Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Property Development Expected to Surge with Cracker Plant Growth Anticipated throughout Region

Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Property Development Expected to Surge with Cracker Plant Growth Anticipated throughout Region

Article excerpt

The decision by Shell Chemical Appalachia to build a multibillion-dollar ethane cracker in Beaver County, announced this week, could be a big shot in the arm for real estate development - not only near the plant but throughout the region and even into West Virginia.

Pittsburgh-area real estate executives said the plant likely will spur manufacturing and industrial activity near the sprawling site in Potter and Center townships as well as additional office, commercial, restaurant and hotel development throughout the region. Add to that the space needed for engineers, contractors, lawyers, architects and others to support the cracker and spinoff activity, and the impact could be off the charts.

"This is a game changer. It's an absolute game changer. The benefits are going to be better than anyone can imagine," said James Scalo, president and CEO of Burns & Scalo Real Estate Services.

Jeffrey Ackerman, managing director of the CBRE real estate firm, recalled the opening of the Volkswagen plant in Westmoreland County in the late 1970s, where the auto manufacturer built cars for a decade. That plant produced a "tremendous amount of economic activity," from suppliers who moved in to residential and shopping center development, he said.

Mr. Ackerman expects to see the same kind of impact from the ethane cracker, which will employ an estimated 6,000 workers during construction and 600 once it starts operating in several years.

In addition to the cracker, the Shell complex will include three units that will convert ethylene into polyethylene pellets that can be used in the manufacture of plastics and other products.

"In my opinion, this is a transformative opportunity for our region," said Dan Adamski, managing director of the Jones Lang LaSalle real estate firm. Spinoff activity around the cracker could create three to four times the level of investment as the plant itself, Mr. Adamski estimated.

It might be more cost effective over the long run, he said, for a manufacturer that wants access to the pellets, for example, to build a plant close to the cracker rather than to transport the material elsewhere.

Hotels, offices, more

Real estate professionals see the impact of the cracker extending into different types of development, driven in part by the progress on the plant.

Mr. Ackerman is expecting a significant increase in hotel construction, particularly near where the plant is being built. He said rooms will be needed for workers during construction, which is to take about five years, as well as for others.

Meanwhile, Mr. Adamski noted more office development will be needed to support engineers, contractors and others working on the cracker and other projects that will spawn from it.

Gregg Broujos, managing director and founding principal of the Colliers International real estate firm, expects an uptick in restaurants and stores. …

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