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Big-ticket projects point to boom times ahead in Western Pennsylvania

Tom Fontaine
| Monday, Dec. 23, 2013, 11:11 p.m.
Construction of the new PNC Tower in Downtown on November 13, 2013.
Justin Merriman | Tribune-Review
Construction of the new PNC Tower in Downtown on November 13, 2013.
The $72 million UPMC Lemieux Center site Friday December 13, 2013 in Cranberry.
James Knox | Pittsburgh Tribune-Review
The $72 million UPMC Lemieux Center site Friday December 13, 2013 in Cranberry.
The $72 million UPMC Lemieux Center site Friday December 13, 2013 in Cranberry.
James Knox | Pittsburgh Tribune-Review
The $72 million UPMC Lemieux Center site Friday December 13, 2013 in Cranberry.

Billions of dollars of Western Pennsylvania development projects are poised to get long-awaited approvals, progress dramatically or be completed in 2014, perhaps signaling a broad economic uptick, development officials say.

The largest would be Royal Dutch Shell's proposed multibillion-dollar petrochemical plant in Beaver County. The oil giant's recent activities fuel optimism that the project is closer to happening.

“There have been encouraging signs, but if anyone tells you they know what's going to happen, one thing is probably for certain: They don't know,” said James Palmer, president of the Beaver County Corporation for Economic Development.

Western Pennsylvania development officials say more than a dozen projects of $70 million or more are or soon could be in the works Downtown, around Pittsburgh International Airport and in Butler and Washington counties.

Shell did not return calls but could decide next year whether to build an ethane cracker project along the Ohio River near Monaca, where it holds an option on 300 acres. Many viewed its decision this month to abandon a proposed $12.5 billion plant-building project in Louisiana as a positive sign.

Officials think Shell's project could spur related development on a scale not enjoyed in generations in the region.

“It'd probably be on par with when they figured out how to get iron ore, coke and coal from three different places and then bring it to Pittsburgh to make steel out of it,” Palmer said.

Officials think the large-scale projects in the pipeline could be a sign of broad economic growth. They said the region fared better than most during the recession, in large part because of a boom in natural gas exploration and spin-off development.

“The rest of the nation was seeing a downturn, and that's when things have been really ramping up for us,” said Mary Stollar, director of business investment for the Washington County Chamber of Commerce.

Palmer said developers in 2010 and 2011 showed a “pent-up desire for investment and a lot of people kicked the tires, but in many cases, there was an unwillingness to pull the trigger because of economic uncertainty. That has loosened up, and I think next year you're going to see more companies deciding it's time to invest.”

Jeff Burd, founder of the Ross-based construction research firm Tall Timber Group, predicts that demand for construction labor will increase starting in the second half of next year and continue growing during the next decade. Meeting the demand for skilled workers could be a challenge, he said, before adding, “That's a good problem to have.”

Building permits on rise

Building permit applications in Pittsburgh grew during the past three years, Planning Commission data show. The city issued 1,937 commercial building permits this year through Friday, up from 1,835 last year and 1,726 in 2011. Residential permits grew to 4,945 so far this year from nearly 3,800 in each of the previous two years.

Several major projects are sprouting Downtown. PNC is on target to complete The Tower at PNC Plaza, a $400 million, 33-story corporate headquarters, at Fifth and Wood streets in 2015. Washington County's Millcraft Investments said last week it finalized financing for its $104 million Gardens at Market Square and will begin work on a 330-space parking garage, 198-room Hilton Garden Inn hotel and office and retail space next year.

Oxford Development is considering whether to build a $238 million skyscraper at 441 Smithfield St. or spend $40 million renovating a building there. A spokeswoman said the project hit a snag recently when a possible anchor tenant backed out.

The Pittsburgh Penguins are expected to submit preliminary land development plans soon for proposed redevelopment of the former Civic Arena site. The proposed $500 million project includes retail, residential and office development.

The team, which did not return calls, previously said it would submit plans early this month. Then a public meeting it held late last month turned contentious, with Hill District residents blistering officials for not including more housing for lower-income residents, among other things.

“We're quite optimistic,” Pittsburgh Planning Director Noor Ismail said of city development.

Monster projects

Several of Western Pennsylvania's big-ticket projects are billed as $1-billion-plus developments. Aside from Shell's, they include mixed-use projects on a 178-acre riverfront site in Hazelwood and 900 acres near Southpointe in Washington County.

The Hazelwood project by Almono LP, a partnership of the Downtown-based Regional Industrial Development Corp. and four foundations, is under way with grading work wrapping up. Major infrastructure work on the former LTV Steel Co. site, including construction of about 1.5 miles of roads, will begin next year.

The Washington County monster project is less certain. Officials have discussed it for years. Developer P. Ronald Sabatino, president and CEO of T&R Properties in Dublin, Ohio, said, “We're hopeful that we'll be moving some dirt when the weather gets better next year,” declining further comment.

It would be an extension of another Washington County monster development along Interstate 79: Southpointe, home to about 60 energy companies.

Southpointe II, the Cecil development's $350 million second phase, is nearing completion. Mylan Inc. opened a headquarters there last week, and three other office buildings are expected to be done in 2014, said Bill Sember, director of operations for the Washington County Authority.

Officials are looking to sell a remaining 10-acre parcel by spring and complete construction by 2015, Sember said.

Most of the big projects are relying on at least some public money, but Buncher Co. says its proposed $450 million, mixed-use riverfront development in the Strip District would be covered entirely with private financing. Plans are on hold while City Council considers a request to designate the Strip's Produce Terminal a historic building. That could complicate Buncher's plan to demolish part of the building and access the riverfront.

Elsewhere, land around Pittsburgh International Airport is a hotbed for development. Consol Energy reached a deal this year to drill for natural gas on airport property that's expected to generate $500 million in fees and royalties for the airport authority with Consol spending $500 million on roads, utilities and other infrastructure. Site preparation will begin next year, said airport spokeswoman JoAnn Jenny.

Airport officials plan to continue preparing authority land for development, including a 200-acre site that could be ideal for a corporate headquarters, said Dennis Davin, an airport authority board member who is the county's economic development director. Officials in Moon await word from Chevron Corp. on whether it will build a regional headquarters there.

Tom Fontaine is a staff writer for Trib Total Media.

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