we bring to the job. The Operating Engineers lead the nation in pipeline training. 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, the Commercial Real Estate Development NAIOP in the western Association, is the leading organization for developers, Pennsylvania tri-state region owners and related professionals in office, industrial at naioppittsburgh.com and mixed-use real estate. NAIOP provides or 412-928-8303. 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.

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BreakingGround November/December 2015 79 Closing Out What’s Next for Downtown Pittsburgh? By Jeremy Waldrup

n cities around the world, people are rediscovering urban advance mobil- centers and this renewed interest has manifested itself in ity and livability in Jeremy Waldrup many ways in our Downtown. I have been in Pittsburgh Pittsburgh’s central for four years now and the Downtown environment has neighborhoods Ichanged dramatically, with more than 60 projects announced by making it safer and more convenient for everyone to get to, in just the last year and a half. The restaurant scene is booming through and around a beautiful Downtown. This is no simple with a new restaurant opening every few weeks and our com- task but a critical component in what I believe will make Down- mercial corridors are seeing redevelopment after years of ne- town and our region more competitive in the years to come. glect. Wood Street, bookended by large investments from Point Take for example, our sidewalks and streets, one of the larg- Park University and the vibrant Cultural District, is now seeing est public assets in Downtown but an often overlooked and un- the completion of The Tower at PNC, a major investment which derappreciated component of the Downtown environ. Through opened in October. This investment, coupled with the Forbes Envision Downtown, we are beginning to look at other ways we Avenue reconstruction along with the new Tower Two Sixty/ Hil- can enhance the city streets and are piloting the expansion of ton Gardens and Piatt Place, is creating a corridor with a perfect one of the busiest bus stops in Downtown. These changes will mix of new and old. Small boutiques and restaurants, large of- provide more space for riders to queue, new shelters to protect fice towers and residential structures are breathing new life into transit users and, in partnership with the Port Authority, real time a corridor that has been in transition for the last decade. So, with transit information for users at this stop. We are also working to over $2.1 billion dollars in investment in Downtown Pittsburgh ensure that one of my favorite aspects of Downtown, our histori- over the last five years, it leaves one to wonder, what’s next? cal architecture, is preserved and renewed through our Paris to Pittsburgh program. This program, supported by Colcom Foun- Well, one of most interesting ways that Downtown will evolve dation has directed over $5.5 million in private and philanthropic over the next few years will be how new development will re- investment to support outdoor dining and façade improvements connect Downtown to adjacent residential neighborhoods in 77 projects. These enhancements coupled with investments and commercial districts. For years the Golden Triangle which in public space will work to allow pedestrians to more easily is naturally bound by three rivers has also been walled off by navigate this busy corridor and provide a more retail friendly highways, parking lots, and commercial corridors with failing environment for the businesses that front the street. We hope infrastructure. This has discouraged short walks that connect this work will allow us to better allocate public space, craft a Downtown to gems like the Central Northside and Strip District, more pedestrian friendly environment, encourage greater use of effectively isolating Downtown Pittsburgh from its neighbors. public transit, create safer streets and improve the overall built Thanks to the recently launched North Shore connector, the ad- environment in Downtown. dition of transportation options like Healthy Ride bike share, and more people living and working in and around Downtown, we We believe investments in public infrastructure will pay off in are seeing growth in the number of office workers, sports fans significant ways. A recent report by Smart Growth America and and visitors who are walking and biking to, from and all around Cushman & Wakefield stated that companies are choosing to Downtown. With much of the new development happening on move to downtown locations because downtowns project inno- the periphery of Downtown, this reconnection is going to oc- vation and collaboration and allow companies to take advantage cur much faster, rejuvenating historic commercial corridors and of the triple-bottom line –the social, environmental and financial creating new ones, ultimately bringing new residents into quaint motives of the company. We know that recruiting and retaining communities and creating enclaves of residential activity along talent is one of the most critical functions of any successful busi- streets that haven’t seen investment in decades. Our job will be ness and, now more than ever before, workers want access to to ensure that this renewed interest leverages the charm and walkable communities, public transit and a host of other ameni- character of the existing neighborhoods, encourages integra- ties right outside their door. tion and supports the growth and development of existing businesses while welcoming new businesses and residents that seek Downtown Pittsburgh has made significant strides over the past to enjoy the benefits of a walkable urban community. This recon- decade and a concerted effort to enhance our streetscapes will nection will be significant on Penn Avenue and Smallman in the help support continued development. Retail, restaurants, and Strip District, Centre Avenue in the Hill District and the Fifth and a more vibrant residential life will continue to attract a diverse Forbes corridors in Uptown providing a range of housing op- workforce leading to the sustained growth of Downtown and portunities that are not available in the central business district. supporting the development of our region for generations to come. We’re also starting to see changes in the public realm. Through Envision Downtown, a new initiative in collaboration with the Jeremy Waldrup is CEO of the Pittsburgh Downtown Mayor’s Office, we are working to fast-track improvements that Partnership. setting the performance standard

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