News and Notes on Trends, New Projects and Construction In the Commercial Real Estate Development Pipeline Around the U.S.
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Nonresidential Construction Spending Drops In February
Nonresidential construction spending fell 1.6% in February from the previous month to a seasonally adjusted annual rate of $555.4 billion, a likely remnant of the soft patch in the economy last year, according to U.S. Census Bureau numbers released Monday.
Despite the monthly decline, private nonresidential construction spending was up 14.5% from a year ago, however. Total construction spending in February topped year-ago totals by 5.8% as a double-digit increase in private construction offset a small drop in public-sector spending, according to an analysis of the data by the Associated General Contractors of America.
"It is heartening to see that nearly all private residential and nonresidential segments exceeded their February 2011 levels this February and that the decline in public construction has moderated from the steep pace of early last year," said Ken Simonson, the association’s chief economist. "The improvement is too widespread to be attributable just to favorable weather comparisons."
Simonson noted that the largest year-over-year increases were in the two largest private nonresidential categories, manufacturing and power construction, which includes shale-related activity as well as traditional and renewable electric power.
Public construction spending declined 1.4% in February from a year earlier and 1.7% from January. Residential construction spending was unchanged for the month and is 4.6% higher compared to the same time last year.
While the national economy has been improving since last September, a construction backlog indicator compiled by the Associated Builders and Contractors (ABC) declined in the fourth quarter, a sign that construction activity would suffer a lull in the early months of 2012, said ABC Chief Economist Anirban Basu.
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Marriott To Begin Two Hotels Near LA Live
Groundbreaking is nearing on construction of a $172 million, 373,000-square-foot project for two Marriott-flagged hotels with a combined 400 keys in downtown Los Angeles.
A partnership of Seattle-based American Life Inc. and Portland-based Williams/Dame & Associates will begin the project expected create over 1,000 jobs, generate millions in revenue for the city and further boost convention and tourism business.
Construction on the corner of Olympic Boulevard and Francisco Street is expected to begin in the spring, with a grand opening in summer 2014. The developers purchased the site from AEG, the owner/operator of L.A. Live, the 4-million-square-foot sports, residential and entertainment district that sparked a renaissance of downtown when AEG began Staples Center in March 1998.
The hotel development includes a 23-story high-rise housing a 174-room Courtyard by Marriott, and a 218-room Residence Inn by Marriott, including 11,754 square feet of meeting facilities and 5,100 square feet of restaurant. Marriott International Chairman and CEO Bill Marriott and Chief Operating Officer, President and CEO-elect Arne M. Sorenson, AEG’s Tim Leiweke, Mayor Antonio Villaraigosa and other dignitaries ceremonially launched project.
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Wood, East West to Build $62M Apt. Development
Wood Partners, L.L.C., and East West Partners have arranged capital from USAA Real Estate Co. to build a five-story, 280-unit mid-rise apartment project in Denver’s Union Station/Riverfront Park redevelopment.
Construction is scheduled to start in August on the $62 million Alta City House at 1801 Chestnut St. west of Union Station, with the first move-ins scheduled in September 2013.
Wood Partners and East West Partners worked together on the Glass House high-rise condominium project in Riverfront Park in 2007. Wood Partners envisioned the new Alta City House as a complementary development and purchased the land in 2006.
Pat Duncan, chairman and CEO of USAA Real Estate, said the Alta City House brings the total cost of projects for which USAA is the capital partner to over $200 million.
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HDL Launches Biotech Building Expansion Project
Health Diagnostic Laboratory (HDL) has broken ground on a $68.5 million expansion project in Virginia BioTechnology Research Park in Richmond.
HDL and Lingerfelt Development will demolish the three-story BioTech 3 building and replace it with a six-story structure in order to expand its footprint in the two-phase project at 737 N. 5th St. HDL is currently located in the BioTech 8 building.
HDL has grown from 11 employees in 2009 to almost 500 employees, with immediate plans to hire many more to work at the expanded facilities in the BioTech Park, said Tonya Mallory, co-founder and chief executive officer of HDL, Inc.
The park, which houses 62 tenants on its 34-acre campus, is partnering with Richmond-based Lingerfelt Development. The completion date for the first phase is December 2012, followed by the construction of a second six-story building in 2013.
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Big Lease Inked; Life Science Bldg Set To Begin Work At Longwood
A venture led by Alexandria Real Estate Equities, Inc. (NYSE:
ARE) has arranged construction financing for development of a planned 11-story, 414,000-square-foot life science building at the Longwood Medical Center in Boston.
Alexandria and partners National Development, Charles River Realty Investors and Clarion Partners, LLC announced they have signed a long-term, 154,000-square lease with Dana-Farber Cancer Institute. Construction is scheduled to start early in the second quarter, with the Dana-Farber Center expected to take occupancy by the end of 2014.
Boston's Longwood Medical area is one of the world's densest clusters of academic, medical, and clinical care institutions, including Harvard Medical School and Beth Israel Deaconess Medical Center. The JV has closed non-recourse construction financing for 60% of the cost of the project on one acre at Longwood and Brookline avenues.
The building will include new office and lab flex space in a submarket with less than 1% vacancy and no other projects set to break ground.
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Crayon Maker To Move Into Bethlehem Warehouse
Crayola will close distribution centers in Hanover Township, Bethlehem Township and Fredericksburg, Lebanon County, move its warehouse operations next year into a new 800,000-square-foot warehouse at Majestic Bethlehem Center.
Ground breaking at the site developed by Majestic Realty is expected this spring. The crayon maker will become the first tenant for the former Bethlehem Steel land in a move intended to optimize logistics and warehouse operations under one roof, expand operations near the company's manufacturing and office operations and improve product flow, company officials said.
Crayola, owned by Hallmark Cards Inc., is headquartered in Forks Township, PA. The company has a Lehigh Valley workforce of more than 1,000 and will occupy the distribution center next March in a long term lease through 2023.