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St. Louis Named a Top “Sell” Market for Retail Real Estate

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Ten-X, the nation’s leading online real estate marketplace, this week released its latest U.S. Retail Market Outlook, including the top five ‘Buy’ and ‘Sell’ markets for retail real estate assets. The long-term forecast reveals the sector is still recovering, slowed by the rise of e-commerce and major shifts in consumer behavior.

Milwaukee, Detroit, St. Louis, Memphis and Philadelphia are the top markets where Ten-X Research estimates that market conditions might cause retail investors to consider selling their properties. These cities reflect several lagging economic and demographic indicators in the Midwest and Northeast, where stagnating wages and lackluster growth outside of the major urban cores have made for a weakened retail climate.

The long-term forecast reveals Austin, Miami, Fort Lauderdale, West Palm Beach and San Francisco as markets in which investors should consider buying retail assets. These markets, concentrated largely in the Southeast and West, are being fueled by robust local economies, where a steady influx of new residents are able to find jobs and fuel overall growth.

The Ten-X Research report notes that 13 percent of all retail sales are now conducted through e-commerce – a share that is expected to climb in the years to come. This has impeded demand for retail space, but the very low level of new retail construction means that absorption will outpace new supply nationally over the next two years. The result will be continued slow recovery in vacancies, though research indicates demand may begin to dry up by 2019, pushing vacancies back above 10 percent and close to recession-era peaks.

“As more consumers opt to do their shopping online, the retail market is battling major headwinds as it crawls toward a comeback after the downturn,” said Ten-X Chief Economist Peter Muoio. “Strong economic conditions in certain regions are propping up the sector nationally on a statistical level, but this lasting shift in behavior will remain a stubborn impediment to the retail industry in the years to come.”

During the quarter, a modest uptick in demand pushed rents up 2.1 percent year-over-year and vacancies fell by 20 bps to just under 10 percent. Overall deal volume in the sector fell to $17.6 billion during the second quarter – a 10.3 percent reduction from the same period in 2015.

Top Sell Market Chart

The Retail Sector’s Top Five ‘Buy’ Markets:

Austin

Austin’s economic fortunes continue to soar, making it an ideal spot for retail investment. Local employment has grown between 3 and 5 percent over the last five years and shows no signs of slowing, while population growth has more than tripled the national rate for more than a decade. Coupled with a thin supply pipeline, strong demand for retail in the area is poised to drive vacancies below 5 percent by 2018, and rents are expected to rise by more than 4 percent over the same period.

Miami

Burgeoning leisure and hospitality industries have been powering Miami’s swift recovery from the recession, helping to push overall employment to an all-time peak. While unemployment is still hovering slightly above the national rate, it has dropped drastically from its pre-recession peak. The city’s retail sector has been thriving, with rents climbing more than 4 percent over the last year. Vacancies are expected to dip as low as 4 percent by 2018, and a dearth of supply additions on the horizon puts buyers in position to capitalize on the strong market.

Fort Lauderdale

Retail conditions are also inviting in Miami’s neighboring city to the north, Fort Lauderdale. Though vacancies and rents have been mostly stable over the last year, a steady stream of supply is expected to dry up in the near future, pushing the market sharply in the right direction. The city’s recovery from the recession has been robust, and unemployment is currently just above 4 percent – well below the national average. Ten-X Research data indicates strong population growth and job projections are likely to set investors up for annual NOI growth of about 4.2 percent through 2020.

West Palm Beach

The third South Florida city to make the ‘Buy’ list, West Palm Beach is benefitting from escalating population growth and steadily increasing employment numbers, each of which outpaces national averages. Retail demand is strong enough to withstand healthy additions to supply, and Ten-X Research forecasts that it will pull vacancies below 7 percent by 2018. Rents should continue an accelerating growth pattern over the same period, and steadily improving fundamentals show NOI will continue to grow at close to 4 percent.

San Francisco

The surging tech sector in and around San Francisco continues to make the city a solid bet for investors. Employment has taken off since the recession, with job growth averaging better than 4 percent per year and unemployment hovering just above 3 percent. Coupled with an empty supply pipeline, the continued boom projects to lower vacancies to 1.9 percent by 2018 – a historical low. While overreliance on a single sector can make a metro market particularly volatile, data suggests rents are poised to climb in the coming years, pushing NOI up roughly 3.2 percent each year.

The Retail Sector’s Top Five ‘Sell’ Markets:

Milwaukee

Despite an unemployment rate below the U.S. average, Milwaukee is hampered by a struggling economy, including tepid employment growth and near-stagnant population levels. Ten-X Research predicts that the city will continue seeing lukewarm demand for retail space, and with 650,000 square feet of product hitting the market, vacancy rates will stay above the mid-11 percent range in the next two years. The influx of supply will limit rent growth to less than 1 percent per year through 2018, and annual NOI gains are expected to average a meager 0.4 percent through 2020.

Detroit

Detroit’s population is growing for the first time in a decade, but the city’s total employment remains more than 10 percent lower than its prior cyclical peak, in part due to the muted comeback of the city’s manufacturing sector. Even with limited supply coming to market, the report indicates that middling retail demand will nudge vacancy rates into the high-10 percent range by 2018, before the market enters a projected downturn. Ten-X Research predicts that rent growth will average just 1.2 percent over the next two years before declining in a cyclical downturn, while NOI growth is expected to average 0.5 percent per year through 2020.

St. Louis

St. Louis’ metro population growth has lagged behind that of the U.S. for several decades, measuring 0.2 percent in 2015. While the city has surpassed its previous peak in terms of total employment, St. Louis job growth is expected to be 1 percent per year through 2018. The city’s retail market will see modest supply additions in the coming years, but the report notes that weak demand will likely keep vacancy rates at or above the mid-11 percent range over the next few years. Ten-X Research predicts effective rents will grow by 1.3 percent per year through 2018 before falling, while NOIs will grow by 0.8 percent annually through 2020.

Memphis

Buoyed by a transportation/utilities sector which set a new peak level for employment in 2016, Memphis’ total employment numbers are 1.4 percent below their prior highs. The city’s retail supply pipeline is limited, but Memphis’ population grew 0.1 percent in 2015 — a metro that has lagged behind the country in this measure for nine straight years. Ten-X Research projects vacancy rates will remain above 10 percent through 2018 before increasing more drastically. Effective rent growth faces a similarly bleak outlook, with projections averaging 1.3 percent over the next two years before declining during 2019 and 2020.

Philadelphia

Philadelphia’s economy is accelerating, with payrolls 2.5 percent higher than their prior peak, but the city’s population growth slowed in 2015 and its unemployment rate remains higher than the U.S. average. Even with a modest supply pipeline, the city’s limited demand for retail space is expected to keep vacancy rates hovering over 10 percent in the coming years. Ten-X Research projects effective rents climbing just 1.6 percent per year through 2018 and annual NOI growth of 1 percent through 2020.

 

OSHA Requests Nominations for Advisory Committee on Construction Safety & Health

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The Occupational Safety and Health Administration is accepting nominations for eight new members to serve on the 15-member Advisory Committee on Construction Safety and Health. Nominations will be accepted from those interested in representing employee (3), employer (3), public (1) and state safety and health agency (1) groups. Nominations may be submitted at www.regulations.gov, the Federal eRulemaking Portal. Submissions may also be sent by mail or facsimile. See the Federal Register notice for details. The deadline for submissions is Jan. 27, 2017.

ACCSH, established under the Contract Work Hours and Safety Standards Act and the Occupational Safety and Health Act of 1970, advises the secretary of labor and assistant secretary of labor for occupational safety and health on construction standards and policy matters.

OSHA Releases Updated Recommended Practices to Encourage Workplace Safety & Health Programs

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The Occupational Safety and Health Administration has released a set of Recommended Practices for Safety and Health Programs to help employers establish a methodical approach to improving safety and health in their workplaces.

The recommendations update OSHA’s 1989 guidelines to reflect changes in the economy, workplaces, and evolving safety and health issues. The recommendations, according to OSHA, feature a new, easier-to-use format and should be particularly helpful to small- and medium-sized businesses. Also new is a section on multi-employer workplaces and a greater emphasis on continuous improvement. Supporting tools and resources are included.

The programs are not prescriptive; they are built around a core set of business processes that can be implemented to suit a particular workplace in any industry. OSHA has seen them successfully implemented in manufacturing, construction, health care, technology, retail, services, higher education, and government.

Key principles include: leadership from the top to send a message that safety and health is critical to the business operations; worker participation in finding solutions; and a systematic approach to find and fix hazards.

“Since OSHA’s original guidelines were published more than 25 years ago, employers and employees have gained a lot of experience in how to use safety and health programs to systematically prevent injuries and illnesses in the workplace,” said Assistant Secretary of Labor for Occupational Safety and Health Dr. David Michaels. “We know that working together to implement these programs will help prevent injuries and illnesses, and also make businesses more sustainable.”

The OSHA recommendations include seven core elements for a safety and health program: management leadership; worker participation; hazard identification and assessment; hazard prevention and control; education and training; program evaluation and improvement; and communication and coordination for host employers, contractors and staffing agencies.

The recommendations are advisory only and do not create any new legal obligations or alter existing obligations created by OSHA standards or regulations.

Arcturis Receives Three Awards from the Illuminating Engineering Society

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Arcturis is pleased to announce three of their projects have received awards from the Illuminating Engineering Society (IES), whose mission combines lighting knowledge with practical application for the general public.

The IES Illumination Awards provide a unique opportunity for public recognition of professionalism, ingenuity, and originality in lighting design. Arcturis was bestowed two Guth Awards for Interior Lighting Design and an Energy and Environmental Design Award.

Spire offices receive Edwin F. Guth Award for Interior Lighting Design

Arcturis’s Brian Waite was the lead lighting designer for Spire’s new offices at 700 Market Street, which won the Guth Award. The award recognizes exceptional interior lighting projects that balance the functional illumination of space with the artistic application of light to enhance the occupant’s experience.

Waite’s approach to designing the lighting at the iconic building in downtown St. Louis followed architect Philip Johnson’s minimalist, modern style

“The Laclede Group’s building was a 130,000 square foot office renovation and required an understated approach to lighting. Inspiration came from the building’s original design and the client’s vision of a clean, classic, and timeless space,” Waite said.

The building is listed on the National Register of Historic Places. Its square shape is bisected into two three-story triangles, which center on a circular rotunda. Following Johnson’s original approach, flat lensed 2×2 LED fixtures were selected for the split square volume with round fixtures placed throughout the circular volume.

Because the client is a utility company, energy reduction was a major project goal. Strategies to conserve energy include efficient fixtures that reduce power use by 41.83%, occupancy-sensing fixtures in lower-traffic spaces, and extensive use of natural daylight.

Guth Award for CIC @ CET

Arcturis’s CIC@CET project also won a Guth Award. This science and technology incubator space provides entrepreneurs an opportunity to develop new technologies. Designers Eva Krueger and Chrissy Rogers created a collaborative and inspiring concept to support tenants’ work.

“Careful consideration was given to making sure every aspect of the building is dynamic – from the round pendants that dangle over the circular lounge reception area to the linear direct pendants that highlight the custom triangular ceiling,” said Rogers.

Energy and Environmental Design Award for a financial services office project

IES awarded an Energy and Environmental Design Award to financial services office project that was completed as a partnership between Arcturis and William Tao & Associates.

Designers were challenged to meet or exceed the company’s corporate energy reduction initiative within the 90,000 square foot space. The team investigated the impact of upgrading from standard T5 recessed linear lighting to LEDs as part of their work.

“After multiple studies and mock ups, the team decided to go with LEDs for energy savings, maintenance and dimability. When combined with a digital control system, the client’s return on investment is 15%,” Waite said.

Arcturis is a national design firm based in St. Louis that specializes in planning, architecture, interior design, graphic design, and workspace optimization.

AGC Celebrates BuildMO Week

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The AGC of Missouri kicked off BuildMO Week at PARIC’s 212 S. Meramec job site in Clayton on Monday. BuildMO Week celebrates the construction industry in Missouri. Additional events were held in Jefferson City and Springfield on October 11, and at the Construction Training Center in St. Louis on October 14.

Leonard Toenjes, president, AGC of Missouri, said 212 S. Meramec is a symbol of what construction means to the Missouri economy. By the time it is complete, it will have provided 250,000 hours of construction employment to area workers.

The 212 S. Meramec project is 382,666-square-foot, 26-story post-tension concrete high-rise building. When complete, it will be the largest multi-family, mixed-used building in Clayton. The $60 million tower will host retail space, a parking garage, 250 luxury apartments spread across the top 20 stories of the building, and a roof-top swimming pool.

Construction on the high-rise building began in October 2015, and completion is expected in June 2017.  During BuildMO Week, workers were pouring the 17th floor of the structure. Keith Wolkoff, president of PARIC, said that as of September 30, 2016, the 212 S. Meramec project had logged a total of 92,453 hours of work by laborers, carpenters, operators, ironworkers, electricians, sheet metal workers, plumbers, pipefitters, cement masons, sprinkler fitters, glaziers, tapers and roofers.

Keith Wolkoff
Keith Wolkoff

“Three years ago, the developer challenged us and our partners to deliver a best in class, mixed-use building with great amenities and a harmony of great design and marketability,” Wolkoff said. “We are very proud of the technology and innovation we’ve applied to this project to reach that goal, including BIM 3-D modeling to remove waste and robotic layout to eliminate re-work,” he said. “We brought BASF in as a consultant to develop a specialty concrete mix not used in St. Louis before to hit the (strength requirements) with less weight. BASF has worked on the majority of the tallest concrete building designs in the world.”

212 S. Meramec is a joint venture of PARIC and McHugh. Major subcontractors on the project include CECO Concrete Construction, concrete; Murphy Company, HVAC and plumbing engineer; Kaiser Electric, electrical engineer; and Fire Tech, fire protection engineer. The developer/owner is WORP/CA Clayton, LLC. Architect is HDA Architects and Alper Audi is structural engineer. Project investors include union pension funds and others.

Toenjes noted that construction is a major driver of Missouri’s economy, employing more than 116,200 persons throughout the state, with Missouri ranking 4th in the nation in one-month employment growth between July and August 2016.

In 2015, he said, Missouri construction contributed $11 billion (3.8 percent) of the state’s GDP of $293 billion. That same year, Missouri construction wages and salaries totaled $ $6.5 billion. In 2014, construction workers’ pay in Missouri averaged $54,400, 18 percent more than all private sector employees in the state. Missouri had 13,000 construction firms in 2014, of which 92 percent had fewer than 20 employees.

While celebrating what the construction industry has accomplished, Toenjes pointed to challenges ahead.  Employment has passed pre-recession figures and the industry is now facing a critical workforce shortage. “Every day we hear new reports of contractors turning down or delaying work because of the skilled worker shortage,” said Toenjes.

In the last six months, the AGC of Missouri launched a new web portal to connect contractors with unfilled jobs to people seeking work. “We never had to do that before,” he said

“When young people are contemplating a career choice, we hope they will consider construction,” he added. “Our industry can be a rewarding and challenging career choice. With new technologies, sustainable buildings, new construction methods and other innovations, we are looking to the best and brightest to join our industry. We need bodies, hands, and brains to keep building in Missouri. Come join us – there are jobs waiting!”

St. Louis Info Session on Commercial Drone Certification

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The Electrical Connection will host an informational session on compliance with unmanned aerial vehicle (UAV) regulations and is planning to offer certification training at the IBEW/NECA Electrical Industry Training Center.   The Oct. 28, 2016, 1 p.m. to 3 p.m. meeting at the training center is open to any civic or business operation that uses UAVs, also called drones.   The training center is located at 2300 Hampton Ave. in South St. Louis.  The deadline to register for the event is Oct. 25, 2016 can be done by emailing damon@uaviation.us or by calling 314-484-6360.  The Electrical Connection is a partnership of the International Brotherhood of Electrical Workers (IBEW) Local 1 and members of the St. Louis Chapter of the National Electrical Contractors Association (NECA).

On July 21, 2016, the U.S. Department of Transportation’s Federal Aviation Administrator (FAA) finalized rules for UAV systems. The new rules took effect on August 29 2016, offering safety regulations for unmanned aircraft drones weighing less than 55 pounds that are conducting commercial operations.  The rule’s provisions are designed to minimize risks to other aircraft and people and property on the ground.

The informational meeting at the training center will be conducted by the Association for Unmanned Vehicle Systems International (AUVSI) – Gateway Chapter and will be its first since the new FAA rules took effect in August 2016.  “Partnering with the Electrical Connection makes sense because the electrical industry already has the best foundation of knowledge in electrical systems – wireless and otherwise – that power this evolution in robotics,” said Dr. Damon Lercel, president of AUVSI-Gateway Chapter.  “UAVs are essentially flying electronic robots and the Electrical Connection’s IBEW/NECA membership has been engineering and installing robotics in advanced manufacturing facilities for decades.”

The IBEW/NECA Electrical Industry Training Center has been collaborating with the AUVSI-Gateway Chapter and UAViation, an unmanned aviation services and training provider, to develop a curriculum for attaining UAV certification.

“We’ve always adapted our training program to rapidly advancing technology,” said Jim Curran, executive vice president, Electrical Connection.  “We did so at the dawn of the Information Age and for data storage, building automation, wireless integrated communications, electric vehicles and robotics.  It’s why we look to partner with visionary organizations like AUVSI-Gateway Chapter so our workforce is always prepared to safely and proficiently install the technology upon which our future depends.”

While the construction industry is already making extensive use of UAVs, first responders, real estate firms, agriculture, media and film makers, civil engineering and civic entities are all making use of the technology.  “It’s been a bit of a wild west out there as regulation tries to keep up with technology,” said Dr. Lercel.  “The AUVSI-Gateway Chapter was formed in 2012 in anticipation of a greater need to bring sensible rules to the operations of UAV systems.  The Electrical Connection has been a prime supporter of our mission since its inception.”

AUVSI is the world’s largest nonprofit organization devoted exclusively to advancing the unmanned systems and robotics community. Serving more than 7,500 members from government organizations, industry and academia, AUVSI is committed to fostering, developing, and promoting unmanned systems and robotics technologies. AUVSI members support the defense, civil and commercial sectors.  Learn more at www.auvsi.org.

St. Louis-based UAViation is a provider of unmanned aviation services and training.  Its unmanned aircraft and professional pilots provide a safe, low-cost, and environmentally friendly alternative to satellite imagery, manned aircraft, or traditional inspection techniques.  UAViation is FAA approved to commercially operate unmanned aircraft and is fully insured. Learn more at www.uaviation.us.

Members of the IBEW/NECA Electrical Connection provide safe and reliable electrical construction, maintenance, repair and replacement services in Missouri and nationwide. More is online at www.electricalconnection.org.

Christner Honored With Local Design Awards

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The American Institute of Architects (AIA) St. Louis Chapter celebrated excellence in the built environment with its Design Awards celebration held on September 22 at Laumeier Sculpture Park. Through a juried process, projects in various categories were recognized for outstanding qualities in design and craftsmanship.

This year, Christner took home a record seven awards in various categories including architecture, interiors, unbuilt and craftsmanship. Projects recognized include the Donald Danforth Plant Science Center, Climate Corporation, Edward Jones Parking Garage, St. Louis County Library Grant’s View Branch, Knox College Field Station, and Shriners Hospitals for Children – St. Louis.

Wiegmann Associates named Midwest Top 50 Specialty Contractor

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Wiegmann Associates has been named a 2016 Midwest Top 50 Specialty Contractor by Engineering News Record, the leading international construction industry news magazine. With $33.86 million in 2015 revenue, Wiegmann Associates, a mechanical contractor, ranks among the top 12 largest specialty contractors in the St. Louis region.

The annual Engineering News Record Top Specialty Contractors list ranks contractors in such fields as mechanical, electrical, concrete, fire protection, masonry, roofing, sheet metal and excavation.

Wiegmann Associates is a St. Louis-based mechanical contractor serving the commercial, industrial and institutional markets, and a national leader in design/build HVAC projects.

Instructors Needed at Construction Training School

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The AGC of Missouri’s Construction Training School is currently seeking Instructors for the following programs:

  • Supervisor Training Program
  • Project Manager Development Program
  • Building Information Modeling
  • Lean Construction

There will be an informational session held at the Construction Training School in St. Louis Missouri and another held at the AGC of Missouri’s facility in Jefferson City Missouri.  The courses will be taught from both locations.

Session Topics:

  • The courses contained within each program and the subject matter expertise needed to effectively teach that material.   Which course best fits your experience.
  • Instructor Expectations and Student Expectations.  What you need to do in the classroom and what the students should do?

If you are interested in being an instructor for the Construction Training School, please attend the session nearest you.

St. Louis – Monday October 24, 2016 at 6:00 PM

Jefferson City – Monday November 7, 2016 at 6:00 PM

Please contact Paul Smith to let him know what session you will be attending and which program you may be interested in being an instructor.

Paul Smith

314-644-1525

psmith@stl-cts.org

Home Builders Association Donates $10,000 to Ranken Technical College

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On behalf of the Home Builders Charitable Foundation (HBCF), 2016 HBA President Kim Hibbs of Hibbs Homes (left) presented a $10,000 donation to Kari Davidson, director of major gifts for Ranken Technical College.

The donation will be used to support Ranken Technical College’s neighborhood revitalization and home building program, RCDC (Ranken Community Development Corporation). The RCDC was founded in 1994 to revitalize North City and give Ranken students real-world experience in building permanent homes. Carpentry, HVAC/refrigeration, plumbing, architectural technology, electrical and industrial technology students spend a portion of their second year building the homes and gaining valuable experience. Program participants are currently completing their 61st home. Ranken homes are sold as single-family, affordable housing and receive a ten-year real estate tax abatement from the City of St. Louis.

The HBA is a local trade association of more than 600 member firms representing the residential construction industry. The Home Builders Charitable Foundation, the HBA’s charitable arm, is a non-profit organization dedicated to providing housing assistance to people or organizations with special shelter needs.

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