DEVE LPittsburghOPINGSpring 2015 The Up-and-Coming Communities NAIOP PITTSBURGH ANNUAL AWARDS A CONVERSATION WITH GOVERNOR WOLF YEAR-END MARKET UPDATES HIGHEST AND ® BEST USE... opportunities and constraints strategically transformed CEC uses informed analysis to identify and harness the potential of each site’s unique conditions, creatively enhancing value while delivering a conscientious integrated design. CEC’s consulting services for the commercial, institutional, educational, retail, industrial and residential real estate markets are utilized by owners, facility managers, developers, architects and contractors at all points in a property’s life cycle. Rendering Courtesy of PNC Realty Services and Gensler Architects S e r v i c e s ► Site Selection / Due Diligence ► Land Survey ► Landscape Architecture ► Civil Engineering Services ► Geotechnical Engineering ► Construction Phase Services ► Building / Site Operation & Maintenance ► Construction Management E x p e r t i s e ► Acquisition ► Development ► Management ► Redevelopment www.cecinc.com | 800.365.2324 Austin | Boston | Bridgeport | Charlotte | Chicago | Cincinnati | Columbus | Detroit | Export | Indianapolis Knoxville | Nashville | Philadelphia | Phoenix | Pittsburgh | Sayre | Sevierville | St. Louis | Toledo | Spring 2015 05CON President's PerspectiveTE NTS 28 NAIOP Interviews Incoming Gov. Tom Wolf and Outgoing PRA President DeWitt Peart Feature 06 Developing Trend Pittsburgh’s Up-and- 39 How different is the “new” office. Coming Communities. Four communities are working to be the next Eye On the Economy hotspot for development. 45 51 Office Market Update Newmark Grubb Knight Frank 55 Industrial Market Update PA Commercial Real Estate 60 Retail Market Update Colliers International 65 Capital Markets Update 71 Legal / 23 NAIOP Pittsburgh Annual Awards Legislative Outlook Making sense of the revised Mechanics Lien Law. 75 Benchmarks Pittsburgh is looking for more people. 79 Voices Economic development executives from the surrounding counties explain their “to do” list for Gov. Wolf. 81 New from the Counties 33 Developer Profile People / Events Highwoods Properties 90 www.developingpittsburgh.com 3 President’s Perspective PUBLISHER emember Y2K? Do you recall Tony While I cannot say what the next 15 years will Tall Timber Group Soprano’s introduction to the pop bring I can tell you that 2015 is shaping up to www.talltimbergroup.com landscape? Hanging chads? It does be a great year for NAIOP Pittsburgh. not seem that long ago! EDITOR We already have presented monthly programs Jeff Burd RWho, as they were storing up batteries and on the economy and an update of Pittsburgh’s 412-366-1857 rations in anticipation of the apocalypse, commercial real estate market. Look for [email protected] could have predicted that fifteen years later upcoming programs on energy, advocacy, the Pittsburgh region would be where it is. development in and around sports venues, PRODUCTION Had you heard of Marcellus Shale in 2000? developing in the City of Pittsburgh, working Carson Publishing, Inc. Kevin J. Gordon Was your only reference to a “cracker plant” with institutions of higher education and [email protected] the Nabisco factory in East Liberty? Can you more. imagine that it was only fifteen years ago ART DIRECTOR/GRAPHIC DESIGN when Google outgrew their garage office and Our Annual NAIOP Pittsburgh Banquet is on Carson Publishing, Inc. moved into a new facility in Palo Alto with just March 5, 2015. We expect more than 700 in- Jaimee D. Greenawalt eight employees! Who among us could have dividuals in the commercial real estate industry forecast that hundreds of Googlers would call and economic development who will network CONTRIBUTING PHOTOGRAPHY Pittsburgh home in 2015 and that they would and celebrate this year’s award winners. Carson Publishing, Inc. be working out of that “cracker plant.” Rycon Construction We will have a robust advocacy initiative in NEXT Architecture Not even Punxsutawney Phil could have 2015 that will promote issues of importance Desmone & Associates Architects prognosticated the region that we have to our industry. Federal Tax Reform, transpor- Massery Photography become. One simply has to take a drive to tation, efficient and consistent permitting, The Elmhurst Group Horizon Properties Group Southpointe………or Pittsburgh’s East End…. advantageous regulations and legislation, Bus Burns & Scalo Real Estate Services or Cranberry to see the remarkable change Rapid Transit (BRT) and others. Wilkinsburg Community Development Corp. in our economic landscape. In the Pittsburgh CBD the residential population has doubled 2015 will also see the introduction of at CONTRIBUTING EDITORS since 2000. least two new opportunities for networking Anna Burd and education among NAIOP Pittsburgh Karen Kukish NAIOP Pittsburgh also was in a very different members�. place in 2000. ADVERTISING SALES I need your help to make 2015 a great year. I Karen Kukish Membership was 198. urge you to get involved in NAIOP Pittsburgh 412-837-6971 and help us to bring quality education, [email protected] It was the first year for Night at the Fights. In networking and advocacy to our members. the intervening years NAIOP Pittsburgh has MORE INFORMATION: helped to raise more than $500,000 for area Enjoy this, our sixth edition of Developing DevelopingPittsburgh is published by non-profits. Pittsburgh. Tall Timber Group for NAIOP Pittsburgh 412-928-8303 www.naioppittsburgh.com Bill Hunt was one year away from becoming Sincerely, NAIOP Pittsburgh President and twelve years No part of this magazine may be away from becoming the Chairman of the reproduced without written permission Board of NAIOP Corporate. A position that by the Publisher. All rights reserved. would bring much attention to the Pittsburgh region as he travelled throughout the country. This information is carefully gathered and com- piled in such a manner as to ensure maximum De Peart had just completed two years as accuracy. We cannot, and do not, guarantee NAIOP Pittsburgh President. He would soon either the correctness of all information furnished leave his job in development and assume vari- nor the complete absence of errors and omis- sions. Hence, responsibility for same neither can ous positions within the Allegheny Conference be, nor is, assumed. on Community Development ending in his tenure as Executive Vice President, Economic Keep up with regional construction Development and Public Affairs; President, and real estate events at Pittsburgh Regional Alliance and President, www.buildingpittsburgh.com Greater Pittsburgh Chamber of Commerce. It is fair to say that De has contributed as much as anyone to our region’s transformation and the success of NAIOP Pittsburgh. We wish him well in his new position as President and CEO Brian Walker of the Downtown Austin Alliance. NAIOP Pittsburgh President www.developingpittsburgh.com 5 f e a t u r e Bakery Square is the linchpin development that brought employment and new residential to transform East Liberty. Photo courtesy Walnut Capital Partners. Pittsburgh’s Up-and-Coming Communities 6 DEVELOPINGPITTSBURGH | Spring 2015 f e a t u r e Imagine what your reaction would have corridor and sporadic residential infill for been to an out-of-town friend who told at least that long, but on a very limited you they were going out to dinner near scale. A variety of factors combined Penn Circle ten years ago. Or how you to create swelling demand for living, might have advised a business colleague working and playing in these formerly who wondered what your opinion was forgotten or blighted neighborhoods, of buying a storefront or two on Butler mostly within the past five years. Street near the 62nd Street Bridge in 2000? Perhaps the tipping points were Whole Foods or certainly Bakery Square in East The perception of these two neighbor- Liberty and the construction of the new hoods – East Liberty and Lawrenceville – Children’s Hospital in Lawrenceville/ has been radically transformed by invest- Bloomfield. Perhaps it was just time in ment in development and a very different both communities for the redevelopment attitude about urban lifestyle. A variety efforts and public investment to pay of developers had plans for projects – a off. Whatever pushed East Liberty and few even occurred – in East Liberty as far Lawrenceville from pioneering to hot, the back as the mid-1980s. Lawrenceville be- two neighborhoods are places people are gan to get redevelopment of its business waiting in line to inhabit and visit. www.developingpittsburgh.com 7 f e a t u r e Pittsburgh is home to more than heyday. Andrew Carnegie built his of Americorps, a Federal service its fair share of East Liberty’s. The first steel mill there, and later his program that endeavors to improve collapse of Pittsburgh’s industrial first free library. The city is home to the lives of disadvantaged Americans. base and the gradual shift to the the Edgar Thompson Works of U.S. Working with young people to help suburbs over several generations left Steel, the town’s principal employer, them get high school equivalency many small towns and inner core where 5,000 people once worked. accreditation, Fetterman was at- neighborhoods without an economic The Thompson Works still operates tracted to Braddock and moved there base. Most of them will continue but employs slightly more than ten permanently. He was elected mayor to struggle for some time but many percent of its former workforce. of Braddock in 2005 and began a of these communities are seeing series of programs aimed at attract- the tide begin to turn. For a few of The 90 percent reduction in steel- ing people to Braddock and creating these places, a time in the sun seems workers multiplied out to virtually all a new identity for the community. possible again. other aspects of Braddock’s com- munity. At the 2010 census, roughly Fetterman founded Braddock Redux Braddock 2,500 people lived in Braddock. There to improve Braddock through job op- has been a similar decimation of portunity preparation and initiatives Perhaps the most widely-known of the businesses in town.