Pittsburgh's Awards NAIOP Pittsburgh’S 20Th Annual Awards Banquet Honors Projects and Individuals Exemplifying Excellence in the Commercial Real Estate Industry

DEVE LPittsburghOPINGSPRING 2013 PITTSBURGH’S NEXT ACT

Naiop PITTSBURGH s Annual Awards

Year-End Market Updates

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05 President’s Perspective CONTE NTS Dan Puntil

19 Development Project Pittsburgh International Business Park

26 Developer Profile Chapman Properties

06 Pittsburgh’s Next Act 36 Eye on the Economy The region’s assets are getting accolades from around the globe but the civic and commercial real estate leaders aren’t resting on their laurels. Regional leaders talk Office Market Update about what works and what needs to work better for Pittsburgh to keep thriving. 40 Newmark Grubb Knight Frank

44 Industrial Market Update Langholz Wilson Ellis

48 Retail Market Update CBRE

50 National Market Update Avison Young 33 Developing Trend An improved Panama Canal should change global logistics and create the need for more transportation and distribution to the Midwest and Northeast. 58 Legal/Legislative Outlook

63 Benchmarks

69 Voices

73 News from the Counties 52 NAIOP Pittsburgh's Awards NAIOP Pittsburgh’s 20th Annual Awards Banquet honors projects and individuals exemplifying excellence in the commercial real estate industry. 85 Transactions of Note

www.developingpittsburgh.com 3 CAPITAL MARKETS DEBT & EQUITY FINANCE

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We obtained the information in this document from sources we believe to be reliable. However, we have not verified its accuracy and make no guarantee, warranty or representation about it. It is submitted subject to the possibility of errors, omissions, change of price, rental or other conditions, prior sale, lease or financing or withdrawal without notice. We include projections, opinions, assumptions or estimates for example only, and they may not represent current or future performance of the property. You and your tax and legal advisors should conduct your own investigation of the property and transaction. President’s Perspective

PUBLISHER Tall Timber Group elcome to this market while maintaining these www.talltimbergroup.com the second enviable statistics? Will the growth edition of come from “Eds and Meds?” The EDITOR Develop- energy sector? Will it be in the form Jeff Burd ingPitts- of new development or renovation of 412-366-1857 burgh some of our existing assets? My sense [email protected] Magazine, Wa publication focusing on is that it will include all of the above. the commercial real estate industry and In this edition of DevelopingPittsburgh, PRODUCTION brought to you by NAIOP Pittsburgh. we will explore the factors that will Carson Publishing, Inc. It is my distinct privilege to serve as impact our ability to maintain this Kevin J. Gordon President of NAIOP Pittsburgh for momentum and continue to grow and [email protected] 2013. I am humbled to follow in line prosper. We will discuss the challenges with some of the most prominent and of keeping up an aging infrastructure, ART DIRECTOR/GRAPHIC DESIGN influential leaders in the commercial the need for pad ready sites and foster- Carson Publishing, Inc. real estate industry that have served in ing public/private partnerships in a new Jaimee D. Greenawalt the same capacity. These great lead- era of austerity for government. ers have developed a strong founda- CONTRIBUTING PHOTOGRAPHY tion that has served as the base from We’ll also spotlight our annual NAIOP Carson Publishing, Inc. which this organization was built upon, Pittsburgh award winners. This Devel- Jan Pakler much like a real estate project. NAIOP oping Pittsburgh has a special section Pittsburgh Regional Alliance Pittsburgh has grown year after year, devoted to the projects and people to become the preeminent real estate that made special contributions to the CONTRIBUTING EDITORS organization in Pittsburgh with a focus commercial real estate industry. Anna Burd on our core values of Education, Advo- Cecelia Cagni cacy and Leadership. Together with our We should all be proud of our accom- Karen Kukish outstanding Board of Directors, it will plishments, but not rest on our laurels. be my goal to further our mission and Much like the city of Pittsburgh has ADVERTISING SALES continue to grow this great organiza- adapted over the years, so too does Karen Kukish tion. our real estate industry need to adapt. 724-837-6971 We need to continue to be creative, [email protected] This edition of Developing Pittsburgh be proactive, be innovative and be Magazine will focus on ‘what’s next’ disciplined. Those qualities have been MORE INFORMATION: for commercial real estate in Pitts- the hallmark of Pittsburgh over the DEVELOPINGPittsburgh is published by burgh. The secret has been revealed decades and have served our city very Tall Timber Group for NAIOP Pittsburgh that Pittsburgh real estate has not only well. Let’s take the next steps and con- 412-928-8303 fared far better than many other cit- tinue to grow the Greater Pittsburgh www.naioppittsburgh.com ies during the economic downturn, it commercial real estate industry. has in fact, prospered. Our controlled, No part of this magazine may be reproduced without written permission sustainable growth as a result of high by the Publisher. All rights reserved. barriers to entry have prevented over building resulting in a real estate mar- This information is carefully gathered and compiled ket that performs at the top of all mar- in such a manner as to ensure maximum accuracy. kets in the country. Our vacancy rates We cannot, and do not, guarantee either the in office, industrial, retail and multi- correctness of all information furnished nor the family are among the lowest of all of complete absence of errors and omissions. Hence, responsibility for same neither can be, nor is, the nation’s top 64 markets. Pittsburgh assumed. is now attracting regional, national and international institutional investors Keep up with regional construction and real estate who have identified our region as a events at www.buildingpittsburgh.com market that provides attractive returns while providing a stable real estate environment.

So what’s next for Pittsburgh? How do we maintain this position and most im- portantly, how do we continue to grow Daniel P. Puntil

5 DEVELOPINGPITTSBURGH | Spring 2013 www.developingpittsburgh.com 5 FEATURE

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6 DEVELOPINGPITTSBURGH | Spring 2013 FEATURE

“Our firm identified and head of invest- a decade ago, in fact, the characteristics of ment at ING Clarion that the twin closings a good investment Partners. “We believe of the Lazarus and market. We look at Pittsburgh has all the Lord & Taylor stores the economic drivers. right pieces.” in Downtown left the We believe the next business community phase of economic It wasn’t that long feeling like nothing development will be ago that the econom- would work to return driven by high tech, ic prospects for Pitts- the central business healthcare and en- burgh were a bit less district or the city to ergy,” says Tim Wang, rosy than they are to- its former hey days. senior vice president day. It was less than

www.developingpittsburgh.com 7 FEATURE Of course what was happening in Washington County are not acci- at the time was the gradual and dental. They are the result of years incremental improvement in the All it took to become of strategic planning undertaken by sectors that would be the leading the Washington County Commis- economic drivers of 21st Cen- one of the economic sioners, business community and tury Pittsburgh. Those gains were darlings of the globe our economic development organi- taking place below radar but the zations to anticipate future growth ‘new’ Pittsburgh began a period of was a generation to and be proactive in developing not-so-quiet improvements when pass and a couple site ready business parks,” states Bob O’Connor became mayor of Jeff Kotula, president of the Wash- the City of Pittsburgh, the Imagine hundred thousand ington County Chamber of Com- Pittsburgh campaign kicked off and jobs to be replaced. merce. “While we of course did not the G-20 Summit came to town. foresee the tremendous positive A half-decade later and you could economic impacts of the energy make an argument that Pittsburgh industry 15 years ago, the decisions is becoming overexposed but after made then to develop ready-to-go A measure of the success that can a generation of bad news, few sites made our county uniquely po- be claimed by the region’s institu- regional leaders are worried about sitioned to take advantage of these tions was aided by public policy. too much good news. energy opportunities and earn the The Commonwealth of Pennsylva- moniker Washington County-The nia made investments in the uni- This is Pittsburgh’s new Golden Energy Capital of the East." versities that have yielded results. Age. But while Pittsburghers are Likewise, the federal government happily accepting accolades from Those next energy opportunities endowed research grants that all over the planet, this is also represent major turning points in resulted directly in a number of probably a good time to ask, economic direction for the region. marketable advances. “What’s next?” Most casual observers probably expect that the natural gas industry The more difficult investments to will simply follow an ever-climbing GETTING HERE make over the years have been in path of growth in Western PA but projects and programs that worked no success is assured. Success All it took to become one of the to the benefit of the private sec- tends to come from opportunities economic darlings of the globe was tor, especially those for private finding the well prepared. With a generation to pass and a couple development. State or local aid for potential employers of hundreds of hundred thousand jobs to be re- companies who promise to create thousands deciding where to locate placed. Business and civic leaders jobs is politically charged and often key assets, now would be a fortu- have worked through three ‘Re- controversial. Whether it’s a PIDA itous time to prepare for the future naissances’ to remake Pittsburgh’s loan or a school district tax incre- of public/private partnerships (P3). economic landscape. For more than ment financing (TIF) deal, taxpayers 30 years there were no home runs, have a hard time supporting the just economic ‘small ball’ – singles transfer of public funds to private P3 FOR THE FUTURE and sacrifice bunts and bases on companies. Those sentiments can balls – that scratched out thou- get even more inflamed when the NAIOP Pittsburgh and the Pitts- sands of small wins. beneficiary is a property developer. burgh Regional Alliance organize In the final analysis, however, if a biennial tour of the city for site Over the years, there were plenty you had to point to one policy that selectors, called the Developers of false starts but behind the did the most to bring the economy Showcase. The day ends with a scenes there were continued ad- to where it is today it might be the presentation of the findings of the vances in education, healthcare publicly-funded support of develop- site selectors to an audience of and whatever the technology of ment sites. developers and economic develop- the day was. Seeds were sown at ment officials. One of the consis- the University of Pittsburgh, Carn- The civic and business leaders who tent points made by site selectors egie Mellon and the University of have worked to secure the public is that attractive cities demonstrate Pittsburgh Medical Center, among support and private investment in regionalism and cooperation among others. With operating models that the region’s sites could not have all players. Effective public/private reinvested income in research, each known what today’s opportunities partnership is a key element. of these institutions began form- would be but they needed to pre- ing a new identity and the eco- pare as though they could. Those The transition from the Rendell to nomic development leaders began that best foresaw the potential for Corbett administrations was one to link the city’s image to those economic growth were eventually that had a dramatic impact on new identities. Advancement at the rewarded. public/private partnerships. Even as universities and hospitals worked tax receipts plummeted during the like compound interest. The effect “It is important to remember that recession, Gov. Rendell kept up the was only breathtaking after enough the successes we are experiencing stream of funding for private in- time has passed. dustry. His last days in office even

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included a flurry of Redevelopment Redevelopment Assistance Capital Assistance Capital Program (RACP) Program grants for Metropolitan grants that were controversial “We are always Pittsburgh projects were announced enough that Gov. Corbett delayed by Gov. Corbett’s office February 11. signing off on the final funding. in competition Businesses that were next in line with other states we hold up as successes – The Wa- for state grants weren’t so fortu- and right now terfront, South Side Works, Pitts- nate. burgh Technology Center – would some of them exist today. As incoming governor, Corbett was concerned about the amount of are getting more The position of the fiscal conserva- debt being taken on to fund the competitive,” tives is understandable: private de- RACP grants, especially without a velopment should be able to stand methodology for tracking whether on its own business case or not at or not the investment returned re- all. The problem is that competi- sults that could justify the borrow- tive markets haven’t operated as ing. Like many funded programs, “We need to gain a better and free markets in decades and with- RACP foundered while the new timelier understanding of Penn- drawing public funding that primes administration evaluated what was sylvania’s position with regard to private investment puts Pennsylva- fiscally – and politically – in line economic development. I don’t nia at a disadvantage. With the gas with their view of government. understand what the administra- industry expanding in Ohio, West tion intends; what’s available and Virginia and New York at the same The program was reorganized and how to access it,” he says. “I’m pro time it is maturing in Western PA, trimmed down to $125 million per administration but it’s difficult for this is a good time to remove any year, to be managed in two rounds business to understand the state disadvantages, says Avison Young’s annually but in 2012 the evalua- and what is available.” Duke Kingsley. tion was reduced to a single round. Funding for projects that were put Regardless of your politics you “We are always in competition with in the pipeline in 2012 was belat- can’t realistically look at the cur- other states and right now some edly announced during the first rent successes in the region’s of them are getting more competi- week in February 2013. Grants for economy without finding traces tive,” he says. 14 Pittsburgh area projects totaled of public investment throughout, $24.7 million but three large proj- but certainly in the area of real Given the current government fis- ects, including the RIDC’s Almono estate development. Western PA cal environment it is falling to the site missed out on grants this is a region with topographical and Commonwealth to create programs round. site challenges that make develop- that can allow investment and ment difficult. When the industrial funding opportunities. In 2004, the Steve Guy is CEO of Oxford Devel- economy crumbled thirty years ago state launched the Business in our opment, one of the applicants for there were hundreds of abandoned Sites loan program, which has been its 350 Fifth Avenue project. He sites that were also unsuitable for valuable to projects like Alta Vista, supports the administration but redevelopment because of environ- Starpointe and Almono but has finds their economic development mental hazards. Without the use of reached the point of having limited policies unclear. public funding, few of the projects funds available from its revolv-

www.developingpittsburgh.com 11 FEATURE

ing loan proceeds. Legislation adding as much as $75 million in underutilized development funds has been proposed but no action has been taken.

While there may not be the money available nor the political will to use it at the moment, there is little disagreement about what would be the best use of public support for private development.

“The big issue is still that we don’t have enough pad- ready, shovel-ready sites for development,” says PRA president DeWitt Peart.

At the most recent Developers Showcase, held in No- vember, site selectors were effusive in their praise for the region’s accomplishments but among the kudos were comments that echoed Peart’s concern.

“Pittsburgh could benefit from a process of getting more sites ready for the development of industrial and manufacturing facilities,” noted William Hearn of CH2M Hill.

With the improving economy, there is more urgency to finding a way for public/private site preparation projects to happen more quickly. “We can spend years and years getting sites ready but most clients can’t wait two or three years for a property,” says Randall Foris- ter, director of development for the Allegheny County Airport Authority. “If we don’t have the sites ready it’s impossible to attract development.”

Gregg Broujos’ suggestion is specific and succinct, “We have a lack of available speculative industrial flex product.” Broujos is a broker and the managing partner for Colliers International, so his product- oriented answer isn’t surprising. But his concern about the short supply of industrial space was focused less on the developers than on the process. “It’s a definite detriment to the region not to have the space now. The complexity of the development process makes it difficult to move a project along.”

The last point Broujos makes is one that is often over- looked in P3 discussions. Public funding for private development is well and good but it may be more useful in the long run for state and municipal leaders to look at the process of entitling a project as an opportunity for partnership with private industry. Pennsylvania has earned a reputation for unwieldy environmental and transportation approvals for development, even when there are no complex issues involved. Moreover, the lack of uniformity and consistency at the municipal level can leave developers frustrated. For developers that aren’t accustomed to dealing with the permitting environment – like those coming from out of state – the hassles may prove to be too much.

“When you talk about due diligence that takes nine, twelve or fifteen months to get approvals, that dis- courages development,” notes Donald Smith, CEO of the RIDC. “Everybody should be looking for high

12 DEVELOPINGPITTSBURGH | Spring 2013 FEATURE quality projects but when you get country – and certainly in the parts THE CULTURE OF SUCCESS a high quality project [regulators] from which the oil and gas industry should do everything they can to is coming – the process of getting There’s little question but that a expedite the process.” approvals to build is much more change in attitude accompanied streamlined. Moving in that direc- the improvement in the economic Smith makes the point that cor- tion at any level would signal to fortunes of the region. It is not a porations aren’t making decisions those businesses looking at West- bad thing to shift from an attitude lightly, certainly not in the eco- ern PA that there was a business that expects the other shoe to drop nomic conditions of the last few -friendly culture. to one that is looking for the next years, and that once a decision good thing to happen. Of course, to proceed with a project is made the inherent danger in that is com- the companies don’t want to wait placency. another year waiting to have a plan “Ever ybody should approved. He advocates for a fair be looking for high “Our corporate community has and predictable regulatory process been so positive for us. That has to so developers know exactly what quality projects continue and I think it will, but we can be expected when they start still have to be attractive to busi- down a project. “Investment capital but when you get a nesses,” says Duke Kingsley. “We wants a consistent, predictable high quality project benefitted from everyone saying path,” he says. Pittsburgh is on the upswing and [regulators] should we have to be careful to keep that One of the hallmarks of this new do ever ything they up.” era in Pittsburgh’s real estate his- tory is that many of the industries can to expedite the For certain there is little that re- and capital that are driving devel- process.” sembles complacency with regard opment are coming from out of to the biggest opportunity in front the region. In most parts of the of the region. The announcement

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A shift in population trend is showing a net increase in population. A trend that includes a long-term trend towards a younger average age. Source: Pittsburgh Regional Alliance.

public relations. For Pittsburgh to continue to be a ‘top ten’ city, systemic changes will be required in a number of our institutions. Some of these changes can be driven by business or civic leaders but others, like changing the culture of elected government, will have to be part of an American cultural change. It may seem beyond the call of duty for the average citizen of Western PA to lead a national movement but the economic opportunity in front of our region creates that chance.

of a preferred cracker site by Shell Steve Guy is concerned about the Don Smith, the RIDC’s CEO, thinks was trumpeted around the globe impression outsiders get about the that public policy has been focused but regional officials have con- current debate from taxing non- on the wrong issues. “There is no tinued to work to answer Shell’s profit organizations. growth coalition at the state, fed- questions and concerns. Most lead- eral or local level. The debate has ers expect the project to be built “We need an appropriate resolution been about fiscal problems and the in Monaca but the work to close for some of our largest corporate like but it’s not about how to solve the deal is ongoing. The oil and citizens with regard to their non- our economic growth problem,” gas industry is still in the discov- profit status. The negative PR hurts he says. “The focus should be on ery stages about the shale forma- us,” he says. “I can’t say which creating conditions conducive to tions in our region. Some of that outcome is right but a definitive a better business climate. It’s an discovery is geological but some resolution is necessarily better than investment problem not a consump- of the feeling out is to ensure that saber rattling from both sides in the tion problem.” companies land where it’s best for press.” them to do business. Smith suggests that the debate Bill Hunt was reminded how impor- should be on improving the tax and “One of the issues we must ad- tant the projection of enthusiasm regulatory environment, education dress as a region is encouraging was when he traveled around the and training for workforce. While the City of Pittsburgh to rescind U.S. as NAIOP Corporate chairman. he expects that funds will still have its ban on natural gas drilling. This “In Nashville it was actually their to be available to create opportuni- anti-gas position is harmful to our politicians. Everyone said they loved ties his belief is that the long-term regional attraction efforts and has the political leaders, how they return will come from the better the potential to discourage new seemed to be everywhere,” he says. standard of living that results from energy company relocations and job “The developers said the politicians investing in the people. growth,” Kotula says. “And while it were all about growth but at the is correct that our regional eco- same time they do the right thing Attracting and training a skilled nomic results are encouraging, the for the community and environ- workforce is another problem that is true economic growth is occurring ment. People were saying that made national rather than local, as is one in counties that have embraced the them want to go to work.” of the solutions: foreign immigra- energy industry such as Washington, tion. Obtaining an H1B visa is nearly Greene and Butler. However, make “I still think we are not the greatest impossible for workers with the no mistake, we are now competing ambassadors of our region. I think kinds of technical skills in construc- with Ohio’s Utica Shale and we must that is important to companies that tion or manufacturing, for example, convince the City to also welcome are looking at a city – how enthusi- especially since unemployment is the jobs, business opportunities and astic the residents are about living still high in the U. S. Demographics economic growth the natural gas there,” continues Hunt. tell us that the need for more skilled industry is offering our region” workers will be upon us sooner than Of course, a culture of success the public thinks – certainly in less is about more than attitude and than a decade – but the political

14 DEVELOPINGPITTSBURGH | Spring 2013 FEATURE climate is not conducive to anticipating that need.

Another workforce-related issue is the right to work. Nearly half the states in the U.S. have laws that protect a worker’s right to be em- ployed without joining a union. In January, six different PA legislators introduced laws that would create a right-to-work environment. Gov. Corbett has said in past that he would sign such legislation that passes but it is still unlikely that he will get the chance. Both sides of the argument make the case that they are protecting work- The $900 million mixed-use Almono development ers’ rights and the debate will stir is planned to be the next live/work/play project emotions on both sides. along the riverfronts of Hazelwood.

For many businesses outside Penn- sylvania, the right to work legislation is one of the boxes that must NEXT SOUTHPOINTE port. There are almost 10,000 acres be checked before they will consider of airport-controlled and private a location. The subject is difficult If you ask 50 economic development sites that are within a mile or so for economic development leaders in or real estate executives what the of the I-376 interstate connection. Pittsburgh because they are charged region needs most, don’t be sur- Exploration of the shale forma- with making the region as competi- prised if most of them say the same tions is moving in that direction, tive as possible but union leadership thing: the next Southpointe. whether it is in Ohio or northwest has also been a helpful partner in of Pittsburgh. The Shell cracker the region’s turnaround. “Thank God we had Southpointe and the polyethylene-fed industries to absorb all the demand when it that will follow will be accessible Changing the environment for taxa- came,” says Peart. While he doesn’t to I-376 just ten minutes or so tion is not necessarily a national is- think the natural gas industry would from the airport and the recently- sue, however. As companies evaluate have avoided the region without announced Southern Connector will locations, the corporate and busi- Southpointe’s capacity, Peart says, complete the connection from the ness taxes play a big role in the final “I don’t think we would have seen airport/I-376 to Southpointe. decision. PA’s corporate taxes have all the suburban office deals that long been a competitive disadvan- we’ve had without Southpointe.” The drawback for the airport sub- tage, even though few companies market is that the biggest chunk pay the full tax rate. Many of the When asked what project or sub- of land there is subject to Federal states that compete for employers market could become the next land- Aviation Administration rules, the with PA have tax structures based on ing place for new businesses Peart most restrictive of which is that consumption or usage rather than cited several opportunities. the land controlled by Allegheny income. For businesses, this seems County must be leased not sold. fairer since it taxes them more pro- “The Almono site I think is a huge For the oil and gas industry, this is portionally to the public resources opportunity for the region,” he counter-cultural. As time goes on, they consume. This means higher says. The RIDC project is a 178-acre the advantages of the location will sales and excise taxes, highway tolls planned development along Sec- probably outweigh the desire to or gas taxes. The latter is especially ond Avenue and the Monongahela own land for new businesses. In the appealing for Pennsylvania, since it River in Hazelwood. Its adjacency to meantime, the FAA rules should be would encourage the use of natural Oakland creates exciting potential a stimulus for the private develop- gas instead of oil. for research and technology expan- ments already underway, like Chap- sion but its mixed-use master plan man Westport, Findlay Westport and States with lower income tax struc- is what Peart referred to. “It offers Pittsburgh International Business tures do better at attracting new a live/work environment. That’s sort Park. employers. That’s a reality that of the next wave for Pittsburgh.” should keep legislators motivated One other alternative to the large while they consider revamping Penn- Another area with lots of land and suburban development is the wise sylvania’s revenue sources. great access to transportation is investment in infrastructure that the Pittsburgh International Air- promotes the development of un-

www.developingpittsburgh.com 15 FEATURE

derutilized land nearer to the city’s the edge of the City of Pittsburgh. opportunities over the years, the core. De Peart considers that infra- These sites – like Route 51, the natural advantages of the Pittsburgh structure planning to be one of the Etna-Millvale-Sharpsburg area, or region have ultimately won the keys to continued prosperity. McKees Rocks – have transit infra- day. The rivers, access to water and structure other than roads and are labor and abundant energy made “It’s easy to lose sight of the im- within 10-15 minutes from Down- the region attractive. Those assets, portance of transportation infra- town. Most of these sites also grew especially the latter, are still bolster- structure. If we can get a federal originally because of the access ing the regional balance sheet. and state transportation bill and to industry and would be areas of invest well, I think there is a better infill between town and suburban Dean Barber, president/CEO of Bar- opportunity to find the next South- markets that are currently growing. ber Advisors was one of the experts pointe,” he says. “The transporta- Most would also be well-suited for who toured Pittsburgh as part of the tion issue right now is that we’re at new manufacturing or transporta- Developers’ Showcase. He looked capacity for infrastructure. I think tion that supports the new indus- at the region as having an historical the region has to look at transit- tries. opportunity to provide companies oriented development. We have a great economic environment and a fixed system but we don’t take For all the talk of new urban plan- a unique take on energy indepen- advantage of it. That has to inform ning and culture change, it is the dence. our planning process because there new industries that represent the are some areas that really need new game-changing potential. The region “The idea of locating on a site and investment.” may well be sitting at one of those being energy independent because intersections of opportunity and you can actually tap into the gas The focus on transit-oriented preparation that happen only rarely, wells on your property, that’s not development would be especially but have happened in Western PA so wild a dream,” he said. “It could important to communities that are a few times before. No matter how happen. It could actually happen in along historically active corridors at poorly or well we have managed the Pittsburgh.” DP

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Service Group • Preventative Maintenance • Predictive Maintenance • Full Maintenance • Tenant Modifications • Energy Management 24-Hour Building Maintenance HVAC & Plumbing Service • Controls Management • NEBB Certified Tests and Balancing • Plumbing Service For more information on these Groups and our Power & Industrial and Metal Fabrication Groups, please visit our website:

www.mckamish.com 412.781.6262 Three projects. Two developers. One contractor.

Carl Belli 412.464.3006

Cranberry Business Park - Cranberry Township, PA Chaska Property Advisors

North Shore Place I and II - Pittsburgh, PA Continental Real Estate Companies

Pittsburgh International Business Park - Moon Township, PA Continental/Chaska, LLC. Development Project

The finished exterior of the ServiceLink buildings (rendering by WTW Architects)

feet they also agreed to get a first ity’s efforts to convert as much of Pittsburgh building underway in 2012. On the the 10,000 acres surrounding the way to planning the 53,000 square airport to private, tax-generating International foot spec building a funny thing use. In 2004, the Authority com- happened: they signed a lease for pleted a master plan that identi- Business Park two buildings of that size with loan fied the most likely sites for devel- service company, ServiceLink. By opment and created a hierarchy of November of 2012, the Building 100 opportunities for public support. ike many de- and 110 were under construction Governor Rendell was still early in velopers, the and the master plan was already in his first term and had also identi- partners in need of an update. fied opportunities for public in- the Pittsburgh vestment that would optimize the International Pittsburgh International Business return in new jobs. Among those Business Park Park (PIT Business Park) is the culmi- was the ‘Business in Our Sites’ have had difficultyL getting a spec nation of several long-range public program, which aimed to support building started, although not for policy projects and the work of pub- regional development of pad-ready the reasons you may think. lic agencies at the local, regional sites with high likelihood of at- and state levels. The project is an tracting developers. As it turned When Continental Real Estate example of public investment in a out a couple of public authorities Companies and Chaska Properties site that pays taxpayers back with had a site in mind in Moon Town- signed an agreement to develop the the fruits of private development. ship. 40 acres along Cherrington Parkway The development is one of several Extension into a six-building office that have been offshoots of the “We looked at all the sites that complex of roughly 350,000 square Allegheny County Airport Author- were developable at the airport and

www.developingpittsburgh.com 19 liked the Cherrington site the best. Corporation headquarters. The At the same time Moon Township land had been used as a coal mine came to us and said that they would “The flexibility is in past and the topography wasn’t really like to see the Cherrington the important thing conducive to development. To make site move ahead,” remembers Randy the site attractive, the plan was to Forister, senior director of develop- about the design. The extend Cherrington Parkway south ment for the Airport Authority. “The to Ewing Road and undertake the Moon Township Transit Authority buildings are ver y grading and remediation needed on (MTA) indicated that it was willing amenable to different a brownfield. The price tag for the to fund work that could get the site work was $14 million and would ready. Our feeling was that if the utilization, be that require the coordination of a multi- community is behind this, let’s see light manufacturing tude of agencies. what we can do in Harrisburg.” or all office,” notes The Airport Authority and the MTA The site that was attracting interest Bryant Robey, partner entered into an agreement to pro- was land that lay between Ewing ceed with the work, which meant Road and the end of Cherrington at WTW Architects. lining up funds from the county and Parkway, just southeast of the Eaton state that would cover construc-

20 DEVELOPINGPITTSBURGH | Spring 2013 tion. Funding came from on the North Shore. The conversa- foot. Because the tenants’ access, the Allegheny County tion was along the lines of we’re in restrooms and loading/storage areas Redevelopment Author- the middle of this recession so how are all within the leasehold, there ity, six million in loans are we all going to make a living are no common areas. Useable and grants from the next year,” remembers Ford, who is space and rentable space are the state through the Airport president of Continental Real Estate same. Authority, two million in Companies. “I said we ought to find state loans through the someplace else to build Cranberry “The flexibility is the important MTA and $2.5 million in- Business Park.” thing about the design. The build- vested by the MTA’s capital ings are very amenable to different funding and Moon Town- The product at Cranberry Business utilization, be that light manufac- ship respectively. The Air- Park has a number of features that turing or all office,” notes Bryant port Authority managed the make it different from the tradi- Robey, partner at WTW Architects. contracting and oversaw the tional office product. One differ- While the buildings are from a simi- construction, which wrapped entiating factor is the generous lar concept, Robey points out that up in September 2008, just as parking, with five or six spaces per the team works at making improve- the financial crisis was break- thousand square feet. The buildings ments on each project. “We have ing. have twelve- to sixteen-foot high lessons learned meetings after each windows that create lots of natu- job that are lively and the discussion Another developer planned ral light and open floor plans that can get pretty spirited but we have several multi-tenant office allow for great flexibility in layout. been able to use those meetings to buildings at the site, hoping to There are no elevators or central make a better building.” capitalize on the location and core to reduce the usable space the number of corporate users in the building or to add common Putting the two developers together in the market. The market was area maintenance. Tenant spaces wasn’t a tough sell. “I talked with softening in 2008, however, and each have their own ground-level Barry about being our partner in a severe economic chill eventually entrance for which they can control [Cranberry] but they were busy with scuttled the project. secure access. the Waterfront, so I’ve known him

By 2011, business conditions had recovered in Western Pennsylva- nia. The gas industry – which was only arriving when plans for the site were announced – was now en- trenched and beginning to expand to the airport corridor. Vacancy rates were falling with no new construction planned. Late in the year the airport authority’s marketing of its sites succeeded in attracting new interest.

“We held a tour for developers. Bar- ry Ford and his people were there – Dick Donley may have been too – and a few days later Barry called me (From left) Mike Hudec and Barry Ford from Continental to say that they had a concept that Real Estate Companies with Dick and David Donley from might work on the site and could Chaska Property Advisors. we talk,” Forister recounts.

The concept that Ford had in mind Construction is brick and steel, with and Continental for a number of was single-story flex office build- a matching concrete block on the years,” Donley says. “And then we ings similar to the ones developed back of the buildings. The front ended up using Continental Build- by Chaska Properties at Cranberry elevation is broken up with EIFS- ing Systems to build the buildings Business Park. By coincidence, Ford covered entrances and canopies. in Cranberry. They are really good and Chaska’s Donley had been in The windows are set in 6’4” open- people to work with.” He says that discussions about working together ings to allow for door sets to be in- Jason Stewart was the final piece of for some time before the site tour stalled instead of glazing. The shell the puzzle in common. “Barry has took place. building is able to be delivered for been using Jason for their office approximately $65 per square foot. space for years and I’ve used Jason “I asked Dick to join Jason and I Depending on the tenant’s build out for all our flex space so we all knew and several other business friends and parking requirements, rents are each other very well.” for dinner at one of our buildings between $15.50 and $17 per square

www.developingpittsburgh.com 21 Stewart was aware of the Cher- rington Parkway site by the airport and he really liked it. The site was a mile or less from two interchanges on what is now called I-376, with access at Thorn Run Road and Ewing Road exits on the Parkway West. He also felt that the flex office had great advantages in the airport corridor.

“One of the things about the Park- way West is that it is so deep with corporate users – where do you start - with Bayer, Thermo Fisher, Dick’s, Cigna, GlaxoSmithKline,” notes Stewart. “The Parkway West is the biggest suburban sub-market but it’s seen far less new construction than Cranberry or Southpointe. You have the biggest numbers of users working in an older product. The fact that it’s a 2013 product in a market with 1980’s buildings is a big advantage.”

“The theory that we all bought into was that the airport market is the largest suburban market and with 8 million square feet of conventional office product there was no way we couldn’t lease up 50,000 square feet,” says Donley. “It seemed to us that we had a relevant part of the market and the opportunity to do a large enough park that it could be ational First-Tier Ranked something special. There’s enough N latent demand in the market that we can land tenants who want the convenience of a single-story modern office.”

Stewart believes the opportunity to move into single-story sole tenant buildings – property types that varied greatly from the multi-story, multi-tenant offices they were in construction – was attractive to ServiceLink. He says that having that kind of unique new product in the Parkway West market was a big factor but not the the ‘BEST’ team for your only factor. private and publicly funded projects “The other advantage is Cranberry Business Park,” he explains. “The • • regional national international idea of single-story, no common area add on, full control of utilities looks good on paper, but the fact that we could take them to seven existing buildings was very helpful. When we www.dmclaw.com started in Cranberry it was more a 1.800.243.5412 case of ‘trust us’.”

22 DEVELOPINGPITTSBURGH | Spring 2013 Despite their mutual interest in the project and their belief that the one-story flex building was the right product, the team would not have come together without some help from Donley’s family.

“My wife didn’t want me to get involved in another project unless one of our children was involved to take on some of the work, so the day before we needed to pull the trigger I was going to tell Barry that I was happy to help them with the product but that I couldn’t be their partner,” he recalls. “My son David called me that day from Florida to say that he and his wife really wanted to move back to Pittsburgh. I said, do you need a job? He said yes so I said great, we can do this deal now!”

For several reasons the planning stage of the project was compressed. Of course, the most pressing of the factors was the successful pre-leasing of the ServiceLink buildings, but the project was on a fast track from the start.

With Continental Real Estate as one of the development partners, construction was going to be done by their sister business Continental Building Systems, which had more than a decade of experience working with the principals involved in the project. The partners also brought in WTW Architects and engineers from Herbert Rowland & Grubic, both of which had designed the Cranberry Business Park that served as the inspiration for the PIT Business Park. Building relationships Matt Curtis, vice president of construction for Continental says that We focus on developing and maintaining strong relationships the familiarity made handling the with our customers. Working with you, project after project, has accelerated planning less difficult. made us the largest commercial real estate lender in the U.S. “We did the first building with Dick from a sketch off a napkin as a de- Construction loans • Secured lines of credit • Repositioning/rehab lending sign/build and we’ve treated them Mini-perm loans • Interim/bridge loans • Term loans • Acquisition all as design/build projects,” says Interest rate swaps Curtis. Even though WTW develops a complete set of documents before construction Curtis says the design/ We’d like to build our relationship with you. build mentality and approach lets Contact us today. the team skip a lot of intermediary steps that would be needed for a Mark Monstwil new client. “It helps that these are [email protected] fairly economical buildings to build. They are attractive and well built but there’s nothing very complicated about the buildings.” © 2013 Wells Fargo Bank, N.A. All rights reserved. MC-5426

MC-5426_Developing_Pittsburgh_ad_4.75x4.75in.indd 1 www.developingpittsburgh.com2/6/13 11:2423 AM PIT Business Park represented change For winning results, turn to a for Continental in a couple of ways. For Ford, the product was a depar- team with proven performance. ture from the office product he was accustomed to developing.

“It really is a new product type for me personally. Of course, [Continen- tal CEO] Frank Kass started developing 30 years ago with this same type of property in Columbus,” he explains. “I watched our construction group put the buildings together for seven or eight years and watched MB&M Law Teams: Dick figure the product out to the Real Estate Labor & Employment point where it really works well in the market.” Construction School & Municipal Business Litigation The more significant shift was in Banking & Finance Estate Planning the speculative nature of the project. Continental prefers not to build spec – in fact they had done no spec Call 412-242-4400 office development in Pittsburgh prior to this – but Ford says they had a higher level of comfort because of their familiarity with this flex office concept as a contractor. Plus, Ford says, their partner was entirely com- ittsburgh outh ide orks exford mbm-law.net P s s W W fortable doing spec development. “Dick always says he can’t lease what he doesn’t have.”

Of course, in this case that adage turned out to be untrue. ServiceLink had been in the market for more and better space for a couple of years. They wanted more efficient space and a bigger parking field that made a single-story layout ideal – although they didn’t necessarily know it at the time. The flexibility of the PIT Business Park design gave them the chance to have about ten percent of their space as mail room/storage, Innovative Solutions. Outstanding Support. with both loading dock and drive- in dock access. The open floor plan KU Resources, Inc. provides a full range of environmental management and site that put all of their people on one development engineering services to a wide array of clients. By engaging the skill level also improved their work flow set of the firm’s personnel, clients ensure a quality partner from project inception to and productivity. Having the exist- completion. The firm specializes in: ing park in Cranberry was a big advantage, as ServiceLink was able - Brownfield Redevelopment - Civil/Geotechnical Engineering to touch and feel the product there, - Environmental Site Assessments - Site Development Support and make changes to customize - Environmental Risk Management - Water Resources Engineering the space for their specific needs. - Site Remediation - Water Quality In some ways this project was the - Economic Revitalization Assistance - Litigation Support building they didn’t know they were - Regulatory Compliance - Air Quality looking for; however, there was one issue that was a potential deal breaker. ServiceLink’s corporate real estate policy required that they sign a five year lease, a condition with KU Resources, Inc. which the developers weren’t com- 22 S. Linden Street | Duquesne, PA 15110 | 412-469-9331 fortable. www.kuresources.com

24 DEVELOPINGPITTSBURGH | Spring 2013 “We had a tenant that had a corporate policy of not entering into leases of longer than five years for a number of reasons that made sense for their business but we didn’t want to have two buildings and 100,000 square feet come due on the same date,” explains Don- ley. “What we did was approach them and say how about if we do a four-year lease on one building and a six-year lease on the other. If Ser- viceLink decided not to renew that would allow us to have only 50,000

The PIT Business Park design allows for open floor plans with lots of natural light.

“The reality is we’re a member of “Jason is shaking the bushes awful square feet on the market and two the community too and we want to hard but we’re confident enough more years to market the second see Moon Township thrive and do that we will move forward this building before that lease expired.” well,” he says. “We’re also a public year,” says Barry Ford. “I hope to entity and are like any other public have something in place before The creative solution was in line entity struggling for funding. We we build but we’re pressing ahead with the spirit of ServiceLink’s converted a property that was a either way.” policy. The staggered leases were brownfield into land that is generat- accepted as proposed. ing revenue for the Airport and tax Dick Donley chuckles at the irony revenues for the Township.” of their fortunes thus far. “We’re PIT Business Park is off to a great trying to build a spec building there start. Not only does the ServiceLink As the plan for PIT Business Park but we may never be able to,” he lease effectively double the space is revised and the next building is jokes. that was planned to be under con- planned, interest in the park re- DP struction by now, it has also remains high and the possibility exists duced the speculative nature of the that another single-tenant user project, although Jason Stewart has- may snatch up the building prior tens to remind you that Buildings to construction. The development 100 and 110 were moving along partners are resolute about moving towards 2012 construction without ahead with a third building, with or the ServiceLink deal. without a tenant.

“They effectively did go spec to get ServiceLink in the first place. If they had not already invested heavily PROJECT TEAM for services like the engineering, Continental Real Estate Companies...... Co-Developer entitlements and approvals to do in nine months what often takes Chaska Property Advisors...... Co-Developer eighteen, there may not have been Continental Building Systems...... General Contractor a deal,” he says. “Randy Forister Jones Lang LaSalle, Jason Stewart...... Leasing Agent went out of his way to make that happen. He went outside his role at WTW Architects...... Architect the Airport Authority to smooth the NEXT Architecture...... Interior Design Consultant way with Moon Township.” Herbert Rowland & Grubic...... Civil Engineer Forister says his motives were both Dollar Bank...... Lender idealistic and practical.

www.developingpittsburgh.com 25 Developer Profile

Chapman A rendering of the Properties Chapman Westport project.

here aren’t many commercial real estate phase of the company’s expansion. a difficult period, we were still able developers Thomas explains that both deals to progress and grow, and that had who can look were leveraged, and the reces- everything to do with our people. back fondly sion pretty well killed any oppor- In terms of efficiency, synergy and at the lastT five years. The financial tunity to develop the projects on how we’re positioned for the next crisis and resultant recession made the timetable that was planned. development we’re in a far superior business conditions for development Instead of spinning a tale of gloom position than we ever were before.” very difficult. For Steve Thomas, and bad luck, Thomas is clear that the market wasn’t particularly kind the fortunes of Chapman Proper- Thomas is particularly effusive in during that period, yet he is upbeat ties blossomed because of its most his praise for key executives Tony and proud about the course that his important assets: its people. Rosenberger, vice president of company, Chapman Properties took operations, and Kevin Withers, during that period. “This business started to take off Chapman’s chief financial officer, in the way we function and interact who helped set the tone for a more Just prior to the downturn, Chap- about five years ago, and has accel- customer-focused approach. He’s man acquired two properties that erated and been clicking on all cyl- also clear in explaining that the cur- were to mark the launch of the next inders since then,” he says. “During rent trajectory of Chapman Proper-

26 DEVELOPINGPITTSBURGH | Spring 2013 The Chapman Properties ties comes from every- management team includes Chapman Evans rede- one on staff pulling (from left) Steve Thomas, veloped several older in the same direction. Tony Rosenberger and Kevin Withers. buildings into office He describes the work and retail properties, atmosphere by using built a strip center the F-word: Fun. and profitably improved and flipped a Chapman Properties number of residential has evolved over the properties. Thomas course of the last describes that period three decades. Like in LA as especially many Pittsburgh-based heady times as he and developers, Chapman’s his wife, Judith, were story is also the story becoming established of its chief executive. and starting their And Thomas’ story has family. At the same a few twists and turns, time they were main- although the roots of taining ties to Judith’s his business go very hometown of Pitts- deep. Another buddy of mine from college burgh. Her father was showed me a big commission check Joe Mulach, owner of Mulach Steel. “I was always fascinated with real that came from just one real estate According to Thomas, his father-in- estate. When I was 16 years old deal. I decided I was in the wrong law persisted for a decade in his at- I borrowed $500 from my grand- business.” tempts to attract them to Pittsburgh mother (my parents wouldn’t lend to help transition his business. In it to me) and bought a piece of R-2 After marrying in 1973, Thomas 1987, the Thomas’s made the com- land with two buddies in Cardiff, moved back to California to find mitment to move back. California near where we used to his fortune in the commercial real surf,” Thomas says. “We put $1,500 estate business, joining Coldwell For the next year, Thomas commut- down against a $13,000 price, and Banker as an investment property ed between Los Angeles and Pitts- exactly twenty years later to the day broker. burgh, winding down projects of we sold the property for $260,000.” his California development business “Back then with Coldwell it was while taking on the management of Getting a 20-bagger on his first kind of “all in” if you were a bro- a steel fabricating and design/build deal should have set the course for ker. I got a small salary while I was parking garage business. Mulach his career path but Thomas instead being trained, but then went on a wanted to find a buyer for Mulach went on to college and graduate $400/month draw after leaving a Steel but the market was difficult school before accepting positions in $40,000 a year job in New York. for their businesses. Many of their marketing with J. Walter Thompson My wife wondered if she had mar- projects weren’t making money and and, subsequently, Seagrams in New ried the wrong guy,” Thomas jokes. the company would eventually shut York. On his honeymoon in Greece “My first big deal took 14 months. down operations. The upside for he had a few dinners that would I made nothing for over a year and Thomas was that he had the chance bring him back to his interest in real then got several big checks. I was to work with the assets of Mulach estate. solidly committed to the business Steel, one of which was Leetsdale after that.” Industrial Park. “A buddy of mine from grad school was in Athens working for General After a decade with Coldwell The property was owned 50/50 by Motors selling heavy equipment and Banker, Thomas formed his own Mulach Steel and the principals of he had a couple of meals with my development company, Chapman Turret Steel. Leetsdale Industrial new bride and me,” Thomas re- Evans Company in Beverly Hills. He Park consisted of 130 acres and members. “He told me that he was had done well as a broker, but says one million square feet of buildings leaving the business there to move “I was working with a number of that had previous lives as a steel to Los Angeles to join Coldwell successful developers who were do- processing center for several com- Banker, then the largest commercial ing really well, so I thought why not panies, eventually ending up in the real estate company in the world. try it myself.” hands of Bethlehem Steel. During

www.developingpittsburgh.com 27 ing the former American Bridge and Armco Pipe mills in Ambridge. Tony Rosenberger was focused on making former industrial buildings attractive for small tenants who were often startups. Mulach thought Rosen- berger might have ideas that would allow them to get more out of the Leetsdale property. Rosenberger saw the massive structures’ potential and hit it off with Mulach. “Joe was a card, a real character and we fell in love immediately,” he jokes. “So whenever he had something to fix or update he called me.”

For the next decade, Rosenberger’s their ownership, Bethlehem Steel company worked to renovate pieces built a 360,000 square foot building of Leetsdale Industrial Park. Thomas as part of an initiative to compete “The demand for was impressed with Rosenberger’s with American Bridge. They shut- work ethic, optimism and steady tered that business after fifteen Class A warehouses stream of ideas for improving the years. was much greater property. He was also impressed with the opportunities that the Just before Thomas moved to Pitts- than most people property presented. After arrang- burgh, Joe Mulach had reached out realized ... ing to buy out the Turret Steel to a young industrial contractor interests in 1998, Thomas began a who was having success redevelop- program of development over the

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28 DEVELOPINGPITTSBURGH | Spring 2013 next decade that would fill a market By 2006, the success of Leetsdale “I actually called Tony to see if he demand that was going unmet. Industrial Park presented Chapman could recommend someone for the with a problem: they were running construction and property man- “The demand for Class A ware- out of inventory. agement position I was trying to houses was much greater than most fill,” Thomas says. Rosenberger people realized, because the major- “At that point we were at 90 per- seemed to have had something else ity of the region’s inventory was cent occupancy. We had plans to in mind. “I only interviewed one functionally obsolete,” he explains. build one more 50,000 square foot guy!” “Class A vacancy rates were low, building” explains Thomas “after and people who came to look at which there was no further land What Thomas had in mind was a this market for modern warehouse available for development. So we change in culture for Chapman and manufacturing space often acquired the 300 acre parcel out Properties. His business philosophy couldn’t find what they needed and at the airport that became Chap- is that tenants are customers first, went elsewhere.” man Westport. Of course, we had and that keeping them happy is the no idea what was about to happen best way to ensure ongoing suc- Those first few buildings were done from 2008 through 2011.” cess. The tenant/landlord relation- as spec projects and the market ship can be an adversarial one, rewarded Chapman as companies While Chapman was running out where the objective is for one side signed leases for roughly 500,000 of inventory, Tony Rosenberger was to make money by squeezing the square feet before the buildings facing serious health issues. “I got other side. Thomas believes that were completed. During a ten-year a very bad prognosis so I sold my serving tenants well and keeping period, Chapman doubled the size business and my wife and I decided them happy is the best business of Leetsdale Industrial Park to over to simplify our lives and con- strategy, and much more productive two million square feet, renovat- solidate our properties,” he says. than constantly having to seek new ing all of the older heavy industrial “Then I got through the health tenants. buildings and building roughly issues against all odds and Steve 100,000 square feet of new Class A called. Chapman had always pushed for space every year. innovation in their new buildings,

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www.developingpittsburgh.com 29 The new construction at Leetsdale and Westport is Class A, high-bay space.

making them more efficient and the neck, but he’s our pain in the provides us the tools to financially offering “state of the art” building neck. Go give him a hug.” manage all aspects of operations,” features. Thomas wanted to make says Rosenberger. “Our cash sure Chapman’s attitude towards One of those ‘right people’ was management system gives all of the customer was the same, includ- chief financial officer Kevin With- our vendors a comfort level about ing when they were offering some- ers. He joined Chapman in 2001 timely payments. It gives us a clear thing less than Class A product. He after eight years with J.J. Gumberg, picture of the current status as well was counting on Rosenberger for and brought a discipline that the as future planning.” that. company hadn’t previously had. During his first few years at Chap- Having a responsive maintenance “The right people were here. They man, Withers’ controls and finan- and management team helps keep just needed to be given some direc- cial projections weren’t being fully tenants in place. While Rosen- tion,” explains Rosenberger. “It has integrated into the business. But berger talks about it in terms that a lot to do with getting our outside by 2007, Rosenberger and Thomas may seem idealistic, there is also a staff to look at customers as the agreed to implement the neces- practical side to Chapman’s atten- people who are putting food on the sary changes internally to allow tion to service. Management’s be- table, not as someone who is their everyone to get the full benefit of lief that attracting and building for problem, or who is always bother- a controls and financial information new tenants is much more costly ing us. We teach our people that system that keeps the management than what it takes to stay ahead of it’s a good thing if the customer’s team on top of the business. existing tenants’ needs is a phi- toilet breaks. It gives us a chance losophy that drives their decisions to go over there and see how they “Kevin’s continual review of our about new construction as well, are doing, to see if they need any- tenants, building maintenance right down to landscaping. thing else." Thomas jokes “I tell costs and historically supported them that this guy may be a pain in input from our job costing system

30 DEVELOPINGPITTSBURGH | Spring 2013 “People like to work in comfortable, attractive, clean environments,” says Thomas. “We make a significant investment in landscap- Completely Furnished ing and property maintenance, but in the long run it pays for itself. It Move In Ready Space for really does.” $25/RSF …Installed!™ Comfortable, attractive environments are a big part of the Chap- man Westport plan of course. The project will eventually be larger than Leetsdale Industrial Park, with 2.6 million square feet of Class A warehouse, manufacturing, office and retail space planned on a 300-acre site. Chapman Westport lies along I-576, the Findlay Connector, just 3 minutes from the airport, and is situated in a sweet spot for its planned use and the region’s growth.

“It’s a better site than Leetsdale, with great access to the airport,”

Chapman had always pushed for innovation in their new buildings, making them more efficient and offering “state of the art” building features. MOBILI, Pittsburgh’s leading modular architectural Thomas says. “One hot button for logistics busi- interiors provider, has created the industry’s most nesses is to be right on an interstate so truck driv- innovative products and service program. Our ers don’t waste time and fuel wandering around turnkey program includes: local roads. It’s hard to find that in Pittsburgh." He sees Westport as a hub for that part of the region. • Glass Walls “It may not become Tyson’s Corner in my lifetime, but if Pittsburgh continues to grow, the place it’s • Systems Furniture going to grow is in and around the airport.” • Modular Desks Thomas acknowledges that Pittsburgh has not quite • Office Seating yet returned to a spec development market, but he expects to be under construction on the first build- • Voice & Data Cabling ing at Chapman Westport later this year or in early 2014. It is planned as a ten-year project, one that • Carpet Tiles will take Thomas into what should be a retirement. ® He chuckles when asked why he’s taking on a new • LEED Compliant Products challenge at this point. • GREENGUARD® Certified “I’m a deal junkie. There’s no doubt about that, but I’m a cautious one at this point. You ask why Contact Us Today to Learn More! I am still doing this at this stage of my career. As long as I stay healthy and continue to enjoy the business, I’ll be here. This place and these people [email protected] are why. We are really having a lot of fun.” DP 412 281 6090

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A rendering of the canal’s wider third lane after construction is completed. Source: Vickerman and Associates.

expansion on transportation and The Panama Canal connects the The Expansion distribution for regions that are Atlantic and Pacific oceans and is far removed from Central America, used by as many as 14,000 vessels of the Panama places like Pittsburgh. a year, handling about five percent of the world’s trade. Those ves- Canal Will The project sets up several scenari- sels are, by necessity not the size os that describe a perfect marriage that move most of today’s freight Revolutionize that will create more than double because the current canal capac- the volume of goods being cur- ity does not accommodate the Logistics rently transported by truck and rail state-of-the-art ship, referred to as from the East Coast ports within a post-Panamax. Once complete, the or more than few years. Adding to that incoming expansion project will cut voyage five years, con- freight is the yet unknown volume times and costs for these bigger struction has of shipping needed to move natural ships. It will open up new trade been underway gas products from the Marcellus/ routes for energy fuels and manu- on the expan- Utica fields to the Pacific Rim. But factured goods. sion of the against this burgeoning oppor- Panama Canal in order to accom- tunity there are also factors that It is the size of the post-Panamax F could blunt the need for infrastruc- ships that is driving the changes. modate the larger and larger ships moving goods from the Pacific to ture growth and render the canal According to global shipping expert the Atlantic and vice versa. The expansion a non-event for the East John Vickerman, demand for cargo project is expected to cost $5.25 Coast. moved over water in container billion upon completion, which has ships will grow by 260 percent by been delayed until fall 2015. It has It’s helpful to start with a look at 2025 compared to 2009. Virtu- only been recently, however, that what experts see as the change in ally all of that growth is coming experts in logistics have been mak- trade flow that will result from the from Asia and most of the world’s ing noise about the effects of the improved canal. shippers prefer to bypass the North

www.developingpittsburgh.com 33 American ports altogether because northeast. By 2050, this zone will either the Suez Canal or the rail- they don’t meet modern standards consume more than 60 percent of roads – which relieve the congested and are therefore too expensive. the goods in North America and West Coast ports – that increased shippers will need to get to the volume will follow. “Pacific ship- Because of U. S. demand, however, hubs of that consumption zone as pers will want to ram as much global shipping still moves actively quickly as possible, meaning that cargo through the Panama Canal as to the ports on the West Coast and the East Coast ports will still have possible.” another sea change is a motive for value. making better access to the East Those increases may be more Coast. The continued maturation of Because of the dim view of North strategic to the regional economy the markets in the southeastern American ports and the conflicting than simply the doubled volume U. S., in combination with the on- need for shipping access to those that is predicted. Because of the going spread of the major eastern markets, the government of Pana- accelerated growth of U. S. manu- and midwestern cities, is creating a ma realized that the canal was at facturing and agriculture – which massive consumption zone stretch- risk of losing its value but that en- is growing at 19 percent annually – ing from Atlanta to Chicago and abling better access could actually there will be much higher volumes

The expanded canal will allow for ships that are more than two-and- half times the size of today’s vessels. Source: Vickerman and Associates. increase the volume of trade. The of products that originate or run Panama Canal project represents an through the Tri-State area. About investment equal to 16 percent of 55 percent of dry bulk freight According to global the nation’s GDP. Panama is betting like grains and fertilizer currently that enabling transit will attract moves through the Canal but that shipping expert shippers even if the North Ameri- is expected to grow to 80 percent John Vickerman, can ports aren’t as desirable. The of all trade. No crude oil and only success of that bet holds the key ten percent of liquid natural gas demand for cargo to the logistical changes that may move through the Canal today but moved over water follow. those volumes are estimated to be 42 percent of oil and 90 percent of in container ships “Their investment suggests that LNG by as soon as the 2015 open- will grow by 260 Panama wants to be the Singapore ing. The latter opens the door to of the Western Hemisphere,” says China and the Pacific Rim for gas percent by 2025 Vickerman. He points out that if producers in the Gulf and in the compared to 2009. Panama bases its tolls on volume – shale formations that move gas the toll structure has not yet been through the Gulf portals. announced – and there is little or no competitive price cutting by

34 DEVELOPINGPITTSBURGH | Spring 2013 An economic boom is expected natural gas add to the volume of for the North American ports and freight in America’s heartland when efforts are being made now by Global demand for the Canal project opens in 2015, these ports. In order to be ready to container freight the enhanced access to growing accommodate the new generation global markets – at much cheaper of ships from day one, the Port Au- moved by ocean will rates – will likely be a competi- thority of New York and New Jersey not wane in anyone’s tive stimulus for those businesses is spending $1 billion to raise the to grow. And the sheer volume of Bayonne Bridge. According to esti- forecast for the goods moving through the U. S. mates from the U.S. Army Corps of future. Container ports in the east will create jobs on Engineers, $6 billion to $8 billion a large scale. a year in federal, local and private ship technology is money is being spent by U.S. ports moving towards even Ken Simonson is the president of to modernize. the National Association of Busi- larger ships, perhaps ness Economists in 2013. Also the Since many of the U.S. ports are chief economist for the Associate already deep enough to accom- double the current General Contractors, Simonson had modate the post-Panamax ships, capacity again by the opportunity to brief the Federal the principle changes are focused Reserve Board in December 2012 on how to deal with the influx of 2030. on the impact of the Panama Canal additional cargo post-Panamax project on domestic construction ships will be carrying. The Port of and the economy. Simonson says Miami is spending $607 million to the magnitude of the opportunity bore twin tunnels that will allow Global demand for container isn’t lost on the Fed. for big-rig trucks to avoid the busy freight moved by ocean will not downtown streets of Miami when wane in anyone’s forecast for the “The Chairman asked questions the trucks are entering and leav- future. Container ship technol- that showed he understood the ing the port. In Maryland’s Port of ogy is moving towards even larger subject and its effects very well,” Baltimore, the current tunnel out ships, perhaps double the current Simonson remembers. of the port is not tall enough for capacity again by 2030. Moreover, double-stacked trains and the rail- the costs of shipping by ocean are John Vickerman is less reserved road company, CSX, is planning on extremely favorable. Freight costs in assessing the opportunities. He building a new rail-transfer facil- for a single container are $1,000 presents the case for the widening ity that will assist double-stacked higher by rail compared to ship. to be what he calls a “Y2K event” trains exiting the port. Here in – Panama decides on higher tolls, Pittsburgh, CSX is currently spend- Those cost differences grow even railroads cut rates aggressively or ing more than $20 million for a more when freight is moved by the Suez reacts competitively – but similar tunnel raising in Station truck, roughly 6.7 times that of it’s clear that he believes that the Square and is preparing to build a ocean transportation. One of the wider Panama Canal will result in $50 million cargo terminal along other logistical considerations of much more trade. the Ohio River. the Panama Canal widening is a reconfiguration of distribution “I personally believe the Canal The $842 million National Gateway facilities to limit the amount of opening will be what leads the Project that CSX undertook almost movement from port to destination. U. S. economy into real recovery,” a decade ago is aimed at linking its These dynamics are working to he predicts. DP best rail lines to Chicago from the make Chicago a super-hub, capital- ports of Wilmington NC, Norfolk izing on its rail capacity and avail- and Baltimore. The Gateway lines able nearby land. As an example, will run through Pittsburgh. More- WalMart built a 3.4 million square over, as the reality of the merged foot import distribution warehouse consumption zones grows closer in at the Joliet, IL rail yards to serve the next decade, there is increased the upper Midwest. The cost of the likelihood that Pittsburgh will be new building was entirely offset valued as an intermediate logistics by the savings in moving freight hub between the Harrisburg and by truck to multiple warehouses Columbus primary hubs. If the ex- throughout the region. pansion of the shale gas extraction and distillation follows the game The economic ripples go beyond plan the industry has shared, this the business opportunities for new new inland logistics infrastructure buildings and infrastructure. Re- will have heightened origination gardless of whether or not revital- and destination demand in South- ized manufacturing, agriculture or Western PA.

www.developingpittsburgh.com 35 Eye on the Economy

ear-end and in 2013 since the Chinese govern- Consistent gains near the levels January/Febru- ment and regulators seem to be experienced in 2012 would result ary economic reacting again to growth concerns in a rosier employment picture than data are paint- instead of inflation fears but the most have forecasted. On average, ing a picture outlook for Euro zone is for more 150,000 new jobs must be created that is slightly sluggishness. each month to keep pace with the more optimisticY about the econom- growth in population alone. Gus ic recovery shifting into a growth The January employment data is Faucher, vice president and senior cycle, at least in the second half perhaps the best reason for op- macroeconomist at PNC Financial of the year. At the macroeconomic timism. Although the estimates Services, pointed out in his remarks level, however, a few potential of 157,000 new jobs created in at the NAIOP Pittsburgh symposium potholes still exist that could prove January were slightly lower than in January that it is the ongoing the optimism unfounded. expected, it was the final review four million job shortfall in employ- of the 2012 data that was the big ment that is dragging the recovery. Starting with the potholes, the story in the January 30 announce- Faucher forecasts that employ- uneven pace of employment growth ment. Employers added 335,000 ment will grow by 160,000 jobs per and the collateral damage from the more jobs in 2012 than initially month in 2013 and sees the unem- political wrangling over the budget reported, boosting the monthly ployment rate falling modestly to pose threats to business expansion average to 181,000 from a prior 7.4 percent by year’s end. that could put the economy back estimate of 153,000, with surpris- in neutral or even trigger another ing findings for the fourth quarter. The Pittsburgh region's unemploy- recession. Corporate earnings and The number of new jobs created in ment rate remained below the small business growth continue December was revised to 196,000 national averages in January, at 7.2 to be under pressure from global from 155,000. November’s figure percent. The January rate was a weakness. Europe remains a weak was revised to 247,000 — the big- reversal of the recent upward trend market, which hurts both U. S. and gest increase in 10 months — from that saw slight increases in unem- Chinese exports. The Chinese mar- 161,000. ployment during 2012. Payroll em- kets should return to higher growth ployment in Pittsburgh continued to climb in 2012, reaching a new historical high of 1,180,000 jobs.

There were other bits of data released at the end of January that may have been cause for celebration or gloom but for the unusual circumstances caused by the perceptions of the outcome of the debt limit haggling. Personal income spiked by 2.6 percent in December but the increase is at- tributable to the acceleration of dividends paid out prior to the change in tax year. In fact, dividend income alone was reported at a rate that was 34.3 percent higher than November’s. The Chicago Purchasing Manager Index – which intends to monitor manufacturing activity – jumped from 50 to 55.6 in January, but the increase was more likely the response to the pullback in government purchasing and business activity ahead of the ‘fiscal cliff’ solution.

36 DEVELOPINGPITTSBURGH | Spring 2013 What does concern That dip in activity after November that a more reasoned debate or is also credited for the decline in economists is the easy compromise on the budget gross domestic product, which ac- eventual outcome of deficit and sequestration solution is tually showed a 0.1 percent decline forthcoming. And in the meantime, in the last quarter of 2012, after the budget deficit there is likely to be the kind of growing 3.1 percent in the third battle. Aside from the strident positioning from both sides quarter. Because of the unusual that created the uncertainty among decline in government activity psychological impact businesses and consumers at year’s most observers were reluctant to end. even accept the estimate of decline the uncertainty until revisions are done this spring. causes, there are a With 70 percent of the U. S. econo- Economists see the decline – if that my tied to consumer spending it’s data proves to be accurate – as number of potential important to look at where the unrelated to the overall economic measures that could consumer sits in the first quarter trend. of 2013. By virtually all measures, be taken to solve the American consumers have worked What does concern economists is problem that could through the effects of the mort- the eventual outcome of the bud- gage crisis and reconciled their get deficit battle. Aside from the be damaging – in the personal balance sheets. Debt has psychological impact the uncer- short run – to the been reduced to historical norms. tainty causes, there are a number Home prices have either recovered of potential measures that could economy. or more commonly, the necessary be taken to solve the problem that measures have been taken – how- could be damaging – in the short ever painful to the homeowner. run – to the economy. able than any compromise, par- And for the near term, consumers ticularly since the White House is appear unlikely to take equity out An excellent example of such not offering spending cuts that of their largest hard asset to fi- measures is the compromise that conservatives feel are appropriate nance the purchase of consumable allowed Congress and the president in kind or magnitude. The decision or depreciating goods. to avoid the fiscal cliff in Janu- to raise the debt limit through May ary. The income tax increases that 18 helped avoid the kinds of nega- The two most watched measures of were enacted on higher earners are tive repercussions that occurred in the consumer are showing a diver- expected to put a $50 billion hit August 2011, but there was noth- gence in trend that is one source on the taxpayers’ wallets; however, ing in that action that indicated of optimism about the potential for the bigger tax increase – the two

percent increase in Social Security Graph by Integra Realty Resources. tax – is predicted to cost taxpayers double that amount. Although the first data on spending showed that consumers largely shook off the increase, experts predict that smaller paychecks will result in less spending during the first half of 2013.

Of course, the more dangerous outcome from the fiscal negotiations would be for the steep budget cuts to occur instead of a more measured approach. These so-called ‘sequester’ cuts would result in short-term job losses and unexpected declines in business revenue that are certain to cause negative GDP growth. Fiscal conservatives may find the painful medicine of these cuts more politically desir-

www.developingpittsburgh.com 37 The improved consumer balance sheet is one of several key factors indicating that the long-awaited housing recovery is imminent. Housing affordability, as measured by the ratio of rent or mortgage payment to household income is at 16 percent, a level not seen since the 1980’s. Interest rates continue to be at all-time low levels. Home values have stabilized and turned higher in 2012, according to the Case Shiller Index. And demand for new housing from continued household formations has been pent up since 2007 and the construction of new units has been at a pace that is roughly 50 percent of the formation rate.

The conditions for a housing recovery are ripe, which is actually a potential concern for the continued health of the multi-family market. recovery. Consumer sentiment, Paul Griffith, managing director for which leads spending, has been Integra Realty Resources in Wex- “The risk with multi- trending upward since late 2009 ford, put forth his concerns about and has now pushed past the the multi-family market at IRR’s family with two readings at the height of the last annual Viewpoint presentation at year construction boom in 2007. Consumer spend- the Rivers Club on January 24. Cit- ing, as measured by real personal ing the affordability and the high schedules is in their expenditures, has been more level of projects in the pipeline – exit strategy. [With volatile and less resilient to the potentially adding 4,000 units to long-term trend. Spending dipped the inventory during the next few low rates] the risk is steeply around the time of the years – Griffith raised the possibil- getting a permanent debt limit deal and downgrading ity that multi-family demand could of U. S. credit in August 2011, soften rather quickly. He also raised loan when they did a only reaching the levels of the concerns about some fundamental early stages of the recovery in investment problems. deal based on a 6.5 2010. Personal expenditures re- cap rate and in 2015 main more than 20 percent lower “The risk with multi-family with than the volume at the peak of two year construction schedules it’s a 7.5 cap rate,” he the boom. is in their exit strategy. [With low says. Griffith explains rates] the risk is getting a perma- What can you take away from nent loan when they did a deal that the artificially low this data? The glass half full based on a 6.5 cap rate and in rates are disguising analysis is that there is significant 2015 it’s a 7.5 cap rate,” he says. room for growth in consumer Griffith explains that the artificially potential problems with spending. At the moment, per- low rates are disguising potential income. “You have to sonal expenditures are nearly $2 problems with income. “You have trillion less than in 2007. Some to maintain a 4.8 percent net oper- maintain a 4.8 percent of that decline is due to delever- ating income growth each year to net operating income aging and part is due to a steady maintain the same value as today increase in savings rate. Those in 2017, if you assume that the cap growth each year to savings are the untapped poten- rate is 7.25 then.” tial. On the other hand, the trend maintain the same may also indicate that a different A commercial property type with value as today in 2017, consumer has emerged from the investment fundamentals trend- recession, one that will continue ing in the opposite direction is if you assume that the to save a larger share of his/her the office building. With vacancy cap rate is 7.25 then.” salary or continue to reduce debt rates falling, especially in the key to more traditional levels. submarket areas, the market for new office product is tight and

38 DEVELOPINGPITTSBURGH | Spring 2013 the environment is very favorable investors need an exit strategy and momentum in employment – espe- for rent increases. In addition to they are looking for an internal cially given the potential for a more spurring development projects, rate of return that is in the high robust housing recovery – should the upward trend in rents has also double digits. When we had stable begin to support better conditions attracted the attention of national occupancy and stable rents, with for GDP growth beyond three per- and global investors, leading to the ongoing operating expenses cent. For the most part, the mac- higher volume in transactions and of the building it was hard to get roeconomic conditions point to the sales prices that are well above the internal return or an exit strategy.” return to growth in 2014, making norm. The sales of PPG Place and this coming year a time for identi- 11 Stanwix set the bar higher in Pittsburgh’s tightening supply fying key indicators of growth and 2011 and last year’s larger commer- means the likelihood of rising rents positioning assets for growth. cial sales showed a continuation of for the next three-to-five years. the trend, with the DelMonte Build- Integra’s mid-range forecast was For the commercial real estate mar- ing changing hands for $194.40/ for rents in Oakland and Downtown ket in Western PA, the economic square foot and the EQT Building to reach the mid-to-high $30’s growth cycle is already underway trading at $155.60 with a ground and suburban rents to reach as but the vulnerability to unexpected lease. high as $26/square foot for Class global events remains, at least A space. With a suburban office until the expected boom from the CBRE’s incoming managing director vacancy rate that is the lowest of natural gas downstream industries Jeffrey Ackerman says the investor the 61 top U. S. markets, Pitts- occurs. The next step towards that interest has everything to do with burgh should continue to stay on reality – the green light from Shell the trend in rents. the radar of investors from around for its cracker plant – is expected the globe. in the first part of 2013. “It has been hard to get institu- DP tional investors interested in this Global weakness, uncertain U. S. market. Their big objection was policy direction and somewhat that the rents never go up and if smaller consumer paychecks are you look at the period from 1995 likely to keep the economy from to 2005 there was no growth in a marked upturn during the first rent,” he explains. “Institutional six months of 2013. The gathering

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www.developingpittsburgh.com 39 Office Market Update

bottomed out at 8.2% which is a decline of 220 basis points from year- end 2011. Certainly the dwindling supply of Class A space and the impact on asking rents speaks to the strength of the region. However, this same strength has caused head- aches for many tenants looking to renew, expand and/or relocate – primarily those in search of larger blocks of space 25,000 square feet and greater.

Central Business District

Maintaining a trend that began a few years ago, the Central Business District (CBD) was once again in the spotlight in 2012.

Development news was plentiful during the year. PNC Bank was responsible ittsburgh 2012 quite an increase considering the for the last completed OFFICE Review previous year-over-year increase office tower in the CBD and contin- Named by the was a mere $0.34 per square foot. ued to feed the construction pipe- Brookings In- Vacancy levels for premium space line as it demolished the future site stitute as one of only three metros in Pthe nation to recover from the Great Recession, the Pitts- burgh office market closed 2012 on a positive note. Vacancy rates maintained a downward trend, dropping 150 basis points from the end of 2011 resting at 14.1%; year-to-date absorption was positive, hitting a respectable 699,107 square feet; weighted asking rental rates climbed to a historical high of $20.38 per square foot and the marketplace experienced a flurry of property sales.

Class A product continued to break records. Weighted average asking rental rates reached an unprecedented $23.63 per square foot, up $1.26 from a year ago. This is

40 DEVELOPINGPITTSBURGH | Spring 2013 Class A product continued to break records. Weighted average asking rental rates reached an unprecedented $23.63 per square foot, up $1.26 from a year ago. This is quite an increase considering the previous year- over-year increase was a mere $0.34 per PLEASE CONTACT OR VISIT Jason Stewart, Jones Lang LaSalle www.cranberrybusinesspark.com square foot. 412-208-1400 [email protected] www.property.jll.com/PIBP of its 800,000-square-foot headquarters building. This will be an owner-occupied building that will not have competitive space to lease to third party tenants. However, its construction may impact the competitive marketplace as PNC may pull operations from leased space in several submarkets, including the CBD. Further, PNC purchased the vacant 120,000-square-foot Lord & Taylor building with plans to renovate the former department store to house 800 PNC employees. Across the street from this property, Oxford Development announced plans to either demolish the existing 441 Smithfield Street building to make way for a new, 33-story, 772,000-square-foot office tower or renovate the existing property into 180,000 square feet of Class A office product. In Market Square, Millcraft Industries began moving dirt to make way for The Gardens. The new development will include 120,000 square feet of office space, 22,500 square feet of retail and a 175-room hotel.

Unfortunately, these new projects will do little to alleviate the cur-

www.developingpittsburgh.com 41 The trends for rents and vacancy rate in metro Pittsburgh since the peak of the last cycle. at One PPG Place, while Gateway 23-story Clark Building, with a Health Plan departed USX Tower bid of $7 million. Characteristic leasing 100,000 square feet at Four of PMC is the conversion of of- Gateway Center and Highmark took fice properties into a residential or rent demand for Class A product in occupancy of 57,248 square feet at partial residential use. Should they the CBD. The availability of Class 6 PPG Place. maintain this business strategy, A space continued to spiral down- they could further deplete office ward, with year-end 2012 vacancy Investors turned to Pittsburgh inventory while continuing to fuel settling at 5.6% - a level not ex- once again in 2012 to satisfy their the CBD housing market. perienced in over 30 years. Fur- appetite, with several sales occur- ther, weighted asking rental rates ring in the CBD. Some of the larger In the Southside sector of the spiked, reaching $27.60 per square trades included the acquisition CBD/ Fringe, the University of foot. Comparatively, rates closed of the 557,559-square-foot Penn Pittsburgh Medical Center (UPMC) 2011 at $25.90 per square foot. Avenue Place by Healthcare Trust exercised their option to purchase Limited Class A opportunities will of America. The property traded the 160,000-square-foot Quantum push users to consider Class B and for $97 per square foot. Adding I from the Soffer Organization and C product to satisfy their immedi- to their newly established high- Rugby Realty obtained the seven- ate needs. However, while space is profile CBD portfolio, Highwoods story Birmingham Towers through a plentiful in these product Classes, Properties purchased one of the ‘deed-in-lieu-of-foreclosure’ trans- tenants may have to wrestle with market’s premiere CBD proper- action. the associated consequences result- ties – the 32-story EQT Tower – for ing from the challenges plaguing $161 per square foot. In the fall Suburbs some of these properties. Further, of 2011, Highwoods purchased an anticipated reduction in office the trophy 1.5 million-square-foot While property sales were plentiful availabilities due to use redevelop- PPG Place complex. Local owner/ in the CBD, the suburban markets ment in a few of these buildings developer Elmhurst Group paid were not left out in the cold. 2012 could create another obstacle for $7.35 million or $57 per square trades included Cranberry Woods tenants in search of larger blocks foot for the Fiserv Center building. Building 4 in the North submar- of existing space in the CBD. PMC Property Group scooped the ket by CG Net Lease Investors LLC 361,576-square-foot Regional En- for $307.00 per square foot - the Notable tenant lease commitments terprise Tower, which also included highest sale of the year for an of- in the CBD in 2012 included renew- the Harvard Yale Princeton Club fice property; the 207,000-square- als by Citizens Bank at Three Mel- and a vacant building, for $7 mil- foot Park Place Corporate Center lon Center for 141,000 square feet, lion. They also acquired the James was acquired by USAA Real Estate Koppers Inc. for 70,000 square feet H. Reed building for $30 per square for $18.2 million in the Parkway at the Koppers Building and Ernst foot and were the winning bidder West submarket; Starwood Capi- & Young for 45,000 square feet in an auction for the distressed tal Group made its debut in the

42 DEVELOPINGPITTSBURGH | Spring 2013 marketplace with the acquisition of (RIDC), owners of the 178-acre for- that is expected to be completed in the 235,902-square-foot 2000 Park mer LTV Steel plant in Hazelwood, 2013. Both companies have out- Lane, and Rugby Realty Co. Inc., divulged plans to begin infrastruc- grown their existing buildings in acquired mortgages totaling $9.3 ture improvements in the hopes of Southpointe I. million for two buildings totaling attracting developers for housing, nearly 120,000 square feet in Penn light industrial and office space. The impact of unstable economic Center West conditions plaguing the nation over The Parkway West and South sub- the past few years has been less- Several segments of the suburban markets were home to the largest volatile for the Pittsburgh region. submarkets experienced an increase suburban lease transactions dur- A lack of overbuilding within the to already-high occupancy levels ing the year. Sizeable transactions competitive office market combined during 2012. The northwest cor- included The Williams Companies with demand from the energy, ridor in the North, the Southpointe who inked a deal for 112,394 healthcare, financial and profes- region of the South and the Oak- square feet at Park Place Corpo- sional services, technology and land/East-End submarkets held their rate Center in the Parkway West education sectors have helped the position as the tightest locations in submarket, while Chevron leased Pittsburgh commercial marketplace the Pittsburgh marketplace. Tenants 66,713 square feet in Building 600 endure uncertain times. However, in search of 10,000 square feet or at Cherrington Corporate Center. if Pittsburgh is to satisfy demand greater seeking quality space alter- Also in this submarket, ServiceLink and foster growth, new product is natives in these market segments needed, desperately so in certain faced a duality of few options segments of the marketplace. There and competition with other us- is currently 1.5 million square ers. Conversely, tenants seeking Investors turned feet of space under construction occupancy in the East submarket prompted by the growth of exist- were greeted with an abundance to Pittsburgh once ing tenants, with all but 13 percent of opportunities. Vacancy in the again in 2012 to committed. As tenants vacate their East ended the year at 26.5% - current locations to take occupancy over 11 percentage points higher satisfy their appetite, of their newly constructed prem- than any other submarket in the with several sales ises, the market may experience marketplace. some loosening. Still, we anticipate occurring in the CBD. that this space may dissipate rap- Construction deliveries through- Some of the larger idly due to continued growth and out the suburbs in 2012 only to- pent-up demand. taled 180,500 square feet. Market trades included the absorption was such that half was acquisition of the For information about office leas- committed, doing little to alle- ing, contact Gerard McLaughlin, viate the demand from Class A 557,559-square-foot executive managing director at users. Strict lending standards es- 412/434-1036 or GMcLaughlin@ tablished in the wake of the Great Penn Avenue Place ngkf.com Recession have made it nearly by Healthcare Trust impossible to finance pure specu- Pamela Lowery is vice president lative construction. However, of America. The of research and marketing for several owners and developers in property traded for the Pittsburgh office of Newmark the most constrained submarkets Grubb Knight Frank. announced plans to bring new $97 per square foot. DP inventory to the market place; all with some level of tenant commitments. Chaska Property Advi- sors and Continental Real Estate Company began development of signed a lease for 106,000 square Pittsburgh International Corporate feet at Pittsburgh International Center – a 360,000-square-foot Business Park. ServiceLink will va- project in the Parkway West sub- cate their existing home in Airport market. In the East Liberty corridor Office Park and will relocate into of the Oakland/East End submar- two 53,000-square-foot buildings ket, Walnut Capital plans to be- sometime in the fall of 2013. In gin construction of Bakery Square the Southpointe II segment of the 2.0, a mixed use project that will South submarket, Ansys commit- include 400,000 square feet of ted to a new 186,000-square-foot office space that is expected to headquarters building, accompa- complete in 2014. Further, the nying Mylan who announced the Regional Industrial Development construction of a 280,000-square- Gerry McLaughlin Corp of Southwestern Pennsylvania foot, 5-story headquarters building

www.developingpittsburgh.com 43 Industrial Market Update

ctivity in the to $5.22/square foot, an increase Significant lease transactions in the Pittsburgh of 6.5 percent from the fourth quarter included the following: Industrial quarter of 2011. At the end of market slowed 2012 the total size of the Pitts- Carter Lumber leasing 160,000 during the burgh industrial market was 168.3 SF at 615 East Butler Road in fourth quarter million square feet, with 13.8 Butler, PA due to politicalA uncertainty and the million square feet available for looming fiscal cliff. Fortunately, lease. Net absorption for the year Protoco PPI LLC leasing 151,000 vacancy rates continued to decline was 388,068 square feet. Industrial SF at Jackson’s Pointe Commerce and absorption has remained posi- space totaling 174,000 square feet Park in Evans City, PA tive. was delivered into the market in 2012 and another 146,313 square Comtech leasing approximately For the full year 2012 the vacancy feet of space was under construc- 100,000 SF to occupy the re- rate fell to 8.2 percent, down from tion at year’s end. mainder of 135 Meadow Lane in 8.9 percent at the end of 2011. As Canonsburg, PA a result, the average rent moved up

44 DEVELOPINGPITTSBURGH | Spring 2013 A unique revival of the manufacturing industr y is starting to occur in Southwestern Pennsylvania. This has been seen in both heavy and light manufacturing.

The lack of existing product and absorption of older inefficient product by companies affiliated with the Marcellus Shale continues to cause a rise in rental rates. More specifically, the market is in a position where demand is outpacing supply. A good example is the Buncher Company’s most recent development in Evans City, PA, Jackson’s Pointe Commerce Park. Construction of a 69,000 SF speculative building commenced in the first quarter of 2012 and by the end of the fourth quarter 50,000 SF of the spec building had been leased plus an additional 200,000 SF of warehouse space that had yet to be constructed.

A unique revival of the manufacturing industry is starting to occur in Southwestern Pennsylvania. This has been seen in both heavy and light manufacturing. Examples include ATI-Allegheny Ludlum’s continued expansion in Bracken- ridge, Holtec’s expansion into an additional 200,000 SF at RIDC’S Keystone Commons in Turtle Creek and Aquion Energy’s lease of over

www.developingpittsburgh.com 45 access to a skilled workforce in the region.

User activity will continue to outpace supply. Compa- nies will exhaust all options in order to be more efficient and reduce the cost to the end user. In the Pittsburgh market this could lead to more built- to-suit transactions versus users settling for inefficient space. Pittsburgh will continue to be considered for international manufacturing site searches due to Amy Brocato the available infrastructure and labor. It will likely see greater growth of companies involved in the new high tech manufacturing – i.e. robotic enhanced production due to the region's fostering of tech related businesses and proximity to Carnegie Mellon University.

315,000 SF in the former Sony Plant Amy Brocato is a broker (2nd Quarter 2012) in Westmoreland specializing in industrial and office County. The manufacturing revival has properties at Langholz Wilson Ellis. She occurred in part due to the existing rail can be reached at [email protected] infrastructure, the river network and or 412-261-7115. DP Matthew Virgin Principal, Langholz Wilson Ellis

46 DEVELOPINGPITTSBURGH | Spring 2013

Retail Market Update

n a sea of insta- “neighborhood” that anchors the For many years, retailers viewed bility, once again region. Pittsburgh as a secondary or tertia- Pittsburgh stands ry market with many opting not to out as a bastion The success of downtown mirrors enter the market. This has changed of stability. The the success of the region. Retail- dramatically. Now, the region is Pittsburgh region ers no longer view Pittsburgh as an experiencing grocery wars with gro- has flourishedI and came out of the emerging market, but rather one cers such as Whole Foods, Giant Ea- recession unscathed and stronger that has emerged. Virtually every gle, Trader Joe’s, Fresh Market (un- than ever before. Countless retail- retailer, both on the high end and der construction), Market District, ers and developers have flocked the low end have embarked on an Aldi, and Bottom Dollar all compet- to Pittsburgh seeking opportunity, expansion program unlike anything ing for market share. Additionally, growth and prosperity. They have Pittsburgh has ever experienced. As virtually every mid-size and big box not and will not be disappointed. a result, retailers and restaurants in the region has been filled with such as Nordstrom, Cheesecake credit retailers such as Ross Dress Any discussion of Pittsburgh, Factory, L.L. Bean, lululemon, The for Less, Marshall’s, TJ Maxx, Dick’s, needs to begin with the success Capital Grille and Crate & Barrel HomeGoods, Hobby Lobby and LA and repositioning of the Central have either entered or expanded Fitness. Lastly, new-to- market full Business District (CBD). The CBD their presence in the market. The service and quick casual restaurants has seen development after devel- totality of this growth is that the such as Bonefish, Texas de Brazil opment in the last several years net absorption in the region has (coming soon), Burgatory, Noodles approaching $5.5 billion dollars surpassed over 250,000 square feet & Company, California Pizza Kitch- in construction costs. With cranes in the last year, while at the same en and Anthony’s Coal Fired Pizza in the air building new mixed-use time rents have increased to levels have given diners plenty of quality developments such as Piatt Place, that have never been seen. Thus, seats to fill for years to come. As Market Square Place and Three the availability rate throughout the discussed previously, there are more PNC Plaza and thus reshaping the region is approximately 9.5% and retailers and restaurants looking for heart and soul of the urban core. should drop below 9% by year end. space to grow than there are actu- The downtown and surround- In many regional markets, the avail- ally available prime spaces. ing area is unrecognizable versus ability rates are 5% or less with tre- years and decades past. Over 25 mendous upward pressure on rents. All of this growth has led to new new restaurants, several new ho- This demand on the present retail retail and mixed-use developments tels and thousands of new multi- supply bodes well for landlords and throughout the region. McCandless family apartments and condomini- creates some expansion challenges Crossing and Cranberry Crossroads ums have transformed the CBD for retailers given the lack of prime (North), Blue Spruce Shoppes (East), into a bustling, vibrant and vital retail space. (See chart). and The Gardens (CBD) and Conti-

Pittsburgh Retail Forecast Summary: 2013. Source CB-Richard Ellis.

48 DEVELOPINGPITTSBURGH | Spring 2013 nental North Shore (North Shore) The growth in employment has led 600 Grant Street, Suite 4800 are just a few of the new develop- to an overall unemployment rate of Pittsburgh, PA 15219-6115 ments underway. These develop- approximately 5% throughout the T 412 394 9840 | F 412 918 5638 ments are under construction and region. [email protected] | www. experiencing rental rates higher cbre.com/retail24-7 than ever seen before. As a market that has historically DP been viewed as secondary or ter- So why Pittsburgh? Pittsburgh has tiary Pittsburgh has now emerged emerged as a top tier market and as a City of the future. The outlook benefitted greatly from strong job for the Pittsburgh market is noth- growth in fairly recession proof ing but positive. With tremendous sectors such as the Meds and The retail and residential growth, strong Eds (hospitals and the universities) positive absorption, new develop- and other heavy growth industries ment heating up, low vacancy rates such as high-tech and financial and dramatic rental rate increases services. Additionally, the region Pittsburgh is well positioned for the is the hot bed of growth for those present and the future. searching for Marcellus and Utica Shale. These overall factors have Herky Pollock | Executive Vice led to the total employment in President & Northeast Director the Pittsburgh area growing 1.2% Retailer Services Group versus national averages of 0.6%. CBRE, Inc. Herky Pollock

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www.developingpittsburgh.com 49 National Market Update

he U.S. presi- The 10.2-billion square feet U.S. Among the Avison Young markets, dential elec- office market registered an overall New Jersey recorded the highest tion, looming vacancy rate of 12.1 percent as 2012 vacancy (25.5 percent), with “fiscal cliff” year-end 2012 approached, reflect- flat market conditions expected and tepid ing a slight improvement compared in 2013. The lowest vacancy rates economic re- with 2011. Tenants continued to were recorded in Pittsburgh (8.1 covery in Tmany metropolitan areas enjoy favorable conditions with percent), where rents have risen resulted in a sluggish real estate tech- and energy-driven markets to new levels; and San Francisco recovery in 2012. experiencing the greatest levels of (9.9 percent), where large-tenant positive absorption. Class A prop- movement is driving the market. Large U.S. cities that are home to erties accounted for two-thirds of Only four markets expect to see clusters of energy or tech firms, the 47.4 million square feet of net increased vacancy in 2013, with the along with “gateway” metropolitan absorption achieved through third- largest increase being in Washing- areas with port facilities, generally quarter 2012 as tenants continued ton, DC (+60 bps) where there are enjoyed positive growth in 2012. to seek new improved space and threats of federal spending cut- The U.S. unemployment rate hit a lock in favorable rental rates. As backs and where 4 million square four-year low of 7.7 percent in No- a result, class A vacancy declined feet of office space is set to be vember 2012, after beginning 2012 50 bps to 13.6 percent from 14.1 delivered this year. at 8.3 percent, thanks to increased percent at the end of 2011. employment in the retail, profes- U.S. retail markets held steady with sional and business services and The 17 U.S. markets Avison Young an average vacancy of 6.9 percent healthcare sectors. tracked for this report comprise 2.8 - unchanged for four quarters - and billion square feet with an overall were kept in check by a dearth of Among the major U.S. metropoli- vacancy rate of 15.1 percent, down new supply. Delivery of new retail tan areas, New York (+128,000), slightly from that of year-end 2011. product has fallen each year since Houston (+95,800) and Los Ange- A majority of Avison Young mar- 2008 and, in 2012, 46 million les (+78,300) have added the most kets are anticipating further, albeit square feet was delivered. Power jobs since 2011. While recent job- modest, vacancy improvement in centers are outperforming retail as creation figures are encouraging, 2013; however, vacancy in the U.S. a whole and posted a 6.2 percent sustained employment growth is markets will likely remain elevated, vacancy rate nationwide. Many required to have a meaningful and when compared with Canada, as Avison Young markets are report- positive impact. With early 2013 cautious businesses continue to ing the expansion of discount and expected to look much like 2012, defer occupancy decisions in the big-box retailers. Select submarkets this trend will have to continue in wake of a slow recovery. Many ten- in Charleston and Houston have earnest for a full economic recov- ants demonstrated a preference for improving retail conditions due to ery to gain traction. Look for the urban live-work-play environments population increases; Boston is see- adaptive re-use and renovation with cultural diversity, new prop- ing further stabilization; San Fran- of obsolete properties in all asset erties and amenity-rich locations cisco is reporting a steady retail classes in lieu of new construction. when they relocated. comeback and limited construction;

50 DEVELOPINGPITTSBURGH | Spring 2013 and 4.5 percent, respectively. All all property types except multi-res- but two U.S. markets are expect- idential fell year-over-year. Demand The anticipated ing further declines in vacancy for core assets with stable cash during 2013. Dallas (+10 bps) is flow exceeded the available prod- expansion of the experiencing growth of warehouse/ uct in many U.S. markets. Manhat- Panama Canal is distribution space around the city’s tan led the country in office sales inland port and, in the Houston with $7.8 billion, followed by San spurring speculative market (+30 bps), drilling activ- Francisco with $3.9 billion and Los development and ity is fueling manufacturing and Angeles with $3.1 billion. Capital the Port of Houston’s expansion. flow into the U.S. continued in aggressive land The anticipated expansion of the 2012 as cross-border investors ac- acquisitions in South Panama Canal is spurring specula- counted for $20.3 billion in sales tive development and aggressive by mid-December. Florida, while in land acquisitions in South Florida, Detroit, industrial while in Detroit, industrial rents Duke Kingsley can be contacted at are primed to rise following four [email protected] or rents are primed to quarters of positive absorption. 412-944-2131. DP rise following four Through third-quarter 2012, total quarters of positive investment volume for multi-residential, office, industrial and retail absorption. properties topped $163 billion, demonstrating stabilization after second-quarter sales volumes for and New Jersey welcomed several new retailers and substantial development.

Avison Young industrial markets totaled 6.6 billion square feet with an average vacancy rate of 8.8 percent as of third-quarter 2012, nearly double the vacancy found in Avison Young’s Canadian markets. Chicago (1.2 billion square feet) and Los Angeles (1.1 billion square feet) are the largest U.S. industrial markets with Margaret Donkerbrook, vice Duke Kingsley, principal and vacancy rates of 9.6 percent president U. S. research manager director, Avison Young Pittsburgh

www.developingpittsburgh.com 51

NAIOP AWARDS

Developer of the Year Supporter of Development Chaska Property Advisors Sally Haas

2012 was yet another produc- Sally Haas was the chief executive tive year for Chaska Property officer of the Pittsburgh Airport Advisors as they added to their Area Chamber of Commerce from inventory of Class A office and October 1998 until her untimely flex product in Cranberry Busi- death on December 27, 2012. She ness Park and also took their first joined the organization as development concept to a new membership director in March 1998 submarket in Moon Township. and assumed the duties of Acting Executive Director in July 1998. Dur- In March of 2012, Chaska de- ing her time as President, the Cham- livered its seventh speculative ber grew from 800 members to the venture in Cranberry Business current 1,100 members. Park and the project's first ten- Chaska CEO Dick Donley ant took occupancy of 20,000 Sally Haas Haas teamed with the 911th and of the building's 53,000 square 99th Regional Readiness Command feet. 300 Cranberry Business to develop the Honorary Command- Park brings Chaska's development portfolio in the park ers Association, whose aim is to get the word out to the to 560,000 square feet and, in 2013, Chaska will sub- community-at-large about the vital role and economic impact mit an additional 120,000 square feet of construction the military has in this region's economy. projects to Cranberry Township for entitlements and approvals. Chaska's portfolio of space in the park is over Haas participated with the Pittsburgh Regional Alliance on 90 percent leased presently. business investment missions to Sheffield and Manchester, England, which resulted in recruitment of a company from the In January of 2012, Chaska announced a joint venture United Kingdom to the United States which was located for a with Continental Real Estate Companies to develop 40 time in the Chamber offices. As part of the Chamber's ongo- acres of land in Moon Township. The relationship with ing efforts to create global outreach opportunities, Haas led Chaska and Continental runs deep, as Continental's several outreach missions to China, with close to 200 people Building Systems division acted as general contractor on the tours over the last four years. for the bulk of Cranberry Business Park's base building and tenant improvement work over the past decade. To help local entrepreneurs, Haas became a certified Fast Trac Through an option agreement for land leasing with the Instructor and served as a mentor of the entrepreneur round Allegheny County Airport Authority, Chaska and its table known as E.L.I.T.E., which targets support for start-up partners received master plan approval for more than companies. In 2008, Haas completed a Regionalism & Sustain- 300,000 square feet of development from Moon Town- able Development Fellowship with the Ford Foundation and the ship and immediately commenced pre-development American Chamber of Commerce Executives (ACCE) association work for what will be known as Pittsburgh International under a grant awarded by the Hillman Foundation. Business Park. Just before groundbreaking on a speculative project for 53,000 square feet of Class A single Not limiting her work to businesses, however, but to the entire story office space, Chaska and Continental secured a community, Haas brought the Choices program to the airport lease for two buildings from Service Link, forcing the corridor and the Chamber currently offers that program in ten project to double its construction activity for 2012. school districts in the Chamber footprint. The program uses a Shell construction is well underway for both buildings hands-on approach to make middle school students realize that and Service Link will take occupancy at Pittsburgh Inter- there are long-term effects to the choices they make now. national Business Park in August. Haas was selected by SBN as one of the first recipients of the Chaska Property Advisors' reputation and professional- Pittsburgh Pacesetter Awards, recognizing her for her efforts ism is one of the finest in the industry. Its vision and on behalf of transportation and growth in the Pittsburgh commitment to real estate development in Western region. She also served on County Executive Dan Onorato's Pennsylvania is worthy of recognition. transportation task force, and chaired the SPC Public Partici- pation Panel.

Haas served as the board Chair of the PA Association of Chamber Professionals, and headed the Southwestern PA Chamber Executives division.

www.developingpittsburgh.com 53 Lifetime Achievement Award In addition to his contributions in real estate development, Mark served as Chairman of the Stadium Au- Mark Schneider thority starting in 1993 and continued in various roles through the development of PNC Park and Heinz Field. The region lost one of its best Mark also served as Chairman of the Allegheny County and brightest individuals with Sports and Exhibition Authority and was involved in Mark’s tragic passing in July the successful tripling of the capacity of the David 2012 at the age of 55. While L. Lawrence Convention Center, home of the NAIOP he was only in Pittsburgh for Awards Banquet. thirty plus years, his contributions to our region, community One other project close to Mark’s heart is the World and industry will be a legacy War II memorial being planned for the North Shore. for generations that follow us. Mark was a diligent fundraiser for the project, which is scheduled to start in spring of 2013. Mark Schneider was born in Pittsburgh but moved to To- ledo, Ohio very early in his life Mark Schneider and was educated at St John’s Hall of Fame Inductee Jesuit High School and gradu- William E. Hunt ated from Miami University of Ohio in 1978. Following college, Mark volunteered as Mr. Hunt is President and CEO an AmeriCorps VISTA volunteer and relocated to Pitts- of the Elmhurst Corporation, burgh, PA where he would start his successful career a private equity fund located as a community organizer, real estate developer and in Pittsburgh, PA. Elmhurst public servant. invests in commercial real estate and private operating Mark’s first position was with the Northside Civic De- businesses. Elmhurst’s real es- velopment where he was involved in numerous projects tate holdings include over 2.5 in Germantown and the East Ohio Street commercial million square feet of office, district. While with the NCD, he met Dick Rubinoff, flex and distribution space in who was forming his own development company in the the Pittsburgh region. Specific mid 1980’s. Rubinoff later hired Mark to be president holdings include the RAND of Rubinoff Co. During Mark’s tenure at Rubinoff the Building, Airside Business company developed a number of significant urban Bill Hunt Park, Pittsburgh Airport Busi- projects, including the 32nd Street Business Center, ness Park, McClaren Woods the 100,000 square foot 51st Street Business Center Business Park, Cranberry and the Alcoa Services Operations Center on the North Crossroads and, downtown, One North Shore Center Side. and 912 Ft. Duquesne Boulevard. Elmhurst’s non-realestate investments include the Doubletree Hotel in Perhaps Mark’s most lasting projects are the urban downtown Pittsburgh, Metis Secure Systems, Prospera mixed-use projects that converted brownfield waste- Hospitality Management, and ADS Security located in lands into the successful Summerset at Frick Park resi- Nashville, Tennessee. dential community in Squirrel Hill and the award-winning Washington’s Landing. That project, which turned Bill is actively involved in community affairs and an environmentally contaminated rendering plant into charitable organizations, including the Duke University a world class mixed-use residential, commercial office Graduate School of Visitors (past Chair), the Carnegie and recreational community was recognized by NAIOP Museum of Art (former Chair), Pittsburgh Downtown as Public-Private Project of the Year in 1997. Partnership (former Chair), Pittsburgh Public Theater (former Chair), as well as a Board member of The Pitts- After starting Fourth River Development with business burgh Foundation and the Pittsburgh Cultural Trust. partner John Watson, Mark’s focus shifted toward his passion of urban residential projects. His most recent He served as NAIOP Pittsburgh board president in 2001 projects include Columbus Square in the city’s Man- and was national chairman of NAIOP Corporate in chester neighborhood and Union Square, a major town 2012. home community being built in downtown Erie, PA.

54 DEVELOPINGPITTSBURGH | Spring 2013 NAIOP Pittsburgh Officers Daniel Puntil, President Grandbridge Real Estate Capital

Jerry Bunda, Vice President Imperial Land Corporation

Lou Oliva, Secretary Newmark Grubb Knight Frank

Christine Vann, Treasurer Alpern Rosenthal

Lynn DeLorenzo, Past President PWC Property Solutions

Domenic Dozzi, National Board Jendoco Real Estate

Gregory Quatchak, National Committee Civil & Environmental Consultants

DeWitt Peart, National Committee Pittsburgh Regional Alliance

Board of Directors At Large Michael Belsky Columbia Gas of Pennsylvania

W. Scott Caplan

Linda Fisher Dollar Bank

Wm Randell Forister Allegheny County Airport Authority

Grant Mason Oxford Devemopment Corp.

Brian Walker Millcraft Investments Learn more about NAIOP, the Commercial Real Estate Development NAIOP in the western Association, is the leading organization for developers, Donald Smith Jr. Pennsylvania tri-state region owners and related professionals in office, industrial Regional Industrial Development Corp.

at naioppittsburgh.com and mixed-use real estate. NAIOP provides Michael Swisher or 412-928-8303. unparalleled industry networking and education, and Horizon Properties Group

advocates for effective legislation on behalf of our David Weisberg members. NAIOP advances responsible, sustainable The Huntington National Bank development that creates jobs and benefits the Tyler Noland, DL Representative communities in which our members work and live. PenTrust Real Estate Advisory Svcs.

Patricia Farrell, Legal Council Meyer Unkovic & Scott

Committee Chairs Jerry Bunda, Imperial Land Corporation Transportation Maureen Ford, ALCOA Marketing/Communication For more information on how you can develop connections with commercial real estate through NAIOP, David Weisberg, The Huntington National Bank visit us online at www.naiop.org or call 800-456-4144. Programming Carl Belli, Continental Building Systems Membership Jamie White, LLI Engineering Inc. Economic Development Mike Embrescia, Class-G.org Developing Leaders Congratulations to

Build To Suit - Industrial Gardner Denver Nash 100,000 sq ft Divisional Global Headquarters and North American Manufacturing & Distribution Facility

Est. 1922 The Good Business Bank

Washington County Commissioners Speculative Office

Embassy Park at 6000 Town Center, Southpointe

Completed in June 2012, the project was 132,000 square feet of new construction.

DEVELOPER: Horizon Properties ARCHITECT: TKA Architects CONTRACTOR: Rycon Construction

Build-to-Suit Industrial

Gardner Denver Nash New Divisional Headquarters, Alta Vista Business Park

Completed in January 2012, the project was 100,539 square feet of new construction.

DEVELOPER: LaCarte Development Inc. ARCHITECT/CONTRACTOR: Al Neyer Inc.

Renovation, Industrial

Building 33, Impact Guard Renovation

Completed in May 2012, the project was a 133,349 square foot renovation.

DEVELOPER: Chapman Properties ARCHITECT: NEXT Architecture CONTRACTOR: Springer Construction

www.developingpittsburgh.com 57 Legal/Legislative Outlook

deadlines have passed. Of these, Dodd Frank 176 (63.1%) have been missed and 103 (36.9%) have been met with And finalized rules. Additionally, about 129 rulemaking requirements have Commercial not yet even been proposed. Let’s just say that the process is not Real Estate - moving exactly as planned.

Where It All Who (or what) is responsible for the delay? Among those targeted Stands are the banking regulators, who have been accused of “lagging” on By Jonathan W. Hugg, Esq. their duty to complete vital ele- and Lauren D. Rushak, Esq. ments of Dodd Frank. For example, they are charged with crafting the t has been rule that requires lenders to retain over two some of the credit risk on mort- and one gages that are sold off and bundled half years into securities. Specifically, this since the element of Dodd Frank requires passage of that banks who issue commercial the Dodd-FrankI Wall Street mortgage-backed securities have Reform and Consumer Pro- what is referred to as a five per- tection Act (“Dodd Frank”). cent “skin in the game.” Lenders After Dodd Frank’s passage, securitizing loans, thus, must retain we attempted to predict ownership of five percent of each some of the possible impli- pool of the commercial mortgage- cations that the daunting backed securities (CMBS) loans that legislation would have on they create. (Certain carve outs for the commercial real estate commercial real estate mortgages (“CRE”) market. Needless exist.) By requiring lenders to to say, many questions were retain an economic interest in the unanswered at that time. assets that they securitize, this pro- Not surprisingly, many ques- vision of Dodd Frank is touted as tions remain unanswered seeking to better align the interests today. Time, however, has of lenders with investors. This will, brought about some bits of seemingly, also better safeguard clarity regarding the way bondholders. in which Dodd Frank has impacted and will continue Some are not complaining about to impact CRE in the future. the lag time in implementing the This article will attempt “skin in the game” requirement. to highlight some of the Some believe that the measure will developments of the past only serve to restrict credit avail- two and a half years with able to the CRE market. Whether respect to Dodd Frank and it does or not, and on what level CRE. remains to be seen. What we do know is that the new regulations Dodd Frank – and its 848 for CMBS are not estimated to pages of legislation – re- actually be implemented and take quired that 398 sets of effect until later this year. rules be implemented. As of February 1, 2013, reports The SEC, who is responsible for show that a total of about more Dodd Frank regulations than 279 Dodd Frank rulemaking any other agency, has also been

58 DEVELOPINGPITTSBURGH | Spring 2013 heavily criticized for lagging on Many CRE lenders “stress testing” performed. The its duties. The SEC is charged with Office of the Comptroller of the finalizing, for example, key regu- and other capital Currency (“OCC”) recently pub- lations involving new controls on market participants, lished its final stress testing rules. credit ratings and the claw back The OCC will provide a set of “Base of executive pay. The agency has anticipating line,” “Adverse” and “Severely Ad- reportedly finalized only 33 of the the onslaught verse” scenarios to banks to input 95 rules for which it is responsible. into the testing. Obviously, the SEC has much work of government ahead of it. regulation under Per Dodd Frank, and part and parcel to this stress testing, banks In early 2013, the “reaction” to Dodd Frank, acted over the $10 billion threshold are Dodd Frank still appears to be preemptively and also required to have and have had mixed from a CRE market perspec- reappraisals of their products done tive. Commercial real estate lend- self-policed their yearly. Such examinations have ers’ concerns over the legislation own policies and reportedly led to the overriding of appear to be, on some level, fading appraisals and loans being slated as with the passage of time. However, procedures. They did “nonaccrual” loans – even where this seems to be (at least in some borrowers have not missed a pay- part) at the lenders’ own doing, so to allow investors ment. This has caused many banks rather than due to any specific to understand new across the country to write down “regulatory” action imposed by significant capital amounts because Dodd Frank. Many CRE lenders investments, better of the ratio of lending to capital. and other capital market partici- meet market demands In turn, fearing additional capital pants, anticipating the onslaught investment write-offs, the disincen- of government regulation under and tr y to “fix” tive for banks to make additional Dodd Frank, acted preemptively problematic ways of loans heightened. and self-policed their own policies and procedures. They did so to the past. For banks with assets less than $10 allow investors to understand new billion, there are no current bank- investments, better meet market wide “stress testing” requirements demands and try to “fix” problem- within Dodd Frank. Thus, many result in (i) higher lending costs atic ways of the past. As a result, local community banks are not to all and (ii) higher risk borrow- some transactions have reportedly subject to the same testing regula- ers having more difficulty securing become simpler, practices easier to tions. Yet, many community banks CMBS financing. And, ultimately, it understand and standardized docu- – with smaller compliance functions remains quite possible that imple- ments and loan packages easier to – find themselves spending signifi- mentation of the risk retention compare. All of these things being cant time and costs determining requirements will result in banks positive steps for CRE in the wake what aspects of Dodd Frank may or having less capital available; not to of Dodd Frank. may not apply to them, what will mention more complexity on how or will not impact them, and how it is leveraged and more strict and However, there remains a large they will meet any demands that complicated packages. Naturally, camp of market participants who may be placed on them. One report negative steps for CRE. dispute any long-term “positive” estimated that additional compli- impact by Dodd Frank on CRE. They ance costs due to Dodd Frank could Despite the ongoing speculation cite, primarily, to what they believe be in the range of $700,000 to and uncertainty regarding the ulti- will be very stringent underwrit- $1.2 million for local community mate, long-term impact that Dodd ing standards and much more time banks alone. Thus, the community Frank will have on CRE, the reality required to screen loans once Dodd banks find themselves trying to appears to be that many banks are Frank’s risk retention requirements balance the need of ensuring that and remain hesitant to make loans. are finally completed and imple- they have effective risk manage- One cited reason is that under mented. Undoubtedly, tougher reg- ment techniques in place on the Dodd Frank’s regulatory scheme, ulations (and increased processing one hand while, on the other hand, an institution with assets ranging time) could directly and unfavor- ensuring that they are not stopping between $10 billion and $50 billion ably impact how CMBS are issued good CRE lending from happening is required to have certain internal and priced. This could also then altogether. Faced with these con-

www.developingpittsburgh.com 59 cerns and what could be unintend- standards of title I of the legisla- Volcker Rule ed consequences of Dodd Frank’s tion (i.e., enhanced risk-based massive regulations on local banks, capital and leverage requirements, This rule is designed to prevent some predict that within the next liquidity requirements, single-coun- banks from making speculative five years, “regional” or “com- terparty credit limits, stress testing, bets. In essence, the rule prohib- munity” banks will fade away and risk-management requirements, its banks from investing their own be replaced by “super” or “mega” an early remediation regime, and capital in funds that they operate, banks – banks that are supposedly resolution-planning requirements). the goal being to eliminate some of equipped to handle Dodd Frank’s The final framework for the regula- the riskiest trading and preventing regime. tion/supervision of nonbank finan- banks from becoming “Too Big to cial companies who could pose a Fail.” This could mean, however, But, even the “super” or “mega” systematic risk to the financial mar- that many private equity and hedge banks themselves are feeling the kets has yet to be completed. This funds that invest in real estate impact of Dodd Frank now. They has caused much uncertainty in funds operated by the banks will cite mainly to (i) increased compli- the market and has been viewed as need to be sold. As of early 2013, ance costs imposed by Dodd Frank impeding the CMBS market growth. the rule has not been finalized. (costs that inevitably will pass A recently proposed amendment to increased costs onto borrowers) the final law – requiring that the Capital Rules Implicating and (ii) more rigorous underwrit- unique characteristics of the CMBS Construction Loans ing standards imposed by Dodd market be looked at – may help Frank, as putting the “chill” on counterbalance the uncertainty. A big ticket area of concern for additional lending and CRE itself. CRE participants involves Dodd The latter is important because Other Dodd Frank measures that Frank’s impact on construction tightened underwriting standards CRE participants are closely watch- lending. Dodd Frank restricts “high could undoubtedly result in, among ing include: volatility commercial real estate other things, lenders demanding loans.” Experts believe that this additional equity from borrowers The Investment could be interpreted to include cer- seeking to refinance. Commercial Advisers Act tain construction loans. The defini- borrowers seeking to refinance, tions are not yet settled, but what however, will likely be unable to This component of Dodd Frank has is settled is that reserve banks will take on more debt if they are fi- been enacted. It requires private ultimately be required to hold 12 nancing properties that are already funds with real estate assets to percent instead of 8 percent on in trouble. In fact, one report has register as “investment manag- their books for each loan that they predicted that by 2020, hundreds ers” and be regulated accordingly. issue. Capital restrictions could of billions of dollars of commer- Thus, funds under the classifica- result, hurting not only real estate cial mortgages – or more – will not tion must follow SEC laws, which developers but many community qualify for refinancing. If accurate, mean increased operation costs, banks whose bulk of lending con- this could have a stammering im- among other things. Additionally, sists of construction loans. pact on CRE for years to come. compensation structures for those in charge of the private funds will Bottom line: As we approach Yet another aspect of Dodd Frank be changed significantly – causing three years, Dodd Frank continues that could have bearing on the CRE much concern among CRE partici- to unfold, and the ability to ac- and CMBS markets is the require- pants. Specifically, performance- cess liquidity for CRE projects and ment that federal agencies more based compensation (a “carried the legislation’s complete impact carefully scrutinize any institution interest” linked to project comple- on the CRE market itself remain whose activities could pose a sys- tion) will be limited for “manag- questionable and not fully known. temic risk to the financial markets ers” of funds whose clients have We will need to keep a close watch (“Too Big �to Fail”). The collapses invested less than $1 million or as the regulations continue to take or near-collapses of major financial have a net worth less than $2 mil- shape, are debated and are imple- companies (major nonbank com- lion. This could be a real disincen- mented. Let’s just hope that it is panies in particular) in the days tive to investors who previously not another three years before any leading up to Dodd Frank certainly took risks on new buildings and real progress has been made or im- highlighted the lack of any effec- projects with the goal of mak- portant questions answered. tive framework for supervising ing a large carried interest payout and regulating important financial once completed. However, like Jonathan W. Hugg, Esq. and Lauren institutions. Dodd Frank is sup- many other parts of Dodd Frank, D. Rushak, Esq. are Partners in the posed to change that. It created it remains unclear what companies Commercial & Corporate Litigation the Financial Stability Oversight are or will be deemed “funds” that Practice Group of Thorp Reed & Council to establish a framework must comply with this piece of the Armstrong, LLP. for designating nonbank financial legislation. DP companies who should be subject to supervision by the Federal Re- serve and the enhanced prudential

60 DEVELOPINGPITTSBURGH | Spring 2013 WHY SO MANY BUILDINGS IN THE PITTSBURGH AREA ARE OPERATING MORE EFFICIENTLY.

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Sometimes bringing your commercial real estate plans to life takes more than just a loan. It takes financing and banking solutions that work hand in hand. At PNC, we do it all. From construction to bridge to permanent financing. From treasury management to interest rate risk management. Locally and nationally. To learn more, visit pnc.com/realestate

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Is Green Building Growing Without LEED?

s green building was getting a firm foot- hold in the middle of the last decadeA – when the number of LEED-certified buildings in the region was in the dozens – the conversation about commercial buildings being LEED-certified went something along the lines of “my clients would love to be in a LEED building but they don’t want to pay the extra rent.” Within a few years the conversation had changed to something like, “my client’s sustainability policy will only let them rent in a LEED building.”

Now, however, there is a growing curiosity about the necessity of LEED certification. It is unfair quite the opposite – but reluctance Council (USGBC) as a voluntary, to characterize it as a backlash to document the process is there. third-party certification that would because the questions are coming encourage sustainable design and from developers who have been “The term that is being used is establish a set of uniform criteria building LEED-certified projects for LEED certifiable,” says Aurora for architects and owners to follow. a number of years and who plan Sharrard, vice president of innova- During the 15 years since LEED has to continue to build those kinds of tion for the Green Building Alli- been in the market the USGBC has buildings. Developers have for the ance. Sharrard confirms that ques- regularly updated it standards for most part embraced the value of tions about the necessity of LEED certification, adding higher levels energy efficient, light and healthy certification is a national trend and of achievement and stratifying the buildings, if not for the sake of one that sustainability advocates certification standards to serve the the environment then certainly as are not surprised to see occurring. full spectrum of construction. a response to the marketplace. The question seems to be, if I built my “What we are hearing is ‘LEED- The success of the LEED program is last two projects as LEED-Gold and like.’ It’s what a lot of our pros- evidenced by the more than 15,000 I build the next one the same way, pects and customers are asking certified projects currently listed why do I need to get it certified? for,” says Jim Scalo, CEO of Burns on the USGBC’s directory. But for & Scalo Real Estate Services. “Make commercial real estate the case It’s not only developers who are no mistake. Sustainability is abso- isn’t going to be made by the sheer feeling what is being called ‘green lutely as important as ever. It’s just volume of LEED-certified projects. fatigue.’ Even architects, who were that LEED doesn’t seem to be.” In the end, the argument will come early green building proponents, down to what adds the most value are seeing resistance from within Leadership in Energy and En- to the property. their firms to take the steps to cer- vironmental Design (LEED) was tify a project. There is no resistance developed in the late 1990’s by What changed the tide for com- to designing more sustainably – the United States Green Building mercial property a few years ago

www.developingpittsburgh.com 63 Elmhurst 4.75 x 4.75_Final NAIOP ad 2/20/13 2:53 PM Page 1

was demand from corporations who began to include a LEED- certified building on their list of requirements, but there remains a difference between whether the corporation is leasing or owning. No corporation has done more to advance the idea of corporate sustainability than PNC. It has The Elmhurst Group. invested heavily in LEED-certified buildings since developing its First Woven into the fabric of Pittsburgh. Side operations center in 2001 and is currently building a building that Whether it’s locating space in one of our existing commercial buildings, or aims to be the ‘greenest’ in the developing an entire turnkey office community from a clean sheet of paper— world. Yet, its 300,000-plus square as we did with Airside Business Park— Elmhurst Group can accommodate virtually any commercial real estate need. foot space in Allegheny Center was not LEED-certified when originally We manage every building we own. We maintain close personal contact with our clients. leased, although PNC has since We operate with the understanding that we are in the service business— renovated and achieved LEED certi- not the space business. We recognize that our legacy is inextricably linked to fication for 80,000 square feet, as the quality of our people and the service we provide, so we conduct well as the Eco Bistro restaurant. our business with integrity, and honor our commitments. For more than 30 years, Elmhurst Group has been a part of the Greater Pittsburgh region. And in order to remain, we know that our deeds always need to back our words.

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“Large corporations with mandates initiated in the C-suite or even from their board will be more likely to get LEED in an owned building but it’s tough to do that in the market as a tenant,” notes Brad Totten, senior vice president and principal at Avison Young.

Dan Adamski still sees a difference

in demand when higher rents are involved. The managing director for Jones Lang LaSalle’s tenant representation group, Adamski says that clients are looking at the sustainability of the potential buildings they occupy. “About 20 percent of the time [LEED] is a factor, especially if it’s a corporate client,” he says. Coming to Southpointe “But I’d say fewer than ten percent in Spring 2014 of that number is willing to pay any extra for it.”

64 DEVELOPINGPITTSBURGH | Spring 2013 It is certainly not a negative that the real estate development community has become familiar enough with sustainable design that they question whether or not certifica- Driving innovation in Pittsburgh’s tion adds anything to the building; commercial real estate solutions and services in fact, it is probably a sign of success that energy efficiency and environmental sensitivity ultimately get taken for granted. While the cost of construction isn’t really more for LEED than for non-LEED buildings, the cost of the additional planning and administration does add a few bucks per foot and for higher levels of LEED, there are costs that add on. For the kinds of buildings that are built in Western PA, any added costs can mean a bit more. Bill Hunt, CEO of the Elmhurst Partnership. Performance. Group, was the NAIOP Corporate board president in 2012. As the Avison Young’s integrated team approach to national board’s leader he traveled commercial real estate engages deep expertise from a to many cities and heard from other broad range of professionals across our organization. developers about the ‘LEED certifi- EQT Plaza In a partnership focused on your strategic business 625 Liberty Avenue, Suite 3150 able’ trend. Hunt’s feeling is that objectives, we deliver intelligent, best-in-class solutions Pittsburgh, PA 15222 there are regional factors that can that add value and build competitive advantage for P 412.944.2130 influence development of LEED-cer- your enterprise. www.avisonyoung.com tified buildings.

“Whatever the extra costs are for LEED certification, they make up a bigger share of the project costs in a city like Pittsburgh,” he explains. “If you are doing a project in Manhattan for $400/foot it’s not a big deal if LEED adds a few dollars a square foot more, but if you’re doing a building in Pittsburgh for $125 or $150 per square foot those costs mean something.”

Commercial property is attractive because it provides income through rents that covers the costs of financing and operating the building (ideally anyway), with a return on top of that; and, because the market provides appreciation of the property value. A significant number of the owners – not the majority – DLA + a unique approach to achieve your unique vision who are doing sustainable construction are doing so because it’s the Minimize risk. Maximize results. AERIAL PERSPECTIVE right thing to do. The same can be said for the majority of humans who now have more sustainable life- styles. But the credit-worthiness of DLA+ is currently engaged in several community development a project or the profitable operation Master Planning efforts for the Pittsburgh Region. of a building trumps doing the right To learn more call us at 412.921.4300 or visit our website at thing in commercial real estate. www.dlastorino.com Sustainability has to have a credible business case.

www.developingpittsburgh.com 65 USGBC has devoted resources to re- dates the national organization and searching the impact of LEED-certi- LEED by several years. GBA’s most fication on the commercial market. At the end of ambitious initiative is the Pitts- They have prepared a business case the day, the best burgh 2030 District, an effort to for LEED on their website, listing bring the buildings in the CBD to five main benefits to the property argument for reduce consumption of energy and owner or developer: LEED certification water by as much as 50 percent by 2030. That effort recently achieved Competitive differentiator. Green may well be the the participation level of half the buildings offer lower operating accountability of Downtown space. The 2030 Chal- costs and better indoor environ- lenge is built upon the realiza- ments, which meet the needs of which Sharrard tion that not all owners are going corporate tenants, investors and to have the opportunity to LEED buyers. speaks. With all certify their properties but all can the pressures that significantly reduce their consump- Mitigate risk. The third-party verifi- tion. GBA’s advocacy of sustainable cation offers some protection from a construction design and construction naturally lawsuits over indoor air quality or project endures, includes LEED certification but their energy savings. In many jurisdic- goal is that buildings be better. tions, LEED buildings move more the commitment Aurora Sharrard says that LEED has quickly through entitlement and and discipline that the same goal. permitting. the certification “LEED isn’t necessarily about the Attract tenants. 21st Century ten- requires make it certification; it’s about the quality ants are demanding the benefits of building that is built,” she says. that come from a LEED building much more likely and many are mandated to lease that green building Sharrard argues that LEED certifica- only in LEED. Rents in Class A tion – or other third-party certifica- LEED-certified buildings run from projects will finish tions like EnergyStar, Green Globes average to 20 percent above aver- of Living Building Challenge – all age. as green as they help ensure that the owner gets start out to be. the project he/she expects. Docu- Cost effective. The cost per square menting the steps needed to meet foot for LEED buildings is within Without a way to a certification goes a long way the range of those that are not measure the process towards turning intentions into ac- LEED-certified. A LEED building has tions. Without the discipline of the life cycle savings of 20 percent of it’s impossible to certification process, project sus- the total construction costs and tell if a project is tainability goals can erode, espe- building sale prices for energy ef- cially when budget concerns arise. ficient buildings are as much as 10 staying on course to As one architect answered when percent higher per square foot than meet the goal. asked how LEED certification slips conventional buildings. away, “One VE at a time.” LEED is also set up to evolve towards Increase rental rates. Green build- higher standards and more innova- ings outperform their non-green that are hard to quantify and mea- tive practices, something that even peer assets in occupancy and rental sure. Moreover, the study looked owners committed to sustainability rates. LEED buildings command at buildings constructed in 2006 would have difficulty achieving. rents that are $11.33 per square and 2007. Market conditions have foot more than their non-LEED changed radically since then and At the end of the day, the best peers and have 4.1 percent higher the number of green commercial argument for LEED certification occupancy. buildings – LEED or otherwise – has may well be the accountability of grown exponentially. which Sharrard speaks. With all USGBC’s case relies on a CoStar the pressures that a construction report from 2008 that looked at More to the point, the business project endures, the commitment values, rents and life cycle benefits case for LEED is also the business and discipline that the certification of LEED on commercial properties. case for energy efficient, healthy requires make it much more likely The report found that there was a and attractive buildings in general. that green building projects will $50 to $65 per square foot in- That fact seems to be at the crux of finish as green as they start out to crease in net present value over 20 the LEED vs. green argument. be. Without a way to measure the years for green buildings; however, process it’s impossible to tell if a somewhere between $35 and $50 Pittsburgh’s Green Building Alliance project is staying on course to meet of that increase was in “productiv- (GBA) is the local chapter of the the goal. ity and health value,” two values USBGC but their existence pre-

66 DEVELOPINGPITTSBURGH | Spring 2013 Still, the aim of all green building proponents – be they zealots or novices – is a permanent change in the behavior of the industry.

Jim Scalo was looking to change and reward corporate behavior when he helped create Class-G, a self-reporting certification system that allows owners and tenants to document and communicate their sustainable practices in their day- to-day operations. Companies get a score based on sustainable criteria and then can grow that score as their sustainable practices grow. Like the Pittsburgh 2030 Challenge, Class-G is designed to encourage businesses and property owners who don’t have the certification opportunity to behave more respon- sibly and to get credit for it. But Scalo isn’t among those who question the value of LEED certification.

“We are by no means anti-LEED. We’re doing three buildings at Southpointe and they will be LEED- certified and Class-G,” Scalo says.

Green building has always gone against the grain so it’s not a sur- prise that some developers, contractors or designers would grow weary of LEED certification. LEED staked Proven Success | Unparalleled Client Service out a position when there were few other certification systems in place and has defended its position in the marketplace. The USGBC also has its detractors, as can be expected with any organization that succeeds in interposing itself in an industry. Yet without either, it’s unlikely green building would have the share of the market currently enjoyed. LEED is being expanded to include existing building operations and maintenance (LEED-EBOM) and the next version of LEED will be more focused on measurable performance. Providing Effective Solutions for Southwestern Whether or not LEED loses its position as the standard by which Pennsylvania’s Commercial Real Estate Needs sustainability is measured remains to be seen but the regular evolution Office | Industrial | Retail | Investment of LEED’s standards won’t hurt that cause.

“LEED version 4 is a lot more about performance and especially more about materials,” explains Sharrard. “It should get people to start asking questions like they did in 1999.” 606 Liberty Avenue | Suite 300 | Pittsburgh, PA 15222 DP 412.261.2200 | www.LWEre.com

www.developingpittsburgh.com 67

Voices

Developing Leaders Answer the Question, "Why Pittsburgh?"

Joseph Johnson Michael Sharp myself. Moving forward, I plan to Development Manager Vice President, stay in the Pittsburgh region and Horizon Properties Group LLC Business Development am even looking at the possibil- Continental Office Environments ity of buying a condo in the cen- I didn’t tral business district (something choose Having I used to think was unimaginable Pittsburgh. grown as people just did not live down- I am not up in the town while I was growing up). The from Pittsburgh potential that a young professional here. Pitts- area (Mur- has in this city is indescribable. The burgh was rysville), I market is one of only a few in the chosen for had never nation that was not majorly im- me. It all viewed pacted by the recession. Pittsburgh started Pittsburgh is now one of the most livable cit- when I met as a city ies in the country and flies on the this teacher that could radar of many prominent lists. We in Atlanta cater to have culture, nightlife, champion- in 2001… One big Pittsburgh young pro- ship sports teams, low cost of liv- wedding (with a cookie table?), fessionals. In my mind, Pittsburgh ing, and a plethora of opportunity one big baby boy, and 6 years was a great place to be raised, but in major growing business sectors. later… When I interviewed with then it was time to move away. In All of these are extremely impor- Horizon Properties in February of fact, in 2005 I moved to New York tant to young professionals. Pitts- 2007, I didn’t have any idea what City to pursue my career in the burgh can now provide the perfect was happening in the ‘Burgh. By contract furniture industry. After balance of work and personal life faith, and confirmed in prayer and spending 5 years in Manhattan, all while catering to the sometimes circumstance after circumstance, I I realized that I wanted to both demanding needs of the younger was relocating my family because spend more time with my family folks. I am extremely excited to see it seemed like it was God’s plan and eventually start a family of my what the future will bring to Pitts- and timing. It made perfect sense! own. I realized New York City was burgh as I know we are heading in Leave a thriving Atlanta develop- not the right place for me to do it. the right direction. ment company and market to go to In 2010 I moved back to Pittsburgh. Pittsburgh (instead of Florida where It wasn’t until I moved back that I I am from) for another commercial realized the tremendous potential Autumn R. Harris real estate development job… in that Pittsburgh had to offer young Relationship Manager, AVP Pittsburgh. The market here wasn’t professionals. Up until this point, PNC Real Estate Banking looking so good in spring of 2007. I felt like I was viewing Pittsburgh The past five years have shown with blinders on. In those 5 years There are what I know! Thank God we didn’t that I was gone, Pittsburgh had three main do what seemed the obvious choice been completely transforming itself reasons in 2007 and go to Florida, or even (all while maintaining its’ heritage that I chose stay in Atlanta! Both Pittsburgh’s and Midwestern values). We are Pittsburgh and Horizon Properties’ incredible now on the forefront of the envi- over other prosperity in the past 5 years has ronmental building scene, the oil cities now. been a priceless blessing to me & gas industry is booming, and The first and my family. For the foreseeable the technology/healthcare sectors was afford- future, hopefully the rest of this are becoming prominently known. ability. One life, there isn’t anywhere in the Major corporations such as Apple demonstra- world that offers more to me and and Google (many of whom target tion of af- my family than the S.T.E.E.L. (Steel, young talented professionals) now fordability Technology, Energy, Education, Liv- have regional offices here. All of that led to able) City. this I probably would have never my ultimate decision is the median known if I were not a “boomerang” sales price of a home. It was very

www.developingpittsburgh.com 69 important to me to be able to buy to market participants from across great attribute to doing business in a home and still have disposable the country. With significantly our region. income available for travel, food lower than national unemployment and other activities. The median and an array of industries driving More Why?: The neighborhoods, home sales price in Pittsburgh is the economy (Energy, Technology, the great universities and health $130k, which is $72k under the Medical, Finance, to name a few) care that continue to explode, a national average of $202k, in ac- it is an easy story to tell. In fact, thriving business climate, and an cordance with zillow.com. This was so much upside exists that it is exciting startup scene (garnering a huge factor in my determination virtually impossible to capture the national attention) --- in my opin- of where to lay my foundation and story in one conversation and still ion, a sleeping giant. after a little analysis I found that discuss the matter at hand. Dur- I would get much more bang for ing these daily conversations some "Why Pittsburgh now?" My ques- my buck in the city of Pittsburgh people are pleasantly surprised to tion is, why not?! than most other cities. The second learn about the health of our city, reason for my decision was family. but many are not surprised, there is As a native from Beaver County and no doubt that Pittsburgh is on the Tyler Noland my husband a native of Washington national real estate radar screen. Portfolio Manager/Underwriter County, it is important to me that PenTrust Real Estate Advisory I am close enough for comfort. I Services Inc. don’t want to miss out on sharing Michael Embrescia holidays, new births or times when Co-creator and Director First, it my family needs to be together. Class-G always The third reason that I chose Pitts- comes down burgh was the want to be part of Duquesne to good a vibrant community. I purchased a University's people, and home in Upper St. Clair, which like MBA (Sus- Pittsburgh’s many of the communities in Pitts- tainability) people are burgh has all the amenities to make brought me salt of the up a vibrant community including: to Pitts- earth. Sec- parks, community organizations, burgh in ond is the nice restaurants and convenient '07. My opportunity shopping. I am very pleased with Cleveland- for career my decision and proud to call Pitts- roots and advance- burgh my home. lifelong ment. In distaste for Pittsburgh, young professionals all things swim in a lake rather than an ocean Tony Rossi Pittsburgh like New York City, Chicago, or LA, Vice President, Debt changed quickly. Instantly, I was and the opportunity to be no- & Equity Finance welcomed by neighbors (still won't ticed is higher. And third, it’s the CBRE Capital Markets move from our first Dormont climate. I couldn’t live anywhere home), became regulars at all the without four truly distinct seasons. As a Pitts- cool spots, and it was clear within Four seasons offer four opportuni- burgh the first full month of living here ties for varying hobbies and out- native, the --- this is home. door life. decision to stay in Following grad school, I quickly Pittsburgh immersed myself in the business to pursue environment. I was lucky to land my real es- some pretty cool gigs, and cur- tate finance rently mentor under a few amazing career was and prominent figures. Needless an easy to say, I'm in the right place at the one. Enter- right time. ing the industry The Two-Degree Town: the town as a young professional during a is larger than most, but quaint time of softening financial markets enough to realize the best of both the stronger fundamentals of the worlds. Professionally, I can make Pittsburgh MSA allowed me to hit acquaintances and build relation- the ground running. Working in ships with folks with relative ease the mortgage banking industry I -- if you don't know a person, all have the distinct pleasure of tell- you have to do is ask someone ing the story of our dynamic city in your network. To me, this is a

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ber 31, 2012. Sloan Brothers Company, a fourth generation family-owned business located in Northpointe, designs and builds lubrication systems for compressors and other critical equipment. Sloan outgrew their 20,000 SF facility within three years and has recently added an additional 10,000 SF. To accommodate their expansion, Sloan purchased a portion of the adjacent lot from the ACIDC in December 2012.

The largest of the County’s office/business parks is located only 35 minutes from down- Armstrong County town Pittsburgh. Northpointe, located along State Route 28 Armstrong County Department of at exit 18, was strategically Economic Development developed in the southwest Armsdale Administration Building portion of Armstrong County 124 Armsdale Road, Suite 205 to capture the office and light Kittanning, PA 16201 industrial markets along Route 724-548-1500 (T) 724-545-6055 (F) 28. Northpointe was designed Michael Coonley, Executive Director with the following components: [email protected] industrial/business, retail and www.armstrongidc.org residential. The 925 acre fully permitted facility also features The Armstrong County Industrial multiple sources of high band- Development Council (ACIDC) sold width fiber, an abundance of five lots consisting of 21 acres power, approximately 300 acres between June 1, 2012 and Decem- of passive recreation and open

www.developingpittsburgh.com 73 space, including sidewalks, walking a 10,000 SF facility. Occupancy is profit (501c3) economic devel- trails, and professionally manicured expected in February 2013. With opment corporation. The ACIDC storm water ponds. The ACIDC will KOZ, Projectile Tube Cleaning and provides a single-point-of-contact embark on a major site prepara- Steve’s Auto Body & Repair will service for information pertain- tion project in early 2013 to create receive abatements for 10 years on ing to all economic development additional pad ready sites. The site real estate taxes and certain state and business related resources in design was finalized in late 2012 taxes. The Manor Township Busi- Armstrong County. Operating four and will result in 43 pad ready ness Park is now fully occupied. industrial parks, a multi-tenant of- acres. Northpointe is currently fice building and other properties, home to ten companies, a branch In the West Hills Industrial Park, the ACIDC is tasked with present- campus of Indiana University of the ACIDC sold lot #17 to the ARC ing new or expanding businesses Pennsylvania and the Penn State Manor Auxiliary Foundation in a wide range of options to guide University Electro-Optics Center. December 2012. ARC Manor will their relocation, expansion, or ini- construct a 35,000 SF medical facil- tial location decisions. The ACIDC The ACIDC recently sold two of the ity later this year. The West Hills works directly with companies to remaining Keystone Opportunity Industrial Park is home to multiple identify sites and assist with fi- Zone (KOZ) lots in the Manor Town- medical service providers including nancing, permitting and workforce ship Business Park. Projectile Tube one of the County’s largest employ- development needs Cleaning, Inc. purchased lot #4 in ers, the Armstrong County Memo- December 2012 and plans to con- rial Hospital. struct a 9,000 SF facility to serve as their headquarters and dispatching The Armstrong County Department terminal. Construction is expected of Economic Development is the during the summer of 2013. Pro- lead economic development agency jectile Tube Cleaning manufactures within the County. The Department condenser tube cleaning equipment provides staff to the Armstrong and products including patented County Industrial Development mechanical scrapers. In Novem- Authority (ACIDA), a public devel- ber 2012, Steve’s Auto Body & opment agency and the Armstrong Repair purchased lot #5 and has County Industrial Development recently completed construction on Council (ACIDC), a private non-

development comes upon CED com- long term lease with the company Beaver County pleting the sale of the 120 acre first insured the investment remained in Beaver County Corporation phase of the project in early 2012. Pennsylvania. Creekside currently for Economic Development employs approximately 50, and can 250 Insurance Street, Suite 300 Also in August, CED purchased the increase employment to 75 with the Beaver, PA 15009 former Tegrant Diversified Brands new business it will take on with its 724-728-8610 (T) 724-728-3666 (F) facility on Blockhouse Run Road in expanded production capacity. James Palmer, President New Brighton. This 67,000 square [email protected] foot plant sits on over four acres of www.beavercountyced.org land. The building has been vacant for several years. CED purchased In August 2012, the Beaver County the plant and entered into a long Corporation for Economic Develop- term lease with Creekside Springs, ment completed a $3 million infra- LLC for the entire facility. Creek- structure project at its Aliquippa side, with facilities in Ambridge, Industrial Park. The project involved Pennsylvania and Salieneville, Ohio, construction of a road, sanitary is a private label bottler of water sewer service, and storm drainage and flavored drinks. The company (water was already in place) to 72 has opportunity to expand its fla- acres of vacant land owned by CED, vored water production and was all served by rail and approximately considering sites both in Ohio and 45 of which have frontage on the Pennsylvania. The former Tegrant Ohio River. This second phase of plant was well suited to Creekside needs, and CED’s purchase and

74 DEVELOPINGPITTSBURGH | Spring 2013 Another way the Gateway Engineers are helping develop Pittsburgh

Experience The Right Approach... The Gateway Engineers manages numerous projects for a wide variety of clients. We understand that every project and every client is unique. Our project management system, decades of experience, qualified personnel, and turnkey engineering services allow us to successfully execute projects regardless of size or complexity. • Aggressive schedules • Countless stakeholders • Numerous site constraints • High profile projects We’re ready to start!

A FULL-SERVICE CIVIL ENGINEERING FIRM www.gatewayengineers.com Butler County Community Development Corporation of Butler County 112 Woody Drive Butler, PA 16001 724-283-1961 (T) 724-283 3599 (F) Ken Raybuck, Executive Director Since 1958 [email protected] www.butlercountycdc.com Desmone & Associates Yeltrah, LLC purchased the Butler County Economic Development Cor- Architects poration’s 14,700 square foot flex Architecture • Planning • Interior Design building located at 295 Delwood Road in late 2012. The new Butler 3400 Butler Street • Pittsburgh, PA 15201 County business will manufacture 412.683.3230 • www.desmone.com components for the automobile glass industry.

Two parcels in the Victory Road Business Park are also under agreement and are expected to close in the first quarter of 2013. Each parcel is approximately eight acres. A manufacturing building costing approximately $1,000,000 will be constructed on one parcel and it is also expected that an additional $1,000,000 in equipment will be housed in the building. The second parcel will be the new home of a health care facility that will employ up to 25 people. Construction of Connecting ideas, this new building is expected to be- capital and clients. gin in the Spring. Both Victory Road parcels are located in Keystone Op- portunity Zones.

Grandbridge Real Estate Capital provides the vital link between complex market The Trinity Building located at 140 conditions and capital solutions. As a national full-service leader in commercial and Hollywood Drive in the Pullman multifamily finance, we combine our wide range of capital sources with a knowledgeable Center Business Park Expansion is currently under a sales agreement and experienced team to deliver results, deal after deal. as well. The 30,000 square foot our scope of services includes: flex/warehouse space is situated on more than five acres and will be the - Freddie Mac Program Plus® Seller/Servicer | Seniors Housing new home of an HVAC wholesaler. - Fannie Mae DUS® The building will permit its new owner to have both showroom and - FHA-insured Loans | MAP and LEAN warehouse capabilities. - Nearly 50 Insurance Companies - CMBS | Institutional Investors | Pension Funds The Pullman Commerce Center will - Proprietary Lending Platform | Structured Finance be the new home of a local union - $29 Billion+ Loan Servicing Portfolio as they agreed to purchase 10,000 square feet that will house their office. There are 3,600 square feet C o n t a C t U s of first floor office space available Two Gateway Center | 603 Stanwix Street | Suite 1899 for lease in this building as well Pittsburgh, PA 15222 | Phone 412.391.3366 | Fax 412.471.1773 as additional office space that will grandbridge.com be available at 124 Woody Drive in July, 2013. Loans are subject to credit approval. Equal Housing Lender.

76 DEVELOPINGPITTSBURGH | Spring 2013 Colliers International | Pittsburgh Fayette County specializes in adding value to our Fay-Penn Economic clients to accelerate their success. Development Council 1040 Eberly Way, Suite 200 Lemont Furnace, PA 15456 724-437-7913 (T) 724-437-7315 (F) Michael A. Jordan, Jr., Executive Director [email protected] www.faypenn.org

Over the past 20 years, Fay-Penn has assisted numerous companies by providing superior confidential business services, such as site selection assistance. Fay-Penn has been able to successfully market Fayette County to new businesses by having sites that are readily available, Commercial Real Estate Sales and Leasing Services which attracts new private investment into the area. > Real Estate Management > Valuation and Advisory > Corporate Solutions > Investment One of the most recent attractions > Sustainability > Auctions included Calfrac Well Services, a Marcellus related company that 412 321 4200 | www.colliers.com | @PghCRE has established permanent roots in Learn how we are living our values of service, expertise, Fayette County. Calfrac has invested community and fun at www.colliersinternationalpittsburgh.com over $20 million in the development of a new complex at Fay-Penn’s - Fayette Business Park, Georges Township, which will serve as the hub for its tri-state area operations. Selected for its central location in the region, the site currently employees 342 people with an expec- tation of reaching 1,000 employees or higher in a few years. Calfrac is committed to becoming part of the Fayette County community and hir- ing local residents.

Fayette County boasts of several business parks that are home to companies like Williams, Valerus, GHX, BOS Solutions and many more. With an ever increasing demand for business sites, Fay-Penn has recently announced the construction of a new business park in Dunbar Town- ship. Ground breaking is planned for early 2013 on this new development area that will include 311 acres with some sites having rail access that will connect the companies to northeastern United States and Canada. As a region, Pennsyl- 412.243.3430 vania’s southwestern corner has WWW.LAMIGRUBB.COM become the center of the Marcellus Shale industry attracting national and international investments.

www.developingpittsburgh.com 77 Ralph Resnick, NCDMM President and and earning the Chairman’s Award Indiana County Executive Director and Acting Director for Pittsburgh Impact Companies. Indiana County Center for of the National Additive Manufactur- Environmental Service Laboratories Economic Operations ing Innovation Institute (NAMII) said, provides analytical testing, consulting 801 Water Street “We have found the ideal location and field sampling services for water Indiana, PA 15701 and community for NCDMM’s head- and natural gas. Environmental Ser- 724-465-2662 (T) 724-465-3150 (F) quarters. Additionally, we are proud vice Laboratories and its sister com- Byron G. Stauffer, Jr., to support the revitalization efforts pany, Environmental Land Surveying Executive Director underway in Indiana County to bring and Solutions, Inc. also received over [email protected] back more industry and business to $30, 000 in job creation tax credits www.indianacountyceo.com the region. We look forward to many from the state of Pennsylvania. successful years in Blairsville." In Au- In 2012, relocation, expansion, and gust, NCDMM was awarded manage- The Communities at Indian Haven recognition were paramount in Indi- ment of the (NAMII), a pilot project earned the Employer of the Year ana County. Two national companies for the National Network for Manu- Award for Indiana County from the selected business parks in the Blairs- facturing Innovation (NNMI). Tri-County Workforce Investment ville/Burrell Township area for new Board. Communities at Indiana Haven locations. Bayada Home Health Care H & W Global Industries, Inc., com- operates assisted-living facilities that finalized the transition of their new pleted a 21,000 square-foot, state- provide nursing, dietary, and therapy regional office at the Interchange of-the-art expansion project in 2012, services. Center multi-tenant building, located and the 46,000-square-foot facility is at the Corporate Campus business now fully operational at the Corpo- Steady progress in 2013 will surely park. Bayada Home Health Care pro- rate Campus business park. H&W continue with the past year as an vides a variety of nursing and per- Global Industries is an industrial coat- indication of things to come. For sonal home care services to people in ings company providing processing more information about opportunities the comfort of their own homes. The and finishing for steel and aluminum in Indiana County, please contact the National Center for Defense Machin- parts, serving a broad range of indus- Indiana County Center for Economic ing and Manufacturing (NCDMM) also tries including aerospace, defense, Operations (www.indianacountyceo. expanded to Indiana County, mov- and medical. com). ing their national headquarters to the Corporate Campus. The NCDMM Finally, Environmental Service Labo- delivers optimized manufacturing ratories, Inc. grew 274%, adding solutions to the defense industry. 37 new employees in the past year

Most recently, LS Power of St Louis expected to go into operation in 2016 Lawrence County presented plans on Monday, Oct 8, or 2017. Lawrence County Economic 2012 to build a $750 million gas fired Development Corporation electric generation plant at the New Just 10 miles from the border of 100 East Reynolds Street Castle Development site located off Lawrence and Beaver counties is Plaza South, Suite 100 Route 551 in North Beaver Township. the next BIG energy opportunity for New Castle, PA 16101 The Hickory Run Energy Station is the Lawrence County. In mid-March 2012 724-658-1488 (T) 724-658-0313 (F) largest investment ever in Lawrence Royal Dutch Shell announced that the Linda Nitch, Executive Director County! The project offers infrastruc- Horsehead site in Monaca had been [email protected] ture improvements including extensions selected as its preferred site to build an www.lawrencecounty.com of Aqua Pennsylvania public water ethane cracker plant. No final decision supply and North Beaver Township’s has been made. But should the plant Lawrence County is a player in the municipal sewer to the site. Also of be built, then the opportunities that world of natural gas. SWEPI LP, which importance is the $15 million electric this facility will offer Lawrence County is owned by Royal Dutch Shell, and substation planned adjacent to the are tremendous. From plastics to phar- HilCorp Energy Company, Houston, new facility. With an anticipated real maceuticals to carpeting and clothing, Texas, have emerged as drillers of the property assessment of $40 million the many plants utilizing ethylene and Marcellus and Utica Shale throughout school district, county and township polyethylene will build in the area to the county. As of December, 2012 will receive a windfall from the ex- be near that source of raw materials. sixty two (62) permits have been issued pected taxes. The company intends to according to the DEP Office of Oil and purchase materials locally and use local With the opportunity of the ethane Gas Management. The wells that have contract services whenever possible. cracker plant, comes the challenge of been drilled circle the county from the The plant will generate a $3 million being prepared. Lawrence County’s Patterson Farm in Little Beaver Town- annual payroll and employ 25 people. Commissioners and our private sector ship to the Twentier drilling site in Additionally 500 construction workers leaders have taken the lead on prepar- Perry Township. will be used to build the plant which is ing shovel-ready sites. There are 100

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www.washcochamber.com Lawrence County (continued) acres at Millennium Technology Park, 50,000 sq ft multi-tenant speculative private sector leaders must be certain to 60 acres at Neshannock Business Park building in Millennium Technology Park. allocate the necessary financial resourc- and 30 acres at Shenango Commerce Not only will sites be needed, but also es to extend the infrastructure. Law- Park that are ready to go. In addition, the necessary infrastructure of water, rence County is working to meet these the Lawrence County Economic Devel- sewer, electric and gas to make these challenges and be OPEN FOR BUSINESS opment Corporation is constructing a projects a reality. Our municipal and in the years to come!

the world, announced in March 2012 In September 2012, Ansys Inc., located Washington County its intent to build a new corporate in Southpointe I and a global provider Washington County Economic headquarters near its current location in of engineering simulation software, an- Development Partnership Southpointe I located in Cecil Township nounced its decision to move its head- 20 East Beau Street just south of Pittsburgh. quarters to a new building in South- Washington, PA 15301 pointe II to be developed by Burns & 724-225-3010 (T) 724-228-7337 (F) Mylan has more than doubled the num- Scalo/Quattro Partners that is within a Jeff Kotula, President ber of its employees over the last five mile of its current operation. [email protected] years and is committed to remaining in www.washingtoncountyworks.com the area. Its new corporate headquarters Nearly 60 percent bigger than its cur- will be located along Town Center Bou- rent site, Ansys plans to expand into its In the second half of 2012, Washington levard in Southpointe II and is expected new 186,000 square feet headquarters County continued to attract businesses to be completed in 2013. by consolidating 438 employees from its as its residential housing market contin- Southpointe I and Station Square loca- ued to increase in activity and average The overall development will include tions as their leases expire in 2014. It sales prices of existing homes. Examples an approximate 280,000 square foot, expects to open its new location in the of the continuing business development: five-story, LEED-certified, Class-A office last quarter of 2014. building with associated infrastructure Mylan, Inc., a leading generic and and parking. At Starpointe, the Washington County specialty pharmaceutical company in Council for Economic Development

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was successful in securing a Redevelopment Assistance Capital Program grant of $1.5 million to aid the development of the park’s next phase. Fourth River Development is currently in the planning stages of Flex Building 3, a 60,000 sq. ft. spec building to be built later in 2013.

Westmoreland County Property Valuation Westmoreland County Industrial Development Corporation 40 North Pennsylvania Avenue, Suite 520 Greensburg, PA 15601 724-830-3061 (T) 724-830-3611 (F) Jason W. Rigone, Executive Director [email protected] www.co.westmoreland.pa.us

Healthy Business Activity – these are words that could sum up 2012 in Westmoreland based on its aggressive economic development agenda and the numerous activities occurring throughout the county that may very well be in direct rela- Property Valuation tion to a healthy business climate.

Enforcing the terminology were some compelling statistics reported during the last quarter of the year. Data, such as the state’s unemployment rate of 7.9% rising above the national rate of 7.8% with Westmoreland County’s rate reportedly remaining at 0.7% and 0.6% below state and national averages, respectively. In November, foreclosures in the region were declared to be the lowest in a decade, including Westmoreland’s account of 319 predicting that the county would end the year with its lowest number of foreclosures since 2002. The region affirmed its housing starts in the third quarter at 2,396, all of which incorporated Westmoreland County’s figures that were already exceeding 2011 records by 40% and expecting to almost double its total by year end. Litigation Support “Our local economy is healthy and growing for a number of reasons, but there is no doubt that some of this growth can be attributed to the county’s industrial park system and Integra Realty Resources - Pittsburgh the opportunities that have been made available there for business,” said Commissioner Chuck Anderson. “Small and Over 135 years of experience providing commercial real medium-sized companies are of particular focus and are the estate appraisals, market and feasibility studies, impact back-bone to our economic vitality." studies, litigation support and consulting throughout With the location announcement of Aquion Energy select- Western Pennsylvania and West Virginia. In addition, with ing RIDC Westmoreland for its first full-scale manufacturing 65 offices across the United States, we provide a national facility near New Stanton to many other pronounced county platform to solve your valuation challenges. expansions during the second half of the year, Westmoreland County’s business climate appears to be healthy and on the rise. Growing companies are capitalizing on the opportunities Paul D. Griffith, MAI, CRE, FRICS in the county, such as Exxon Mobile and Chromoglass locat- Managing Director ing at the Bushy Run Corporate Park in Export, Yerecic Label T: 724.742.3324 and Xodus Medical expanding at the Westmoreland Business F: 724.742.3390 & Research Park in Upper Burrell and Washington Townships and the most recent industrial park announcement, Shale- [email protected] stone Group. www.irr.com/pittsburgh

82 DEVELOPINGPITTSBURGH | Spring 2013 Shalestone Group, a subsidiary of Wendell H. Stone Company recently purchased 28 acres at the I-70 Industrial Park located in South Huntingdon Township to construct and market buildings to businesses in the natural gas industry. Plans call for the company to erect buildings between 10,000 and 21,000 square-feet, complete with “lay-down yards” for outside storage needs and will be leased or sold to private companies locating to the area.

In addition to the 28 acres purchased by Shalestone, another 6 acres has been optioned to EFR Partnership at the Westmo- reland County Airpark in Latrobe. EFR Partnership, a developer of more than 220,000 square-feet of building space within the Airpark, plans to construct yet another 75,000 square-foot flex warehouse. The building will be divisible in 7,000 square-foot leasable increments for light industrial/manufacturing operations.

The total projects, including Shalestone and EFR Partnership, bring the overall acreage sold and/or optioned to almost 70 acres within the county’s industrial park system for 2012. “This DEVELOPMENT is right in line with the county’s average rate of land absorption marketed in the industrial parks,” said Jason Rigone, Executive Director of the county’s Industrial Development Cor- poration. “With an average annual absorption of 45 acres sold in the county’s industrial park system during the last 10 years, future developed sites are a premium as we work to support this demand over the next 10 years,” adds Rigone.

In addition to green-field industrial parks, Westmoreland County extended leases on almost 113,000 square-feet of space within its existing brownfield redeveloped sites. The re- BROKERAGE newed leases include space at the Mount Pleasant Glass Cen- tre to Lenox Outlet, Pittsburgh Electric Engines and O’Rourke Cut Crystal, as well as a lease extension to Philips Respironics at the South Greensburg Commons facility located in South Greensburg Borough.

During the third quarter of 2012, the county’s overall vacancy rate for privately-owned industrial space was reported at 11.8%, according to the Pittsburgh Office of Newmark Grubb Knight Frank, one of the largest real estate service firms in the PROPERTY world. “Although this rate appears to be elevated, it should be noted these calculations include the RIDC Westmoreland facility,” said Rigone. “This building caters primarily to the MANAGEMENT largest projects of 200,000 square-feet and up and removing the 1,500,000 square-feet from the inventory actually reduces the county’s rate to only 6% - one of the lowest in the region and resulting in the need for more Class A industrial space in the 25,000 – 100,000 square-foot range.”

Some of the county’s strategic marketing efforts for 2013 will feature the newly designated Keystone Opportunity Expansion Zone (KOEZ) – New Stanton, which includes both available land parcels for sale for new construction and existing building space for lease opportunities. This site is comprised of Westmoreland Distribution Park North (177 acres) including 3 prime, pad-ready industrial sites and the county’s 2.8 million square-foot RIDC Westmoreland facility divisible in 100,000 square-foot leasable increments (173 acres). DP

www.developingpittsburgh.com 83 PWC PROPERTY SOLUTIONS, LLC PWC operates a full service commercial Transactions real estate management platform capable of assisting our clients with many services of Note to enhance properties, offering a seamless working relationship facilitating all services on a single contract basis. his list includes Allegheny Three Parkway Center County property Suite 102 KNOWLEDGE transfer data Pittsburgh, PA 15220 originally col- INTEGRITY lected from pub- 412.937.1925 lic recordsT by RealSTATs, Inc. (www. EFFICIENCY RealSTATs.net) and identified by them as a transfer of non-residential prop- SATISFACTION erty. Initially published in the Pitts- burgh Post Gazette Sunday edition’s pwcpropertysolutions.com • pwcnow.com Real Estate Sections, only non-residen- Nicole DeLuca • Chuck Diloreto • Christine Andreyo tial transfers with a consideration or stamp value greater than $1,000,000 were selected by Tall Timber Group for research at the Allegheny County Assessor’s Online Database. Property use is determined by the assessor and data shown here (Sale Date, County CONGRATULATIONS Total Assessed Value, Prior Sale Price/ Date, Taxes, etc.) were collected from Horizon Properties Group those online records. The value of the sheriff’s deeds and the stamp value of & TKA, Inc. nominal transactions are included.

Only transfers from the last six months of 2012 are included. There’s a total of $406.3 million for the 90 transactions with the City of Pitts- burgh claiming nearly $61 million and accounting for 15% of the total transfer dollars in the county.

Shopping centers, particularly in Homestead, West Homestead, and Ross Township account for $145,402,863 or nearly 36 percent of total transfer dollars in the county. In- dustrial uses account for $55,789,709 or nearly 14 percent.

In the first half of 2012, 35 percent of the new owners were from outside on the award winning Embassy Park of Pennsylvania entirely while 38% of the second half’s transactions were Speculative Office Project of the Year! from outside Pennsylvania.

84 DEVELOPINGPITTSBURGH | Spring 2013 Transactions of Note

Property Address Prop Use Sale Price Prior Price Total Assd Val Buyer Municipality Sale Date Prior Date Taxes Buyer City, State Lot Size 300 Waterfront Drive W Theater $49,780,000 $97,743,308 $17,059,900 M & J - Big Waterfront Town Center I LLC West Homestead 10/3/12 3/2/07 $85,257 Chicago IL 18.09 A $30,167,305 2/18/04 2000 Park Lane Dr Office-Elevator $36,005,184 $29,500,000 $23,500,000 IX WR 2000 Park Lane Dr LP North Fayette Twp 12/14/12 12/28/05 $132,358 Greenwich CT 7.61 A $846,031 4/7/92 680 Waterfront Drive E Discount Store $33,070,000 $16,399,206 $3,897,100 M & J Big Waterfront Amity Square LLC Munhall 10/3/12 3/2/07 $21,731 Chicago IL 4.65 A $4,112,546 11/24/03 E Carson Street Office-Elevator $25,069,000 $347,500 $15,867,300 UPMC Pittsburgh, Ward 16 10/11/12 7/28/00 $146,299 Pittsburgh PA 1.39 A 100 Papercraft Dr Warehouse $24,415,769 $19,725,000 $14,723,900 Stag O'Hara LLC O'Hara Twp 10/12/12 5/2/07 $82,103 Boston MA 33.38 A Siebert Road Shopping Center $20,050,000 $0 $3,885,000 GRI McKnight Siebert LLC Ross Twp 12/21/12 11/2/12 $24,479.55 Bethesda MD 4.5 A 1501 Northway Mall Shopping Center $12,000,000 $1,597 $16,400,000 LRC Northway Mall Acq LLC Ross Twp 11/30/12 5/29/12 $82,469.33 Akron OH 28.79 A $24,200,000 11/29/00 400 Northtowne Sq Neighborhood Shopping Center $10,575,000 $1,450,000 $6,528,600 Northtowne Station LLC Richland Twp 7/13/12 7/1/92 $36,405 Cincinnati OH 16.1 A 153, 158, & 172 E Bridge Dr Theater & Retail $7,627,563 $57,527,862 $8,690,600 M & J - Big Waterfront Town Center I LLC Homestead 10/3/12 3/2/07 $51,693 Chicago IL 5.46 A 30 Pine Creek Road Retail Structures $6,560,000 $6,620,000 $5,187,500 MM WG McCandless LLC McCandless 12/28/12 11/7/07 $14,805 Albany NY 3.85 A $2,000,000 5/1/06 350 Waterfront Dr E Department Store $6,400,000 $16,399,206 $7,182,200 M & J Big Waterfront Amity Square LLC Homestead 10/3/12 3/2/07 $40,049 Chicago IL 7.12 A 495 East Waterfront Dr Medical Clinics/Offices $6,250,000 $500,000 $4,025,000 WSC Realty Partn LP Homestead 12/31/12 4/16/01 $62,643 Homestead PA 2.0 A SR 22 Industrial $5,865,000 Industrial Scientific Corporation Robinson Twp 12/12/12 185 Waterfront Drive W Restaurant, Café and/or $5,660,000 $16,399,206 $1,682,100 M & J Big Waterfront Amity Square LLC Homestead Bar 10/3/12 3/2/07 $9,380 Chicago IL 1.82 A $1,610,641 11/24/03 1427 Cook School Road Agricultural $5,600,000 $1 $212,400 Bedner Estates LP Upper St. Clair Twp 10/2/12 6/6/79 $1,767 Pittsburgh PA 112.5 A 405 Sixth Avenue Office-Elevator $5,500,000 $6,500,000 $4,600,000 PMC 600 William Penn Place Assoc LP Pittsburgh Ward 2 10/22/12 10/15/08 $25,495 Philadelphia PA 40,800 sf $5,826,250 1/4/84 324 -338 Amity Street Small Detached Retail $5,100,000 $5,350,000 $1,792,100 M& J Big Waterfront Amity Square LLC Homestead 10/3/12 7/27/07 $9,993 Chicago IL 1.45 A $850,000 1/7/02 400 Oxford Drive Office-Elevator $5,040,000 $0 $4,560,000 UPMC Monroeville 12/3/12 1/5/09 $21,955 Pittsburgh PA 4.36 A 10918 Frankstown Road Independent Living-Seniors $4,825,000 $0 $2,200,000 Penn Arbors Apt LLC Penn Hills 12/31/12 7/29/83 $12,083 Spring Valley NY 3.93 A 401 Chestnut Street Commercial Other $4,601,419 $2,799,300 FDG C39 PA Carnegie LLC Carnegie 9/4/12 Woonsocket, RI 1.0158 A Waterfront Drive Discount Store $4,500,000 $3,187,900 M & J Big Waterfront Market LLC Munhall 10/3/12 Chicago IL 3.77 A 829 Milton Street Government/Commercial Vacant Land $4,092,861 $3,000,000 $1,154,900 Education Capital Solutions LLC Pittsburgh, Ward 14 7/23/12 6/13/06 $12,422.00 Kansas City MO 30,138 sf 6191 Steubenville Pike Auto Sales & Service $4,000,000 $0 $3,000,000 Diehl Of Robinson Realty LLC Robinson Twp 9/20/12 5/5/50 $16,729 Butler PA 9.28 A 513 Smithfield Street Department Store $4,000,000 $630,000 $2,165,000 Urban Redevelopment Auth Of Pittsburgh Pittsburgh, Ward 2 12/28/12 8/16/12 $31,039 Pittsburgh PA 22,549 sf 610 Alpha Drive Light Manufacturing $3,900,000 $10 $2,750,000 Penhurst Realty 2 LP O'Hara Twp 11/9/12 3/6/96 $21,296 Pittsburgh PA 6.0 A 230 N. Craig Street Office/Apartments $3,897,173 $1 $3,997,100 Sherwood Property LP Pittsburgh, Ward 4 8/15/12 6/22/10 $23,096.00 Pittsburgh PA 30,014 sf 1 Penn Center West Office $3,700,000 $1,566 $5,250,000 PCW Lender Assoc 1 LP Robinson Twp 12/21/12 1/31/12 $34,019.66 Pittsburgh PA 6.63 A $6,000,000 12/23/96 1630 Golden Mile Hwy Warehouse $3,608,280 $1 $869,000 Bridge Pennsylvania LLC Monroeville 12/28/12 9/30/83 $5,643 Monroeville PA 3.41 A www.developingpittsburgh.com 211 Beecham Dr Motel & Tourist Cabin $3,427,344 $3,390,000 $1,810,000 G6 Hospitality Property LLC 85 Kennedy Twp 11/7/12 9/1/99 $9,794 Carrollton 3.79 A $615,114 10/17/86 228 Semple Street Restaurant $3,500,000 $80,000 $286,500 Comhdan Realty LP Property Address Prop Use Sale Price Prior Price Total Assd Val Buyer Municipality Sale Date Prior Date Taxes Buyer City, State Lot Size 300 Waterfront Drive W Theater $49,780,000 $97,743,308 $17,059,900 M & J - Big Waterfront Town Center I LLC West Homestead 10/3/12 3/2/07 $85,257 Chicago IL 18.09 A $30,167,305 2/18/04 2000 Park Lane Dr Office-Elevator $36,005,184 $29,500,000 $23,500,000 IX WR 2000 Park Lane Dr LP North Fayette Twp 12/14/12 12/28/05 $132,358 Greenwich CT 7.61 A $846,031 4/7/92 680 Waterfront Drive E Discount Store $33,070,000 $16,399,206 $3,897,100 M & J Big Waterfront Amity Square LLC Munhall 10/3/12 3/2/07 $21,731 Chicago IL 4.65 A $4,112,546 11/24/03 E Carson Street Office-Elevator $25,069,000 $347,500 $15,867,300 UPMC Pittsburgh, Ward 16 10/11/12 7/28/00 $146,299 Pittsburgh PA 1.39 A 100 Papercraft Dr Warehouse $24,415,769 $19,725,000 $14,723,900 Stag O'Hara LLC O'Hara Twp 10/12/12 5/2/07 $82,103 Boston MA 33.38 A Siebert Road Shopping Center $20,050,000 $0 $3,885,000 GRI McKnight Siebert LLC Ross Twp 12/21/12 11/2/12 $24,479.55 Bethesda MD 4.5 A 1501 Northway Mall Shopping Center $12,000,000 $1,597 $16,400,000 LRC Northway Mall Acq LLC Ross Twp 11/30/12 5/29/12 $82,469.33 Akron OH 28.79 A $24,200,000 11/29/00 400 Northtowne Sq Neighborhood Shopping Center $10,575,000 $1,450,000 $6,528,600 Northtowne Station LLC Richland Twp 7/13/12 7/1/92 $36,405 Cincinnati OH 16.1 A 153, 158, & 172 E Bridge Dr Theater & Retail $7,627,563 $57,527,862 $8,690,600 M & J - Big Waterfront Town Center I LLC Homestead 10/3/12 3/2/07 $51,693 Chicago IL 5.46 A 30 Pine Creek Road Retail Structures $6,560,000 $6,620,000 $5,187,500 MM WG McCandless LLC McCandless 12/28/12 11/7/07 $14,805 Albany NY 3.85 A $2,000,000 5/1/06 350 Waterfront Dr E Department Store $6,400,000 $16,399,206 $7,182,200 M & J Big Waterfront Amity Square LLC Homestead 10/3/12 3/2/07 $40,049 Chicago IL 7.12 A 495 East Waterfront Dr Medical Clinics/Offices $6,250,000 $500,000 $4,025,000 WSC Realty Partn LP Homestead 12/31/12 4/16/01 $62,643 Homestead PA 2.0 A SR 22 Industrial $5,865,000 Industrial Scientific Corporation Robinson Twp 12/12/12 185 Waterfront Drive W Restaurant, Café and/or $5,660,000 $16,399,206 $1,682,100 M & J Big Waterfront Amity Square LLC Homestead Bar 10/3/12 3/2/07 $9,380 Chicago IL 1.82 A $1,610,641 11/24/03 1427 Cook School Road Agricultural $5,600,000 $1 $212,400 Bedner Estates LP Upper St. Clair Twp 10/2/12 6/6/79 $1,767 Pittsburgh PA 112.5 A 405 Sixth Avenue Office-Elevator $5,500,000 $6,500,000 $4,600,000 PMC 600 William Penn Place Assoc LP Pittsburgh Ward 2 10/22/12 10/15/08 $25,495 Philadelphia PA 40,800 sf $5,826,250 1/4/84 324 -338 Amity Street Small Detached Retail $5,100,000 $5,350,000 $1,792,100 M& J Big Waterfront Amity Square LLC Homestead 10/3/12 7/27/07 $9,993 Chicago IL 1.45 A $850,000 1/7/02 400 Oxford Drive Office-Elevator $5,040,000 $0 $4,560,000 UPMC Monroeville 12/3/12 1/5/09 $21,955 Pittsburgh PA 4.36 A 10918 Frankstown Road Independent Living-Seniors $4,825,000 $0 $2,200,000 Penn Arbors Apt LLC Penn Hills 12/31/12 7/29/83 $12,083 Spring Valley NY 3.93 A 401 Chestnut Street Commercial Other $4,601,419 $2,799,300 FDG C39 PA Carnegie LLC Carnegie 9/4/12 Woonsocket, RI 1.0158 A Waterfront Drive Discount Store $4,500,000 $3,187,900 M & J Big Waterfront Market LLC Munhall 10/3/12 Chicago IL 3.77 A 829 Milton Street Government/Commercial Vacant Land $4,092,861 $3,000,000 $1,154,900 Education Capital Solutions LLC Pittsburgh, Ward 14 7/23/12 6/13/06 $12,422.00 Kansas City MO 30,138 sf 6191 Steubenville Pike Auto Sales & Service $4,000,000 $0 $3,000,000 Diehl Of Robinson Realty LLC Robinson Twp 9/20/12 5/5/50 $16,729 Butler PA 9.28 A 513 Smithfield Street Department Store $4,000,000 $630,000 $2,165,000 Urban Redevelopment Auth Of Pittsburgh Pittsburgh, Ward 2 12/28/12 8/16/12 $31,039 Pittsburgh PA 22,549 sf 610 Alpha Drive Light Manufacturing $3,900,000 $10 $2,750,000 Penhurst Realty 2 LP O'Hara Twp 11/9/12 3/6/96 $21,296 Pittsburgh PA 6.0 A 230 N. Craig Street Office/Apartments $3,897,173 $1 $3,997,100 Sherwood Property LP Pittsburgh, Ward 4 8/15/12 6/22/10 $23,096.00 Pittsburgh PA 30,014 sf 1 Penn Center West Office $3,700,000 $1,566 $5,250,000 PCW Lender Assoc 1 LP Robinson Twp 12/21/12 1/31/12 $34,019.66 Pittsburgh PA 6.63 A Property Address Prop Use Sale Price $6,000,000Prior Price Total Assd Val Buyer Municipality Sale Date Prior12/23/96 Date Taxes Buyer City, State Lot Size 1630300 W Goldenaterfront Mile Drive Hwy W TheaterWarehouse $49,780,000$3,608,280 $97,743,308$1 $17,059,900$869,000 MBridge & J - PennsylvaniaBig Waterfront LLC Town Center I LLC MonroevilleWest Homestead 12/28/1210/3/12 9/30/833/2/07 $85,257$5,643 MonroevilleChicago IL PA 3.4118.09 A A 211 Beecham Dr Motel & Tourist Cabin $3,427,344 $30,167,305$3,390,000 $1,810,000 G6 Hospitality Property LLC Kennedy Twp 11/7/12 2/18/049/1/99 $9,794 Carrollton 3.79 A 2000 Park Lane Dr Office-Elevator $36,005,184 $29,500,000$615,114 $23,500,000 IX WR 2000 Park Lane Dr LP North Fayette Twp 12/14/12 12/28/0510/17/86 $132,358 Greenwich CT 7.61 A 228 Semple Street Restaurant $3,500,000 $846,031$80,000 $286,500 Comhdan Realty LP Pittsburgh, Ward 4 12/28/12 12/26/854/7/92 3,200 sf 6802871 W Freeportaterfront Road Drive E DiscountAuto Sales Store & Service $33,070,000$3,000,000 $16,399,206$0 $3,897,100$1,248,200 MShults & J Big Ford W aterfrontHarmarville Amity Associates Square LLC LP MunhallHarmar Twp 10/3/127/12/12 3/2/073/9/73 $21,731$6,960 ChicagoWexford IL 4.652.75 A 922 Brush Creek Road Mini Warehouse $2,945,000 $4,$295,000112,546 $2,510,600 Guardian Self Storage Bc LLC Marshall Twp 11/8/12 11/24/036/25/98 $13,216 Pittsburgh PA 4.83 A E Carson Street Office-Elevator $25,069,000 $347,500$169,846 $15,867,300 UPMC Pittsburgh, Ward 16 10/11/12 7/28/006/13/96 $146,299 Pittsburgh PA 1.39 A 1002801 Papercraft Freeport Road Dr WMotelarehouse & Tourist Cabin $24,415,769$2,600,910 $19,725,000$1 $14,723,900$2,223,000 StagRed RavenO'Hara Motel LLC Ltd O'HaraHarmar TTwpwp 10/12/1212/31/12 5/2/076/3/91 $82,103$21,766 BostonAllison Park MA 33.384.49 A A Siebert100 Weyman Road Road ShoppingApartment-40+ Center units $20,050,000$2,580,055 $0 $3,885,000$8,800,000 GRIMaiden McKnight Bridge Siebert Limited LLC Partnership RossWhitehall Twp 12/21/128/28/12 8/28/1211/2/12 $24,479.55$42,833 BethesdaPittsburgh MD PA 4.52.4 A 1501712 W Northwayashington Mall Road ShoppingBank Center $12,000,000$2,422,608 $1,597$10 $16,400,000$1,050,000 LRCARC NorthwayCMBTLPA001 Mall LLCAcq LLC RossMt. Lebanon Twp 110/1/30/1211/12 5/29/127/24/07 $82,469.33$5,855 AkronJenkintown OH 28.7912,052 A sqf $24,200,000$1,050,000 11/29/0012/3/01 4006250 Northtowne Library Road Sq NeighborhoodService Station Shopping Center $10,575,000$2,320,000 $1,450,000$400,000 $6,528,600$683,300 Northtowne7 Eleven Inc Station LLC RichlandBethel Park Twp 10/16/127/13/12 12/29/977/1/92 $36,405$3,810 CincinnatiDallas OH 16.11.48 A 153,4700 158, McKnight & 172 RoadE Bridge Dr TheaterCommunity & Retail $7,627,563$2,125,000 $57,527,862$4,500,000 $8,690,600$1,800,000 M4780 & J McKnight - Big Waterfront LLC Town Center I LLC HomesteadRoss Twp Shopping Center 12/18/1210/3/12 6/30/063/2/07 $51,693$18,616 ChicagoPittsburgh IL PA 5.463.84 A 30 Pine Creek Road Retail Structures $6,560,000 $6,620,000$260,000 $5,187,500 MM WG McCandless LLC McCandless 12/28/12 11/7/075/7/76 $14,805 Albany NY 3.85 A 4919 William Flynn Hwy Commercial Garage $2,100,000 $2,000,000$325,000 $270,900 BI NT Allisan Park LLC Hampton Twp 10/15/12 12/23/5/1/0611 $1,511 Chicago IL 1.15 A 350 Waterfront Dr E Department Store $6,400,000 $16,399,206$245,000 $7,182,200 M & J Big Waterfront Amity Square LLC Homestead 10/3/12 13/2/071/8/89 $40,049 Chicago IL 7.12 A 4953721 East William Waterfront Penn Hwy Dr MedicalAuto Sales Clinics/Offices & Service $6,250,000$2,100,000 $1,540,000$500,000 $4,025,000$1,548,600 WSCF& M RealtyReal Estate Partn LLC LP HomesteadMonroeville 12/31/127/24/12 4/16/011/19/93 $62,643$8,635 HomesteadMonroeville PA 2.02.21 A A SR150 22 Lake Drive IndustrialOffice $5,865,000$2,082,900 $18,000 $1,663,900 IndustrialLake Drive Scientific Realty Partners Corporation LLC RobinsonPine Twp Twp 12/12/1210/2/12 9/15/88 $10,225 Pittsburgh PA 1.14 A 18545 South Waterfront 23rd Street Drive W Restaurant,Light Manufacturing Café and/or $5,660,000$2,050,009 $16,399,206$850,000 $1,682,100$1,050,000 MRJ & Equities J Big W aterfrontLP Amity Square LLC HomesteadPittsburgh, Ward 16 Bar 10/22/1210/3/12 2/13/083/2/07 $9,380$6,428 ChicagoPittsburgh IL PA 1.8231,680sf A 4695 Campbells Run Road Car Wash $2,000,000 $1,610,641$125,000 $859,200 Snyder Automotive Works Inc Collier Twp 11/15/12 11/24/033/25/85 $5,424 Pittsburgh PA 2.11 A 14272nd Street Cook School Road AgriculturalVacant Commercial Land $5,600,000$2,000,000 $1 $212,400$44,000 BednerCenterside Estates Industrial LP LP UpperLeetsdale St. Clair Twp 10/2/129/27/12 4/15/996/6/79 $1,767$261 PittsburghLeetsdale PA 11.8612.5 A A 4054775 Sixth McKnight Avenue Road Office-ElevatorAuto Service Station $5,500,000$2,000,000 $6,500,000$1,120,000 $4,600,000$531,100 PMCRK McKnight 600 William Road Penn LLC Place Assoc LP PittsburghRoss Twp Ward 2 10/22/1212/31/12 10/15/0810/8/08 $25,495$3,581 PhiladelphiaHuntington PA 40,80029,000 sf 305 Old Mill Road Residential-Vacant Land $1,985,000 $5,826,250$1 $833,500 Hammock Beach Partners LLC Fox Chapel 12/28/12 12/29/991/4/84 $1,603 Allison Park 15.86 A 324 -338 Amity Street Small Detached Retail $5,100,000 $5,350,000$800,000 $1,792,100 M& J Big Waterfront Amity Square LLC Homestead 10/3/12 7/27/074/7/95 $9,993 Chicago IL 1.45 A 7001 Jones Street Warehouse $1,950,000 $850,000$0 $1,000,000 Eastman Chemical Resins Inc Jefferson Hills 12/31/12 8/30/541/7/02 $15,167 West Elizabeth 10.25 A 400700 OxfordTrumbull Drive Drive Office-ElevatorOffice/Warehouse $5,040,000$1,800,000 $0 $4,560,000$1,770,000 UPMCGlobal Links MonroevilleGreen Tree 12/3/127/3/12 1/5/092/1/61 $21,955$10,071 Pittsburgh PA 4.362.26 A 10918645 Alpha Frankstown Dr Road IndependentOffice Living-Seniors $4,825,000$1,750,000 $984,000$0 $2,200,000$1,000,000 PennWest ArborsSpruce AptRealty LLC Holdings LP PennO'Hara Hills Twp 12/31/1210/12/12 7/29/832/7/92 $12,083$5,576 SpringPittsburgh Valley PA NY 3.933.04 A 4015309 Chestnut Campbells Street Run Road CommercialMedical Clinics/Offices Other $4,601,419$1,630,000 $1 $2,799,300$754,000 FDGVCA RealC39 PropertyPA Carnegie Acquisition LLC Corporation CarnegieRobinson Twp 19/4/121/2/12 5/30/01 $6,702 WLosoonsocket, Angeles RI 1.015820,959 Asf Waterfront Drive Discount Store $4,500,000 $175,000 $3,187,900 M & J Big Waterfront Market LLC Munhall 10/3/12 7/11/97 Chicago IL 3.77 A 8291600 Milton South Street Braddock Avenue Government/CommercialService Station or Oil Stor Vacant Land $4,092,861$1,620,000 $3,000,000$1 $1,154,900$370,000 Education7 Eleven Inc Capital Solutions LLC Pittsburgh,Swissvale Ward 14 Stamp value 7/23/129/11/12 6/13/069/28/07 $12,422.00 KansasDallas TXCity MO 30,13813,393 sf 6191 Steubenville Pike Auto Sales & Service $4,000,000 $275,000$0 $3,000,000 Diehl Of Robinson Realty LLC Robinson Twp 9/20/12 12/29/975/5/50 $16,729 Butler PA 9.28 A 5131801 Smithfield Murray Avenue Street DepartmentBank Store $4,000,000$1,605,562 $630,000$10 $2,165,000$850,000 UrbanARC CBPBG RedevelopmentPA001 LLC Auth Of Pittsburgh Pittsburgh, Ward 214 12/28/1210/11/12 8/16/127/24/07 $31,039$6,128 PittsburghJenkintown PA 22,54915,043 sf 610 Alpha Drive Light Manufacturing $3,900,000 $850,000$10 $2,750,000 Penhurst Realty 2 LP O'Hara Twp 11/9/12 12/3/013/6/96 $21,296 Pittsburgh PA 6.0 A 2302745 N. Freeport Craig Street Road Office/ApartmentsDrive-In Rest or Food Service $3,897,173$1,592,253 $1$0 $3,997,100$1,360,900 SherwoodPWK Freeport Property Holdings LP I LP Pittsburgh,Harmar Twp Ward 4 12/31/128/15/12 10/16/756/22/10 $23,096.00$14,570 PittsburghAllison Park PA 30,0142.98 A sf 11615 Penn Golden Center Mile West Hwy OfficeAuto Sales & Service $3,700,000$1,566,000 $1,460,000$1,566 $5,250,000$1,517,700 PCWRoundhouse Lender AssocProperty 1 LP Holdings LP RobinsonMonroeville Twp 12/21/1212/13/12 12/20/071/31/12 $34,019.66$7,782 PittsburghExport PA 6.636.15 A 1102 Perry Hwy Auto Service Station $1,540,000 $6,000,000$917,000 $547,800 Skytop Investments LLC Ross Twp 12/31/12 12/23/969/9/10 $2,885 Covington 32,391 sf 1630 Golden Mile Hwy Warehouse $3,608,280 $600,000$1 $869,000 Bridge Pennsylvania LLC Monroeville 12/28/12 9/30/837/20/09 $5,643 Monroeville PA 3.41 A 230811 Beecham7th Street Dr MotelOffice-Elevator & Tourist Cabin $3,427,344$1,530,000 $3,390,000$1 $1,810,000$800,000 G6Hefren- HospitalityTillotson Property Inc LLC KennedyPittsburgh, Twp Ward 2 8/14/1211/7/12 6/10/939/1/99 $9,794$4,053 CarrolltonPittsburgh PA 3.792,250 A sf 3845 Northern Pike Retail Structures $1,525,000 $615,$10114 $1,480,000 CE Acquisitions VI LP Monroeville 7/9/12 10/17/867/5/12 $8,253 Carnegie 7.04 A 228Park Semple Manor DriveStreet RestaurantVacant Commercial Land $3,500,000$1,522,682 $80,000$0 $1,130,100$286,500 ComhdanRobinson RealtyManor LPHotel Group 2689 LLC Robinson Twp 12/21/12 $6,577 Pittsford 3.15 A 201 Corey Ave Warehouse $1,512,810 $0 $623,900 Hox Management LP Braddock 11/9/12 1/8/68 $2,978.71 Warrendale 1.13 A 526 Penn Avenue Owned by College/University $1,500,000 $1,651,800 PMC 526 Penn Avenue Assoc LP Pittsburgh, Ward 2 12/23/86 $26,426 Pittsburgh PA 8,475 sf DEVELOPINGPITTSBURGH | Spring 2013 86 7702 McKnight Road Restaurant - Fast Food $1,500,000 McDonald's Ross Twp 11/14/12 6325 Penn Avenue Bowling Alleys/Rec Facility $1,454,427 $1,533,930 $1,243,100 Racquetball One Associates Pittsburgh, Ward 11 Stamp value 12/28/12 12/6/79 $6,741 Pittsburgh PA 28,817 sf Quality, Excellence, Integrity Since 1951 Google Pittsburgh, Bakery Square (412) 828-5500 Strada Architecture www.amartinigc.com

www.developingpittsburgh.com 87 Pittsburgh, Ward 4 12/28/12 12/26/85 3,200 sf 2871 Freeport Road Auto Sales & Service $3,000,000 $0 $1,248,200 Shults Ford Harmarville Associates LP Harmar Twp 7/12/12 3/9/73 $6,960 Wexford 2.75 A 922 Brush Creek Road Mini Warehouse $2,945,000 $295,000 $2,510,600 Guardian Self Storage Bc LLC Marshall Twp 11/8/12 6/25/98 $13,216 Pittsburgh PA 4.83 A $169,846 6/13/96 2801 Freeport Road Motel & Tourist Cabin $2,600,910 $1 $2,223,000 Red Raven Motel Ltd Harmar Twp 12/31/12 6/3/91 $21,766 Allison Park 4.49 A 100 Weyman Road Apartment-40+ units $2,580,055 $0 $8,800,000 Maiden Bridge Limited Partnership Whitehall 8/28/12 8/28/12 $42,833 Pittsburgh PA 2.4 A 712 Washington Road Bank $2,422,608 $10 $1,050,000 ARC CMBTLPA001 LLC Mt. Lebanon 10/11/12 7/24/07 $5,855 Jenkintown 12,052 sqf $1,050,000 12/3/01 6250 Library Road Service Station $2,320,000 $400,000 $683,300 7 Eleven Inc Bethel Park 10/16/12 12/29/97 $3,810 Dallas 1.48 A 4700 McKnight Road Community $2,125,000 $4,500,000 $1,800,000 4780 McKnight LLC Ross Twp Shopping Center 12/18/12 6/30/06 $18,616 Pittsburgh PA 3.84 A $260,000 5/7/76 4919 William Flynn Hwy Commercial Garage $2,100,000 $325,000 $270,900 BI NT Allisan Park LLC Hampton Twp 10/15/12 12/23/11 $1,511 Chicago IL 1.15 A $245,000 11/8/89 3721 William Penn Hwy Auto Sales & Service $2,100,000 $1,540,000 $1,548,600 F& M Real Estate LLC Monroeville 7/24/12 1/19/93 $8,635 Monroeville PA 2.21 A 150 Lake Drive Office $2,082,900 $18,000 $1,663,900 Lake Drive Realty Partners LLC Pine Twp 10/2/12 9/15/88 $10,225 Pittsburgh PA 1.14 A 45 South 23rd Street Light Manufacturing $2,050,009 $850,000 $1,050,000 RJ Equities LP Pittsburgh, Ward 16 10/22/12 2/13/08 $6,428 Pittsburgh PA 31,680sf 4695 Campbells Run Road Car Wash $2,000,000 $125,000 $859,200 Snyder Automotive Works Inc Collier Twp 11/15/12 3/25/85 $5,424 Pittsburgh PA 2.11 A 2nd Street Vacant Commercial Land $2,000,000 $1 $44,000 Centerside Industrial LP Leetsdale 9/27/12 4/15/99 $261 Leetsdale 1.86 A 4775 McKnight Road Auto Service Station $2,000,000 $1,120,000 $531,100 RK McKnight Road LLC Ross Twp 12/31/12 10/8/08 $3,581 Huntington 29,000 sf 305 Old Mill Road Residential-Vacant Land $1,985,000 $1 $833,500 Hammock Beach Partners LLC Fox Chapel 12/28/12 12/29/99 $1,603 Allison Park 15.86 A $800,000 4/7/95 7001 Jones Street Warehouse $1,950,000 $0 $1,000,000 Eastman Chemical Resins Inc Jefferson Hills 12/31/12 8/30/54 $15,167 West Elizabeth 10.25 A 700 Trumbull Drive Office/Warehouse $1,800,000 $0 $1,770,000 Global Links Green Tree 7/3/12 2/1/61 $10,071 Pittsburgh PA 2.26 A 645 Alpha Dr Office $1,750,000 $984,000 $1,000,000 West Spruce Realty Holdings LP O'Hara Twp 10/12/12 2/7/92 $5,576 Pittsburgh PA 3.04 A 5309 Campbells Run Road Medical Clinics/Offices $1,630,000 $1 $754,000 VCA Real Property Acquisition Corporation Robinson Twp 11/2/12 5/30/01 $6,702 Los Angeles 20,959 sf $175,000 7/11/97 1600 South Braddock Avenue Service Station or Oil Stor $1,620,000 $1 $370,000 7 Eleven Inc Swissvale Stamp value 9/11/12 9/28/07 Dallas TX 13,393 sf $275,000 12/29/97 1801 Murray Avenue Bank $1,605,562 $10 $850,000 ARC CBPBGPA001 LLC Pittsburgh, Ward 14 10/11/12 7/24/07 $6,128 Jenkintown 15,043 sf $850,000 12/3/01 2745 Freeport Road Drive-In Rest or Food Service $1,592,253 $0 $1,360,900 PWK Freeport Holdings I LP Harmar Twp 12/31/12 10/16/75 $14,570 Allison Park 2.98 A 1615 Golden Mile Hwy Auto Sales & Service $1,566,000 $1,460,000 $1,517,700 Roundhouse Property Holdings LP Monroeville 12/13/12 12/20/07 $7,782 Export 6.15 A 1102 Perry Hwy Auto Service Station $1,540,000 $917,000 $547,800 Skytop Investments LLC Ross Twp 12/31/12 9/9/10 $2,885 Covington 32,391 sf $600,000 7/20/09 308 7th Street Office-Elevator $1,530,000 $1 $800,000 Hefren-Tillotson Inc Pittsburgh, Ward 2 8/14/12 6/10/93 $4,053 Pittsburgh PA 2,250 sf 3845 Northern Pike Retail Structures $1,525,000 $10 $1,480,000 CE Acquisitions VI LP Monroeville 7/9/12 7/5/12 $8,253 Carnegie 7.04 A Park Manor Drive Vacant Commercial Land $1,522,682 $0 $1,130,100 Robinson Manor Hotel Group 2689 LLC Robinson Twp 12/21/12 $6,577 Pittsford 3.15 A Property Address Prop Use Sale Price Prior Price Total Assd Val Buyer 201 Corey Ave Warehouse $1,512,810 $0 $623,900 Hox Management LP Municipality Sale Date Prior Date Taxes Buyer City, State Lot Size Braddock 11/9/12 1/8/68 $2,978.71 Warrendale 1.13 A 300 Waterfront Drive W Theater $49,780,000 $97,743,308 $17,059,900 M & J - Big Waterfront Town Center I LLC 526 Penn Avenue Owned by College/University $1,500,000 $1,651,800 PMC 526 Penn Avenue Assoc LP West Homestead 10/3/12 3/2/07 $85,257 Chicago IL 18.09 A Pittsburgh, Ward 2 12/23/86 $26,426 Pittsburgh PA 8,475 sf $30,167,305 7702 McKnight Road Restaurant - Fast Food $1,500,000 McDonald's 2/18/04 Ross Twp 11/14/12 2000 Park Lane Dr Office-Elevator $36,005,184 $29,500,000 $23,500,000 IX WR 2000 Park Lane Dr LP 6325 Penn Avenue Bowling Alleys/Rec Facility $1,454,427 $1,533,930 $1,243,100 Racquetball One Associates North Fayette Twp 12/14/12 12/28/05 $132,358 Greenwich CT 7.61 A Pittsburgh, Ward 11 Stamp value 12/28/12 12/6/79 $6,741 Pittsburgh PA 28,817 sf $846,031 119 VIP Drive Medical Clinics/Offices $1,400,000 $1,105,0004/7/92 $1,160,000 NRPD LLC 680Marshall Waterfront Twp Drive E Discount Store $33,070,00012/3/12 $16,399,2069/6/02 $3,897,100$11,449 MPittsburgh & J Big W PaterfrontA Amity Square3.2 LLC A Munhall120 Andrew Drive Community Shopping Center $1,400,00010/3/12 $442,5003/2/07 $1,292,700$21,731 ChicagoTK Robinson IL LLC 4.65 A North Fayette Twp 7/5/12 $4,112,5462/8/96 $7,208 Chicago IL 1.49 A 850 Penn Avenue Bank $1,395,686 11/24/03$10 $652,300 ARC CBTCKPA001 LLC ETurtle Carson Creek Street Office-Elevator $25,069,00010/11/12 $347,5007/24/07 $15,867,300$4,058 UPMCJenkintown PA 25,179 sf Pittsburgh, Ward 16 10/11/12 $625,0007/28/00 $146,299 Pittsburgh PA 1.39 A 100 Papercraft Dr Warehouse $24,415,769 $19,725,00012/3/01 $14,723,900 Stag O'Hara LLC O'Hara1 Railway Twp Drive Heavy Manufacturing $1,330,00010/12/12 $625,0005/2/07 $180,200$82,103 BostonGreenville MA Commercial Properties 33.38LP A SiebertMcKees Road Rocks Shopping Center $20,050,0007/5/12 3/14/$011 $3,885,000$1,025 GRIPittsburgh McKnight PA Siebert LLC 36.8 A Ross Twp 12/21/12 $200,00011/2/12 $24,479.55 Bethesda MD 4.5 A 1501 Northway Mall Shopping Center $12,000,000 11/29/99$1,597 $16,400,000 LRC Northway Mall Acq LLC Ross12620 T wpPerry Highway Vacant Commercial Land $1,300,00011/30/12 $2,225,0005/29/12 $82,469.33$705,000 AkronLME Enterprises OH LLC 28.79 A Pine Twp 9/7/12 $24,200,0006/26/08 $3,931 Gibsonia PA 1.05 A $111/29/0010,000 400 Northtowne Sq Neighborhood Shopping Center $10,575,000 $1,450,00011/7/83 $6,528,600 Northtowne Station LLC Richland12680 Perry Twp Highway Vacant Commercial Land $1,300,0007/13/12 $2,225,0007/1/92 $795,000$36,405 CincinnatiLME Enterprises OH LLC 16.1 A 153,Pine 158,Twp & 172 E Bridge Dr Theater & Retail $7,627,5639/7/12 $57,527,8626/26/08 $8,690,600$4,433 MGibsonia & J - Big P AWaterfront Town Center1.23 I LLC A Homestead 10/3/12 $290,5003/2/07 $51,693 Chicago IL 5.46 A 30 Pine Creek Road Retail Structures $6,560,000 $6,620,0001/7/88 $5,187,500 MM WG McCandless LLC McCandless555 Epsilon Drive Industrial $1,292,85012/28/12 11/7/07 $14,805$75,900 AlbanyBryan P NY Gentile Family LP 3.85 A O'Hara Twp 10/17/12 $2,000,000 Pittsburgh PA 32,496 sf 2660 Monroeville Blvd Office $1,236,870 $725,0005/1/06 $760,000 H & M Holdings LLC 350Monroeville Waterfront Dr E Department Store $6,400,00010/5/12 $16,399,20611/19/93 $7,182,200$4,238 MMonroeville & J Big W aterfrontPA Amity Square1.07 LLC A Homestead310 Saw Mill Run Blvd Small Detached Retail $1,210,00010/3/12 $600,0003/2/07 $574,300$40,049 ChicagoDG Saw MillRunIL LLC 7.12 A 495Brentwood East Waterfront Dr Medical Clinics/Offices $6,250,00012/31/12 $500,0003/15/10 $4,025,000$2,813.69 WSCPhiladelphia Realty PartnPA LP 1.24 A Homestead 12/31/12 $500,0004/16/01 $62,643 Homestead PA 2.0 A SR 22 Industrial $5,865,000 12/27/85 Industrial Scientific Corporation Robinson1215 Brighton Twp Road Discount Store $1,200,00012/12/12 $0 $376,300 CE Acquisitions VII LP 185Pittsburgh, Waterfront Ward Drive 22 W Restaurant, Café and/or $5,660,0009/12/12 $16,399,2061/25/64 $1,682,100$4,665 MCarnegie & J Big PWAaterfront Amity Square37,256 LLC sf Homestead5511 Baum Blvd BarNursing Home/Private Housing $1,200,00010/3/12 $1,8083/2/07 $1,249,800$9,380 ChicagoTJ Acquisition IL LLC 1.82 A Pittsburgh, Ward 8 8/31/12 $1,610,64112/17/10 $7,681 Pittsburgh PA 21,700 sf $1,419,80011/24/03 1427 Cook School Road Agricultural $5,600,000 11/2/06$1 $212,400 Bedner Estates LP Upper4761 W St.illiam Clair Flynn Twp Hwy Bank $1,179,88510/2/12 $700,0006/6/79 $700,000$1,767 PittsburghARC CBALP PAPA001 LLC 112.5 A 405Hampton Sixth TAwpvenue Office-Elevator $5,500,00010/12/12 $6,500,00012/3/01 $4,600,000$3,903 PMCJenkintown 600 W illiam PA Penn Place Assoc1.41 LP A Pittsburgh1130 Ridge W Driveard 2 Apartment-40+ units $1,147,70010/22/12 10/15/08$0 $1,147,700$25,495 PhiladelphiaTriko Holdings PA Inc 40,800 sf Coraopolis 12/20/12 $5,826,2509/15/82 $5,353 Coraopolis PA 1.13 A 31 Foster Ave Bank $1,146,075 $330,0001/4/84 $336,700 ARC CBPBGPA002 LLC 324Crafton -338 Amity Street Small Detached Retail $5,100,00010/9/12 $5,350,00012/3/01 $1,792,100$1,878 M&Jenkintown J Big W aterfrontPA Amity Square 19430LLC sqf Homestead345 East Eighth Avenue Institution $1,120,29210/3/12 7/27/07$0 $297,200$9,993 ChicagoARC CBHST IL PA001 LLC 1.45 A Homestead 10/9/12 $850,0007/24/07 $1,524 Jenkintown PA 6,600 sf 400 Walmart Drive Neighborhood Shopping Center $1,120,000 1/7/02$0 $500,000 Richland Zamagias Limited Partnership 400Richland Oxford Twp Drive Office-Elevator $5,040,00012/21/12 $0 $4,560,000$3,965 UPMCPittsburgh PA 1.11 A Monroeville5434 Walnut Street Retail Structures $1,106,68012/3/12 $208,8641/5/09 $1,371,300$21,955 Pittsburgh5436 Walnut PA Associates 4.36 A 10918Pittsburgh, Frankstown Ward 7 Road Independent Living-Seniors $4,825,0008/24/12 9/19/97$0 $2,200,000$9,900 PennPittsburgh Arbors PA Apt LLC 3,438 sf Penn5501 CampbellsHills Run Road Office/Warehouse $1,100,00012/31/12 $1,000,0007/29/83 $1,049,300$12,083 SpringPolycycle Valley Industrial NY Products Inc 3.93 A 401Robinson Chestnut Twp Street Commercial Other $4,601,4199/13/12 6/8/99 $2,799,300$5,851 FDGClackamas C39 P ORA Carnegie LLC 3.73 A Carnegie 9/4/12 $420,000 Woonsocket, RI 1.0158 A Waterfront Drive Discount Store $4,500,000 10/20/92 $3,187,900 M & J Big Waterfront Market LLC Munhall141 41st Street Office-Walk Up $1,100,00010/3/12 $10 $705,000 ChicagoRA CAT ILI LP 3.77 A 829Pittsburgh, Milton WStreetard 9 Government/Commercial Vacant Land $4,092,8617/3/12 $3,000,0008/11/05 $1,154,900$3,598 EducationPittsburgh CapitalPA Solutions LLC 21,120 sf Pittsburgh,6325 Penn WAvenueard 14 Bowling Alleys/Rec Facility $1,094,9457/23/12 6/13/06$0 $12,422.00$935,850 KansasRacquetball City MOOne Associates 30,138 sf 6191Pittsburgh, Steubenville Ward 11 Pike AutoStamp Sales value & Service $4,000,00012/28/12 9/19/79$0 $3,000,000$5,971 DiehlPittsburgh Of Robinson PA Realty LLC 1.13 A Robinson260 Alpha T wpDrive Office $1,060,0009/20/12 5/5/50$1 $635,300$16,729 ButlerPractical PA Administrative Solutions9.28 LP A 513O'Hara Smithfield Twp Street Department Store $4,000,00012/7/12 $630,0007/19/93 $2,165,000$3,737 UrbanPittsburgh Redevelopment PA Auth Of Pittsburgh1.41 A Pittsburgh,3030 Penn WAvenueard 2 Retail/Stor Over $1,050,00012/28/12 $160,0008/16/12 $700,000$31,039 PittsburghTTPA LLC PA 22,549 sf 610Pittsburgh, Alpha DriveWard 6 Light Manufacturing $3,900,00011/27/12 9/3/97$10 $2,750,000$7,520 PenhurstPittsburgh Realty PA 2 LP 8,400 sf O'HaraLong Street Twp Vacant Commercial Land $1,000,00011/9/12 $1,760,0003/6/96 $21,296$47,500 PittsburghRed Stag Investments PA LLC 6.0 A 230Elizabeth N. Craig Township Street Office/Apartments $3,897,1739/19/12 5/29/12$1 $3,997,100$220 SherwoodScenery Hill Property PA LP 2.03 A Pittsburgh,Park Lane WDriveard 4 Vacant Commercial Land $1,000,0008/15/12 $100,0006/22/10 $23,096.00$586,140 PittsburghIX WR 2000 P APark Lane Drive LP 30,014 sf 1North Penn Fayette Center T wpWest Office $3,700,00012/14/12 $1,5661/9/07 $5,250,000$3,168.76 PCWGreenwich Lender CT Assoc 1 LP 16.18 A Robinson Twp 12/21/12 1/31/12 $34,019.66 Pittsburgh PA 6.63 A $6,000,000 12/23/96 1630 Golden Mile Hwy Warehouse $3,608,280 $1 $869,000 Bridge Pennsylvania LLC Monroeville 12/28/12 9/30/83 $5,643 Monroeville PA 3.41 A 211 Beecham Dr Motel & Tourist Cabin $3,427,344 $3,390,000 $1,810,000 G6 Hospitality Property LLC Kennedy Twp 11/7/12 9/1/99 $9,794 Carrollton 3.79 A $615,114 10/17/86 228 Semple Street Restaurant $3,500,000 $80,000 $286,500 Comhdan Realty LP

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