In this week's issue, a joint venture will break ground in Washington, D.C.on a 362,000-square-building office building for the nation's top nuclear regulatory agency; demand for architectural design services continued to decline in September, according to a leading index; after 56 years, Minnetonka, MN-based Opus Corp. will shut its doors, a victim of the soft construction and development market; a San Diego developer will break ground next month on a medical office building in Orange County, CA; a diagnostics lab is developing a new property in Manning, South Carolina; Ridgeview Medical Center has broken ground on a $17 million outpatient center in Chaska, MN; and Target Corp. completes construction of a 1.6 million-square-foot distribution center at 1880 Stover Court in Newton, NC. Plus, more development news from around the U.S.

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CoStar Group's In The Pipeline is a column on significant land sales, transactions and trends affecting office, industrial, flex, multifamily, mixed-use, hotel and public works developers. Send us news leads about your new project -- and sign up to be added to our distribution list to receive future In the Pipeline columns by e-mail.

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U.S. Nuclear Agency to Occupy New 362,000-Sq.-Ft. Office Bldg

A joint venture of USAA Real Estate Co. and LCOR will break ground in March on a 14-story, 362,000-square-foot office building at North Bethesda Center. The U.S. Nuclear Regulatory Commission (NRC) will occupy the space in the largest new office lease signed in Maryland so far this year, according to CoStar information.

The LCOR-USAA joint venture, North Bethesda Center Office One LLC, will develop and own the building, according to a joint release. The U.S. General Services Administration (GSA) signed a 15-year lease for the property at the mixed-use development near White Flint Metro Rail station. The GSA leases and/or owns 8,300 properties on behalf of the federal government.

The current NRC headquarters is across the street on Rockville Pike and about 1,200 NRC employees will occupy the new building when it's completed by July 2012. Architectural firm HOK designed the building to meet LEED Silver certification standards set by the U.S. Green Building Council.

Master developer LCOR is building North Bethesda Center in phases on a 32-acre site about halfway between downtown Bethesda and downtown Rockville. The development is planned to include 930,000 square feet of office space, 202,000 square feet of retail, four apartment buildings and a hotel. All buildings will be linked to to the Metro station.

The first phase of the project, including Wentworth House apartments and a Harris Teeter supermarket, opened last year.

Turner Construction is the general contractor for the office building. The Washington, D.C. office of Eastdil Secured served as capital markets adviser to LCOR in the transaction.

CB Richard Ellis Government Services Group, headed by Tim Hutchens, and Transwestern, with Phil McCarthy and Keith Foery, represented the JV in the lease transaction. Studley represented the GSA.

For more information about this property, please see CoStar Property ID #625906.

Architecture Index Rises, But Activity Still in Decline

The Architecture Billings Index rose slightly in September but demand for design services continued to decline, as it has since January 2008, according to the American Institute of Architects (AIA).

The forward-looking leading economic indicator of future nonresidential development activity was 43.1 in September, up from 41.7 in August. The index reflects an approximate nine- to 12-month lag time between architecture billings and construction spending. Any number above 50 indicates an increase in billings, while any number below 50 indicates decline.

One positive sign is that the index for new project inquiries rose to 59.1, its highest level since September 2007. But even that indicator comes with an asterisk.

"The fact that inquires for new projects are so high is an encouraging sign that we may be seeing new construction activity entering the design phase," said AIA Chief Economist Kermit Baker. "But that optimism has to be tempered by the fact that the marketplace is so competitive that firms are broadening their search for new projects, thereby inflating the number of inquiries that they are reporting."

That said, some larger stimulus-funded building activity should be coming online over the next several months, partially offsetting the steep decline in private commercial construction, Baker said.

Opus Corp. to Shut Down After Nearly Six Decades

By Laurie Forbes

After 56 years, Opus Corp. will shut its doors and Chairman/CEO Mark Rauenhorst will move into a new position.

The Minnetonka, MN-based development company is restructuring after three of its five subsidiaries, Opus West, Opus South and Opus East, went bankrupt. Rauenhorst will become a consultant with Rauenhorst Trusts, which owns the surviving Opus companies. He will lend his more than 27 years of experience at Opus to advise on restructuring and investment strategies.

Opus North Corp. and Opus Northwest LLC, the remaining companies, will take on responsibilities that were previously handled by the parent. Danny Queenan, president and CEO of Opus North, and John Solberg, president and CEO of Opus Northwest, will continue in their respective roles.
Rauenhorst joined the firm in 1982, was named president and CEO of Opus Northwest in 1996, promoted to president of Opus Corp. in 1999, was tapped as CEO a year later and was named chairman in 2007. He’s played a key role in the company’s diversification and geographic expansion. Gerry Rauenhorst, Mark’s father, started the earliest carnation of Opus as a general contractor and family business in the 1950s. He's held several top leadership roles until his retirement in 2007.

Pacific Medical to Build More MOBs in California

Pacific Medical Buildings will break ground in November on an 88,000-square-foot medical office building for the St. Jude Heritage Medical Group in Yorba Linda, CA.

In addition to primary care and multi-specialty medical offices, the Yorba Linda facility, which will be jointly owned by physician investors and the hospital system, will house imaging and urgent care centers.

The building is one of three new MOBs and a parking structure the San Diego-based company will build in California over the next couple years.

The other two projects are scheduled to start in 2011, a 60,000-square-foot building and 320-space parking structure developed in conjunction with the Sharp Rees-Stealy Medical Group in San Diego, and an 80,000-square-foot medical office building in the San Francisco Bay Area community of Castro Valley on the campus of Sutter Health System's Eden Medical Center.

Sharp Rees-Stealy will be the sole occupant and owner in the San Diego project and Pacific Medical will construct, own and manage the Castro Valley development.

Select Laboratories Breaks Ground on New SC Facility

Select Laboratories-SC LLC has officially broken ground on a new 10,000-square-foot lab facility in Manning, SC.

Select Labs provides high quality, diagnostic laboratory testing for doctors and patients in rural areas of the state and currently has 50 employees.

The company, managed by Synermed Select Partners Inc. of Greensboro, NC, has been operating since April 2007 in a temporary facility on the F.E. DuBose Campus of Central Carolina Technical College provided by the Clarendon County Development Board. The company’s new facility will be located in the Clarendon County Industrial Park in Manning.

Gov. Mark Sanford, the South Carolina Department of Commerce and the Clarendon County Economic Development Board participated in a groundbreaking ceremony at the new site last week.

Ridgeview Medical Center Breaks Ground in Chaska, MN

Ridgeview Medical Center has broken ground on Two Twelve Medical Center, a $17 million, 163,000-square-foot outpatient center in Chaska, MN.

The new facility at 111 Hundertmark Road is slated for completion in February 2011 in Chaska, the seat of Carver County, MN, about 26 miles from Minneapolis.

It will include primary and specialty clinics, 24-hour emergency/urgent care, outpatient surgery, rehabilitation therapies, imaging, laboratory and pharmacy services.

Target Corp. Completes 1.6M-SF Distribution Center

Target Corp. completed the construction of a 1.6 million-square-foot distribution center at 1880 Stover Court in Newton, NC.

Construction began in the summer of 2007. The facility is on 40 acres just south of Western North Carolina Highway 10 in between Highway 321 and the Hickory-Lincolnton Highway in Catawba County.

This distribution center is vital part for both Target and the surrounding areas. The retailer could receive as much as $9 million in state and local incentives for the 1.6 million-square-foot center. In addition, it will create close to 600 jobs for an area that has lost around 25,000 jobs in textiles and furniture over the past several years. (By Chris Rowland)

More Development News

Welsh Construction Completes Senior Community

Welsh Construction and Genesis Architecture has completed Highview Hills by Walker, a 242,000-square-foot senior living community center in Lakeville, MN. A grand opening ceremony was held Oct. 24.

The three-story senior living community at 20150 Highview Ave. sits on approximately 6 acres and contains 153 units, with 75 for independent-living, 44 for assisted-living, 24 for memory care, and 10 for assisted-living care.

Highview Hills by Walker is owned and operated by Minneapolis-based Walker Methodist, which operates nine other senior living facilities in Minnesota. (By Andrew Hodges)

Emerson Opens Westerville, OH Learning Center

Emerson Network Power opened a nearly 70,000-square-foot Learning Center on five acres at 530 Westar Blvd. in Westerville, OH.

The Class A office delivered last month and will be used to train employees and customers on equipment for Emerson Network Power's Liebert services business. It includes an 11,000-square-foot equipment lab, classrooms and a data center. The company applied for LEED Gold certification from the U.S. Green Building Council because the building includes an environmentally-friendly construction and design. (By George A. Cerny)

MacKenzie, Kinsley Deliver Maryland Office Property

MacKenzie Cos. and Kinsley Construction delivered a sixth building in the Schilling Road Corporate Campus to the market on Oct. 14, 2009. The 53,798-square-foot, Class A office building is at 55 Schilling Road in Hunt Valley, MD.

The new building, a two-story, state-of-the-art-facility, has many "green" features including a white roof, high-efficiency HVAC units and motion censored lighting. The facility also offers 24-hour access and on-site storage. The structure is on 2.5 acres formerly used as an industrial park in the Route 83 Corridor North submarket.

Daniel Hudak, SIOR and Julio Purcell, SIOR of MacKenzie Commercial Real Estate Services LLC handle the leasing at the facility. (By Heather Berwanger)