Developing the Riverfronts

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Developing The Riverfronts

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05CON President's MessageTENTS

33 Developer Profile Continental Real Estate 06 Feature Developing the Riverfronts 39 Developing Trend Is the Multi-family ride coming to an end?

43 Eye On the Economy

49 Office Market Update CBRE

55 Industrial Market Update Newmark Grubb Knight Frank

61 Capital Markets Update

67 Legal / Legislative Outlook 21 2016 NAIOP Pittsburgh Awards Understanding Pittsburgh’s proposed riverfront overlay.

71 Benchmarks Job creation in Pittsburgh and its peer cities.

77 Voices Engineers discuss the slowdown in natural gas exploration.

79 News from the Counties

People / Events 25 Development Project 88 3 Crossings

www.developingpittsburgh.com 3 PNC REAL ESTATE | Successful commercial real estate owners, developers and investors can envision the properties of the future — even before the first sketch is made. PNC Real Estate shares that vision. As a top five originator,* we offer comprehensive banking insights, solutions and the expertise to put them to work. Whether you need construction, bridge or permanent financing; public equity or debt solutions; treasury management; risk mitigation; or loan syndications, know that we can help bring your vision to life.

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PUBLISHER Tall Timber Group www.talltimbergroup.com 2015 was another fantastic year for Harrisburg in mid-May to discuss our NAIOP Pittsburgh and I really loved state issues. I surely hope the budget EDITOR serving this great organization as your stalemate is done by the time we get Jeff Burd President. Before I focus on the year there! We are finishing the roll out 412-366-1857 ahead, I’d like to recap some of the of the enhanced website, which is [email protected] highlights from 2015. targeted to be completed in March. I think you will love the improvements. PRODUCTION Our Annual Awards Banquet has We have a strong monthly education Carson Publishing, Inc. Kevin J. Gordon already won awards, but we felt that it platform for you in 2016, which will [email protected] may be time to freshen up the event; include some joint events with the therefore, we instituted some great Pittsburgh Airport Area and CoreNet. ART DIRECTOR/GRAPHIC DESIGN tweaks to the evening. The result was We have added a Political Landscape/ Carson Publishing, Inc. fantastic and from surveys conducted it Advocacy event for later this year. Jaimee D. Greenawalt looks like we made some great deci- Lastly, we are working to line up a sions. We had very successful advocacy signature speaker event for later this CONTRIBUTING PHOTOGRAPHY trips to Washington, DC and Harrisburg year so keep an eye out for details. Riverlife as we were making sure the needs of Charles Uhl Ed Rieker Photography our members were being heard. We 2016 for sure will be over before we Mark Grosso formed very active task forces that know it, and I’m definitely looking Rycon Construction are focused on addressing State and forward to continuing to serve this Horizon Properties Group local permitting issues that impact great organization. Burns & Scalo Real Estate Services our members. Recently we met with the PWSA to open dialogue on plans CONTRIBUTING EDITORS submissions, improved communications Karen Kukish and finding ways to meet our common ADVERTISING SALES goals. 2016 will see a continued focus Karen Kukish on DEP issues relating to processes 412-837-6971 and transparency, and transportation [email protected] will remain a priority as we engage the various agencies in an effort to improve MORE INFORMATION: infrastructure throughout the region. DevelopingPittsburgh is published by Tall Timber Group for NAIOP Pittsburgh We began to make improvements to 412-928-8303 our website, and we reinstituted our www.naioppittsburgh.com Finance Committee which focused on No part of this magazine may be financial reviews and the implementa- reproduced without written permission tion of new cash reserves and invest- by the Publisher. All rights reserved. ment policies to make sure we are focusing on the future. It was a great This information is carefully gathered and com- year, but it went so fast and we have piled in such a manner as to ensure maximum much more to do. Brian Walker accuracy. We cannot, and do not, guarantee NAIOP Pittsburgh President either the correctness of all information furnished nor the complete absence of errors and omis- This year, I’m very thankful to have sions. Hence, responsibility for same neither can another year to serve as your President. be, nor is, assumed. We will finish what we started on the advocacy side, continuing to push Keep up with regional construction forward with our aforementioned task and real estate events at www.buildingpittsburgh.com forces. We were in Washington, DC in February to continue to fight for our key local and national issues of our members. I urge you to visit www. naiop.org to see the 2016 National advocacy agenda. We will be back to

www.developingpittsburgh.com 5 feature

6 DEVELOPINGPITTSBURGH | Spring 2016 feature

t started with the rivers. When you consider the topography of Western PA, there certainly weren’t many other reasons to stop and settle along the steep hillsides and forests of Pitts- Iburgh. But the watersheds that created the rivers that meet in Pittsburgh (and McKeesport too) gave life to the region, and eventually to indigenous tribes and settlers from Europe.

“The rivers were the first superhighways. We fought a war over them, the French and Indian War,” notes Tim White, senior vice president of development for the RIDC of Southwestern PA. “The railroads were the next superhighways. Now it’s vehicle traffic but there is still a tremendous amount of material moved by rail. When people say riverfronts, you need to think of them as highway exits. Where riverfronts were developed, it was to give access to the river and the railroads.”

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The master plan by DLA+ for Buncher’s Riverfront Landing development predated the new IPOD but incorporates many of the concepts that would connect residents with the riverfronts again. Image courtesy DLA+ Architecture & Interior Design.

hite’s concise backs to the rivers. As a result, ment began to gain steam in the summary takes you Pittsburgh found that its rivers 2000s. Over the past decade, the from the period of stayed undeveloped while most of lessons learned about how people fur trading right the world’s best real estate was want to relate to the rivers have upW through the industrialization next to water. led to a riverfront development of Southwestern PA. Ideal for renaissance. And as this shift in moving large amounts of mate- One of the ironies of the last 30 focus towards riverside lifestyle rial cheaply, the rivers were the years is that the economic distress is gaining momentum, a new arteries that carried coal, coke caused when manufacturing opportunity has the potential to and iron to the factories for steel collapsed in Western PA resulted bring industrial vitality to the manufacturing. It was a happy in environmental relief for the waters of Southwestern PA. coincidence for Pittsburgh that rivers. As nature reclaimed the its rivers connected conveniently waters of the Monongahela, As the 2020s approach, there is from the coal mines in West Vir- Ohio, Allegheny and Yough- real potential for thousands of ginia, Fayette County and Greene iogheny Rivers, government and people to live within a block or County to the Gulf of Mexico. civic leadership worked to make two of one of the region’s wa- That geographic coincidence put the land along the rivers usable. terways for the first time. At the Pittsburgh at an economic conflu- Advocacy groups gained strength. same time, thousands of jobs may ence as well, especially when the Sites were cleaned up or sealed be created in new plants built to developed world needed to be off from environmental problems. serve a different basic industry. rebuilt after World War II. What remained strangely miss- This new confluence will present ing during this era was demand challenges to the economy and That economic benefit was also for new development along the the environment, as corporations an environmental disaster, how- rivers. and communities try to balance ever. There were communities economic growth with environ- throughout Southwestern PA that After a decade of preparation, a mental stewardship. offered a river lifestyle but by the few developments began to test 1970s, the rivers were industrial the theory that the riverfronts Livable Rivers and commercial transportation would again be economic hubs. arteries. Pollution made them life- Combined with public investment The Allegheny Conference on less. Many of the facilities located to connect the land directly to Community Development today on the riverfronts turned their the rivers, riverfront develop- operates more in the realm of

8 DEVELOPINGPITTSBURGH | Spring 2016 feature

economic development and business attraction, but at its inception the Conference was formed to unite business and government to clean up Pittsburgh. And one of its first accomplishments was the partial res- toration of Fort Duquesne and the development of Point State Park. A former mill site, the Point represented the confluence of the three rivers, the very reason Pittsburgh developed in the first place. That project was one of the first steps away from the destruction of the rivers and the environment that Rachel Carson described. But for the next 30 years, it was still industry that made the greatest use of the waterways.

Later, as it became more and more apparent that there were no steel companies coming back to start up those shut- tered by U.S. Steel, J & L and the like, local leaders began to look at the rivers in Western PA as assets of a different type. There were millions in many of the citizens of Western work community was developed aid flowing into the region for PA as possible. Old rail lines, by the Rubinoff Company on job training and placement in the which often ran along the rivers, Herr’s Island at the site of a 1980s but there were also funds were being reclaimed as bike and slaughterhouse. Without the coming from Washington DC and hiking trails. Runners, who enjoy publicly-funded environmental Harrisburg to bring the small flat, long trails, were looking at cleanup the project was impos- towns and mill sites to a cleaner riverfronts as excellent training sible. The addition of a trail and and more beautiful state. paths. In 1994, one of those infrastructure improvements by runners, Tom Murphy, was sworn the URA linked the island to the As the rivers healed, recreational in as mayor of Pittsburgh. North Side and Downtown. Today, use increased. Pittsburghers were residential property values on like the rest of Americans in that It’s often forgotten that the Washington’s Landing are among they were looking to be more Murphy administration inherited the highest in the city and the active. Advocates looked to make one of the first of the major boat house is thriving for rowers the riverfronts available to as riverfront redevelopment projects, and kayakers. Washington’s Landing. The live/

www.developingpittsburgh.com 9 feature

An advocate for the outdoors and multi-decade project that combined Planning began on the project in the the positive impact natural amenities riverfront trails, abandoned rail mid-1990s, when most commercial add to the quality of life in Pitts- beds and overland trails to connect development on the rivers turned burgh, Murphy supported protection Pittsburgh to Washington, DC. its back to the water. During the of the riverfronts and included the Several pieces of that Passage made lengthy planning process, the impact input of advocacy groups in the plan- enormous impact on unrelated com- of new thinking about riverfront ning process. In 1999, a coalition mercial development. The improve- development impacted the design of those advocates and civic leaders ments to Point State Park and the very directly. formed Riverlife, which became construction of parks and trails along the leading voice for safeguarding the Allegheny and Monongahela Mark Dellana, executive director for the rivers and setting standards for provided recreation space and links Genesis Partners, headed develop- riverfront development. to other trails for the thousands of ment for Soffer Organization dur- new residents Downtown. The North ing the construction of the South Riverlife was often seen publicly as a Shore riverfront park gave wide Side Works. He recalls that the voice calling for commercial develop- walking, biking and boating access orientation of the project towards ment to be bent to a new vision but but more importantly provided direct the waterfront was baked into the the organization was probably more access from the park to the major planning. effective at planning, organizing and league sports stadiums, restaurants marshalling resources to create oppor- and offices on North Shore Drive and “It was part of the visioning plan tunities for greater access to the rivers. Federal Street. The success of South from the very beginning to connect For the past 16 years, much of the Side Works – a transformational the neighborhood to the rivers. signature riverfront development has urban lifestyle development at the The 34 acres of South Side Works been aided or augmented by a handful time - was augmented by the South was the only place where you could of significant projects that changed Shore Riverfront Park. connect directly to the rivers, where dead riverfronts into parks and trails. there was a bridge and the railroad South Side Works may have been the didn’t block the access.” Dellana The most ambitious of these projects prototype for how riverfront devel- credits the role of the South Side was the Great Allegheny Passage, a opment transformed in the region. Local Development Corporation

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with strong advocacy for the river Association. With earlier government mercial or residential usage, water- access. “The stakeholders in the planning and redevelopment stints front property has become some of community wanted it on the plan. in Newark and in Boston under her the most expensive in the city. Those The city wanted it on the plan. So it belt, Li has seen the impact river- dynamics are good for developers. was always part of the master plan,” front advocacy can make on private he says. development success. “My relationship with NAIOP in Boston goes back almost 25 years. Each of these projects involved the “When I think of the waterfront In the beginning it was ‘Oh Miss Li, kinds of partnerships that Pittsburgh cities in this country - whether it’s why would you make us have public has become known for assembling New York or Hoboken or Boston or access and all these things.’ That effectively. Government agencies, in Pittsburgh - people 30 or 40 years was when we were in the midst of funded by public grants and philan- ago really thought of the waterfront the cleanup of Boston Harbor,” Li thropic organizations, worked with for industrial activity, because that’s recalls with a laugh. “Now if you private developers to realize the what it was used for,” Li says. “There were to ask David Begelfer, head of vision of using commercial develop- were practices back then of pollu- NAIOP Boston, he likes the fact that ment to provide greater access to tion, whether it was by industry or the harbor is clean. He likes the fact the rivers for residents. That formula when we flushed our toilets. In Bos- that there’s the Harbor Walk. Why? has transformed riverside activity in ton, that land was the Navy Yard; it Because the developers can make small communities outside the city as was the Army base, and the terminus more money.” well. While the public objective was of railroads. People are now getting to enhance the riverfronts, the parks upwards of $1,200 to $1,500 per Li points out that all of the improve- and trails have the dual benefit of square foot for residential because ments made along urban waterfronts enhancing the private development, they have a waterfront view.” have one thing in common: they raising occupancy and rents. bring more people to the area. That In the cities Li cites, the cleanup of supports the shops and restaurants Vivian Li joined Riverlife as its new waterways to eliminate sewage, bad along the waterfronts, bringing president and CEO in October 2015 smell or oil sheen, has made the land A-credit tenants and better rents. after a lengthy stay at Boston Harbor more valuable. Whether it’s for com-

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“It’s hard to imagine today because Photo courtesy Riverlife. the market is significantly different. [RIDC] got into it when heavy industry was collapsing and the thought was to replace the jobs by putting new industry there,” explains Tim White. “The first question was brownfield redevelopment rather than riverfronts. The city, the URA, RIDC and others proved out successful brownfield redevelopment at Pittsburgh Technology Center. That became the blueprint for Act II.”

Pittsburgh Technology Center, which sits between Second Avenue and the Monongahela River, is on the site of part of Jones & Laughlin Steel’s massive plant. RIDC also undertook reclamations of former mills in McKeesport and Duquesne, where successes came in the form of multi- “The evolution of the relationship tenant incubators and a handful of between the more environmentally- light industrial buildings. focused organizations and real estate The boom in developers has really changed. We’re natural gas A very different type of developer in it together. They may not like the saw an opportunity in the reclama- details of what we want them to do, exploration in tion of J & L’s massive Aliquippa but the cleanup, the fact that there’s Pennsylvania and Works. C. J. Betters Enterprises was public access, the fact that there are able to profit from the demolition more people, that fact that there are Eastern Ohio and scrapping of the former mill and 24/7 neighborhoods, they like that. the mill’s site. Over the period of And we collectively work towards has, in just a few almost two decades, the site at- that.” years, created tracted the county prison and several manufacturing facilities, including a Rivers of Industry the potential for drywall plant for U.S. Gypsum. USG’s a rejuvenation of competitor, National Gypsum, built a It was the demise of heavy manufac- plant earlier on the opposite side of turing that led to the revitalization manufacturing in the Ohio River. of the rivers in Western PA. If for the region that nothing else than the sheer amount Successes like these did not lead to of land that has been redeveloped, could bring a a rebirth of manufacturing. Instead, especially along the Monongahela boom in industrial economic development efforts River, the loss of industry allowed for helped create a series of smaller commercial real estate to re-engage development victories over a long period of time. with the rivers. But of course the along the rivers It was a game of singles and doubles shutdown of heavy industry also rather than home runs. Redevelop- gave the rivers a chance to recover where steel was ment shifted from manufacturing ecologically too. A generation of employment to lifestyle uses. It was a recreational boaters and outdoors once made. game plan that was slowly changing enthusiasts never had the experience the face of Western PA. That game of the rivers at their worst and can’t plan changed with the Marcellus truly imagine the magnitude of that of Southwestern PA. The current Shale play. change. president of the RIDC, Don Smith, likes to say that part of the RIDC’s The boom in natural gas exploration Not all of the economic change has charter is to develop when no one in Pennsylvania and Eastern Ohio been about lifestyle shopping centers else will and that was certainly the has, in just a few years, created the or apartments. One of the early case in the 1980s. But the highest potential for a rejuvenation of manu- players in the effort to turn around priority was not the rivers. facturing in the region that could the former mill sites was the RIDC

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bring a boom in industrial development along the rivers where steel was once made.

From the beginning of the Marcellus play, the companies involved promoted the fact that the economic benefit to Western PA would come after the early stages of exploration, when the output of the ethane available from the wet gas could be proven and the manufacturing of ethylene and polyethylene would begin. That concept gained shape in March 2012, when Royal Dutch Shell announced that it had chosen the Horsehead Corp. site in Monaca as the preferred site for an ethane cracker. That decision, and The Mon River Industrial Park, at the site of the former U.S. Steel Allenport plant, was the subsequent evaluation process, considered strongly by PTT for a second ethane cracker. The almost 400-acre property is broken kicked off four years of anticipation into three tracts that could be developed into one heavy manufacturing site. and trepidation. With hundreds of Photo courtesy Newmark Grubb Knight Frank. millions of dollars invested in engineering and site preparation for the If a third cracker does develop, that front real estate has skyrocketed in project, Shell appears to be poised project is as likely as not to end value because of the appeal of living to finally make the final investment up at the Mon River Industrial Park next to attractive useable waterways. decision in the first half of 2016. in Allenport, PA. That Washington Residents of the new Hot Metal County site was one of the finalists Flats, The Yards at 3 Crossings, Cork A decision to proceed will precipitate for PTT but it required more prepara- Factory Lofts or the planned Mill at a decade-long reaction that will have tion than PTT felt it had time to Second Avenue are drawn to rivers significant impact on the rivers of wait. The schedule for a third cracker that offer safe and clean recreation, Western PA. would allow the owners of Mon River not waterways that glisten with Industrial Park to invest in grading fuel or pollution. Advocates for The first domino expected to fall af- the additional 90 or so acres to riverfronts understandably feel that ter a green light from Shell is a simi- accommodate such a facility. trading industrial jobs for livable lar investment decision by Korean rivers will be cutting off our nose to energy giant PTT, which has chosen Three major industrial chemical spite our face. a site in Dilles Bottom, OH for a plants located on rivers within second slightly smaller cracker. That 50 miles of Point State Park will Shell and its competitors will be site sits on the Ohio River roughly 20 bring an economic multiplier that subject to regulatory approvals and miles west of Washington, PA. PTT’s will rejuvenate the manufacturing oversight that didn’t apply to the plan is to start construction about sector. Estimates of the multipliers steel industry. The petrochemical one year after Shell, meaning the in this industry are much higher than companies have assured Pennsylvania region will see production of about others, predicted to be anywhere that their processes are safe and 2.5 million tons of polyethylene per from 5:1 to 13:1. Such multipliers that the rivers on which the plants year in 2021 and 2022. According to raise economic hopes. They also raise sit won’t be polluted by their activi- the Marcellus Shale Coalition and the environmental fears. ties. But environmental advocates Allegheny Conference, the volume of are wary. Most see the natural gas natural gas in the Appalachian and There has been significant measur- exploration as being environmentally the demand for plastics makes at able economic benefit from the negative thus far, even though the least a third ethane cracker feasible, cleanup of the rivers in metropolitan drilling and processing activities have if not likely. Pittsburgh. Like in the cities that been regulated. Vivian Li speaks of, Pittsburgh’s river-

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One aspect of this nascent industry Shell decision, which after its Febru- call. That’s not by coincidence. Civic that is different from the manufac- ary 4 shareholders meeting seems investment in riverfront parks and turing that once dominated Pitts- imminent, doesn’t assure that the access were meant to attract com- burgh’s landscape is its logistics. The company will be making polyethylene mercial investments. The city’s 16:62 location of crackers on the rivers is in 2021. It wouldn’t take a return Design Zone was intended to identify not for the use in shipping products, to Pittsburgh’s smoky past to undo opportunities for exactly the kinds of at least if Shell’s model is an indica- the progress, both economic and developments that are occurring at tion. The Monaca plant will be built environmental, that has been made 3 Crossings, Riverfront Landing and from the river, as sections of the since 1985, when Pittsburgh was Lawrenceville Technology Center. plant are constructed modu- Late last year, larly offsite and the city’s Plan- barged to the Photo by Ed Rieker. Use ning Department construction site. courtesy Washington County announced the But Shell plans to Chamber of Commerce. intention to create move its product, and revise the zon- principally poly- ing standards for ethylene pellets, development within by rail. Through- close proximity to out the Three the rivers. Much Rivers basin, rail of that property lines parallel the remains zoned for rivers, making industrial usage as the location of a legacy of when riverfront sites manufacturing logical for both dominated the purposes. riverfronts. The first step is the Shell also has implementation of shared that it a Riverfront Interim plans to use Planning Overlay the chemical District, or IPOD. byproducts of the An overlay district cracking process applies addi- as fuel to gener- tional standards to ate electricity and heat. That would existing zoning conditions. Overlay reduce the waste and the odds of districts don’t change the use or pollution of the rivers. height restrictions, for example, in a zoning district but rather adds stan- What is anticipated to follow in the dards that usually mean to address wake of the development of these conditions that weren’t foreseen cracker facilities are new plants when the comprehensive plan was involved in either the polyethylene done. As the name implies, an IPOD supply chain or the customer base, applies standards and conditions that which includes bulk distributors, are temporary while the zoning for a polyethylene compounders and con- district can be revised permanently. verters. With as many as 60 percent of the polyethylene customer base Since 2001, IPODs have been put located within 500 miles of Monaca, first named “Most Livable City” by in place in Oakland, Walnut Street, there are economic incentives to Rand McNally. Baum/Centre Corridor and Uptown. locating the manufacturing of plastic Each IPOD had a different outcome, materials within close proximity to Pittsburgh Gets an IPOD including no new zoning on Wal- the polyethylene plants. nut Street, and whatever changes Whether or not we’re in a Golden occurred were integrated into the Will the Three Rivers again look like Age of riverfront development will planning process. the glowing rivers of industry of the be better judged in decades to come, 1950s? That scenario is unlikely. but since 2014, there have been Planning Director Ray Gastil says that None of the anticipated gas down- more projects proposed along the the IPOD is designed to start the de- stream activity is assured. Even the rivers concurrently than one can re- bate that will create the framework

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for a permanent overlay or revised give more natural space between the All projects proposed within the zoning. It’s his opinion that the city development and the river; to allow Interim Planning Overlay District needed the IPOD to have specific better connections to the riverfronts must submit to design review. standards so that the conversation through the new developments; could start with transparency. and to ensure there is a consistent The latter item is meant to bring process for review. Some of the consistent neighborhood par- “The main thing about an IPOD highlights are: ticipation, which Gastil says has not is that there are only sticks; there always been the case. He emphasizes are no carrots. But when you start The minimum setback will be 50 that requiring such reviews isn’t an IPOD you kick off an 18-month feet but at least 70 percent of the meant to slow down development planning process that decides what building’s footprint must be set back but to add some clarity. riverfront development will be like 95 feet. going forward,” Gastil says. “People “This is a formalization of questions have said that we shouldn’t have The maximum length of a building being asked by Zoning for years,” changed anything at the start but parallel to the river will be 500 feet. asserts Gastil. “The basic principle I think we’re kind of showing our is to give the river a chance ecologi- hand, saying this is the stuff we Structured parking can only be cally so the setbacks are more than really care about. We’re not saying visible from the riverfront if it’s 50 feet. We’re trying to make sure that none of this will change but it’s elevated because of flood plain that when you’re standing near the where we are starting.” restrictions. In those cases there river you’re not looking at parking must be architectural screening on but at the river.” The proposed IPOD has some specific the river side. new requirements and changes a few IPOD requirements would not apply of the current zoning standards that Surface parking lots located between to projects that have already been exist within districts along the rivers. the building or public right-of-way entitled and have been through the The intention is to limit the use of are limited to 10 spaces. planning/zoning process. The proj- parking facilities along the rivers; to ects that have been in the pipeline

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For varying reasons, have been subjected to many of playing field, higher standards and these standards or have voluntarily most of the projects clarity for anyone expecting to build crafted projects that included the along the rivers. principles that the IPOD embraces. would have been While developers rarely like to see unthinkable just a “If nothing else, we want it written their property infringed or restrict- down that the highest and best use ed, Pittsburgh’s developers seem decade ago, before of riverfront isn’t a parking lot,” to accept that higher standards for Pittsburgh residents Gastil says. riverfront development means better development. Buncher CEO Ted saw what it was like Keeping the Rivers Balanced Balistrieri is a founding member of to look at the rivers Riverlife. Oxford Development has Almono. 3 Crossings. Uber Research. been publicly supportive of revising again. Replacing Station Square East. Edgewater. standards. factories for houses, Riverfront Landing. The first hearings for the IPOD were offices and shops These are but a half-dozen of major delayed from February 9 to February has been good for commercial developments that are 23. Once the public hearing process underway or in the pipeline that begins, the city’s Planning Depart- the region. What the will continue the transformation of ment expects to meet extensively Pittsburgh’s waterfront. For varying with property owners and develop- riverfronts look like reasons, most of the projects would ers until a permanent resolution today is the new image have been unthinkable just a decade is adopted. Ray Gastil, who was ago, before Pittsburgh residents recruited to Pittsburgh from Seattle of Pittsburgh, what saw what it was like to look at the to help with just this kind of plan- people outside of rivers again. Replacing factories ning, expects passionate debate that for houses, offices and shops has will ultimately lead to a more level Western PA are finally been good for the region. What the realizing.

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www.developingpittsburgh.com 19 feature

be the key to whether the “new” Pittsburgh continues Projects like the South Side Works and the to be a model of revitaliza- North Shore have benefitted from direct tion. Polluting the rivers access to riverfront parks. and making riverfronts toxic again will be a loss for the region, regardless of the gain in gross domestic product. One of the secrets unearthed in Pittsburgh’s recent renaissance is that there was still a lot of money here; there was just no place to spend it. Making the environment unlivable again would chase those investment and enter- tainment dollars elsewhere again.

Environmental advocates argue that such a balance is impossible. Once the industry is established, it becomes difficult to regulate and enforce standards. Employees are voters and elected officials who support a clean environment become reluctant to take a stance when the position might cost the jobs of voters.

It’s also tough to reverse from the course that has been followed over the past 20 years. Humans may ignore what they know to be true but we can’t un-know it. What Pittsburghers know from the past 20 years is that the riverfronts are an important part of Pittsburgh’s new economic equation. Balance may be difficult to achieve but economic history is on its side.

“When we write the history of urban centers that riverfronts look like today is the new urban landscape – are a direct result have waterfronts, it’s a very image of Pittsburgh, what people of the allure of jobs that the mills different situation today versus the outside of Western PA are finally offered. As a 21st Century city that relationship 20 or 30 years ago, realizing. desperately needs to attract popula- and certainly how waterways were tion to meet the needs of its future viewed 40 or 50 years ago,” remarks It’s also difficult to argue that the employers, Pittsburgh will benefit Vivian Li. “They were the dumping Pittsburgh of today would even exist economically from the growth of a grounds. It doesn’t matter what the without those steel mills. Many of new industry in the coming decade. city. Today waterfronts are the most the things that we hold most dear valuable properties.” as Pittsburghers – our ethnic groups, The balance between living along DP the many neighborhoods, the gritty the rivers and working on them will

20 DEVELOPINGPITTSBURGH | Spring 2016 NAIOP AWARDS

Best Speculative Office

Zenith Ridge II 2400 Zenith Ridge Drive, Southpointe The project is new construction of five stories and 150,000 square feet. The site-cast tilt-up building was completed in spring of 2015.

DEVELOPER: Burns & Scalo Real Estate Services CONTRACTOR: Clayco Construction Corp. ARCHITECT: Forum Studio

Best Build-to-Suit Office

Noble Energy Headquarters 1000 Noble Energy Drive, Southpointe II Town Center The project is a 207,000 square foot, six-story office building anchored by Noble Energy’s headquarters lease. The building was completed in spring 2015.

DEVELOPER: Horizon Properties Group LLC CONTRACTOR: Rycon Construction Co. ARCHITECT: Designstream LLC

www.developingpittsburgh.com 21 NAIOP AWARDS

Best Speculative Industrial

100 Crown Court Imperial Business Park, North Fayette Township The project is a 75,000 square foot, one-story industrial building, which was completed and occupied in July 2015.

DEVELOPER: Ashford/Imperial Associates LP CONTRACTOR: Ashford Partners ARCHITECT: Edwin Pope Architecture

Best Build-to-Suit Industrial

GE Center for Additive Technology Advancement Chapman Westport, Findlay Township The project is a 125,800 square foot additive materials research facility

DEVELOPER: SunCap Property Group CONTRACTOR: Evans General Contractors ARCHITECT: Ware Macomb

22 DEVELOPINGPITTSBURGH | Spring 2016 NAIOP AWARDS

Hall of Fame Industrial Parks, is Domenic currently serves on the Board Domenic Dozzi the originator of of Directors of NAIOP and was a past “Flex” Space in the president from 2006 to 2007. He Pittsburgh Market. also serves on the Board of Directors Domenic is CEO of Jendoco With over 1.5 mil- of the Master Builders’ Association Construction Corporation lion square feet of of Western Pennsylvania (MBA), and Jendoco Real Estate. space today, Jendoco Oakmont Zoning Hearing Board, the He has been an officer of Real Estate includes Allegheny Conference on Community the company since 1987 properties West of Development Transportation and and an employee since Pittsburgh, with Infrastructure Committee, and the starting as a laborer in Jr. Vista and Parkway Young Presidents Organization (YPO). High School. Domenic holds West Business Parks, Domenic is actively involved in com- a Bachelor of Arts degree and Settlers Cabin munity affairs and charitable organiza- from the University of Business Center; tions, including: Pittsburgh Regional Pittsburgh and is a gradu- in the North of Alliance (Allegheny Conference), Urban ate of the GSIA Executive Domenic Dozzi Pittsburgh with a Land Institute (ULI, Chair 1997-2000), Program from Carnegie new office building Pittsburgh Downtown Plan Business Mellon University. in Wexford and in the East with Beatty Climate Task Force and the Crohn’s and Road Business Park, North Versailles Colitis Foundation of America, Western Started in 1962 by his father Peter, Business Park and Royal Oaks Shopping Pennsylvania/West Virginia Chapter. along with Orin Sampson, Jendoco Real Center. Estate, formally known as Pittsburgh

SUPPORTER OF counsel for PMC. “The development of PMC Property Group specialize in dis- 526 Penn Avenue, 908 Penn Avenue, covering unique opportunities in under- DEVELOPMENT the Clark Building, the former ALCOA utilized and overlooked urban proper- Building, the former Schenley High ties and transform them into commu- School building were based upon our nities that meet the unmet consumer PMC Property Group continued strong leasing results. PMC’s demands in their target markets. Their projects include the former Reed Smith acquisition strategies include a stringent PMC Property Group entered the Building, which was developed into the vetting process that visualizes the possi- Downtown Pittsburgh residential mar- Pittsburgh Monaco Hotel after agreeing bilities for adaptive reuse and evaluates ket cautiously in the spring of 2010 by to partner on the development with an the appeal to potential tenants. They signing an agreement to buy its first investment fund raised by a Kimpton have an in-house construction company building, 201 Stanwix Street. PMC was affiliate. We remain confident in the that handles the firm’s full spectrum of leasing units there by summer 2011 future of the city of Pittsburgh and the building and renovation needs. and the first tenants were moving in by product we have in place.” September 2011. President Ron Caplan started the com- PMC has more than 20 projects in vari- pany with the purchase of several “From the start, and contrary to ous stages of development and plan- single-family homes in 1978 and soon conventional wisdom when we first ning that will include more than 2,500 expanded into a collection of multi- arrived, leasing has been strong in the residential units and over one million unit housing ventures in Philadelphia. Downtown market. During the devel- square feet of commercial development. Ron founded PMC Property Group opment of 201 Stanwix and after, They believe in the value of a hands-on (then called Philadelphia Management we were introduced to opportunities approach that guides their nearly 200 Company) and dedicated it to being a to acquire other historic buildings employees and more than 80 properties full service developer focused on adap- in Downtown Pittsburgh, and did so that represent nearly 7,000 rental units tive re-use projects spanning the East one after another,” says Jerry Novick, and in excess of 2 million square feet of Coast. executive vice president and general office, retail, and industrial space.

www.developingpittsburgh.com 23 NAIOP Pittsburgh Officers Brian Walker, President Millcraft Investments Inc. David Weisberg, Vice President BNY Mellon Gerald Bunda, Secretary Imperial Land Corporation Christine Vann, Treasurer BDO Daniel Puntil, Past President Grandbridge Real Estate Capital LLC Domenic Dozzi, Corporate Board Jendoco Real Estate Louis Oliva, Advisory Board Liaison Newmark Grubb Knight Frank

Board of Directors At Large Jason Stewart Jones Lang LaSalle Maureen Ford Alcoa Don Smith Jr. Regional Industrial Development Corporation Linda Fisher TriState Capital Tyler Noland PenTrust Real Estate Advisory Services Inc. Lou Stempkowski PNC Real Estate Banking Jamie White LLI Engineering

Learn more about NAIOP, the Commercial Real Estate Development Patricia Farrell, Legal Counsel Meyer Unkovic & Scott LLP NAIOP in the western Association, is the leading organization for developers, Pennsylvania tri-state region owners and related professionals in office, industrial Tony Rosenberger Chapman Properties at naioppittsburgh.com and mixed-use real estate. NAIOP provides or 412-928-8303. Cecilia Cagni unparalleled industry networking and education, and Allegheny Conference on Community Development advocates for effective legislation on behalf of our Kyle Prawdzik, DL Representative members. NAIOP advances responsible, sustainable CBRE Capital Markets development that creates jobs and benefits the communities in which our members work and live. Advisory Board Steve Thomas Chapman Properties Peter Sukernek Hanna Langholz Wilson Ellis Paul Griffith Integra Realty Resources Inc. David Massaro For more information on how you can develop Massaro Properties connections with commercial real estate through NAIOP, Thomas Murphy visit us online at www.naiop.org or call 800-456-4144. Jendoco Real Estate Barry Ford Continental Real Estate Companies Richard Donley Cranberry Business Park Associates LP Development Project

office building and a 578-car garage Strip District location offered Oxford 3 Crossings and transportation center called a chance to create a large project in The Hub, 3 Crossings is practically a familiar neighborhood. huck Ham- stabilizing as it is built. mel’s decision “We’re a company of Pittsburghers. to build a Hammel’s Pitt-Ohio Express was We’re all very familiar with the Strip state-of-the- headquartered on 27th Street at District. If you’re raised in Pitts- art sustain- AVRR. Over the years, Pitt-Ohio had burgh, at some point in your life the able terminal accumulated adjacent properties Strip District has been part of some- in Harmar CTownship activated a with an eye towards expansion. thing special for you,” says Steven mixed-use development that is one Once the logistics company made Guy, Oxford’s CEO. “That’s where of the fastest-moving projects in the decision to build its new facility you went with your family to get the metropolitan Pittsburgh. 3 Crossings on Route 910, Hammel began to good local produce. You got to see has seen construction start on two consider development partners to some of the characters of Pittsburgh. office buildings – one of which find the best way to use the land. When you were a college student or was speculative – and 300 units of young adult you went there to get apartments in a little less than 18 In Oxford Development Company, in trouble. And now grownups live months. The project has attracted Hammel found a developer that was there.” two high-profile tech tenants, one shifting its focus back to Pittsburgh of which developer Oxford Develop- for new projects. After developing Oxford had projects at varying stages ment Company still can’t confirm many projects in other cities, Oxford of development in the East End and is occupying its building. With con- saw more opportunities in its home Oakland, Airport Corridor, South struction ready to begin on a third region after the Great Recession. The Side and Downtown. A mixed-use

www.developingpittsburgh.com 25 project in The Strip, however, was an Oxford and Hammel signed a non- were a lot of issues, between the opportunity to take advantage of all binding letter of agreement in late environmental conditions that existed the aspects that were positive about 2012. At that point the project was at the site, dealing with 100-plus the “new” Pittsburgh, which was just an idea. Oxford agreed to buy some years of industrial history down getting attention all over the world the properties that Hammel had there, dealing with railroad ease- as a model of revitalization. Exciting acquired and to purchase the orphan ments, not only on Railroad Street, as the opportunity was, developing properties that would consolidate but in terms of the rail line that runs in The Strip was going to be a mixed the site into a developable project. along the back of the property along blessing. It wasn’t until May 2013 that a the river,” details Guy. memorandum of understanding was “Like many parts of Pittsburgh it completed and plans didn’t really “We had to go through Act 2 on is desirable because of its history get underway until late 2013. The virtually the entire site. Right in but it’s undesirable because it was timetable that the developer had in the middle of the planning of the industrial and had environmental mind, however, was beyond aggres- project, right before we started contamination. If you look at how sive. There was significant interest The Yards project, FEMA issued a the electric and the infrastructure is in the offices and an apartment new flood plain, which means you down there, it’s a mess but it also renaissance was in mid-stride in couldn’t build anything on the river has so much potential because it is Pittsburgh. Oxford planned to break without changing the elevations,” a classic Pittsburgh area,” says Guy. ground by Fall 2014. Guy recalls. “With residential, it “If you can get past seeing that, you didn’t just affect the stuff right can really get to the value and the Such an ambitious schedule would against the bank. Depending on how rivers are a big part of that. If you be difficult to accomplish in a year the land goes, there are now fingers tour enough cities and you see what if the site was a flat green property jutting out in different directions has been done with waterfronts, it in an unencumbered community. The across Railroad Street all the way to has an awesome effect on people. Strip District has its advantages but Smallman. What was previously in We think it will have an awesome none of those are among them. a 500-year flood plain are now in a effect here too.” 100-year flood plain and for residen- “I can tell you that the site was tial you can’t put any usable area in extraordinarily complicated. There the flood plain.”

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26 DEVELOPINGPITTSBURGH | Spring 2016 Such an issue put the design and Solving the flood plain design issue construction team to the test. was critical because moving the Oxford had hired Rycon Construc- “We had a whole new buildings away from the rivers was tion as the general contractor from schematic design that an option that Oxford did not want among several contractors with to consider. Integrating the develop- whom the developer had worked preserved our yards ment, which was called 3 Crossings, over the years. WTW Architects had – the open space and into the riverfront was a key to the recently completed work as the local project. architect for Oxford at the Hot Metal access to river. Rycon Flats but the project’s civil engineer, worked with them on “The very first thing we did when Langan Engineering, hadn’t done a we made the deal with Chuck Ham- significant project for Oxford before. pricing. Within five mel and told him we would acquire According to Oxford’s project man- or six weeks, we were the orphan properties he didn’t ager, the work of the team saved the control was to go to Riverlife,” day. back on track, ready says Guy. “We hadn’t even pulled out of Chuck’s parking lot and we “The flood plain issue came up on to move forward. They were calling Lisa Schroeder, asking April 28 of 2014. By the second were very responsive. her what she needed to accomplish week of June, WTW in conjunction what had been talked about. At with Langan, understood all the They rose to the that point the riverfront trail had requirements of the flood plain, challenge.” just been talked about but it was an what you can do and can’t do with important amenity for us to be able residential compared to commer- to drive the community. We market cial,” recalls David Heaton, assistant heavily on the fact that the trail vice president of development for will be built. Riverlife is working pricing. Within five or six weeks, we Oxford. “We had a whole new hard on making that a reality, along were back on track, ready to move schematic design that preserved our with the city, but it really is a driver forward. They were very responsive. yards – the open space and access there.” They rose to the challenge.” to river. Rycon worked with them on

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www.developingpittsburgh.com 27 Photo by Mark Grosso.

The appeal of 3 The building has Crossings is both floor-to-ceiling its location rela- glass to offer views tive to The Strip of the river. There and to the Allegh- was to be a fourth eny River. There terrace on the isn’t the riverfront ground floor [of park that connects Riverfront East] but the develop- Burns White opted ment directly to for a concrete pad the river in the with recreational manner of South features – a fire pit Side Works or and picnic furni- the North Shore, ture – that will get but the buildings used when weather on the riverfront permits. Riverfront side have been West will be set fur- designed to access Lots of glass gives river views even to occupants ther back so as not the river visually. of the buildings on Smallman Street. to block the views of Downtown for “Part of the Riverfront East.” selling point of directly. It’s a private development so The Yards is that river access. It’s it can access the river. Guy uses a golf analogy to describe essentially a U-shaped building that the dichotomy of the relationship creates a courtyard that is open to “The office building has terraces, on between the neighborhood and the the riverfront and the trail,” explains the upper level a fairly large one,” river. “There’s almost no place in Rich Bamburak, WTW Architects’ he continues. “On the lower floor the Strip District where if you have partner in charge of the project. there are two on each side, offering a good drive you can’t hit a ball “Half of the units face the river an upstream and downstream view. in the water; but you can’t get to

28 DEVELOPINGPITTSBURGH | Spring 2016 Photo by Mark Grosso.

the water because of the industrial that could be used to tie all the history, the fences, the railroad, the The Yards is meant to commercial structures together, steepness of the bank that takes you even if it wasn’t used extensively. in and frankly the garbage that has open up to the river At 3 Crossings, Rich Bamburak says accumulated on those banks from and the community, there is a burnished concrete block the industrial era. Now you will be that serves as that base material, able to.” the office buildings although the structural concrete would be more of The Hub eliminates it from use Another of the challenges of the on the garage. With that block, design of the project was the mixed secure. With at least the material finishes selected could nature of the building uses. Juxta- two of the buildings reflect the design intent of each posing apartments and office build- building. ings, with a transportation center being corporate and parking garage in the midst of “We wanted the Yards to have a it, posed a challenge because of the headquarters for Rycon certain residential character but nature of the property types. Softer and Burns White, also have that edge from The Strip residential materials and accessibility and its industrial past. We used were appropriate for The Yards but there was a desire to metal panels, exposed ductwork the intention of the elevation and have the design of the and piping in common areas,” says palette for the offices and The Hub Bamburak. “On the flip side, this is was more industrial, matching the offices to have some Burns White’s corporate offices and feeling of the surrounding Strip differentiation. they wanted higher-quality finishes. District buildings. Moreover, while On Smallman Street we were able to The Yards is meant to open up to the have more industrial materials and river and the community, the office desire to have the design of the of- details. Burns White wanted a more buildings would be more secure. fices to have some differentiation. sophisticated look so there are flat With at least two of the buildings exterior panels and details that are being corporate headquarters for Part of the solution for WTW Archi- more sophisticated.” Rycon and Burns White, there was a tects was to choose a base material

www.developingpittsburgh.com 29 One of the companies attracted to location to eliminate somebody that Construction of the foundations the atmosphere and location of The we might want to attract. on the Burns White building – also Strip was Rycon Construction. The known as Riverfront East – began company had repurposed an indus- “There’s nothing wrong with getting in late February and will be turned trial building at 2525 Liberty Avenue business done in an attractive set- over for tenant fit-out by November as its offices about 15 years earlier. ting. It’s just a good environment. If 1. The remaining office building to By 2014, Rycon’s growth created the I want to meet with our employees be built is a 125,000 square foot need for new digs. Todd Dominick, I like to take a walk and talk with Riverfront West. CEO of Rycon Construction, explains them, stretch our legs, and maybe that 3 Crossings was a strategic op- go to La Prima Espresso for coffee,” The first occupancy at The Yards will portunity for his company. Dominick notes. be in late April and the lease up is ahead of pro forma thus far. “It’s not just this development The 2501 Smallman Street building and this relationship with Oxford is home to Rycon Construction and In addition to the new construction, Development, but it’s a commit- Apple’s new offices (although Oxford Oxford has acquired options or has ment to The Strip. We outgrew cannot confirm that lease). The under control, existing buildings our building and our people really building is 91 percent occupied with that are within or surrounding the love being in The Strip. To have the an expectation of being 100 percent 3 Crossings footprint. Although opportunity to move just a couple occupied by July 1. Two floors of the the developer isn’t ready to discuss of blocks away into a new building 2555 Smallman building have been its plans as yet, Guy says that he was really cool,” explains Dominick, leased to Robert Bosch, which will expects that around 80 percent of the project’s contractor and also take occupancy in July and has some the existing square footage will be the main occupant of the 2501 short-term options for expansion. repurposed. One project that has Smallman Street building. “More Guy says that Oxford is in nego- been announced is the renovation than anything else, being centrally tiations for 75 percent of the final of the Spaghetti Warehouse, which located was the reason we picked floor. Because of Bosch’s options, is operated by BLD Brands from The Strip in the first place. We were finalizing the lease for the second Chicago and will likely remain an growing and knew we were going tenant will for all practical purposes Italian restaurant of an updated to be growing more. We were going bring that building to fully-leased. brand. to be hiring and didn’t want our

30 DEVELOPINGPITTSBURGH | Spring 2016 3 Crossings is proceeding at a rapid better transportation system, rather shirt sleeves to say we’ll work hard pace and has been successful by than building parking that isn’t with you,” Guy states. “I can tell every measure thus far. That doesn’t going to support what tomorrow’s you that economically we got a mean that there weren’t moments generation wants.” fantastic deal and they have been of concern during the planning. One wonderful to work with. They are of those headaches, the parking, is Oxford is only beginning the leasing probably my second biggest part- an area Steve Guy wishes could have of The Yards but the early returns ner.” been dealt with more progressively. support Guy’s point about a different parking and transit model. He Oxford’s most valued partner in 3 “When I was about three-fourths of says the demand for parking at The Crossings has been Chuck Hammel. the way committed, we started to Yards is running about 50 percent, In addition to the properties and see that this financing was getting compared to what is a 90 percent equity, Hammel is developing high- a little complicated. These equity rate at the Hot Metal Flats on the end condos adjacent to the property structures were getting complicated South Side. on 25th Street that complement 3 and I didn’t take enough advanced Crossings. And Guy says his attitude math,” Guy laughs. “It’s all done. Guy recognizes that there was little about The Strip serves as an example Everything is financed and funded. that the city of Pittsburgh could do to the team. Now it’s just a matter of executing to create progressive transit in time construction. for 3 Crossings and says that the city “Chuck Hammel’s been just a great was a helpful partner in the project. partner. His first question is always “I would have much rather built a In fact, he gives a lot of credit to all about the community. How’s this different type of parking facility, the partners in the project, including going to affect the Strip District,” however. Although every property the ERECT Fund and an unconven- notes Guy. “He doesn’t ask about does have a certain amount of park- tional partner of theirs. the economics of it. His family made ing on it, if we had to supplement their future down here and he wants it to a smaller extent it would have “I want to mention an astounding to give back.” been better. I would rather have relationship with labor and the DP taken those excess dollars that had trades. Astounding. We have been no value for what we had to build able to do this all union as a result and put it towards developing a of their willingness to roll up their

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The site of Three Rivers Stadium has become home to $145 million in new commercial space. Photo by Charles Uhl.

“When they first took me to the their business to include real estate Continental site, they took me in from the wrong development. side, from the south, and I said get Real Estate me out of here,” Kass recalls with “When I graduated from Ohio State a chuckle. “But when they took me University in 1965 the interstate Companies in from the north it was a different highway system was being built. If story.” you were from a flat city like Colum- lmost 20 years bus, that changed everything,” Kass after Continen- The six-year, $300 million invest- explains. “We had highways coming tal Real Estate ment marked a significant turning through Columbus going in every Companies pur- point in how the brownfield sites direction. Businesses were moving all chased the 256 in Pittsburgh would be viewed. It over the area and Columbus was one acres that made also marked the first major project of the only Midwestern cities that up the formerA U.S. Steel Homestead Continental Real Estate Companies wasn’t shrinking because it wasn’t a Works from the Park Corporation, undertook outside its home turf manufacturing center. it’s easy to forget that not everyone in Columbus, OH, where Kass and thought the developer was crazy partner Jack Lucks had grown an of- “Our office furniture business was for imagining a live/work/play com- fice supply business into one of the supplying many of the companies munity there. It only seemed that larger office furniture suppliers in that were growing. I wasn’t satisfied way at the time. You can count Central Ohio. In 1973, the partners with getting three-to-five percent of Continental’s Chairman, Frank Kass, had seen a trend developing and their capital expenditures; I wanted among those who weren’t sure. heard enough from their customers to have the whole building,” he to inspire Kass and Lucks to grow continues.

www.developingpittsburgh.com 33 Starting at first with good custom- by building larger centers in both redevelop a former Lennox Industries ers, Continental began building Columbus and Dayton. manufacturing plant that was offices in the suburbs for companies located across two main roads from looking to move their businesses In 1986 and 1987, the savings and Ohio State University’s campus. closer to their homes. The developer loan industry began to experience Reclaiming the contaminated indus- purchased well-located land and steep losses from overextending trial site, Continental developed a built its first spec office building, be- credit and the fallout froze lending 350,000 square foot big box center, ginning a long financing relationship across the board. Like with the Lennox Town Center, which opened with Nationwide Insurance. Over financial crisis that would occur 20 in 1996. It was at that point that a the next two decades the developer years later, lenders looked at apart- chance visit from a Pittsburgh real stayed close to its customers, nimbly ments as the best property type for estate broker opened a door to a shifting direction to build what the credit, since many more consumers new opportunity. market wanted. were renting than owning. Kevin Langholz, now principal at By the early 1980s, Continental had Continental developed a golf-course Hanna Langholz Wilson Ellis, was begun to build small retail projects community, called Turnberry, in the visiting family in Columbus and when it formed a partnership with Columbus suburb of Pickerington had the opportunity to see Lennox Robert Walter and his food wholesal- in 1988. Spurred by the success of Town Square. Langholz contacted ing business, Cardinal Foods (later Turnberry, Continental built similar Frank Kass to gauge his interest in Cardinal Healthcare). Believing that multi-family communities in the redeveloping the site of the former there was demand in smaller towns up-and-coming Columbus suburbs of U.S. Steel Homestead Works and for grocery store-anchored shopping Reynoldsburg, Gahanna, Westerville introduced him to the Park family, centers, Continental developed eight and Dublin, which were located ad- whose company had demolished the centers with Cardinal’s “Mr. Mon- jacent to Columbus’s I-270 belt line. steel mill, remediated the site and eysworth” stores as anchors in small were looking to put a plan in place towns in Central Ohio. With the By the early years of the Clinton to develop the property. retail development experience and Administration, the economy had relationships formed developing with recovered from recession and credit Barry Ford was working for the Park Cardinal Foods, Continental Real had normalized. Continental Real Corporation on the Homestead site. Estate expanded its retail portfolio Estate teamed with CASTO to He stayed in Pittsburgh after law

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34 DEVELOPINGPITTSBURGH | Spring 2016 school and was helping to develop working on a plan for developing replaced. The team spent three years a game plan for the property and what would become The Waterfront. developing a plan for infrastructure crafting a new zoning plan that After Kass’s first impression wore and zoning before work began on worked for all three of the munici- off, he says that they quickly real- the project in 1999. palities in which the former mill sits. ized that the traditional one-mile, The Park Corp. had an idea that three-mile and five-mile radius “Continental stepped in about half- Homestead could work as a mixed- analysis wasn’t going to work for the way through the process and pro- use and lifestyle center similar to Homestead location. Looking at the vided all the marketing we needed,” those being developed around the density and demographics along axes Ford says. “Who could come here? country. rather than circles yielded results the What kind of stores would come developers weren’t expecting. The here? Could we do office? Could we “A mile and half away are some of metrics were actually much better do apartments? Pittsburgh’s great residential com- than most deals. munities and they didn’t have access As the planning for the Waterfront to great regional shopping. It was “We saw something in that site that dragged on it became expedient that thought that started the pro- people living in Pittsburgh didn’t for Continental to buy out the Park cess,” remembers Ford. “We went see. It’s not that we were clairvoyant Corporation’s share of the project. out and searched the country for a but if you grew up in Pittsburgh, The acquisition was quite amicable; development partner. The Park fam- Homestead was an out-of-luck, blue in fact, the Park family has invested ily are manufacturing and industrial collar town [by 1996],” notes Kass. in many of the projects Continental experts, but we knew we needed a “There were affluent communities had developed since then. Conti- commercial development partner to to the north and we realized that if nental also came away with another join the team.” we could get access from the [Home- valuable asset, hiring Barry Ford stead Grays] Bridge it would be more to continue working on the com- Langholz’s introduction brought Kass attractive.” plicated plan for the development. and Ford together at the Interna- Ford, who now serves as president tional Council of Shopping Centers The property needed $35 million of development, was excited for the annual convention. The two men in infrastructure improvements. chance to see the project through sensed that there could be a good The roads and utilities that existed and saw little downside to changing partnership right away and began were antiquated and needed to be employers at that point.

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www.developingpittsburgh.com 35 Continental’s first major project in Pittsburgh was the transformation of the former U.S. Steel Homestead Works into a $300 million lifestyle center.

“I thought it would be a great com- being as aware of what the company “I wanted to do it. You talk about pany to work for. I readily jumped on doesn’t know as what it does. In a forever project; this was a forever board when Continental took over Pittsburgh that has led to partner- project. The reason they wanted the project,” he says. “I was willing ships with hotel developers Concord us to participate was because the to take the chance that at the end Hospitality on a handful of projects, owners of the Steelers were regularly either I’d be done and would find and with Dick Donley’s Chaska coming to the Waterfront,” says another job, which was fine, or I’d Property Advisors on the Pittsburgh Ford. “Frank was reluctant, wonder- move to Columbus. And here I am International Business Park. ing what the chances were that we 20 years later and we’ve done $600 would win.” million worth of development in the Continental has grown a large con- region, which has been great for us. struction business in its Continental Ford hatched a plan to win his This project was a great catapult, if Building Systems but has maintained boss over. you will, for staying here and doing a lean real estate office in Pittsburgh. more work.” Besides Ford, the office at the “It was a beautiful spring day. The Waterfront includes Mike Hudec, vice new stadiums were being finished. During the decade that followed, president of development, and Tina And that whole beautiful riverfront Continental Real Estate bought Mechling, vice president of marketing. park was being put in place with the Galleria in Mount Lebanon With support from Continental’s head- that esplanade between the two and revitalized that property and quarters in Columbus, Ford says the stadiums,” he recalls. “Frank and I developed the Streets of Cranberry operation in Pittsburgh is able to take had been at the Galleria. We were from the ground up. The company advantage of the local knowledge of driving back to the Waterfront but also branched out around the U.S., as its staff to pursue opportunities. That instead of going right on the Fort retail clients encouraged Continental model was helpful when the company Pitt Bridge towards Homestead, I to follow up successful projects in pursued its second major deal in Pitts- went left towards the North Shore. one city with another in a new city. burgh, the development of the North We pulled up to the riverfront and By Kass’s count, Continental has Shore property where the former we walked down to the river and developed projects in 20 major cities, Three Rivers Stadium stood. the park and he said ‘OK but don’t from Portland to New Jersey. Like at spend too much money working other times through the firm’s history, At the time when the Steelers and on this’. A couple months later we Continental’s management has proven Pirates were looking for a developer were meeting with the Pirates and to be nimble, leaving retail develop- to partner with on the project, Con- Steelers and they have become good ment when the Great Recession hit tinental was busy with other projects friends and valued clients.” in favor of multi-family and student and felt that the competition for housing projects. the development deal would be too That partnership has blossomed stiff for them to succeed. Barry Ford into $145 million in development by Ford points out that Continental wasn’t ready to concede the opportu- Ford’s estimate. So far, the develop- likes to be a good partner on deals, nity without trying. ment involves four office buildings,

36 DEVELOPINGPITTSBURGH | Spring 2016 the Hyatt Place hotel and Stage AE. Later this year, Continental expects to have a plan in place for developing one of the two remaining key parcels of the North Shore for residential use. One additional large parcel and a small lot Commercial remain to be developed. Loans* Continental Real Estate will continue to look for opportunities for partnerships You need capital. The Northwest difference: and development in the Pittsburgh mar- Strong relationships ket. In two decades, the company has Northwest has what undertaken two signature projects that Low fees have had a lasting impact on develop- you’re looking for. Competitive rates ment in the region. Frank Kass looks at Fast turnaround Pittsburgh not just as a market full of Local decision making opportunity but also as a town full of kindred spirits. Customized financing

“We like Pittsburgh. It’s different from Columbus from the standpoint of old industrial city versus state capital, hills and valley versus pancake flat, but the people are really alike,” Kass says. “We were really welcomed in Pittsburgh. We welcome people in Columbus. 28 offices to serve you in Greater Pittsburgh We didn’t find that in Indianapolis or 1-877-672-5678 | northwest.com Cleveland or Cincinnati, but we did in Pittsburgh.” DP *Subject to credit approval. See Bank for details. Northwest Bank is Member FDIC.

Barry Ford

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demise of the multi-family market sion and the reluctance or inability Is the Ride Ending aren’t apparent. of younger people to buy homes have pushed renting over owning in for Multi-family? There is a persuasive argument spite of the overwhelming desire to that can be made that demand buy. Fannie Mae’s National Housing By Jason Campagna and Keane George for apartments will not follow the Survey found that 82 percent of its normal cycle during the coming respondents felt ownership made Is the apart- decade or more. Two significant more financial sense than renting. ment market factors – demographic makeup and That included two out of three who in Pittsburgh home ownership rates – suggest were currently renters. NREI con- headed for a that the U.S. should see an average cludes that the obstacles to borrow- bubble or already of 650,000 new rental units for the ing among those under 35 years old in a bubble?” next 15 years, according to a January and lingering credit issues from the “Are there“ any reasonably priced 12 article in the National Real Estate housing crisis will keep demand for properties with reasonable returns Investor (NREI). renting higher. left in Pittsburgh?” “Has the apartment market been overbuilt Research by NREI leans heavily on The Joint Center for Housing Studies in Pittsburgh?” These are some of the low home ownership rates that at Harvard University came to a simi- the questions we, as multi-family have persisted and continue to fall lar conclusion, predicting that the brokers, are constantly being asked since the mortgage crisis. While large Millennial generation will form by our investors and clients. Apart- some of the depth of the decline can 20 million new households between ment construction is booming in be attributed to the artificially high 2015 and 2025 without improving Pittsburgh, with high-end complexes home ownership rate of the mid- the home ownership rate sig- popping up all over town. The question is: Are we building too many apartments? This comes down to the most fundamental economic concept of supply and demand.

Multi-family development was the favorite real estate product as the economy emerged from the Great Recession. A combination of tight financing and demographics drove the growth engine for new apartments up until recent months in the U.S. There have been several multi- family boom-and-bust cycles during the past 30 years or so, each involving perhaps a year or more of overbuilding that resulted in an adjustment by the market that cooled off development.

Given the dynamics of the Source: Wells Fargo Economics Group apartment market of the past five years, 2016 will be the year that should have developers and investors looking for signs that the 2000s, when the overall rate peaked nificantly. The Harvard Joint Center trend is shifting. But both at the at 69.2 percent, NREI notes that the forecasts that low home ownership national and local level, signs of the lingering effects of the Great Reces- among those under 30 will mean

www.developingpittsburgh.com 39 an additional 4.4 million renters, or the number of apartments that have Until about 2004, the Pittsburgh 440,000 new units per year. been delivered or started in that market saw around 500-900 units time period. No data exists on what developed each year. Today, we are The Urban Institute, a Washington share of those 9,000 people are seeing 1,500-2,500 units completed DC-based think tank, is even more renting versus owning (let alone how annually. This does not include all bullish on the rental market. Based accurate that figure is) but growth of the smaller investors/developers on increasing immigration, the of that demographic cohort is a that have purchased empty ware- impact of the Baby Boomer retire- new trend that would support more houses for conversion to high end ment wave and a continuation of the apartments. apartments or the countless smaller lower home ownership rate, Urban vacant buildings (2-20 units) that Institute sees an increase of 13 have been renovated and leased. Up million renting households between to this point, the market has had 2010 and 2030. That would require very little trouble absorbing these an average of 650,000 new rental The Urban Institute, new units with vacancy rates still units annually to keep pace. That a Washington DC- well below historical averages. forecast also flips the historical ratio of two homeowners for every new based think tank, is In 2014, the vacancy rate in Pitts- renter to a ratio of five renters for even more bullish on burgh was among the lowest in the every three homeowners. country at three percent, well below the rental market. its historic average of 4.85 percent. Underlying each of these forecasts Based on increasing All of the new units coming online and studies is the assumption that will inevitably increase the vacancy the home ownership rate will remain immigration, the rate and will mostly likely soften the at its current low (or even lower) impact of the Baby rental rate increases. The question rate. Should the current trend revert of how much is debatable. Nation- back towards the historical mean, Boomer retirement ally, the increasing supply sent the demand for apartments will fall. vacancy rate up to 4.3 percent at wave and a the end of 2015. This is still below Even in a conservative market like continuation of the the historical average of 5.5 percent. Pittsburgh, with its higher home We believe, as most experts do, that ownership levels, a case can be lower home ownership multi-family growth can continue made for continued apartment rate, Urban Institute due to the social and demographic demand from demographics and job trends taking place throughout creation. sees an increase of the country. There is still enough 13 million renting renter demand to outsize the supply Job growth in Pittsburgh has been growth over the next several years. somewhat disappointing, remaining households between This is not to say that the supply will at around one percent for the past 2010 and 2030. not have an effect on vacancy and 24-36 months. But even at that rising rents, but even so, apartment level, some 10,000 to 15,000 new buildings are still a sound invest- jobs have been created in each of ment in the current market. Most of the past two years. That translates Over the past couple decades, the this demand for apartments can be to roughly the same number of Pittsburgh apartment market has attributed to the familiar story of new households. With new home been stable with minimal apprecia- the Millennial generation who have construction at roughly the same tion and rent increases. Besides a this tremendous propensity to rent levels as during the recession, there couple of specific markets - such as rather than buy and move to the is little slack inventory of dwelling Shadyside, Squirrel Hill, Oakland, urban core. Other factors include: places other than new multi-family and South Side - rents had been job growth, the general population construction. stagnant for the decade prior to this shift to urban areas where housing is growth period. However, starting more concentrated, and the decline Updated demographics released by in the early 2010s we have seen in home ownership. the Census Bureau also support the growth accelerate at a pace that theory that more apartments can be most people have not seen in Pitts- Concerns about overpaying and absorbed in Pittsburgh. The growth burgh. The wave began in specific capitalization rates are common in population of those between burgeoning areas such as Lawrencev- topics when discussing investment the ages of 18 and 35 – ages when ille, East Liberty, Downtown/Strip properties. Capitalization rates have people rent at twice the rate of District, and parts of the North Side/ been compressed in recent years in home ownership – has accelerated North Shore. It has since spilled over Pittsburgh and across the country. It in both the city of Pittsburgh and to other subsidiary markets such as is important to note that Pittsburgh’s Allegheny County. Since 2013, in Bellevue, Dormont and Brookline. capitalization rates are still high fact, some 9,000 more adults under This is correlated to residents being compared to other major metros the age of 35 have come to live in priced out of the city neighborhoods and comparable to other second Pittsburgh or Allegheny County. and moving to the closest bedroom tier cities. As interest rates rise, this That number is actually lower than communities. will push up returns on investments

40 DEVELOPINGPITTSBURGH | Spring 2016 Therefore, investors should be watching interest rates, absorption, vacancy rates, and rental rates all very closely in the coming years. These will be indicators of a potential bubble.

Investors should also worry that if apartment prices don’t stay high relative to the income, they will have trouble when it comes time to exit or refinance their properties. If an investor purchases a property at 5 percent cap rate and has to sell in five years at a seven to eight percent cap rate, the net operating income from the property has to increase accordingly. And if some of the factors mentioned above start to rapidly tick up or down, conditions will become problematic for investors purchasing at low cap rates. On a different note, I have spoken to several developers who are feeling bullish because the replacement cost of multi-family properties is likely to rise 15-20 percent over the next five years, which should support higher asset prices.

Pittsburgh has several economic features in its favor and the employment has grown around these sectors. These include the major hospitals, several high-quality universities, and the recent influx of tech companies. The apartment boom is contingent on these sectors and the economy as a whole. All of the questions of boom and bust are directly related to this city’s ability to create high paying jobs and ultimately to population growth. Recent news of Uber and Apple moving into the city is promising. But we will need a lot more of that along with the continued growth of new restaurants, coffee shops, bike lanes, theaters, etc; all of the features that are going to attract this massive wave of renting Millen- nials to Pittsburgh.

Jason Campagna and Keane George are managing directors for Sperry Van Ness’ Pittsburgh office. Jason can be reached at [email protected]. Keane can be reached at [email protected]. DP

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Babst_Construction_DEVPGH_8.625x11.125.indd 1 2/5/16 4:32 PM Eye on the Economy

Cycles don’t die of threatens American manufacturing technical recession, a decline in old age; recessions prospects. gross domestic product (GDP) for happen because two consecutive quarters. That of underlying Global weakness has hurt U.S. recession, like the dot.com bubble problems with the manufacturing and exporting, which of the previous recession, was exag- economy,” PNC’s accounts for about 30 percent of gerated by dramatic (and largely Senior Vice“ President and Senior the revenue U.S. firms take in. And unknown) imbalances that wiped Macroeconomist August “Gus” the slowdown in China’s growth has out a large chunk of investment Faucher explained to an anxious had the largest impact of any global capital. The lessons learned from audience at NAIOP Pittsburgh’s Janu- economic development. the dot.com and housing bubbles, ary 21st chapter meeting. say many economists, created an “China has become a big importer, environment that protects against Faucher was presenting the outlook on a par with the U.S. on a dollar such imbalances. If that’s true, the of PNC Financial Group’s team of basis,” notes George Mokrzan, next recession could well be a mild, economists in the context of a 12 director of economics for Huntington mostly technical, one. percent decline in the S & P 500 National Bank. “China’s imports Index since January 1. Like most declined over 14 percent in 2015. It’s clear from the behavior of economists, Faucher presented an That’s a big shock to trade, about businesses and investors that not outlook that was mostly positive, one percent of all world trade. The everyone is buying into that scenario. looking past the five-day-old head- decline has reduced commodity The caution that Gus Faucher likely lines to the fundamentals of a U.S. prices. It’s a shock that has already felt has crept into the consciousness economy that is the shining star in hit the world economy but should of more businesses at the start of the global galaxy. The divergence persist in 2016.” 2016. The memories of the panic of between the strength of the U.S. 2008 are still fresh enough that there economy and many of its peers is It has been seven years since the is more emotion than reason behind typical of the unevenness that exists U.S. economy experienced its last the caution. The 2.46 percent jump throughout the regional and global economic landscape. That unevenness is creating uncertainty for businesses.

The positives of the job market are offset by steep declines in commodities prices and the prospects in that important business sector. Lower energy costs are a shot in the arm to consumers but a significant drag on one of the primary growth engines of the U.S. and Western Pennsylva- nia economies in recent years (not to mention a devastating blow to two of the emerging BRIC nations – Russia and Brazil). Corporate earnings have raced well ahead of labor costs but corporations have been reticent to invest cash. The stability of the U.S. economy has made the dollar the safest haven for global investors, while at the Sources: Bureau of Census, Moody’s Analytics, The PNC Financial Services Group same time the strong dollar

www.developingpittsburgh.com 43 B&G Breaking Ground Ad:Layout 1 7/2/14 11:58 AM Page 1

in the S & P 500 on the day that the Real Estate I Construction I Manufacturing Commerce Department announced that gross domestic product (GDP) P. 412-227-2500 • F. 412-227-2050 slumped to 0.7 percent in the fourth www.BlumlingGusky.com quarter is an indication that investors’ fear of bad news is greater than the reality of bad news.

To the extent that the memories of 2008 still haunt Americans, it is worth noting the significant differences between that time and early 2016.

The most noteworthy difference between these two periods is the condition of the consumer. Unemploy- ment is five percent and many regions are nearing full employment. Both Project success. consumer spending and confidence are currently as high or higher than It’s what our clients do. in 2007-2008 but the consumer is It’s what we do. spending income in 2016, rather than cashing in home equity that later did not exist. Consumers have paid down debt to 40-year lows and have debt- to-income ratios that are lower than any time since the 1980s. Liquidity is there for the consumer to deploy.

While wage growth remains one in- gredient missing from the consumers’ ideal recipe, the tighter labor market pushed wage growth higher in the latter months of 2015 and prospects for 2016 are for wage inflation to accelerate. With businesses still adding about 200,000 jobs each month, there is room for a slowdown to be absorbed without a wrenching downturn in consumption.

In 2008, corporations, especially financial services companies, were highly leveraged. Today, strong corporate earnings in recent years have led to cash stockpiles and stock repurchas- ing programs that have businesses buffered against a slowdown. Those with dry powder, in fact, can take advantage of a recession by investing or acquiring when prices are lower. The $64 million question, of course, is whether or not companies are keeping powder dry or hoarding out of fear.

The interest rate environment is also significantly different. Prior to the last recession, the Federal Reserve shifted out of an easing mode to raise rates aggressively. From June 2004 to June 2006, the Federal Funds Rate jumped 4.25 points. The 25 basis point increase in December has been followed

44 DEVELOPINGPITTSBURGH | Spring 2016 by a holding of the line at the Fed, with economists talking already about Looking for Commercial Space in Beaver County? an easing should the economy turn negative in the first quarter of 2016. Call Avison Young Commercial Real Estate The lull in the economy will certainly 11 miles limit the number of rate hikes the Fed 602 Morris St. will impose this coming year but even Darlington, PA with resumption in monetary tighten- Industrial Space ing, interest rates will remain under 40 acre site For Sale one percent when 2017 arrives. 5 miles More important than the Fed’s rate 850 4th Ave. policy are the market forces on inter- New Brighton, PA est rates. Global problems have made Office Space U.S. debt more attractive and the + 13,800 sf For Sale recent increased purchasing of U.S. 5 miles Treasury bills has pushed borrowing th rates back down to the levels that 800 5 Ave. existed when the Fed raised its rates New Brighton, PA in December. Weakness of U.S. exports Flex Space is a major contributor to the slow- + 38,000 sf For Sale ing GDP growth and an unfortunate Proposed Cracker 3.5 miles byproduct of a strong economy, but 350 Kentucky Ave. American businesses are better off Rochester, PA on balance to have lower borrowing Industrial Space costs. That fact is especially influential + 24,500 sf For Sale on speculative commercial real estate development because the lower cost of financing gives developers more time to stabilize new product. And lower rates make real estate investment 4 PPG Place | Suite 300 | Pittsburgh, PA 15222 | T 412.944.2130 more attractive than bonds, providing financial stimulus for development.

The strongest argument against the possibility of recession in 2016 is the strength of the labor market. Unem- From Concept ployment had already climbed from a low of 4.4 percent in May 2007 to 6.1 percent when panic struck in Septem- to Completion ber 2008. The current unemployment trend is downward, with expectations that national unemployment reaching 4.6 or 4.7 percent later this year. Con- cerns about workforce participation rates, which have declined steadily since 2000, may be overblown, as ERIE 1001 State Street labor economists are beginning to Suite 1400 attribute the falloff to the accelerat- Erie, PA 16501 ing retirement of Baby Boomers. With T 814.451.1172 Homewood Station Senior Apartments individual productivity declining, it’s F 814.451.1150 unlikely that a mild recession would PITTSBURGH From predevelopment support to long-term trigger large-scale layoffs. 707 Grant Street Suite 1920 lending, Bridgeway Capital has the financing Pittsburgh, PA 15219 tools to strengthen real estate development The latest data on U.S. employment T 412.201.2450 reflected the slowdown in fourth F 412.201.2451 projects with lasting community impact. quarter GDP, but also showed that the UNIONTOWN labor market strength remains. The 2 West Main Street Labor Department reported on Febru- Suite 135 ary 5 that 151,000 non-farm jobs were Uniontown, PA 15401 T 724.425.0330 For more information contact: added in January. Revisions to Novem- F 724.425.0332 Dwayne Rankin | Community Development Loan Officer ber’s and December’s earlier-reported 412.201.2450 x 28 | [email protected] figures essentially offset each other, bridgewaycapital.org

www.developingpittsburgh.com 45 reaffirming that the economy added more than 540,000 jobs in the last two months of 2015. Unemployment fell to 4.9 percent. The most pleas- ant surprise in the data was the 0.5 percent jump in wages, which helped push average hourly wages up 2.5 percent compared to January 2015.

Despite the litany of differences between 2016 and 2008, there are threats that could unhinge the U.S. economy more than the experts are forecasting. Remember that many of those same experts failed to see or account for the imbalances of the housing bubble in 2007 (and the tech bubble in 1999), so it is worth carefully watching events unfold in China and in the energy sector, in case problems in these areas are being underestimated again.

Rumors of China’s own real estate bubble have circulated for years. If those rumors become reality and the Chinese economy slows further or falls into recession, it will be difficult for U.S. manufacturing to reverse the downward trend in 2016. That will have ramifications for the job market.

Lower energy costs are having a salu- tary effect on the consumer but the impact to the oil producers has been Industrial, Retail, Office, Hospitality & Multi Family very negative. Coming hand-in-hand with lower global demand growth, Carnegie Robotics—Best Act 2 Award low oil and gas prices have been 2015 NAIOP Industrial Renovation Award catastrophic for the economies of the

Sharpsburg Library—Certificate of Merit countries which depend significantly on oil exports, like Russia, Brazil and 2015 AIA Pittsburgh Design Competition much of the Middle East. In Saudi Ara- bia, which has precipitated the decline General Contractors by maintaining or boosting produc- Fast and safe execution with a clear cost bene- tion, the extended decline is having fit solution for our clients. social and political ramifications that are growing each month. Should those troubles continue to grow, the Saudis may feel pressure to cut production and reduce the glut of oil. The agency that monitors oil and gas pricing does not anticipate that occurring.

The International Energy Agency (IEA) is forecasting that 2016 should be more stable for energy pricing – not necessarily great news for producers. The IEA is also seeing an increase in demand that it traces to the lower oil and gas prices.

Sales of SUV’s and other vehicles that are less fuel efficient are climbing www.franjo.com

46 DEVELOPINGPITTSBURGH | Spring 2016 more rapidly than other vehicle categories in China and the U.S., the two largest auto purchasing countries. The overall demand for energy is forecasted to climb 1.9 percent in 2016, compared to growth of 0.9 percent over the past ten years. IEA says that the amount of oil used per unit of GDP will continue to decline, however. Manufactur- ing, construction, occupancy and transportation are all becoming less dependent upon oil for growth. That means higher global GDP growth in the future will mean more modest growth in oil demand. Accordingly, IEA sees oil prices remaining in the $50 to $60/barrel range throughout the remaining half of the decade, with a high-growth potential for oil at $80/barrel in 2020. The agency finds an equally compelling case for $50/barrel oil in 2020. Employers continue to hire at roughly twice the pace of workforce growth. Source: Bureau of Labor Statistics Sources: Bureau of Labor Statistics, The PNC Financial Services Group

median age in the MSA is still going up but at a slower rate than the median U.S. age. In the more populous center of the MSA, that trend is reversing dramatically, as the median age of an Allegheny County resident has been to decline and the median age of a resident of the city of Pittsburgh has actually cent year-over-year. Pittsburgh-based Slumping commodity prices have declined steeply over the past manufacturers will likely continue taken the shine off the Marcellus five years, falling to 33 years old. to face the headwinds of a slower and Utica shale plays over the past While the mortality rate still exceeds world economy and difficult currency 12 months. Exploration and expan- the birth rate in Pittsburgh – a trend exchange conditions. sion of the midstream has slowed that will have to be reversed or and cuts in staff impacted the real offset with net immigration – the To the same degree that consum- estate occupied by the gas-related growing share of younger residents ers drive the overall economy, companies in 2015. At the same adds greater support for growth consumer health bodes well for the time, billions will be spent within in household formation, consumer Pittsburgh economy. Home prices the footprint on infrastructure and spending and borrowing for invest- are expected to continue increasing, midstream again in 2016. More tell- ment. with estimates of between three ing is the fact that while the mining and five percent. As of January, the and natural resources category of Assuming these trends are matched low inventory of new construction employment plummeted 14.1 percent by improvements in the job market and existing homes for sale suggest nationwide in 2015, employment in that continue into the next decade, that the reality will be at the higher that sector in the Pittsburgh MSA there is a better economic founda- end of the forecast. Income growth actually increased by 7.3 percent. tion for the 2020s than has existed in Pittsburgh should continue its in Pittsburgh in more than a gen- upward trend in 2016, with median The outlook for the Pittsburgh eration. For 2016, these trends will income at roughly $4,000 higher economy generally still reflects likely be less impactful. than in 2013. DP slightly better conditions than the U.S. economy, with fewer potential Demographic changes in Pittsburgh bumps in the road. Job creation is are also trending much more favor- expected to tick slightly higher than ably than in the U.S. in general. The in 2015, perhaps as high as 1.5 per-

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metropolitan area by the workforce. Furthermore, technology end of 2016. If the fore- jobs represent about 5 percent of casts are correct, more total employment in Pittsburgh, a than 34,000 office-using figure that is notably higher than employees will have been other markets throughout the added to payrolls since country as, on average, tech talent ittsburgh’s the third quarter of 2009 accounts for 3.4 percent of the U.S. office market, and will mark the largest employ- total. Given that the largest share characterized ment expansion since the period of overall U.S. leasing activity (20 by low vacancy between first quarter 1983 and third percent) was attributed to the tech rates and rising quarter 1990 when office-using sector during 2015, the Pittsburgh asking rents employment grew by 44,960 jobs. office market is well-positioned to during the past few years, garnered post sustained demand growth in P High profile companies are seeking the near term. Additionally, accord- attention from out-of-town investors during 2015. Large corporate users Pittsburgh office space due to the ing to the MoneyTree Report (via attracted to the city’s quantity of talent coming out of prestigious National Venture Capital Association highly educated, skilled and moti- institutions like Carnegie Mellon & PricewaterhouseCoopers), venture vated workers drove down available University and The University of capitalists invested a combined office space supply while pushing Pittsburgh. The share of Pittsburgh’s $61.5 million in 20 tech companies rents high. According to Moody’s workforce with a bachelor’s degree in the Pittsburgh region during Q2 Analytics, 10,100 office-using jobs or higher is 36 percent, compared 2015, almost doubling the amount will be created in the Pittsburgh to 28.8 percent for the total U.S. invested during Q1 2015.

www.developingpittsburgh.com 49 Following sustained demand growth, tract recruiting-sensitive companies. Class A asking lease rates hit record According to Urban revitalization is also driving highs during Q4 2015 at $25.47 rents up. According to the Pittsburgh per sq. ft., a year-over-year increase the Pittsburgh Downtown Partnership, since 2005, of 2.5 percent. Certain submarkets the downtown population increased like Oakland and East End have seen Downtown by 20 percent. This is evidenced remarkable growth in asking rates. Partnership, by the amount of completed and Availability has been compressed proposed residential units added to in Oakland since the completion of since 2005, the greater downtown market. From Bridgeside Point II in Q4 2009, but the downtown 2000-2010, 1,334 new residential the recent completion of new Class units were added to the overall in- A product is helping meet demand population ventory. In contrast, during the past and driving up asking rental rates. increased by 20 five years 1,304 new units already The Oakland Class A asking rate is came online with another 484 under at $37.60 per sq. ft., a year-over- percent. This construction and 3,387 in the plan- year increase of an astounding 40 is evidenced ning process. percent. Similar to Oakland, East End rental rates are at $32.20 per sq. ft., by the amount Despite demand growth within core a year-over-year increase of 15 per- of completed CBD and surrounding submarkets, cent. The confluence of demographic direct vacancy increased 190 trends and some of the top tech and proposed basis points, year-over-year, to 11.8 companies in the world pursuing percent. This can be attributed to office requirements, translated into residential units the softening of a few suburban higher rates for select submarkets. In added to the submarkets. The struggling energy order to take advantage of increased sector is directly affecting submar- leasing activity at higher rents for greater downtown kets such as Southpointe where more desirable space, owners are market. the vacancy increased 790 basis undertaking significant capital points year-over-year. This increase improvements in CBD assets to at- is largely attributed to vacancy

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50 DEVELOPINGPITTSBURGH | Spring 2016 at 275 Technology Drive and the largest building to come online in former Fairmont Supply Building. The largest 2015 was The Tower at PNC Plaza, Conversely, Class A vacancy rates located in the CBD totaling 800,000 in the East End submarket posted a building to come sq. ft. Another large building which remarkably low rate of 1.7 percent. completed construction during The CBD still remains tight with the online in 2015 2015 was Industrial Scientific’s new Class A vacancy rate at 7.2 percent. was The Tower 200,000 sq. ft. headquarters in The tightening of downtown Class Parkway West. A office supply is driving demand at PNC Plaza, toward Class B supply as companies located in the CBD Looking at buildings currently under try to expand and move downtown. construction provides a glimpse into totaling 800,000 the future of mixed-use buildings. The development pipeline remained sq. ft. Another Three Crossings in the Strip District active with 1,216,600 sq. ft. under is a great example of providing construction during Q4 2015. large building different amenities to attract top Schenley Place, the latest addition to which completed tenants. Oxford Development is Oakland’s inventory, completed con- planning 375,000 sq. ft. of office struction and secured a lease for ap- construction space, as well as 300 apartments for proximately 20,000 sq. ft. with one during 2015 the project. Leases have been signed of the top tech companies in the with major tech tenants, as well as world. The University of Pittsburgh was Industrial Burns White, a local law firm, who also committed to space on the will occupy 105,000 sq. ft. at the top floor. The remainder of space Scientific’s new development. Millcraft Investments at Schenley Place is expected to be 200,000 sq. ft. is building Tower Two-Sixty in Mar- absorbed quickly due to the dearth ket Square, which will be comprised of availability within the Oakland headquarters in of office space, a 198-room Hilton submarket, as well as, its proximity Parkway West. Garden Inn and 14,000 sq. ft. of to the University of Pittsburgh and prime retail space. Also, the owners Carnegie Mellon University. The of recently purchased Penn Center

www.developingpittsburgh.com 51 East are considering building a hotel, Chicago-based M&J Wilkow during CBRE as well as, a central amenities hub Q4 2015, totaling 884,334 sq. ft. 600 Grant Street, Suite 4800 for employees, along with retail Other major investments included Pittsburgh PA 15219 space. Mixed-use space accounts New York based Faros Properties (412) 471-9500 for 55 percent of all new downtown purchasing Allegheny Center/Nova Jeffrey Ackerman Pittsburgh construction since 2009. Place which amounted to 1,100,000 Managing Director sq. ft. [email protected] Strong demand, rising rents and DP active development continued to Looking forward, expect fundamen- drive acquisitions by institutional tals to remain strong in downtown investors underwriting pro formas and nearby submarkets as vacancies with strong rent growth assumptions remain low while rents continue to during 2015. Investors are optimistic rise. Real Capital Analytics reported as a result of urban redevelopment for Q4 2015 nationwide deal volume and a population shift away from was up 20 percent year-over-year, the suburbs towards the downtown an improvement from Q3 2015 core. National Real Estate Inves- which recorded only 4 percent year- tor, an industry trade publication, over-year growth. With Pittsburgh’s recently named Pittsburgh as one talented workforce and quality office of the five best markets for office product, investors see Pittsburgh investment in the U.S. This accolade as a market where high returns can is supported by recent transactions be achieved. In spite of underlying such as Shorenstein purchasing One investor anxiety evidenced by erod- Oxford Centre, accumulating to ing equity markets in early 2016, more than 1,000,000 sq. ft. M&J money will continue to chase quality Wilkow and DRA Advisors acquired Pittsburgh office assets while users 20 Stanwix for $38.1 million during continue to seek out submarkets and Jeffrey Ackerman Q3 2015, which totaled 380,000 sq. office space that are attractive to ft. Penn Center East was acquired by the millennial generation.

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2015 and several Development, who plans to convert large transactions it into a multi-tenant building. expected to close in early 2016. In Butler County, the Jackson’s Pointe Commerce Center continued In the West its impressive run as CR Bard leased Submarket, Scott 60,000 square feet in Phase II. The Electric leased interesting point here is that the Headwinds in 81,000 square feet at 2150 Roswell industrial product was originally Drive in the Chartiers Industrial limited to Phase I but all 390,000 District. Between this deal and last square feet was absorbed in a three 2016? year’s 250,000 square foot lease year period. As a result of continued with Amazon.com and the 120,000 demand, the developer deviated he Pittsburgh square foot lease with WJ Beitler, from some of the planned retail industrial over 450,000 square feet of new oc- space in Phase II to create additional market had a cupiers have moved to this location. pad sites for industrial users. We solid fourth Alber & Leff moved quarter to out of their North finish off 2015 Side facility and in a strong and relatively stable T acquired the former position. The market remains healthy Clover Hill Foods with overall market vacancy of eight 73,000 square foot percent and year to date positive ab- facility in Bridgeville. sorption exceeding 1,100,000 square Pilot Air is expanding feet. Class A vacancy remained at to 45,000 square feet extremely low levels in the four in the newest 75,000 percent range with only 1,500,000 square foot build- square feet available market wide. ing in the Imperial Business Park and The Class A absorption of CSX announced the 1,100,000 square feet is a clear indi- groundbreaking cator that industrial occupiers desire for its $60 million newer, functional Class A space intermodal rail ter- over older, less functional Class minal adjacent to the B/C buildings as those properties McKees Rocks Bridge experienced a net loss in occupancy in Stowe Township. over 2015. Another indicator is the longer shelf life of the available In the Northwest 8,500,000 square feet of Class B/C Submarket, Paper space; some of which has remained Products Com- vacant for multiple years. Surpris- pany leased 124,000 ingly, a significant amount of lower square feet at 760 ceiling warehouse space (22’ clear) Commonwealth was leased in 2014-2015, confirming Drive in the Thorn that well located, even marginally Hill Industrial Park. functional buildings are remaining In late January, the competitive. However, a clear line 440,000 square foot has been established that industrial former American occupiers cannot live with lower Eagle Outfitters functionality coupled with a less Distribution Center desirable location, regardless of the which closed in the economic terms. summer was sold to a local developer/ There were significant transactions investor, McKnight completed in the fourth quarter of

www.developingpittsburgh.com 55 expect the interest in the I-79 corridor to continue provided that additional developable industrial sites can be sourced.

In the Northeast submarket, there was a significant sale and a major renovation project; TruFoods acquired AmeriServ Trust And Financial Services Company – Trustee PenTrust Real Estate Advisory Services, Inc. – Investment Advisor the 155,000 square foot building it was leasing the past two years at 106 Gamma Drive and Cook Myosite Oxford Development Company’s The Yards at 3 Crossings: started renovations to the 62,000 Built with ERECT Funds square foot building on Delta Drive for its new headquarters/manufacturing facility.

While several long standing Law- renceville based businesses were forced to relocate outside of the city due to limited expansion opportunities or in some cases redevelopment of industrial sites into residential/commercial uses, there were a few noteworthy announcements in the Law- Opening March 2016! renceville/Strip District area of the city of Pittsburgh. The most significant is Uber’s Advanced Technology Center Building Solid Investment Returns For Tomorrow, in the 32nd Street Business Center And Creating Union Jobs Today where Uber is converting the former For more information call 412-279-4100. 53,000 square foot Restaurant Depot space into a two story office/R&D center to accommodate 400 employees. The Lawrenceville area continues to grow its reputation as the Robotics Hub with the RIDC announcing plans Environmental Management and Site Development Engineering for a 60,000 square foot building at the former Heppenstall site at 43rd through 47th Streets.

Given the health of the overall industrial market, local and regional developers are in the process of building over 700,000 square feet of Class A industrial space within the West Submarket which will be complete in the spring of 2016. Ashley Capital is the newest national developer to enter Pittsburgh with a 316,000 square foot Class A cross dock facility in the Findlay Industrial Park. Other projects include 252,000 square feet at the Clinton Commerce Park; 75,000 square feet in the Imperial Business Park and 54,000 square feet at Mc- Innovative Solutions Outstanding Support Claren Woods. In addition to these projects, an additional 600,000 square feet is entitled and ready to start construction in Q3/Q4 2016.

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56 DEVELOPINGPITTSBURGH | Spring 2016 exceeding the limited supply. As our market is dominated by local developer/investors with limited merchant development activity or DLA+ A UNIQUE APPROACH TO existing institutional ownership, our ACHIEVE YOUR UNIQUE VISION industrial capital markets activity has lagged behind office, retail and multi-family. We look for an increase Minimize risk. Maximize results. in industrial capital markets activity in 2016 as several build to suit transactions and several high profile properties are in negotiations.

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www.developingpittsburgh.com 57 In addition, the significant slow- not deteriorate into a recession by ing of China’s economy has led to year end. increased volatility in the US and Most stock market global stock markets which entered Newmark Grubb Knight Frank correction territory. Most stock pundits are predicting 210 Sixth Avenue, Suite 600 market pundits are predicting lower lower to flat earnings Pittsburgh PA 15222 to flat earnings for the S&P in 2016 Louis V. Oliva, CCIM, SIOR resulting in increased volatility for for the S&P in 2016 Executive Managing Director the foreseeable future which could (412) 434-1053 erode consumer confidence. resulting in increased [email protected] DP Lastly, there are concerns that the volatility for the precipitous drop in oil prices will have a significant negative impact foreseeable future on the industrial markets. Capital spending in the energy sector has which could erode been significantly reduced and while consumer confidence. the consumer is benefitting from lower gasoline prices, it appears that this decline in capital spending will the energy sector. It is not yet clear impact manufacturing and industrial how much impact energy declines output. While E-Commerce and will have on the industrial market. logistics activity increases (which The long awaited decision from should also benefit from lower Royal Dutch Shell on the ethane energy costs), economists are mixed cracker plant remains on hold (as on the direction of the economy of this report) for the foreseeable and most are predicting slower GDP future. growth in the two percent range as the best case. In closing, our market remains at Lou Oliva historically tight conditions and the While our diversified industrial speculative development underway market has experienced marginal should be a welcome relief to pent- growth from the energy sector, we up demand provided that national have already seen a negative impact and global economic conditions do to the office market due to layoffs in

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Equal Housing Lender. Member FDIC.common Copyright © 2012, Dollar Bank, Federalcredit Savings in Bank. 2008-2009, so it’s a little rates for most categories fall belowBUS037_12 theme among tougher to judge how or if this cycle seven percent, the unprecedented the year-end is winding down. low interest rate environment has reports from fi- made commercial real estate less nancial services There are some of the classic telltale risky when measured against its BUS037_12.indd 1 2/14/12 11:08 AM companies was signs afoot. Asset prices in a number traditional alternative of corporate the concernA that the credit cycle of markets – Pittsburgh included or Treasury bonds. was nearing a turning point. Credit – have begun to hit levels that are expansion and contraction is as cycli- difficult to support with prevailing Based on the spread between cap cal as any other segment of business market rents. Cap rates have become rates and the 10-year Treasury and roughly as difficult to predict compressed to all-time lows. It’s bill, you could argue that the risk accurately. Like the overall business not hard to grasp why conservative premium on commercial real estate cycle, however, there are earmarks observers feel commercial real estate hasn’t been this low – except for and metrics that can indicate when is primed for a bubble popping. the bottom of recessions – for 20 trends are about to change. years. At the end of 2015, spreads on major commercial Although there property types ranged is no typical from as high as 4.7 credit cycle, it is percent for industrial common for the property and as low end of an expan- as 3.7 percent for sion cycle to see apartments; however, lenders lowering in each category the underwriting current spread was standards, in- higher now than in all creasing leverage but two of the years and discounting since 1995. the premiums that should be charged Underlying most of for higher risk. these capital market What is unusual assumptions is an about this credit expectation of growth cycle is that the in the U.S. that is business cycle may slightly higher in 2016 not be at its end. and slightly slower Over the course of in 2017. The Federal history, business Reserve seems confi- cycles usually dent in a forecast of lose their steam growth just above two first and as business conditions Yet for all the concern about over- percent, while many banks are look- deteriorate, credit follows. Many of heated markets and compressed cap ing for something between 2.5 and the conditions that characterized the rates, the current environment is 3.0 percent. Should these forecasts credit cycle of the past half-decade not that far out of whack as far as be inaccurate, especially on the low were a reaction to the collapse of investor benchmarks go. Even as cap side, there would be consequences

www.developingpittsburgh.com 61 for property values and interest rates reach attractive yields from corpo- loans and elevating the risk for that would wreck many deals. rate bonds, investors will be asked smaller banks. For conduits and life to accept higher risks. Forecasts for insurance companies, varying condi- The pace of global economic growth defaults on high-yield corporate or tions are acting as incentives to hold is likely to rise slightly for the first junk bonds range from three to four the line on loan-to-value ratios (LTV), time in five years, potentially from percent. which could alter what owners and 3.1 percent in 2015 to just under developers have grown to expect for 3.5 percent in 2016, according to Softening in the economy would equity levels. All in all, the lessons of forecasts. “We are still in a cyclical begin to negatively impact the the mid-2000s are impacting liquid- phase of stabilization,” Deutsche performance of the users of com- ity in 2016. Bank Chief Economist Stefan Schnei- mercial real estate; however, in der says. “However, especially in a yield environment like the one On the upside, the takeaway from emerging markets, it will probably described above, investors are likely the Mortgage Bankers Association’s not be on par with the pre-crisis to be less concerned with declining annual Commercial/Multi-family rates due to country-specific prob- performance than poor returns. Housing Finance Expo in late January lems, the drop in commodity prices Capital should continue to flow into was that some of the lenders that and the anticipated change in U.S. commercial real estate rather than have fueled the commercial real monetary policy.” out in 2016. estate expansion – most notably life insurance companies – had increased Schneider forecasts that tighter U.S. At the same time, there are some their allocations for real estate again monetary policy will bring the dollar significant signs that financing com- for 2016. But there was a cloud to on a par with the Euro in 2016. mercial real estate will be more diffi- that silver lining. Should growth in the European cult in 2016 than in the past several Union nations continue to lag and years, or at least lending conditions “For the life companies there were the European Central Bank eases won’t be as favorable. For banks, still allocation increases even after rates again, the timing of the dol- continued regulatory tightening and 2015 was a record year,” says Dan lar’s equivalence to the Euro would proactive oversight by the Office of Puntil, senior vice president at accelerate. Regardless of the timing, the Comptroller of Currency (OCC) Grandbridge Real Estate Capital. the stronger dollar will keep U.S. are making it harder for big banks to “Here at Grandbridge we increased bond returns under pressure. To compete for commercial real estate loan production 20 percent and the

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62 DEVELOPINGPITTSBURGH | Spring 2016 industry average was 15 percent. Ev- securities (CMBS) – have become erybody we talked to got increases Two of the main somewhat constrained in 2016, again. The problem is life companies albeit for different reasons. are conservative. Those deals are 75 lending options percent – maybe 70 percent – loan- Dodd Frank’s impact on commercial to-value and maybe no cash out.” for commercial real estate was delayed compared real estate – banks to its effects on residential loans Puntil notes that unlike 2010 or but the regulations on reserves, 2011, when far fewer deals were and commercial especially for what is classified being done, life companies will have mortgage- as High Velocity Commercial Real the opportunity in 2016 to have Estate (HVCRE), are beginning their pick of deals. Higher demand backed securities to pinch banks. Regulations on for loans means that life companies what are considered HVCRE deals can hold the line on its LTV require- (CMBS) – have are aimed at imposing more ments and still grow production. become somewhat conservative standards on bank underwriting and penalizing those One of the realities of the capital constrained in 2016, with HVCRE loans by requiring that markets in 2016 is that a bigger the lender reserve 150 percent of share of the pie will be deals to albeit for different the loan value against potential refinance loans from 2006 that had reasons. default. These regulations can ten-year maturities. Those deals be especially tough for smaller were made at the height of the real regional banks, which may not have estate bubble, often with conditions them, rather than taking cash out. the resources to fully interpret the like interest only payments and And it’s less likely that there will be regulations. extended or no amortization periods. alternative lenders who will bend on The result is that many of the 2006 conditions to get the loan. “Small banks tend to have less loans are maturing with little equity oversight and may not have the staff accumulation. The borrowers on Two of the main lending options to understand how HVCRE works. those deals will often find that they for commercial real estate – banks I’m not sure anyone completely need to add equity to refinance and commercial mortgage-backed understands yet,” notes David

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www.developingpittsburgh.com 63 Tetrick, senior vice president, commercial real estate for Huntington Bank. Tetrick says that small banks with lower capital levels could be especially vulnerable. “With HVCRE, a bank that has small capital reserves could be forced to reserve 150 CREW Pittsburgh equips percent and could shut down lending.” you to be a success in the commercial real estate industry by providing its members with: Beyond the regulations, the agencies charged with overseeing banks put lenders on notice that they Business Networking will be proactive in protecting against the sins of Leadership Development the past. Citing favorable commercial real estate Industry Research conditions, the Federal Reserve Bank, Federal Deposit Insurance Corporation and the OCC Career Outreach issued a statement on prudent risk management Get exclusive access to CREWbiz: to commercial banks in mid-December 2015. The statement raised concerns about deteriorating 9,500+ members nationwide representing underwriting standards, “including less-restrictive every discipline within commercial real estate. loan covenants, extended maturities, longer interest-only payment periods, and limited guaran- tor requirements.”

CREW Pittsburgh Events The combined statement outlined a number of risk March 15 “Escape the Room” South Side management practices, most of which represent Team Building & Networking reasonable policies, that are part of the current regulatory environment and emphasized that banks April 7 BOMA Real Estate CEU Seminar 2 should take steps to ensure those policies were April 21 Paint Monkey, Lawrenceville in practice. The regulators closed by notifying Networking Event banks that there would be increased supervision of lenders that had increased commercial real estate June 24 CREW/NAIOP Sporting Clays Shoot lending or that had portfolios heavily-weighted in Seven Springs commercial real estate. Implied in the joint statement was the threat that banks with practices that July 19 Connect with CREW the FDCI or OCC deemed were too risky would be Duquesne Club Roof Top forced to change policies, a turn of events that would reduce the banks’ lending.

Changes in the overall capital market have kept 2016 Sponsorship a lid on the renewed proliferation of CMBS issu- Opportunities Available ances. CMBS issuance peaked in 2007, as the sales Contact Mimi Fersch at 412-303-2500 or email pitch of diluted risk appealed to investors in the [email protected]. same way residential mortgage structured debt did. After virtually disappearing in the years following To reach our 2016 President, Michele Allerton call her the financial crisis, CMBS has returned as a more mature and conservative market. Volume in 2015 at 724-742-3321 or email [email protected]. topped $92 billion – less than one-third the peak – and has been forecasted to grow another seven For more information regarding CREW Pittsburgh to ten percent in 2016, as commercial real estate please visit www.crewpittsburgh.org. fundamentals and high 2006 loan maturity levels should promote CMBS. But there are several factors that should limit growth of the CMBS market and could make a decline in volume more likely.

Along with the high demand for refinancing loans in 2016 has come the deterioration of origination standards, which have been trending downward. Competition for issuances has allowed borrowers to shop for better pricing and conditions. In- creased competition, absent a significant increase in deals, is keeping spreads compressed and is a motive for looser underwriting. Standards have not deteriorated to the degree that occurred in the 2005-2007 period, but greater risk is being marketed by originators without commensurate returns.

64 DEVELOPINGPITTSBURGH | Spring 2016 Annual reports before the rate from the bond increase. In fact, rating agencies most forecasters were mixed. see the rates for Most saw looser short term notes underwriting rising about conditions lead- 200 basis points ing to potential over the coming downgrading 24 months but in the coming predict that inter- year; however, est on five- and the forecasts ten-year notes will were for the only move higher majority of the 100 basis points rating actions or so. That would to be affirma- lead to a flat yield tions. The low curve for long interest rate rates, with the environment spread between and the mostly the two-year and solid real estate ten-year notes at performance roughly 50 basis was expected to points. lead to positive ratings for the smaller originators that feed the Rising rates will deals that originated in 2011 and market makers for CMBS. stress debt coverage and put pres- 2012 going into next year. sure on cap rates. Low rates have Even more limiting will be Dodd- pushed property values artificially Raters also downplayed the impact Frank regulations for risk retention, higher in combination with raging of the wave of maturing loans from which will require the originating investor demand. Without the 2006 and 2007, expecting that many agent to hold five percent of the risk real prospect of rate hikes, how- of the loans had been paid off or on a deal. That means originators ever, these concerns won’t be 2016 failed earlier. Moody’s went so far as will retain five percent of the loans, problems. to term the effect of the refinancing making it harder for smaller shops as a “ripple” in the CMBS markets in and B-piece buyers to remain in the “We’ve been hearing about rising the coming two years. market. cap rates for ten years now and not much seems to have changed there,” But the perception of higher risk in “The CMBS world is in a little bit notes Tyler Noland, director of the market has muted CMBS investor of disarray. The market makers are underwriting for PenTrust Real Estate demand, especially for the B-rated still open for business but pricing is Advisory Services. “There was a lot pieces of the bonds, which offer the such that it’s difficult to make much said about interest rates but the Fed better returns. With outstanding money,” observes Puntil. made its adjustment in December CMBS loan volume remaining some and not much changed.” $300 billion lower than in 2008, The headline story for the capital and other financing avenues having markets for 2016 was supposed to The outlook for the capital markets excess capacity, CMBS volume will be the change in interest rates but in 2016 is less settled than the past face headwinds to grow above $100 it’s clear that whatever increases four or five years. Even without billion in 2016. come will have virtually no impact on significant changes in interest rates, commercial real estate financing this there will be market pressures that In addition to the market pressures, year. suppress liquidity, even though capi- the CMBS market will see regula- tal capacity will be strong. Markets tory pressures from the Dodd-Frank Having bumped rates 25 basis points are becoming less certain and the Wall Street Reform and Consumer in December, the Federal Reserve takeaway for commercial real estate Protection Act at the end of 2016. To plans to put through several more finance for the next phase of the promote transparency of documenta- small increases in 2016 but there will market is that owners and develop- tion, the CEO or top executive for be no incentive to raise rates quickly. ers should not be surprised to see the originator will be required to And because the overnight rates equity requirements rise. Lower be personally liable to prospective were artificially low to stimulate the leverage will result in lower interest investors for the underlying quality economy and lending, the gradual rates and better conditions. As with of the entire bond. That means the increase in those rates over the next most times of uncertainty, borrowers executive will be certifying that he two or three years should have little with more skin in the game will find or she is familiar with every loan, effect on mid-to-long term rates. the rules more to their liking. something that can’t reasonably By February 1, long-term rates had DP occur if some of the deals came from returned to the levels that existed

www.developingpittsburgh.com 65 setting the performance standard Photo by Massery Photography

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better reflects a shared vision for the riverfront. Another proposed restric- Down by the riverfront.” tion seeks to prevent long, uninter- rupted building walls parallel to a River: Pittsburgh’s Overlay and Interim Zoning riverfront by limiting the total length All real estate in Pittsburgh is of the wall and requiring intermit- Proposed located in at least one base zoning tent breaks or “articulations” such district (some of which are technical- as stepbacks, building entrances, Riverfront Interim ly called subdistricts). The base zon- lobbies, doors, windows or similar ing districts appear on Pittsburgh’s features. Planning Overlay zoning map with designations such as Local Neighborhood Commercial, The proposed Riverfront IPOD also District Multi-Unit Residential and General imposes restrictions on parking lots Industrial. Each base zoning district and structures in and around the By Andrea Geraghty has a set of rules regarding the riverfront, with provisions limiting and Matthew R. Lasek buildings that can be constructed on visibility, requiring screening and a property and the types of activi- prohibiting certain surface parking. ties that can occur. The Pittsburgh Zoning Code also creates what are With enactment of the proposed s Pittsburgh known as “overlay districts.” As Riverfront IPOD many more proj- transitions the name implies, an overlay district ects may be subject to additional further away is placed on top of a base district, planning review. For example, all from its thus modifying – but not eliminat- developments over a certain size industrial past, ing – the rules of the base district. (currently 10,000 square feet) or the City has Overlay districts often impose that add a certain number of new determinedA that the industrial stricter rules than the underlying parking spaces (currently 15) are zoning applicable to large swaths base district, but in some instances required to go through Site Plan of its riverfront should be replaced. overlay districts ease or eliminate Review with the City Zoning Ad- To that end, the City is considering such rules. An Interim Planning ministrator. This review addresses a significant amendment to zoning Overlay District or IPOD is an overlay issues related to the use, scope and regulations for properties near the district which is purposely designed intensity of a proposed project, the Allegheny, Monongahela and Ohio to be temporary. The Pittsburgh design of the project’s site, build- Rivers in hopes of encouraging Zoning Code allows IPODs to remain ing and landscape, and traffic and commercial, residential and mixed in effect for eighteen months, with transportation. Furthermore, under use development, protecting the the possibility of a single six-month the proposed amendment, certain riverfront environment and ensur- extension. Over the years, Pittsburgh projects within 200 feet of a river- ing that the rivers are an accessible has had IPODs covering areas such as front – what is being termed “Zone public amenity. Oakland, Uptown, Walnut Street and A” of the Riverfront IPOD – will need the Baum Boulevard/Centre Avenue to have a Project Development Plan Current Riverfront Zoning Corridors. approved by the Planning Commis- sion. This additional step is being The Zoning Code already contains a The Riverfront IPOD proposed for a variety of projects, Riverfront Overlay (“RF-O”) district including building demolition, many which imposes additional restrictions While the proposed Riverfront IPOD new or enlarged parking areas, new and development requirements – and amendment has evolved as the City or enlarged buildings of any size enables some additional uses – on has received feedback, all propos- that are adjacent to the riverfront the properties within 50 feet of als to date impose a number of and all buildings or additions over Pittsburgh’s three rivers. The City is restrictions on new developments a certain size. Properties within the now proposing a new “Riverfront within the boundaries of the Riv- Riverfront IPOD, but more than 200 Interim Planning Overlay District” erfront IPOD. The current proposal feet from a river fall into what is or “Riverfront IPOD.” According to incorporates restrictions from the being called “Zone B.” A shorter the City, the “proposed Riverfront already-existing Riverfront Overlay list of projects in Zone B are slated Interim Planning Overlay District District within 50 feet of a river, and to need a Project Development (IPOD) is the first step in a rezoning proposes an additional restriction Plan – they include new or enlarged effort which will result in a perma- on the portion of a building that parking areas over a certain size nent Riverfront zoning district that may be located within 95 feet of the (currently 15 parking spaces) and

www.developingpittsburgh.com 67 projects over a certain size (currently property, courts will likely invalidate What’s Next 10,000 square feet). A map showing the zoning regulation that imposes the boundaries of the Riverfront that treatment. In deciding this After the Planning Commission IPOD and Zone A and Zone B can be question, Courts tend to look more issues its recommendation, the viewed on the City’s website. favorably on zoning regulations that Riverfront IPOD amendment will impose special treatment on proper- be brought before City Council for All Project Development Plans must ties that have some common yet consideration. If the Planning Com- undergo Design Review, which often unique physical attribute, such as mission recommends approval, City includes review by Pittsburgh’s topography. While the City may have Council may pass the amendment Contextual Design Advisory Board avoided the most potent spot-zoning on a simple majority vote. However, or CDAP. While most major projects arguments by including all properties Section 922.05.E of the Zoning Code in Pittsburgh were already subject along Pittsburgh’s three major rivers, states that, if the Planning Com- to this review, the City has made any line-drawing exercise such as mission recommends disapproval, clear that design considerations are the Riverfront IPOD still may need to then City Council needs seven votes especially important in the Riverfront contend with such arguments. to pass the amendment. If the IPOD: “We want to ensure that new Riverfront IPOD amendment passes, development is respectful of, and Timing it is currently slated to be codified responsive to, existing neighbor- as Section 907.02.J of the Zoning hood fabric as well as communities’ As a general rule – and constitution- Code. visions for their neighborhoods and al right – most laws do not apply the public amenity that is the river.” retroactively. Therefore, generally Property owners who are in compli- speaking, a person must comply ance with the existing Zoning Code, Possible Challenges to with the zoning ordinance as it but will not be in compliance with the Amendment exists at the time an application for the Riverfront IPOD or the final building and development approval permanent riverfront district being As general concepts, both overlay is filed. In Pennsylvania, however, contemplated by the City, may want zoning districts and interim zoning there is an exception to this to establish their current compli- have been upheld by Pennsylvania general rule. Under the “Pending ance. This will allow those property courts. However, they can be sus- Ordinance Doctrine” a municipality owners to prove “non-conforming ceptible to legal challenge if not may withhold permits for a project status,” under which existing uses properly done. The most common if the application is filed after the and buildings will be permitted to challenges to zoning code amend- new ordinance is “pending.” For continue as is, even though they no ments seek to invalidate them based purposes of this rule, “pending” longer comply with the Zoning Code. on a claim that the municipality means after a municipality releases failed to follow the correct process, the proposed text of the amendment One thing appears certain, the Riv- provide the required notice, or and issues notice of a public hearing erfront IPOD, and zoning in general, give citizens an opportunity to be regarding it. along Pittsburgh’s riverfronts will be heard on the changes. Interim or an ongoing process. As this article temporary zoning measures also The Riverfront IPOD amendment was is intended for general information have been successfully challenged introduced at the end of 2015 by purposes only, property owners because they fail to reflect a logi- letters to affected property own- who have questions about the new cal planning scheme and, instead, ers, postings to the City’s website Riverfront IPOD should consult an merely preserve the status quo while and announcements to the media. attorney to determine how it may the municipality works on its zoning During early January 2016, the City affect their property or their project. code. Those interim zoning ordi- held public meetings and solicited More information about the River- nances that impose outright bans on public input on the proposed chang- front IPOD, including a map that development are more likely to be es, and, in early February, posted a illustrates the properties affected, is invalidated under this argument than revised version of the amendment also available at: http://pittsburghpa. those that merely impose additional on its website. The Pittsburgh gov/dcp/zoning/ipod/ipod5. development restrictions and require Planning Commission conducted review while a permanent zoning a public hearing on February 9, Andrea Geraghty is a partner in solution is being devised. 2016, and after hearing testimony the Real Estate & Lending Group of both in support of and expressing Meyer, Unkovic & Scott LLP and can Another frequent challenge to concerns about the Riverfront IPOD be reached at [email protected] or zoning amendments is the accusa- amendment, tabled the proposal 412-456-2822. Matthew R. Lasek tion of “spot zoning.” Spot zoning to allow for further consideration. is an associate in the Real Estate & occurs when a zoning regulation The Planning Commission meets on Lending Group of Meyer, Unkovic unfairly singles out a small number alternate Tuesdays, and will revisit & Scott LLP and can be reached at of properties for special treatment, the proposed amendment and make [email protected] or 412-456-2886. either beneficial or detrimental. If a its recommendation at an upcoming municipality cannot sufficiently jus- meeting. DP tify the special treatment of such a

68 DEVELOPINGPITTSBURGH | Spring 2016

Benchmarks

Comparing Pittsburgh’s Job Growth to Its Peers

efore any final revisions that might occur in the March release of employment numbers by the Bureau ofB Labor Statistics, employers in metropolitan Pittsburgh were reported to have added 14,000 jobs to non-farm payrolls in 2015. Below the headline number, there were significant declines in manufacturing (down 2,700 jobs) and goods producing (3,000 jobs); the largest gains were in service producing jobs (up 17,000), leisure and hospitality (7,700 jobs) and education and health services (plus 5,100 jobs).

The total was very much within the range of forecasts for 2015 employment growth for Pittsburgh but the performance was another year of fairly flat job creation, one that ranked Pittsburgh ahead of only four of the 14 cities that are viewed as benchmarks. Those 14 were selected by Pittsburgh Today when it was founded to create metrics with which to measure the region’s progress. The same group of cities has been adopted by the Al- legheny Conference on Community Development as measuring sticks.

Benchmarking against other cities is a necessary way to judge the effective- ness of business attraction and lifestyle improvement efforts that deploy the resources of government, private sector and philanthropic foundations. In Pittsburgh, where the joint efforts of

www.developingpittsburgh.com 71 burgh to the peer cities within the bank’s footprint. Those cities, which include Cleveland, Detroit, Columbus, Cincin- nati and Indianap- olis, are growing employment faster now than Pittsburgh but Mokrzan points out that most of the Midwest is playing catch up to Pittsburgh.

“During the recession, other cities within our region experienced much higher unemployment than Pitts- burgh,” he says. Pittsburgh is roughly in the middle of the 100 largest MSA’s in the U.S. for employment growth. Image courtesy Federal Reserve Bank of Cleveland. “Detroit was at 15 percent. The larger cities in Ohio those three legs of the community were also high. Pittsburgh topped development stool have proven out at 8.6 percent, I think, and exceptionally effective, finding “In the case of began recovering much earlier. peer cities is a matter of matching growth since the cities similar in size, geography and Mokrzan was less concerned about economic base. A quick look at the Great Recession, the somewhat flat job growth in 14 cities (see graph) shows that if you look at Pittsburgh of the last couple of Pittsburgh Today chose cities that years. “Payroll growth in the [Pitts- were within close proximity first, the cumulative burgh] MSA was 1.2 percent last but which also had similar sized employment growth year. That’s pretty solid, especially workforces (St. Louis, Kansas City, when you look at last year, when Denver and Charlotte) outside the since December all the cuts in energy were real 300-mile radius. head winds,” he declares. “There 2007, Pittsburgh has been pretty strong employment From business cycle to business fared pretty in growth throughout our footprint cycle, however, the economies of so that may seem somewhat less the peer cities are quite varied. The the early years of than other cities but it’s still solid. Midwestern cities are more heavily the recovery. But Pittsburgh’s economy tends to be tied to the auto industry and its more stable compared to the other fortunes. Younger cities within Pittsburgh’s growth cities we serve.” the benchmark group are still has been fairly flat experiencing population growth Guhan Venkatu, vice president that mature towns like Pittsburgh recently.” and senior regional officer for the have gone beyond. Moreover, the Federal Reserve Bank of Cleveland’s exploration of the Marcellus and Pittsburgh office, prefers to look Utica Shale formations has cre- Santa Clara may be more relevant at a broader spectrum of markets ated stronger parallels to regions yardsticks. to compare Pittsburgh’s economic where the energy industry is a activity. driving force in the economy. In For these and other reasons, the the coming decades, the trend line utility of creating benchmarks for “When I think about employment of Pittsburgh’s economy may more measurement comes from digging growth rates of Pittsburgh com- closely follow that of Houston than beneath the headline numbers. pared to the rest of the U.S., that’s Cleveland. And if Pittsburgh does the story I’m interested in. I look become a major center for informa- Huntington National Bank’s Direc- at Pittsburgh versus the 100 largest tion technology, additive materials tor of Economics, George Mokrzan, MSA’s and then plot the trajectory and robotics, cities like Austin or compared the job growth in Pitts- over a period of time,” Venkatu

72 DEVELOPINGPITTSBURGH | Spring 2016 explains. “In the case of growth since the Great Recession, if you look at the cumulative employment growth since December 2007, Pittsburgh fared pretty well in the early years of the recovery. But Pittsburgh’s growth has been fairly flat recently.”

One of the sectors that economic development leaders have been trying to bolster is manufacturing. The economic infrastructure that was left behind when the steel industry declined – plentiful water and power utilities, river and rail transportation – remain to support new manufacturing concerns; however, the problems plaguing Pittsburgh’s manufacturing sector are the same as those facing the U.S. as a whole. Higher labor costs and an unfavorable foreign exchange environment make American-made goods less competitive.

Petra Mitchell, president and CEO of manufacturing consultant Catalyst Connections, notes that there are some headwinds facing regional manufacturing as well.

“We’re seeing a decline in three major markets for [Pittsburgh] manufacturers,” Mitchell explains. “Coal mining has slowed dramatically. Spending on defense ebbs and flows over the years and is slowing right now. And shale gas has slowed; the rig count Building Your Success was about five times what it is now. These are all markets that regional manufacturers supported Grandbridge provides commercial and Our scope of services includes: and sold products to.” multifamily finance solutions through n Insurance Companies a wide range of capital sources n Banks Mitchell sees significant oppor- In 2015, Grandbridge’s Pittsburgh Office closed tunity for emerging technologies n Pension Funds loans totaling more $91.4 million – working with ® to drive new manufacturing n Freddie Mac Program Plus our clients to meet their financial goals and businesses but those technolo- n ® ensure their success. Fannie Mae DUS gies are still in the research and n FHA-Insured MAP and LEAN development phases. Traditional At Grandbridge, we connect you with the right companies like Ford, Toyota, source of funding – creating a personal, n CMBS Investors Alcoa and General Electric are successful approach for each transaction. n BB&T Real Estate Funding lining up with tech companies like – Structured Finance Google, Amazon, Yahoo and Uber – Stabilized Fixed-Rate Finance CONTACT US to create new products and new n Capital Markets Dan Puntil, Senior Vice President ways to make existing products. – Taxable and Tax-Exempt Financing When any of these new models Two Gateway Center – Credit Facilities – like 3-D printing or automated 603 Stanwix St., Suite 1899 vehicles – become viable, Pitts- Pittsburgh, PA 15222 burgh will have a leg up but will 412.391.3366 Grandbridge.com still have to compete to attract Loans are subject to credit approval. Equal Housing Lender.

www.developingpittsburgh.com 73 the manufacturing. In those days to Of course, the natural gas business oil dropped from around $100 per come, the competitive advantage has been an employment story barrel to $30 – producers began will be the same as it was in big since drilling really accelerated to slow and then pared back steel’s heyday: close proximity to in 2009. Work in the Marcellus head count. Over the long haul, the researchers and smartest talent Shale play created thousands of if the advances in technology and being produced. Until such a day, jobs and brought economic vitality construction can be maintained, manufacturing isn’t likely to be a into many stagnant small towns in recoveries in healthcare and energy growth driver. Pennsylvania. As the commodity should provide a dramatic boost in price fell and stayed low – and as job creation.

Venkatu also believes that the exploration of the Marcellus Shale formation was an important factor in the strength of Pittsburgh’s early recovery, pointing out that gas production in Pennsylvania in 2014 was roughly 20 times what production was in 2008. Venkatu also notes that Pennsylvania jumped to the second largest gas-producing state after Texas but hasn’t necessarily seen the big job declines of the other states – like Louisiana or North Dakota – with heavy natural gas concentrations because of the greater diversity of its economy. That suggests that the limited growth of jobs in 2014 and 2015 is a more positive overall story than the headline implies.

One factor unrelated to business cycles that is limiting employment growth in Pittsburgh is the shortage or misalignment of skilled Image courtesy the Allegheny Conference on Community Development. workers. Like in most parts of the country, education and vocational training over the past decade or For Huntington’s Mokrzan, there so has failed to produce an incom- are important developments in Like in most parts of ing workforce that matches up to non-manufacturing industries that the country, education the open jobs. More than in most have helped offset the declines in regions of the country, Pittsburgh manufacturing. and vocational misalignment is exacerbated by a training over the higher share of retiring workers. “Pittsburgh has high value-add These dynamics are one of the industries, tremendous research past decade or so has problems hitting the manufacturing universities and hospitals. The failed to produce an sector hardest. economy is very diverse,” Mokrzan notes. “I’m also not as pessimistic incoming workforce “It’s a challenge for small manufac- as many with regard to energy, that matches up to the turers. They are constantly hiring particularly in a high quality area but they are hiring to replace an like the Marcellus. Gas is going to open jobs. More than aging workforce. I expect that be in high demand for many years to go on for at least another ten to come. It’s a rich resource for in most regions of the years,” notes Mitchell. “Every day Pennsylvania.” country, Pittsburgh we see headlines about coal or other energy companies reducing Year-end employment data seemed misalignment is head count or closing but that is to bear out Mokrzan’s point. exacerbated by a much less so with manufacturers. While employment in the natural The manufacturing companies are resources and mining sector of higher share of losing workers to attrition and the U.S. economy shrank by 14.4 retiring workers. aren’t able to find people with the percent in 2015, hiring in that skills to replace them.” sector in the Pittsburgh MSA was up 7.3 percent.

74 DEVELOPINGPITTSBURGH | Spring 2016 An unexpected benefit from the slowdown in natural gas upstream activity has been an increase in the inventory of skilled workers for manufacturing, according to Linda Topoleski, vice president of workforce operations and programs at the Allegheny Conference.

“In the toughest 14 positions to fill [in the energy sector] the skill sets are easily trans- ferrable to manufacturing,” she says. “Calgon Carbon has said for years that it couldn’t attract welders because of wage pressure from the gas industry but now they are finding available workers.”

There are, in fact, jobs to be Job creation in Pittsburgh lagged 10 of the cities benchmarked by Pittsburgh Today. had. Imagine Pittsburgh, the Image courtesy the Allegheny Conference on Community Development. online aggregator of job openings hosted by the Allegheny Confer- ence, had roughly 26,000 open positions as of February 15. That That point of view offers a dif- Attracting people isn’t an easy number remains fairly constant ferent perspective to the analysis task, especially for a city that throughout the year and doesn’t of the employment market in still fights perceptions about its fall below 20,000. There is some Pittsburgh. While the focus of the lifestyle that haven’t been true for relationship between the flat job stories on Pittsburgh’s job creation decades. Word of mouth about growth and the open positions but tends to be about stagnation or Pittsburgh’s new “coolness” is get- Jim Futrell, vice president of market an inability to grow employment, ting out to the rest of the country. research and analysis for the there really isn’t any good reason What will help accelerate an Conference, says not to read that to think that Pittsburgh’s economy exodus back to the region would be much into the numbers. would perform more poorly than a high-profile need for workers. To the overall U.S. economy. In fact, that end, getting announcements “In any region, at any time, there given the fact that the growth of investment decisions from Shell will always be a percentage of jobs engines of Pittsburgh are mainly and PTT will be very helpful. open,” Futrell explains. “Some of the growth engines of the “new it is there are jobs in such high economy”, the trend line for Within the energy sector, there is demand – nurses and truck drivers employment growth should be an interesting recent development come to mind – that employers can parallel to those performing well. that should help with a broader always use more. Some of it is just If there isn’t the population growth appeal for workers. The governors the normal churn of jobs coming to keep up with the jobs being of Pennsylvania, Ohio and West and going. But some of it is the created – and Pittsburgh employers Virginia signed a memorandum shortage of skills needed for the may well be creating them – there of understanding to look at the positions.” won’t be employment growth. Tri-State area as a “workshed” in Employers may still add those order to compete with the Gulf “The other important factor [in needed positions but the hiring will Coast for workers. employment growth] is population occur elsewhere in the employer’s growth,” Venkatu says. “Early in footprint. “The idea is to share data and a recovery the growth in employ- opportunities to train and attract ment draws from the underutilized Demographics pose a big problem workers to jobs needed in the Tri- labor force; but as the recovery for Pittsburgh to keep up with the State area,” says Futrell. “We don’t advances – as you get closer to full inventory of workers compared to care where the worker lives.” employment – you have to draw its peer cities. It’s estimated that DP labor from outside unless there is 140,000 more workers will retire population growth that matches in Pittsburgh over the next decade the employment growth.” than average. That reality alone should be an impetus for ramped up efforts to attract population.

www.developingpittsburgh.com 75 We take a unique approach to every design

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Has the slowdown in the growth of the natural gas play impacted your business and if so, what is your company doing to respond to the cyclical nature of the energy industry?

John Skorupan Scott Rowland Stephen Gould, MA MBA Associate Vice President, Senior Associate/Vice President Senior Vice President Office Director GAI Consultants Pennoni Jason Hanna Senior Associate/Vice President “Our “Pennoni Langan Engineering natural gas has not seen “Recent business is any no- slowdowns built on a table net in the commitment downturn energy to our cli- in workload industry ents—both in the gas have not longtime industry and adversely and new. we continue affected our We began to provide business. working in environ- In fact, this industry mental Langan’s in the permitting, oil and gas 1980s, long before the most recent environmental inspection, slip business boom and subsequent slow-down. design/ repairs on existing pipelines continues We have weathered its cyclical and pads and land development ap- to grow nature by maintaining that focus on provals associated with mid-stream because of our established relationships, while improvements such as compressor the breadth continuing to build trust with new stations as well as pipeline replace- of our clients. Our core clients still have ments. Our Transportation group integrated assets to manage, operate, and continues to provide Roadway consult- grow, and we are helping them by Management Plans for drillers who ing ser- adapting our mix of services to meet are going back to existing pads to vices, which their evolving needs. Many of the drill new wells. include industries GAI works in are cyclical; land de- with that in mind, we support a “Downstream activity is growing velopment diverse mix of clients across a range with the onset of coal power plants services for new projects and of energy and non-energy markets. closing and we have new opportuni- environmental remediation for This diversity allows us to maximize ties with the design of gas fired legacy sites. Another contributing our workforce opportunities and plants. Should the Cracker Plant factor to our continued growth is maintain our commitment to our come on-line in the near future, diversification across market sectors clients.” downstream activity and land including design/development and development activity is expected to corporate environmental clients. explode.” Specifically, our institutional market work, including healthcare and universities, has been strong in the greater Pittsburgh region. Pittsburgh is a diverse and evolving market and Langan is incredibly pleased to be a part of its renaissance and to have rapidly expanded our local presence, which includes relocating into a new office to house our 43 employees.”

www.developingpittsburgh.com 77 Daniel S. Deiseroth, PE Gregory Quatchak Executive Vice President Founding Principal and CEO Gateway Engineers Civil & Environmental Consultants Fortunately, we have not needed “Civil & Environmen- to downsize our tal Consultants, Inc. workforce or sig- (CEC) is involved in nificantly change all segments of the our current business natural gas market: plans as a result of exploration and the temporary slow- production (E&P), down in natural gas midstream, and production. Looking transmission. During back, we believe the past year, the that there are a few E&P segment has reasons we might be experienced notable feeling slightly more insulated during this slowdowns, with particular slowdown. subsequent reductions in midstream activities. These slowdowns have impacted our From a business development perspective, workload as both E&P and midstream activi- we have ten distinct market segment leaders ties require numerous CEC service offerings, each responsible for ensuring client satisfac- including survey, ecological, geotechnical and tion in their respective market segment. civil engineering, and other technical support While some of these markets have a more services. cyclical nature, we continue to emphasize the importance of strong local relationships as a CEC has responded by providing greater value buffer. By utilizing teaming partners, sub- to our natural gas clients through enhanced consultants, and our good reputation with service offerings and support to address local, state and federal governing agencies, operational issues at production and mid- we have been able to continue to provide all stream facilities. These services have included of our clients with a quality product regard- applications of Unmanned Aerial Vehicles less of how that particular market is faring. (UAVs), inspection and maintenance of site infrastructure, and other support services. From a project execution perspective, we In addition, we continue to provide multi- think about and spend our clients’ money disciplined services to support regulatory as if it was our own. By keeping their best compliance activities. interests in mind, we are motivated to plan and execute projects based upon what makes Our natural gas clients are making long-term the most sense for them. We work to provide investments while remaining cognizant of options so that they can select a project solu- commodity market price fluctuations. CEC tion that best fits their unique needs. will continue to monitor market conditions and stay in touch with our clients to assist From a staffing perspective, we spend count- them during this market downturn.” less hours ensuring an appropriate balance DP between employees and workload in order to provide as efficient project execution as possible. Monitoring internal reports, check- ing in with Project Managers, and remaining in constant communication with our office managers help us grow responsibly, at a rate which we think can be sustained. Control- ling our growth during good times helps to absorb the impact that can sometimes be felt during the slower times.

78 DEVELOPINGPITTSBURGH | Spring 2016 News from the Counties

munity are transportation and workforce development. Thanks to unique partnerships with the Community College of Allegheny County, we are able to work hand in hand with businesses and the education community to meet emerging needs.

In transportation, we continue to improve access to air transportation at Pittsburgh International Airport. Boosted by increases on nearly every carrier, passenger traffic was up 7 percent in Allegheny County November and saw the fastest growth since February of 2011. Allegheny County We’ve brought in new airlines, Economic Development began serving new cities, and 112 Washington Place, Suite 900 have re-introduced nonstop Pittsburgh, PA 15219 international service to Paris with 412-350-1000 (T) a greater frequency. Nonstop 412-642-2217 (F) service to Paris is the fastest way Robert Hurley, Director to get to Europe and beyond, [email protected] and this flight has proven to be www.alleghenycounty.us/economic an important economic driver for our region. Allegheny County continues to focus on the economic develop- Another focus of our efforts has ment and job creation in our been our work with the Port region. From meeting with hun- Authority and transit strategies. dreds of companies, we know The intermodal, transit-oriented that the two largest challenges center on the Martin Luther King to continuing to grow our com- Jr. East Busway at the connection

www.developingpittsburgh.com 79 of Shadyside and East Liberty is a vault excavation, site remediation, looks to attract flex space and light great example of those efforts. The sanitary sewer work, storm water industrial opportunities with job facility is at the center of the East line installation, water line installa- creation and tax revenue as overall Liberty Transit Revitalization Invest- tion, and pedestrian railroad bridge goals. ment District -- or TRID -- which is demolition. the first implementation of such a More recently, the Pennsylvania district in the state. This transit ori- In recognition of that work, RAAC Department of Economic and Com- ented development leveraged both received a $10 Million TIGER grant munity Development announced a public and private investment and to improve access to the site via a loan from the Pennsylvania Indus- will expand economic opportunities $14.5 million flyover bridge which trial Development Authority to help for residents and make public transit will extend from the Rankin Bridge, build the Almono industrial park even more accessible for our workers over three railway tracks, directly in Hazelwood. The $2.25 million, and neighbors. onto the site. Construction began in 15-year loan will go to the Regional August of 2013 and a ribbon cut- Industrial Development Corporation We continue to remain focused on ting was held in December of 2015. to help Almono LP build roads and redeveloping severely blighted areas RAAC has constructed approximately utility infrastructure for the project of the Monongahela River Valley. The 1,800 feet of additional roadway along the Monongahela River. Redevelopment Authority of Allegh- and bike lanes extending from the We look forward to even greater eny County (RAAC) purchased the flyover to the historic furnaces. In success in 2016, and will continue to Carrie Furnace property in August of the spring of 2016, an additional move the region in a positive direc- 2005, a former steel yard compris- 125,000 cubic yards of material will tion and build upon the momentum ing 168 acres of underutilized land, be imported to allow 60 acres of that we’ve created. including a vast amount of vacant the site to be ready for immediate prime riverfront property. To date, development. RAAC, in conjunction RAAC has completed underground with the surrounding communities,

obtained storm water and environ- of Kittanning. Bergad purchased Armstrong County mental permits to accommodate the building from NexTier Bank fast-track projects, and worked with and made extensive renovations Armstrong County Department of the local taxing bodies to extend the to accommodate their specialized Economic Development Keystone Opportunity Zone (KOZ) equipment. In cooperation with the Northpointe Technology Center II designation for an additional 10 Armstrong County Planning Depart- 187 Northpointe Boulevard years. Over 600 people currently ment, the ACIDC helped Bergad Freeport, PA 16229 work in Northpointe. Specialty Foams secure a LERTA 724-548-1500 (T) real estate tax abatement for the 724-545-6055 (F) The KOZ-designated West Hills building. Bergad Specialty Foams Michael Coonley, Executive Director Industrial Park saw several new- manufactures products ranging from [email protected] construction projects move forward. medical padding and pillows to www.armstrongidc.org The new 11,410 square foot building specialty products for the oil and gas constructed for the Kittanning State industry. Police barracks opened in September Economic activity during the 2015. CWM Environmental, Inc. Also during the second half of 2015, second half of 2015 in Armstrong continued with construction on their Armstrong County voters elected County included a mix of private 9,600 square foot office and labora- three new County Commissioners. and public sector construction and tory facility. Holloway Seating LLC Messrs. Pat Fabian, Jason Renshaw infrastructure investments. New broke ground for their 8,000 square and George Skamai took office on "shovel-ready" sites were built in foot manufacturing and fabrication January 4, 2016. The new commis- Northpointe, a mixed-use facility lo- facility. CWM Environmental and sioners have pledged to be actively cated 30 minutes north of Pittsburgh Holloway Seating will move into involved, personally engaged and on State Route 28. The industrial their new facilities in 2016. highly supportive of economic pads range in size from 2 to 20 development efforts in Armstrong acres. Additionally, two parcels were Bergad Specialty Foams, Inc. moved County. developed at the main entrance to into a 65,000 square foot industrial accommodate the retail/commercial building in November 2015. The phase at Northpointe. The Armstrong facility is located along State Route County Industrial Development 85 approximately two miles east Council (ACIDC) graded the sites,

80 DEVELOPINGPITTSBURGH | Spring 2016 to Betters Real Estate Holdings LP. Park in Big Beaver Borough. Initial Beaver County The developer plans 140 high-end construction will be a 30,000 foot apartments to be constructed in the space on the 14 acre site, with the Beaver County Corporation first phase of the project, beginning ability to be expanded up to 75,000 for Economic Development in 2016. The second phase, which square feet. Site work will begin in 250 Insurance Street, Suite 300 will be commercial development on the second quarter of 2016. Beaver, PA 15009 the balance of the site, will begin 724-728-8610 (T) in 2017. CED completed over $4 Finally, CED participated in financ- 724-728-3666 (F) million in site improvements including equipment upgrades at Col-Fin James Palmer, President ing access roads, water, sewers, a Specialty Steel II, LLC in Fallston [email protected] riverfront park, a trail system that Borough. CED provided $127,000 www.beavercountyced.org connects the Beaver and Ohio riv- in financing toward the upgrades, erfronts, and a transient boat dock. which totaled $255,000. The com- Beaver County development activity The project will provide significant pany produces cold drawn steel continued to be strong over the private investment along the river- products for use in the aircraft, second half of 2015. front while maintaining public access appliance, automotive, and defense to the riverfront and connections industries and the upgrade will The Beaver County Corporation with other riverfront developments result in the retention of ten jobs for Economic Development (CED) in the Ohio/Beaver Rivers confluence and creation of three new jobs over closed on the sale of the land area. the next three years. designated for private development at its Bridgewater Crossing property CED is also proceeding with con- located at the confluence of the struction of a multi-tenant flex space Beaver and Ohio Rivers. The sale building at its WestGate Business was completed in August of 2015

Commercial Real Estate for Lease in Beaver County

2301 Duss Avenue | Ambridge, PA 800.371.5606 www.AmbridgeRegional.com

Rail Served. Crane Served. Customer Served.

www.developingpittsburgh.com 81 Zelienople, planned for opening in also include an $11 million, eight- Butler County 2017. building housing development along North Duffy road, currently under Community Development Corporation The 350,000 square foot Fed Ex construction. Center Township’s of Butler County site off State Route 528 in Jackson new 168,000 square foot VA Butler 112 Hollywood Drive #102 Township is expected to be done by Healthcare facility is underway; Cen- Butler, PA 16001 August, and may create more than ter Township is also expecting the 724-283-1961 (T) 500 jobs. Also at Jackson’s Pointe new Sheetz and Rite Aid Pharmacy 724-283 3599 (F) in Jackson Township, The Buncher across from the Clearview Mall. Ken Raybuck, Executive Director Company has leased land for a [email protected] Penske Truck Rental Center and will CDC is currently working with www.butlercountycdc.com be constructing a new 90,000 square several prospects, including two foot building, 60,000 square feet of manufacturers, for new buildings Butler County is continuing to see which will be occupied by a medical at its two business parks: Pullman hotel growth. Butler’s Centre City supply company. Center Business Park Expansion in project is expected to be close to Butler and Victory Road Business completion by the end of 2016, Butler Township is getting a new Park in Clinton Township. More which includes a 76 room Marriott multi-million dollar shopping center land is still available, contact Ken Springhill Suites hotel ($8.2 million), on New Castle Road at State Route Raybuck at Community Development and a 230 space parking garage 422, known as Greenwood Plaza. of Butler County for information: ($5 million). Other hotels in Butler Included are a new Dick’s store, a 724-283-1961. County include TownePlace Suites Mattress Firm & several other retail in Cranberry Township (opening fall businesses. Butler Township projects 2016) and the Kaufman House in

Medical Resources. The park is also Looking forward, Fay-Penn has 880 Fayette County home to a US Army Reserve Center. acres in Springhill Township for Only two industrial sites remain, future development. The acreage is Fay-Penn Economic Development along with acreage for commercial strategically located midway be- Council development. tween Uniontown and Morgantown 1040 Eberly Way, Suite 200 WV. A brownfield site, the develop- Lemont Furnace, PA 15456 With Fayette Business Park well ment plans are just beginning to be 724-437-7913 (T) underway, Fay-Penn began develop- conceptualized, and have the poten- 724-437-7315 (F) ment of University Business Park in tial to create an exciting multi-use Bob Shark, Executive Director North Union Township. Fay-Penn project with a major positive impact [email protected] built a multi-tenant office building on the area. Dana Kendrick, Econ. Dev. Dept. Mgr. and eventually relocated their offices [email protected] into the park. The location next www.faypenn.org to Penn State Fayette, The Eberly Campus, affords a great synergy for As the 25th year anniversary of business development. University Fay-Penn Economic Development Business Park recently welcomed its Council approaches, a look back at newest occupant, Speedway. Acre- the accomplishments over the years age is available for development and is inevitable. the park is designated KOZ through 2020. As the lead economic development agency for Fayette County, Fay-Penn Phase I of the Dunbar Township is proud to have changed the coun- Business Park was just completed ty’s landscape by developing three in December. The Dunbar Township industrial parks. The Fayette Business Business Park offers a location with Park in Georges Township was the highway frontage along Route 119, first project undertaken and is now easy access, and rail service in future almost fully developed. Occupants phases. Phase I consists of 92 acres include large corporations such as with 12 developable parcels ranging Boeing, Chevron and Johnson Mat- in size from approximately three to they to local independent businesses nine acres. The first parcel is already including Gerome Manufacturing Co. under contract, with construction and Montgomery Medical Associates planned optimistically for later 2016. and the park’s first occupant, Berkley

82 DEVELOPINGPITTSBURGH | Spring 2016 Colliers International | Pittsburgh Greene County specializes in adding value to our

Greene County Industrial clients to accelerate their success. Developments, Inc. 300 EverGreene Drive Waynesburg, PA 15370 724-852-2965 (T) 724-852-4132 (F) Don Chappel, Executive Director [email protected] www.gcidc.org

Activity in the gas and oil business along with the mining industry slowed during the second half of 2015 but several other projects kept pace with the economy throughout Greene

County. Two companies in the Commercial Real Estate Sales and Leasing Services Paisley Industrial Park in Car- michaels expanded the size of > Real Estate Management > Valuation and Advisory their buildings - Universal Belting > Corporate Solutions > Investment Resources and Stahl’s Hotronix. > Sustainability > Auctions Also in the park, Royal Flush began construction of their new 412 321 4200 | www.colliers.com | @PghCRE Greene County operation with excavation. Learn how we are living our values of service, expertise, community and fun at www.colliersinternationalpittsburgh.com In the Jefferson area, Wilson Forest Products began construction of a new expansion to their operation. MEPCO, a coal mining operation in Mt. Morris, Looking to Expand? Consider Indiana County completed their $11 million expansion to their new portal, bath house and office facilities. HighPointe 119 Waynesburg saw Accessible at Indian Business Dreams Living begin construction of their new senior housing proj- Springs Park ect while Hatch-Mott McDonald, an environmental engineering firm, relocated to a new office in the former RJ Lee building. Windy Corporate Ridge Campus In EverGreene Technology Park Business & Business Senior Life is beginning their space make-over in the same Technology Park RJ Lee former offices. Though Park slowed by decreasing prices in the gas and oil industry, Greene Pad Ready Sites County still remained strong for drilling and also saw several new Class A O ce Suites available permits issued for gas compres- Access to 422, 119, and 22 sor stations. KOZ tax incentives

Indiana County Center for Economic Operations LEARN MORE ABOUT INDIANA COUNTY www.indianacountyceo.com · 724-465-2662

www.developingpittsburgh.com 83 Indiana County

Indiana County Center for Economic Operations 801 Water Street Indiana, PA 15701 724-465-2662 (T) 724-465-3150 (F) Byron G. Stauffer, Jr., Executive Director [email protected] www.indianacountyceo.com

Byron Stauffer, executive director of the Indiana County Office of Planning and Development, de- scribes Indiana County’s economy as “in transition.” It has been transitioning, he said, since the demise of the coal mining industry and since the county’s loss of major manufacturers like Fisher Scientific, FMC Corp., Polyvision and Gorell Enterprises.

And the natural gas industry peaked locally about 2010, in his opinion. “The good news is the Indiana County economy, in my view, is pretty resilient,” Stauffer said. “Nothing is sitting totally idle” and efforts are being made to attract new companies and businesses. “But you need a place for them to go,” he said.

Several years ago there were only a few lots remaining at the Corporate Campus, in Burrell Township, and Commerce Park, in White Township, was full. And a comprehensive plan for Homer City, Blairsville, Center Township, Blacklick Township and Burrell Township showed those municipalities wanted another industrial park. So the 119 Business Park (previously called the Joseph Land Development) along Route 119 in Center Township was started.

The site is now ready for tenants, and Stauffer said that US Trinity Energy Services has signed a lease to occupy the site. Stauffer said “pad-ready” — the availability of sites with infrastructure installed that a new company can move onto quickly — is an important component of the county’s strategy to attract new businesses. The Indiana County Development Corporation purchased the land for the county’s newest business site, the Windy Ridge Business & Technology Park in White Township, and recently Holiday Inn Express signed a sales agreement to develop a 77 room hotel on lot 1A. To learn more about economic development opportunities in Indiana County, visit www.indianacountyceo.com.

84 DEVELOPINGPITTSBURGH | Spring 2016 Lawrence County

Lawrence County Economic Development Corporation 100 East Reynolds Street Plaza South, Suite 100 New Castle, PA 16101 724-658-1488 (T) 724-658-0313 (F) Linda Nitch, Executive Director [email protected] www.lawrencecounty.com LET’S GET DOWN The Lawrence County Impact Awards held in 2015 at Shakespeare’s Restaurant was a celebration of our county’s existing industries and the recognition of TO BUSINESS five of the great companies that have recently made a ...in Westmoreland County! significant contribution to our economy. North American Forgemasters, Consolidated Glass Corporation, Porters- ville PRD, Magnetic Lifting Technologies and the New Castle Industrial Rail Road were recipients of this first annual award. Qualified The LCEDC recently launched a new web site that is more customer-focused and provides an interactive Workforce search of available industrial sites and facilities. The LCEDC teamed up with Online Economic Development Solutions, GIS Planning, to allow access to our community’s available real estate along with demographic analysis and industry reports.

In 2015, our economic development efforts with new and existing industries affected hundreds of jobs in five successfully completed projects and resulted in the investment of over $150 million in new capital invest- Pad Ready ment. Leading investments this past year that received assistance from the LCEDC include the following: Sites Dairy Farmers of America completed a facility upgrade and expansion this year at their Wilmington Township location for a total investment of $5 million. The LCEDC assisted with the processing of a $2.5 million Common- wealth of PA RACP Grant.

Portersville PRD completed construction of their new, The WCIDC offers 17 fully developed industrial parks 50,000 square foot manufacturing facility on Route 422 including pad ready sites and tax abatement zones in Shenango Township. This company produces valve (KOZ). One premier development is the Westmoreland components for the energy industry and has relocated their existing 50 employees to Lawrence County and Logistics Park Rail Freight Terminal. Served by three created an additional 25 positions. The LCEDC assisted Class I railroads, it helps provide rail service to the region. with the processing of a $500,000 Enterprise Zone Tax Credit award.

The LCEDC is excited to announce the completion this year of its 50,000 square foot, multi-tenant facility at 724.830.3061 the Millennium Technology Park. Steelite International USA, a warehouse distribution facility for the tableware westmorelandcountyidc.org firm, now occupies both halves of the building. WCIDC Board of Directors: North American Forgemasters has nearly completed Gina Cerilli the process of expanding its facility with a total invest- Ted Kopas ment of over $26 million that will surround its new $80 million, state of the art open die press. The LCEDC Charles W. Anderson

www.developingpittsburgh.com 85 Project7_Layout 1 2/12/15 3:11 PM Page 1

86 DEVELOPINGPITTSBURGH | Spring 2016 assisted them with applying for and amount of $204,615 to assist with honored the LCEDC by recognizing receiving $500,000 in Enterprise Zone rail lines. the Corporation as the 2015 PEDA Tax Credits. Small Agency of the Year. PEDA A home-town favorite, Joseph’s cited the organization’s outstand- Weitsman & Son is nearing comple- Baking Company, recently moved and ing collaborative efforts with other tion of its metal scrap processing expanded its wholesale bread making regional organizations to promote and facility at the site of the former business in the City of New Castle at complete numerous economic devel- Pennsylvania Engineering Corpora- the site of the former DeRosa Bakery. opment projects, administration of tion. The LCEDC assisted in the The LCEDC assisted with the financing multiple loan and grant programs and application process and award of needed to purchase and renovate the the management of over 700 acres $500,000 in Enterprise Zone tax building with $60,000 from our local of industrial property as some of the credits and a Multi-Modal Grant Enterprise Zone Revolving Loan Fund. reasons for the award. from the Commonwealth of PA in the At its 2015 fall conference, PEDA

The strong activity in the energy sec- Washington & Jefferson College Washington County tor led to $37 million of infrastructure opened the Janet Swanson Tennis investment by First Energy and West Center in September, the first com- Washington County Chamber of Commerce Penn Power in 2015. Construction of pleted phase of a $100 million athletic 375 Southpointe Boulevard #240 the $63 million portion of the Rover complex expansion project which Canonsburg, PA 15317 Pipeline to be built in Washington will include renovations to the Henry 724-225-3010 (T) County will begin in the spring of Memorial Center and construction of 724-228-7337 (F) 2016. In addition, the ongoing U.S. the James David Ross Family Recre- Jeff Kotula, President Army Corps of Engineers’ $58 mil- ation Center. [email protected] lion project in Charleroi will improve www.washcochamber.com the Locks and Dam to support the The Pennsylvania Turnpike Commis- increased barge traffic. sion awarded a $6.5 million dollar Washington County continues to be contact in October for interchange a leader of energy production. Even Retail remains strong with additional work on the portion of the 13 mile, in the energy downturn year of 2015, stores and restaurants opening at the $670 million segment of the Southern the county led the state in number of Old Mill, Park Place and The Street Beltway that runs through Smith and unconventional well permits issued plus the announcement of The Prom- Cecil Townships. Once completed, the and in the number of unconventional enade at Meadows Landing and the Southern Beltway will open more land wells drilled. In fact, more unconven- Win Development project at the for development securing Washing- tional wells were drilled in Washington former Sharps Furniture site. ton County’s leadership position in County than any other county in the economic growth for years to come. state since the first well was drilled here more than 10 years ago.

Below are a few other recent develop- are projected. Freightliner also optioned Westmoreland County ments in Westmoreland County: 6.62 acres in the Phase II expansion area of the Westmoreland Airpark in Westmoreland County Industrial Exel, Inc. – Proposed new construction Unity Township to support their trucking Development Corporation of a 260,000 square foot building on operations. 70 jobs are projected at this 40 North Pennsylvania Avenue # 520 44 acres in Distribution Park North in location. Greensburg, PA 15601 East Huntingdon Township. 200 jobs are T: 724-830-3061 projected. RV Coleman – Previously located in Arm- F: 724-830-3611 strong County, this trucking operation Jason W. Rigone, Executive Director JK Tool Inc. – This production machining moved into a 28,567 square foot building [email protected] company purchased a 17,500 square foot in what was the former Alon Process- www.co.westmoreland.pa.us building in the Business & Research Park in Upper Burrell Township. 75-100 jobs ing site in Industrial Park II, Allegheny Township. The second half of 2015 was filled with are projected. a lot of positive development news for Excel Glass – This granite and marble Express Scripts - New construction of a Westmoreland County. A number of manufacturing operation expanded their 70,000 square foot facility on 14 acres in companies either broke ground, signed building in the Jeannette Industrial Park North Huntingdon Township was com- new leases, or expanded in the area. De- by about 6,000 square feet. 13 jobs are pleted. The mail-delivery pharmaceutical molition has begun on one of the county’s projected. company employs about 700 people. key projects, the Monsour Medical Center, located off US Rt. 30 in Jeannette, will be Freightliner - New construction starts of a Please check our website, www. ready for further development by the end 50,050 square foot maintenance facility westmorelandcountyidc.org, for project of 2016. in Distribution Park East/West in East updates and more information on our Huntingdon Township where 30 new jobs organization. DP

www.developingpittsburgh.com 87 People & Events

(Left-to-right) Habitat for Humanity volunteer Barb Van Inwegen, with Stephen Hart, HFHGP Habitat’s volunteer services coordinator and Colleen Cadman, event & development coordinator for Habitat, at the 16th annual Night at the Fights. Proceeds from the NAIOP Pittsburgh event go to support Habitat for Humanity of Greater Pittsburgh.

(From left) Brent Bishop, Tyler Lonchar and Mike Belsky from Columbia Gas.

88 DEVELOPINGPITTSBURGH | Spring 2016 Bridget Johnson from W. G. Tomko & Sons with Terry Wiltrout from Wash- ington County and California Universi- ty’s Anthony Mauro.

(Left-to-right) Millcraft’s Chad Wheatley, NAIOP Pittsburgh President Brian Walker and Marcus Piatt with Lynn DeLorenzo from TAR- QUINCoRE.

www.developingpittsburgh.com 89 (From left) Blumling & Gusky’s Bob Blumling, Rich Bosco from Ryco Plumbing and Rycon Construction’s John Sabatos.

Past NAIOP Pittsburgh presidents Mark Dellana from Genesis Partners and Jendoco’s Domenic Dozzi (right).

LANDAU BUILDING COMPANY RELATIONSHIPS I REPUTATION I RESULTS

724-935-8800 I www.landau-bldg.com

Buncher’s Brian Goetz (left) with Amy Brocato from Hanna Langholz Wilson Ellis and Gene Pash from JeDi Consulting

90 DEVELOPINGPITTSBURGH | Spring 2016 RIDC’s Don Smith and PRA President David Ruppersberger (right).

(From left) Elmhurst’s Bill Hunt, Tony Rosenberger from Chap- man Properties and First Niagara’s Randy Cornelius.

PenTrust’s Tyler Noland and Maureen Ford from Alcoa at the NAIOP Pittsburgh holiday party.

www.developingpittsburgh.com 91 BDO’s Michelle O’Leary and Heath Winsheimer flank BNY/Mellon’s David Weisberg (left), Grandbridge’s Megan Ruth Wepfer of Wepfer & Associates. Zillweger-Jones and Chuck Chiatto from BB&T.

92 DEVELOPINGPITTSBURGH | Spring 2016 HomeGoods Lowe’s Old Navy Home2 Suites LA Fitness shop. play. dine. stay. DoodleBugs! Longhorn BJ’s Brewhouse Bonefish Grill Panera Bread Ethan Allen Pet Valu First Watch Chestnut Hills Dental S&T Bank WesBanco CVS Pharmacy Style Encore Massage Envy Hats Off Hair Design Gigi’s Cupcakes The Barre Code Hello Bistro Xfinity European Wax Center GNC The UPS Store Supercuts Coming Soon: Handel’s Ice Cream Tuxedo Junction Burgatory Texas Roadhouse Geico Chipotle Color Nail Spa DiBella’s subs IHOP Gifted Hands Gift Shop The Joint Verizon Wireless And more! Sport Clips Nail Studio ii Dentistry For Kids Re/Max Select Realty Convive Coffee

www.adventuredev.com www.mccandlesscrossing.com The Partnership Behind the Project.

412-683-3810 412-261-8810