Pieces Together the Putting DATA PUZZLE: BIG AND PROPERTY OFFICE THE

Writes Book a Hall of Famer Pittsburgh Pittsburgh NAIOP NAIOP

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Daniel S. Deiseroth, P.E. President

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Solid RELATIONSHIPS built on a solid foundation Fairchance Construction Co. <> 724.564.7485 <> www.fairchanceconstruction.com CONTENTS | Spring 2019

05 President’s Message 07 Executive Director’s Message 37 Development Trend Work Them to Life 43 Eye On the This is what 100 years of 08 Feature Economy The Office Property and Big Data Puzzle: EXPERIENCE Putting the Pieces Together 48 Office Market Update looks like Avision Young 50 Industrial Market Update CBRE 54 Capital Market Update 59 Benchmarks 21 NAIOP Pittsburgh Awards Can Pittsburgh’s Office 2019 Awards Rents Keep Rising? 63 Voices 67 News from the Counties 80 People / Events BUTLER BUILDERS SINCE 1965

Solid RELATIONSHIPS built on a solid foundation 29 Development Project District 15 Fairchance Construction Co. <> 724.564.7485 <> www.fairchanceconstruction.com www.developingpittsburgh.com 3 PNC REAL ESTATE | Successful commercial real estate owners, developers and investors can envision the properties of the future — even before the first sketch is made. PNC Real Estate shares that vision. As a top five originator,* we offer comprehensive banking insights, solutions and the expertise to put them to work. Whether you need construction, bridge or permanent financing; public equity or debt solutions; treasury management; risk mitigation; or loan syndications, know that we can help bring your vision to life.

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*Top 5 in originations among banks, MBA 2014 ◊ PNC, PNC Bank and Midland Loan Services are registered marks of The PNC Financial Services Group, Inc. (“PNC”). Treasury management and lending products and services, and investment and wealth management and fiduciary services, are provided by PNC Bank, National Association (“PNC Bank”), a wholly owned subsidiary of PNC and Member FDIC. Investment banking and capital markets activities are conducted by PNC through its subsidiaries PNC Bank, PNC Capital Markets LLC, Harris Williams LLC, Harris Williams & Co. Ltd. and Solebury Capital LLC. Services such as public finance investment banking services, securities underwriting, and securities sales and trading are provided by PNC Capital Markets LLC. PNC Capital Markets LLC, Harris Williams LLC and Solebury Capital LLC are registered broker-dealers and members of FINRA and SIPC, and Harris Williams & Co. Ltd. is authorized and regulated by Financial Services Authority (FRN No. 540892). PNC Bank and certain of its affiliates, including PNC TC, LLC, do business as PNC Real Estate. PNC Real Estate provides commercial real estate financing and related services. Through its Tax Credit Capital segment, PNC Real Estate provides lending services, equity investments and equity investment services relating to low income housing tax credit (“LIHTC”) and preservation investments. PNC TC, LLC, an SEC registered investment advisor wholly-owned by PNC Bank, provides investment advisory services to funds sponsored by PNC Real Estate for LIHTC and preservation investments. Registration with the SEC does not imply a certain level of skill or training. This material does not constitute an offer to sell or a solicitation of an offer to buy any investment product. Lending products and services, as well as certain other banking products and services, require credit approval. ©2016 The PNC Financial Services Group, Inc. All rights reserved. CIB RE REB PDF 1115-0104-200041 PUBLISHER Tall Timber Group President’s Message www.talltimbergroup.com

EDITOR Jeff Burd 412-366-1857 [email protected]

PRODUCTION Carson Publishing, Inc. Kevin J. Gordon As we reflect on commercial threaten to undo the progress that [email protected] real estate in the region in 2018 has been made. I am a firm believer and look forward to 2019, I am that markets dictate outcomes and GRAPHIC DESIGN struck by the radical (by Pittsburgh policy helps to shape those market 321Blink standards, at least) pace of change results. When the marketplace tells and development, and the myriad us that the job creators need to CONTRIBUTING PHOTOGRAPHY opportunities on the horizon. There make business location decisions at NAIOP Pittsburgh is great opportunity for the region, the same rapid pace as they achieve Allegheny Conference on Community for the commercial real estate technological advances, we must Development industry and for NAIOP Pittsburgh. adapt our regulatory apparatus accordingly. We must focus on the Tall Timber Group I am lucky to be taking the reins economics of development – the of NAIOP Pittsburgh on the heels forces that drive growth – and the CONTRIBUTING EDITORS of David Weisberg’s tremendously impacts it contributes. The industry successful leadership, and with a Karen Kukish and public policy makers must work talented and engaged staff and together to keep us competitive. ADVERTISING SALES board. 2018 saw the organization Karen Kukish transition from the long and As the voice of the commercial real 412-837-6971 effective tenure of our first and only estate industry, NAIOP Pittsburgh [email protected] Executive Director, Leo Castagnari. is taking the lead in advocating for Building on that strong foundation, the needs of growth in our region, MORE INFORMATION: and a new strategic plan that and to advance an understanding of DevelopingPittsburghTM is published by highlighted the importance of just how important commercial real advocacy to our industry, we estate is to the region’s economic Tall Timber Group for NAIOP Pittsburgh were able to recruit a terrific new prosperity. I firmly believe that 412-928-8303 executive director in Brandon opportunity is ripe in Pittsburgh and www.naioppittsburgh.com Mendoza. Brandon brings a host that we can work together to fuel of experience and energy to the growth. No part of this magazine may be advocacy front. reproduced without written permission We can grow our way to prosperity, by the Publisher. On the industry side, this has and an inclusive and broadly All rights reserved. been an unprecedented period of shared prosperity. Without growth, new development, driven by new we cannot address the region’s This information is carefully gathered industries, new companies and new challenges. I look forward to working with all of you, our staff and compiled in such a manner as to residents in our region. Despite these great developments, there and our board to advance the case ensure maximum accuracy. We cannot, are headwinds facing our industry, for support for the commercial and do not, guarantee either the cor- which could threaten to slow or real estate development industry rectness of all information furnished wipe out the gains that are being and the large economic and social nor the complete absence of errors and made. contributions that our industry omissions. Hence, responsibility for same makes to the region. Our region, while experiencing neither can be, nor is, assumed. many great things, is underperforming the national Keep up with regional construction economy, rather substantially. And and real estate events at: while the growth in our region www.buildingpittsburgh.com in nascent industries, companies and technologies bodes well for a brighter future, it also presents challenges. Indeed, that rosy future is not a foregone conclusion. Talent shortages, a lack of population growth, restrictive zoning and burdensome, costly, Don Smith Jr. and often ineffective regulations NAIOP Pittsburgh President

www.developingpittsburgh.com 5

EXECUTIVE DIRECTOR’S MESSAGE

zΩs we begin 2019, I am glad we should be aware that in the aftermath to report that Pittsburgh’s of last year’s election, a lot of power Acommercial real estate (CRE) in Harrisburg went to Southeastern outlook is strong, with increased demand Democrats, who not only gained seats, for top tier inventory, strong growth in but also, more importantly, gained several the tech sector, and an accelerating leadership positions. need to replace old inventory. However, as with most of the economy, external Lastly, the CRE community must keep forces can impact the growth trajectory abreast of the upcoming municipal of our industry. Nationally, monetary elections and the always important policy at the Federal Reserve and trade presidential election. As I am writing negotiations between the U.S. and this, there are more than half a dozen China could swing the economy for the Democrats entered into the primary for better or worse. A little closer to home, the Democratic nomination. The policies the continued lackluster GDP growth offered by them will determine the by the Commonwealth matched with contrast going into 2020. And this contrast minimal state incentive packages, and a could offer significant risks for the snail’s paced permitting process, could CRE community. raise threats to business investment in our state. Locally, the CRE community Rest assured that NAIOP Pittsburgh will will need to convince policy makers stay vigilant in 2019 and will work to that, despite the very real growth in keep our members abreast of relevant development and investment, our developments. If you or your firms have region’s economy is nowhere near the any policy concerns, please don’t hesitate growth trajectory we need to keep pace to reach out to me and my team. with other top tier cities. P.S., please save the date of March 28, As we move into 2019, the CRE 2019 for our 26th Annual Awards Banquet. community must stay vigilant and Please join nearly 700 of your fellow CRE prepared for the eventual policy and peers in celebrating excellence political debates. For example, the CRE in development. community should focus on potential Sincerely, changes to the City of Pittsburgh’s Local Economic Revitalization Tax Act District (LERTA), which could alter the program in a shift to try to get more affordable housing. While this is not a bad policy goal, early analysis shows that the internal rate of return for the new LERTA would need to be attractive to a developer without added incentive. NAIOP Pittsburgh is engaged with City Council and is working to try to inject some potential alternative policies. The CRE community should also stay abreast of possible pilot inclusionary zones within the city. The first such zone could occur in Lawrenceville.

When it comes to Harrisburg, the CRE Brandon J. Mendoza community must stay engaged in Executive Director the budget and policy deliberations. NAIOP Pittsburgh While there are no broad-based tax increases included in the Governor’s budget proposal, there are some policy debates worth following in 2019, including: marijuana legalization, natural gas severance taxes, minimum wage increases, PA Turnpike’s financials and its impact on transit funding. Furthermore, for LANDAU BUILDING COMPANY those of us in Southwestern Pennsylvania, RELATIONSHIPS I REPUTATION I RESULTS

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www.developingpittsburgh.com 7 THE OFFICE PROPERTY AND BIG DATA PUZZLE:

Putting the Pieces Together Kimberly Winson-Geideman, Ph.D.

8 DEVELOPING PITTSBURGH | Fall 2018 Technology is changing real estate in remarkable ways as advances in computing power, coupled with the development of new data sources, have introduced a range of opportunities to the industry. Firms of all sizes are contending with the speed, depth and breadth of this change, and those with the resources to harness the new technologies are developing a distinct advantage over their competitors.

www.developingpittsburgh.com 9 FEATURE

ne of the more recent inventive ways, either by building on All of this new information has technological developments current approaches or by using entirely produced a generation of smart O capturing industry attention new technologies. The property buildings and smart systems that is the concept of “big data.” Media managers have been collecting building achieve functional efficiencies far attention highlights this trend with management data, but not widely using greater than imagined possible a Forbes defining big data as a “justifiable digital data analysis to attract and retain few years ago. New buildings like obsession” (Stuart, 2018) that will tenants. Collecting and synthesizing The Edge in Amsterdam use the improve transparency and efficiency various forms of tenant data is an area data collected from computer in real estate markets (Murphy, 2018). of interest but is not yet commonplace. technology embedded in lighting and CIO asserts that “big data is disrupting ventilation to optimize total building the real estate industry” (Rands, 2017). Big data has the potential to be a major performance and enhance the indoor The Financial Review states that there catalyst for evidence-based decision- working environment (Diehl, 2017). has been a “shift in mindset” as the making in the office sector. Big data’s Existing buildings retrofitted with new “property sector is latching on to the usefulness can be categorized into technology realize similar benefits. power of big data” (Lenaghan, 2017). two interrelated areas: 1) how big data The New York Times’ offices, for Furthermore, investors are using improves operational efficiencies; and example, implemented a system “science and big data to make more 2) how to use big data effectively to of sensors embedded in lighting sustainable investments” (Scott, 2018). attract and retain tenants. and motorized window shades that operate under a single software Although the use of big data offers Operational Efficiencies structure used to monitor temperature great potential, it also presents and lighting needs. As a result, its challenges. This white paper seeks In many respects, the big data 52-story, 1.5 million-square-foot to define big data and to identify generated from the “internet of headquarters in Manhattan achieved some of the obstacles and things” (IoT) provides the greatest a 70 percent savings by reducing opportunities associated with it within potential (and disruption) to the office energy consumption from 1.28 watts the context of office properties. For property sector. The IoT represents of lighting power per square foot to 0.4 example, electronic data collection of the merging of multiple technologies, watts per square foot. AT&T achieved tenants’ movements through an office all of which produce continuous $8 million in energy consumption building may provide insights into streams of data that interact with savings by installing similar systems how the building is used or could be each other over the internet. Wireless in 240 buildings with an average size improved, but it also triggers privacy communications, GPS, smart buildings of 84,000 square feet (Barendrecht, concerns that may affect the tenant- and machine learning are all part of 2017). Figure 1 illustrates the process landlord relationship. the IoT. For example, sensors located of integrating multiple systems into a throughout an office can assist in single software structure to optimize To gain a broader perspective on booking conference rooms, indicate heating and cooling. this topic, the author questioned which employees are using specific seven office property management workspaces and for how long, and Furthermore, automated HVAC systems professionals – representing a real monitor energy consumption. have the potential to reduce water estate services company in Minneapolis consumption dramatically. Facility and a development company in Dallas The growth in this area is extreme Executive cited a case in which a – to find out if and how they collect by any measure. By 2020, it is 220,000-square-foot office building and analyze big data in their buildings. estimated that 30 billion IoT devices saved 364,921 gallons of water per Specifically, were they using big data to will exist worldwide. International year by eliminating manual heating and improve operational efficiencies, attract Data Corporation2 estimates that cooling of individual offices, which is tenants or both? Their responses are worldwide spending on IoT in 2016 estimated to contribute 28-48 percent included throughout this paper. was approximately $737 billion, a of a building’s water consumption. A See the appendix for the questions number expected to reach $1.29 second study estimated a savings of emailed to the property managers trillion by 2020. Cross-industry IoT 778,518 gallons of water per year for and selected responses. investments that are not industry a 500,000-square-foot data center specific (e.g., connected vehicles and with 3,000 tons of cooling power It became clear from the author’s smart buildings) will be among the top (Dempster, 2017). conversations with the property expenditures through 2020, and the managers that advanced data industries with the fastest anticipated The data collected from these systems collection in office buildings is growth in IoT spending include are analyzed in real time; because the becoming a priority and is an area that insurance, consumer, health care and data most often flow in a structured will continue to grow in relevance, retail (IDC, 2017). Furthermore, the “use format (e.g., temperature, kilowatts), especially regarding improving of IoT technologies to manage office the analysis is relatively straightforward. buildings’ operational efficiencies (e.g., spaces could have an economic impact This makes the predictability of building energy use). A majority of the property of $70 billion to $150 billion per year in system data very reliable. Further, this managers stated that their industry is 2025” (McKinsey Global Institute, 2015). technology has extended the smart gradually using big data in new and

10 DEVELOPING PITTSBURGH | Fall 2018 FEATURE

building infrastructure to such a degree internet connectivity. Connectivity is, type of scheme when a hacker did not that buildings can now be part of a and will continue to be, one of the steal, but rather froze access to, the larger network that constitutes a smart primary criteria of tech-savvy tenants, county servers. The hacker shut down campus or even a smart city. making it critical that owners and all email, printing and web applications; operators understand the demand installed bitcoin mining software; and Network-based security systems for reliable and robust connections demanded a ransom of two bitcoins also offer some efficiencies to (Barendrecht, 2016). WiredScore,3 a (approximately $23,000). Nearly all tenants. A building enabled with real estate tech startup in New York, county services came to a complete virtual credentialing technology via addresses some of these issues. The halt, including the tax assessor’s office smartphones means employees no company offers a commercial real (Stack, 2017). longer require keys or keycards to estate rating system that certifies gain entrance, and visitors can be buildings’ digital infrastructure, with Businesses and governments that prescreened and granted admission the highest rating going to those with fall prey to this type of activity with the use of an email barcode. The the greatest number of internet service often pay the ransom because it is data shared between the smartphone, providers, redundancy and resiliency cheaper and quicker than bringing server and access reader are encrypted of telecom infrastructure, ease of in experts to resolve the problem to improve security and access to installation and capacity to readily internally. This choice of action each entry controlled remotely. If an support new telecom services. makes risk management, particularly employee resigns, his or her building in regard to technology, a primary access can be immediately terminated Greater degrees of interconnectedness issue. The greater the reliance on without having to collect keys and come at a cost, however, because the IoT to streamline operations and change locks. Keycards and keys never buildings become more vulnerable improve efficiencies, the greater the need to be replaced, further reducing to cyberattacks that disrupt or disable cybersecurity needs. security costs (Dennis, 2018). entire systems (O’Keefe, 2017). Hacking has evolved from the theft Attracting and Retaining Although smart systems and network- of personal data into cases where Tenants based security are some of the most internal systems are held hostage for a useful innovations in the office sector, ransom. Mecklenburg County in North Attracting and retaining tenants is they are only as good as a building’s Carolina recently fell victim to this imperative to an investor’s bottom line

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and, in the era of big data, involves a It is important to understand the and mobile phone numbers. When focus on effectiveness along with the difference between tracking the shoppers “opt in,” the system can efficiencies generated through the number of people moving through a match this information with shoppers’ use of integrated HVAC and network- building and tracking their identities. location data and funnel personalized based security systems. Creating and The level of detail retailers collect advertisements directly to them. maintaining spaces that enhance depends on the degree of access the tenant experience, improving granted by an individual. In many Beacon technology supported by productivity and developing a cohesive cases, systems preserve nearly smartphone apps is another way working environment are examples complete anonymity because they retailers track customers’ movements, of the potential benefits big data can track only the number of people. specifically their microlocation bring. Much of this potential is being Limited (but not strictly anonymous) activities. When a shopper is in range, sourced from our seemingly constant tracking occurs in shopping centers beacons trigger location-specific companion, the smartphone. when individuals access public Wi-Fi messages that can be granulized to by providing an email address or the aisle the shopper is standing in. The proliferation of smartphones agreeing to terms and conditions that Retailers use these data to maximize means that we now have more permit tracking and the collection sales by delivering personalized detailed information on tenants, of other information. In other cases, promotions that create individualized potential customers and clients than individuals grant permission for more shopping experiences for customers. ever before. Big data tells us where detailed tracking by sharing personal This approach encourages customers people congregate, when they move information, by granting access to to stay longer and spend more money through buildings, where they came social media accounts or through the (Fung, 2017). Users can regulate from and in some cases why they use of apps. Social Wi-Fi, which allows what personal data are collected, were there. Retail is leading this charge users to log on to the internet using either remaining anonymous or as public Wi-Fi and other systems their social media accounts, gives the distinguishable, for example, by in shopping centers track shopper retailer or landlord access to a virtual linking their membership in a loyalty movements, capturing location treasure trove of information including program to the app. The location- information to target advertising and demographics, “likes” such as movie based technology underlying Wi-Fi inform tenant placement. and book preferences and contact and beacons is more precise and information such as email addresses dependable than the traditional GPS,

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12 DEVELOPING PITTSBURGH | Fall 2018 FEATURE

now being used use data can introduce a host of public by property relations troubles, particularly when managers are as they do so in less than transparent follows: ways. Target Corporation faced a public backlash when it used buying histories Smart to determine if female customers bathrooms were pregnant so that it could target that track peak advertising accordingly. When these use to save incidents gain traction on social media, on custodial they can cause damage to reputations costs. Sensors that takes years to rectify. collect data on restroom Privacy visits and use that data to Although much of the big data predict when collected by landlords fails to trigger the restrooms any privacy issues (e.g., energy use will need to data), disclosure and permission are be serviced. advised in some instances, such as This analysis cases where a landlord is monitoring has allowed tenant movements using Wi-Fi. In other the property cases, disclosure may be mandated manager to by the local jurisdiction, for example, redirect the by requiring signs indicating camera day cleaning surveillance in parking garages. staff to clean Because of these issues, landlords and restock the and tenants should approach data bathroom only collection with a clear understanding when required.4 of privacy laws and a great deal of which can be subject to interference transparency. These types of data and accuracy problems. A phone’s GPS Smart ceilings, containing movement are most informative when everyone does not have to be on for either Wi-Fi and heat sensors, provide real-time data participates, but tenants should be or beacons to work, although it can on occupancy. The data allow property able to opt out of data collection improve accuracy in some instances. managers to provide space use and if they prefer. Personal information analytics to existing tenants, as well as should not be collected or, at the very The office sector can realize benefits digital building navigation. The system least, records should be anonymized. similar to those seen in retail. From operates on an internet-based platform Furthermore, data should be released the moment a tenant uses an access and aims to improve the tenant only in the aggregate, if possible, and card to enter a building, the system experience while helping operators systems put in place to ensure the can track his or her movements to run the buildings and individual spaces security of the data. help understand how tenants use the more efficiently.5 building. Radio-frequency Identification As previously discussed, technology (RFID) uses electromagnetic fields Although big data can play an has evolved to such an extent that and Bluetooth technology to monitor essential role in improving the tenant sensors, RFID and Wi-Fi can produce the location of labeled items and experience, overreliance has risks that extremely detailed information about personnel. Wi-Fi can track past and can negatively affect the personal individuals and how they use buildings; real-time presence as well as dwell connections at the core of the tenant- however, the fact that the technology time, and sensors embedded in carpet landlord relationship. Big data needs exists and the data can be collected can record foot traffic (Mobley, 2014). to be reduced to a useable form to be does not necessarily mean it should valuable, but it should be narrowed be used. To this end, building owners This information, combined with in a way that does not compromise and operators often hesitate to collect predictive modeling, can answer individual privacy. Narrowing the and use tenant data because doing so questions regarding the type of space data can sometimes reveal sensitive can be viewed as an intrusion on the needed, where it should be positioned, information that subjects the tenant or tenant’s privacy, triggering disputes and when it is most likely to be used. individuals to unnecessary exposure or even legal problems. This concern Collaborative space, quiet areas and with long-term and far-reaching leaves landlords and building owners enclosed offices can be located in the consequences. Data breaches are in the somewhat precarious position of most efficient and effective areas of relatively commonplace, and the bigger deciding what data to use and for what the building relative to the needs of the data, the greater the potential purposes. the tenant. Some examples cited as problem. Furthermore, the way firms

www.developingpittsburgh.com 13 FEATURE

The author’s conversations with several stages of advanced data collection. to the era of the data scientist, a property managers indicated that they Although they are aware of privacy specialist who can manage volumes have a strong desire to use data to issues, they agree it is an area that will of continually streaming data and know more about how tenants occupy grow as landlords begin to realize their evaluate their importance to an buildings (e.g., the locations and times competitive advantages in attracting organization. Working with big data is of day that tenants gather in buildings). and retaining tenants. not impossible, but it is different from They also want to use evidence-based working with the data conventionally information to help make decisions Other Considerations used in commercial real estate. Firms about improving and investing in Related to Big Data lacking the specialization of a data common spaces, determining peak scientist may find themselves losing occupancy hours, analyzing parking Although the most notable effects ground in a highly competitive industry. use and determining the amount of of big data now relate to operational Consulting groups with a real estate foot traffic in and around a building. efficiencies rather than tenant focus may fill the need for smaller real Although landlords are generally retention, big data and related estate firms, whereas others may find comfortable with collecting and using technologies affect the commercial it strategically advantageous to pay the nonpersonalized data to improve real estate industry in some other $100,000-plus salary, the specialization operational efficiencies, privacy ways, with significant implications demands (Columbus, 2017). Other new concerns, along with uncertainty about for the office sector. Despite being types of positions that have grown how to analyze data, have most likely conceptually distinct, all of the around big data include data engineer delayed widespread application of following have evolved from the big (liaison between a company and the tenant- tracking technology. A property data framework. data scientist), data architect (database manager commented, “The technology Creation of New Disciplines designer), data steward (manages to enable data collection has advanced and protects data) and data visualizer faster than the ethical, legal and moral Using big data means leaving the (explains outcomes to decision-makers requirements discussions.”6 confines of the traditional Excel in plain language). spreadsheet, where an analyst or The general consensus among the appraiser could single-handedly property managers the author spoke process cash flows, and moving with was that they are in the early

14 DEVELOPING PITTSBURGH | Fall 2018 FEATURE

Location and Acquisition Information System (GIS) software to Real Capital Analytics (RCA), for Decisions Are Subject to identify trends for improved location example, launched its latest metric in decisions (Davidson, 2014). Although 2017: the capital liquidity score, which More Detailed Analysis the availability of this type of data will is designed to estimate the depth and likely increase, privacy concerns and breadth of capital and liquidity in a Locating and acquiring sites for government regulation will temper how given market. The score incorporates purchase or lease that meet long-term much and what type can be used. market volume, unique market activity, tenant needs can be aided by the global cross-border capital, institutional incorporation of big data into advanced and real estate investment trust (REIT) analytic programs that predict Data Collection and capital and the presence of top-ranked macroeconomic trends, demographic Aggregation Are Now an investors by zone and globally; it can shifts, real estate prices and workforce Industry be used in any market where those accessibility. This information can be data are available. Of note is the vetting added to a risk-return model to The collection and aggregation of real process used to ensure the relevancy guide corporate strategies and estate data have become an industry and reproducibility of the metric. decision-making. unto itself, with companies such as According to Leahy (2017), it compared LoopNet, Real Capital Analytics and Health care is one example of an favorably “with the ask-sale price spread industry using this technology to CoStar among the first to see the in Central London – one market where predict demographic shifts that inform value in collecting, standardizing and there is sufficient data on the spread,” site selection and leasing decisions automating commercial property data thus validating the RCA approach to earlier and more cost-effectively. The such as transaction prices, cap rates, market liquidity. Data aggregators are industry follows cohorts to understand concessions and operating expenses. now, arguably, an indispensable part of the commercial real estate industry. where their best patients are through These companies have progressed an examination of health care use, from simply collecting, aggregating Although most aggregators focus health expenditures, insurance and disseminating data to creating primarily on traditional sources coverage and source of payment. their own set of proprietary metrics of data, some smaller firms have Proprietary information and data developed specialized products using a from the Medical Expenditure Panel that can be incorporated into strategic combination of proprietary and public Survey7 are integrated into Geographic decision-making.

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information with real estate implications. For example, Walk Score™8 produces a series of metrics that measure walkability, public transit and bike access within neighborhoods. In a similar vein, Streetlight Data9 provides transportation analytics including travel times, travel distributions and commercial and personal travel comparisons. Other data aggregators combine different data sources to create unique products targeting a specific segment of the industry. CrediFi,10 for example, combines property, mapping and loan information with commercial mortgage-backed securities (CMBS) and financial data to provide detailed loan and asset information for commercial real estate lenders. These new aggregators VALUED exemplify the first wave of data marriages and nuanced analytics of the big data era. RELATIONSHIPS Blockchain Will Change Recordkeeping As big data and the associated technology proliferate, ... built on our commitment blockchain technology is expected to play an increasingly larger role in data management and storage for property to client service. transactions. A blockchain is a digitized, distributed ledger that permanently records and shares data in a hypersecure, unchangeable format. The information a blockchain contains • Construction is public and can be searched easily but requires multiple • Corporate & Business Law levels of permissions to access. Every computer on the specialized network continuously verifies the sanctity of the • Creditors’ Rights & Bankruptcy blockchain.

• Employee Benefits In real estate, blockchain has the potential to streamline • Employment Law transactions, eliminate the need for third parties such as escrow agents, increase the reliability of public records • Energy, Utilities & Mineral Rights and reduce fraud. Specifically, it plays an increasing role in • Immigration managing smart contracts, computer programs that take the place of traditional contracts and can be executed • Insurance Coverage automatically without the need for intermediaries. For • Intellectual Property example, an office lease agreement can be entered into a ledger, with the parties agreeing that the contract will be • International Law executed at an exact time and date for a certain amount of • Litigation & Dispute Resolution money. The tenant then places his or her rental fees into a digital cryptocurrency wallet. If the office space is available • Private Clients and occupied by the renter at the agreed upon time, the • Real Estate & Lending money is released automatically from the tenant’s wallet to the owner’s (Spielman, 2018). • Sustainable Development Adopting blockchain technology on an industrywide basis will be a challenge, but some are already speculating on its potential. Two of the early market entrants include Ubiquity,11 a “blockchain-secured platform for real estate recordkeeping,” and Flip,12 a peer-to-peer residential leasing marketplace that stores records in blockchain format (Ungerleider, 2016).

Conclusion

Conversations with property management professionals confirm literature and media accounts that property Henry W. Oliver Building managers are using the digital data generated within office 535 Smithfield Street, Suite 1300 buildings primarily to analyze building systems and improve Pittsburgh, PA 15222 operational efficiencies. However, there is growing interest in 412.456.2800 | muslaw.com using Wi-Fi, beacons and sensors to: 1) track where people go and gather in buildings in order to improve the type and location of amenities in the office building; 2) allow

16 DEVELOPING PITTSBURGH | Fall 2018 FEATURE

tenants to more efficiently track and However, for now, several critical • Office property managers manage their own energy use; and 3) takeaways presented in this paper are comfortable with using provide building navigation through deserve the attention of the real estate nonpersonalized big data smartphones. industry in general and the office sector to monitor and improve the in particular and lend themselves to performance of building systems, Data collection and analysis have further research: but, due in part to privacy increased operational efficiencies concerns, have not yet embraced by saving money as well as • Big data sets are more than tracking tenant movements to environmental resources, but privacy just big. They are dynamic and improve the tenant experience. issues and effective and efficient data multidimensional and can be management are obstacles that have challenging to work with, but they • Landlords and tenants must hindered its widespread use. Although promise to give greater insight approach data collection solutions exist for challenges that may into some of the fundamental with a clear understanding surface relating to collection, storage, questions of real estate more than of privacy laws and a great analysis and presentation of data, anything has before. deal of transparency. Personal privacy and disclosure concerns may information should not be be more difficult to overcome since • The concept of big data is not collected or, at the very least, they are subject to changing laws solely about the data; it is also records should be anonymized. and social pressures. Firms are rightly about the tools created to deal Data should be released only in with the data. The collection, cautious when considering how they the aggregate, if possible, and storage, analysis and visualization incorporate big data into decision- all present unique challenges that systems put in place to ensure the making, especially if it involves the use require innovative and ongoing security of the data of personal information versus simply solutions. numbers of people flowing through • Big data is spurring new spaces. • Small data is still important. Real technologies and disciplines estate markets are local: to make that are affecting the real It remains to be seen how the big data meaningful, sometimes estate industry. For example, innovations brought about by big data the data need to be selected and blockchain technology will will change commercial real estate. sorted to such an extent that they have an increasingly larger are anything but big.

www.developingpittsburgh.com 17 FEATURE

role in data management and complex data sets, driven by machine the value, as well as the pitfalls, of property transactions. The need learning and predictive analytics, will collecting and analyzing diverse sets of for job positions such as data affect real estate investment research. data from their properties. Commercial scientists, data stewards and data For example, how can complex and real estate firms of all sizes can no visualizers will continue to grow diverse data sets merge to evaluate longer expect to remain at the leading as companies take stock of their investment decisions and improve edge of their industry unless they begin data sets. the investment performance of an to harness the potential of big data and office building? its associated technologies. Integrating Office buildings will most likely become big data into an industry based on local equipped with more sophisticated Can big data help determine the ideal information and personal relationships technologies that will not only monitor location of an office building, either will be gradual, but companies that energy use but also have broader now or several decades into the future? embrace the possibilities of big data will applications that give landlords greater As early adopting sectors, such as reap powerful advantages. DP knowledge of how their building is retail and social media, lead the charge (or is not) being used by tenants. on big data collection and privacy Furthermore, the aggregation of issues, property managers are learning Endnotes 1 One zettabyte is the equivalent of 44 6 Ibid. 11 https://www.ubitquity.io/web/index. trillion gigabytes. html, accessed on March 6, 2018. 7 U.S. Department of Health and 2 A subsidiary of International Data Human Services. 12 https://flip.lease, accessed on March Group, a global tech media company. 6, 2018. 8 https://www.walkscore.com, 3 https://wiredscore.com/en, accessed accessed on March 7, 2018. Kimberly Winson-Geideman, Ph.D., on March 7, 2018. is a senior lecturer in property at the 9 https://www.streetlightdata.com, University of Melbourne in Melbourne, 4 Author’s email conversation with a accessed on March 7, 2018. Australia. property manager, April 11, 2018. 10 https://www.credifi.com/company, 5 Ibid. accessed on March 8, 2018.

18 DEVELOPING PITTSBURGH | Fall 2018 Industry Intelligence. Focused Legal Perspective. HIGH-YIELDING RESULTS.

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BEST BUILD-TO SUIT Photo by Mark Grasso OFFICE Argo AI at 3 Crossings Argo AI is the major occupant in the Riverfront West building at 3 Crossings. The 131,000 square foot building was completed in June 2018.

DEVELOPER: Oxford Development Company

CONTRACTOR: Rycon Construction

ARCHITECT: WTW Architects

BEST OFFICE RENOVATION 420 Boulevard of the Allies 420 Boulevard of the Allies involved extensive renovations to the 157,290 square foot core and shell to re-purpose the building from the former Art Institute of Pittsburgh to a commercial office use.

DEVELOPER: M & J Wilkow/ CenterSquare Investment Management

CONTRACTOR: Shannon Construction Co.

ARCHITECT: Strada Architecture LLC

www.developingpittsburgh.com 21 724.524.1280 205 West Water Street Saxonburg, PA 16056 etzelengbld.com NAIOP PITTSBURGH AWARDS

BEST SPEC INDUSTRIAL Findlay Commerce Center 200 Solar Drive, Findlay Industrial Park

Completed in May 2017, Findlay Com- merce Center is a 316,000 square foot speculative industrial development on 23 acres that is fully leased.

OWNER: Ashley Capital LLC

CONTRACTOR: Oliver Hatcher Construction

ARCHITECT: Venture Associates

BEST TECH/FLEX Photo by Jessica Brackin DEVELOPMENT Tech Forge on 47th Tech Forge is a 64,000 square foot flex office/industrial building developed in Lawrenceville’s Robotics Row. Principal tenants include the Caterpillar Automation Center and Aruora Innovations.

DEVELOPER: Regional Industrial Development Corp.

CONTRACTOR: Franjo Construction

ARCHITECT: Desmone Architects

www.developingpittsburgh.com 23 Aligning Beaver County's Quality of Life with Economic & Community Development

Congratulations Jim Palmer on the NAIOP Supporter of Development Award!

Visit our website or call for more information. www.bcchamber.com 724-775-3944 NAIOP PITTSBURGH AWARDS

DEVELOPER OF THE YEAR Al. Neyer LLC Al. Neyer is a Cincinnati-based developer that has been an active leader in speculative industrial development in Pittsburgh since 2003. Al. Neyer has developed major industrial and office projects totaling 2.1 million square feet throughout the metropolitan Pittsburgh market, with properties in Allegheny, Beaver, Butler and Washington Counties. The firm has delivered or is building a total of 1.4 million square feet as part of Clinton Commerce Center near Pittsburgh International Airport, an exclusive multi-phase development agreement with Allegheny County Airport Authority. It recently announced plans for 473,000 square feet of new industrial product in the Commerce Crossing of Westmoreland County.

Al. Neyer intends to break ground in 2019 on its first major urban Pittsburgh project, a 420,000 square foot, two-building development at 21st and Smallman Streets that Neyer is DRIVER OF DEVELOPMENT developing with partner Rugby Realty. The Mosites Company Brandon Snyder, vice president of development in the Pittsburgh office, is a member at large for NAIOP’s Pittsburgh In 1999, East Liberty Development Incorporated (“ELDI”), a board of directors. Jim Neyer, executive vice president for community non-profit organization, developed a plan to capital and investments, recently completed a one-year term attract a broader range of shoppers and residents, to revive the as the national chairman for NAIOP Corporate. urban street grid, and to create jobs and housing. Believing in the neighborhood’s potential, The Mosites Company joined with ELDI and the Urban Redevelopment Authority of Pittsburgh to redevelop in total 14.3 acres of distressed land within East Liberty, with the confidence that it could build from the economic strength of the adjoining more affluent neighborhoods such as Shadyside, Friendship and Highland Park to fuel the revitalization.

Phase I of the project saw the opening of Whole Foods Market in 2002, with sales that nearly tripled the company projections. One of the key pieces in bringing national retailers to the area, and eventually the success of the revitalization, was the conversion of the former Penn Circle, the one-way ring road, into a two-way traffic road system. The former mayor of the City of Pittsburgh, Tom Murphy, initiated the collaboration between The Mosites Company and the City of Pittsburgh that opened the doors to make this a reality.

Open since 2006, Phase II of the development, Eastside II Shopping Center, a LEED Gold certified mixed retail center with a two-level parking deck, is anchored by Walgreens, Starbucks, PetSmart, and the region’s top-grossing Wine & Spirits store. Phases III through V included a multi-modal transit center, a new Target store, and the 360-unit Eastside Bond apartments. Opened in 2017, Eastside Bond marked the conclusion of a 17-year project that included 300,000 square feet of office space, 1,400 parking spaces, and thousands of new jobs. Eastside also sparked nearby development of nearly 1,000 apartment units, one-off retail and hospitality projects, and a new economic foundation for East Liberty.

www.developingpittsburgh.com 25 26 DEVELOPING PITTSBURGH | Fall 2018 NAIOP PITTSBURGH AWARDS

SUPPORTER OF DEVELOPMENT HALL OF FAME James Palmer Dick Donley President, Beaver County Chaska Property Advisors Corporation for Economic An Ohio native, Dick Donley Development has devoted his career to the As President of CED, Jim Palmer commercial real estate community facilitates private investment and in Pittsburgh. Donley is the job creation by managing the president of Chaska Property strategic investments made in Advisors. Beginning with his first businesses and communities to job, working for Pittsburgh National expand and diversify the Beaver Bank in 1972, Donley spent two County economy. Palmer has decades financing commercial over 40 years of community and real estate deals, working also for economic development experience. He has held positions Westinghouse Credit and Carey Kramer Crouse & Associates. at Beaver County’s Planning Commission, Community He seized an opportunity to partner with Mike Zamagias in Development Agency, Redevelopment Authority, and currently 1990 in a venture known as Delta Property Holdings, which the Corporation for Economic Development (CED). Palmer’s worked out and restructured seven million square feet of leadership was integral in attracting Shell Chemicals to Beaver shopping centers. In 1999, Donley saw an opportunity to begin County, navigating both the local and state waters. The developing projects, forming Chaska Property Advisors and project was a multi-year effort that represented the largest taking over the build out of the Cranberry Business Park. from the ground up industrial investment in the region in a generation and was the first major U.S. project of its type to Cranberry Business Park was a pioneer in creating a new office be built outside of the U.S. Gulf Coast in two decades. The flex product in the Pittsburgh market. Built to allow maximum project represents a $6 billion capital investment that will bring flexibility, Cranberry Business Park was designed to be highly up to 6,000 jobs at peak construction and 600 permanent energy efficient, with parking that was unusually generous new jobs to the region, as well as serving as the anchor to for flex property. The park consists of 750,000 square feet of a downstream strategy that is positioned to yield significant occupied space on 180 acres in Cranberry Township, with economic opportunity for Beaver County and beyond. He additional land prepared for an additional 250,000 square feet also helped to lead the community revitalization effort in as the market demands. Aliquippa, which will see $3.3 million in investments over In 2013, Donley and partner Continental Real Estate began the next six years. Under Palmer’s leadership, the CED has the development of the Pittsburgh International Business secured 11,829 jobs and 374 completed development projects Park on 47 acres of land that was unused within the as of 2017. In addition to these wins, some recent significant Pittsburgh International Airport footprint. The first of what investments include a $3.5 million capital investment from the Allegheny County Airport Authority hoped would be Swagelok and $1 million investment from Creekside Spring, large-scale development at Pittsburgh Iinternational, Pittsburgh LLC to expand operations in the county, and an ALS Global International Business Park consists of five buildings totaling investment which yielded 90 new jobs. These investments 350,000 square feet. will influence the direction of Beaver County and region for generations to come. Palmer is a member of the Pennsylvania Dick Donley was the president of NAIOP Pittsburgh in 2009- Economic Development Association (PEDA) and has been an 2010 and currently serves on the advisory board to the NAIOP active member of the Pennsylvania Regional Alliance (PRA) Pittsburgh Board of Directors. Partnership since its inception.

www.developingpittsburgh.com 27 “Integrity, transparency and ingenuity define how we operate.” - John R. Deklewa, CEO

Design+Build General Contractor Construction Management Real Estate Development Property & Asset Management

1273 Washington Pike, Bridgeville, Pennsylvania 15017 + phone. 412.257.3235 + www.buildwithRDC.com Development Project

District 15

Phase two of the District 15 will include twice the office space, structured parking, ground floor retail/ dining and a 20,000 square foot ground floor flex space that can support a wide variety of uses. Image courtesy RDC Star. Rendering by AE7 Pittsburgh.

t’s one of the more visible real estate coming from companies that were The difficulty in delivering on Fox’s deals done in the last year but the starting operations in Pittsburgh, calculation, of course, is that the Strip Ideveloper that landed the high- whether that was Fortune 500 has few available sites. To fulfill its profile tenant isn’t taking any bows. companies adding a presence here or vision of the right product in the right John R. Deklewa, CEO of RDC Inc. tech startups that had gotten through location, RDC was looking at sites and partner at RDC Star LLC, declined a critical funding stage to grow. They between the heart of the Strip shopping to comment or even acknowledge needed office and research space. They district and the convention center. the widespread reports of Facebook’s also needed maker space.” That’s hotly-contested land, most of leasing of the District 15 building that Recognition of those requirements had which is under the control of The was recently completed in the Strip a lot to do with key elements of the Buncher Company. The good news is District. When you listen to Deklewa or District 15 development, most notably that Buncher had looked at its holdings his partners talk about the District 15 the location and design of the building. there, most of which were surface development plan, however, it’s clear parking lots, and created a master plan that such an emerging technology “We wanted to be in the urban fringe for a development, called Riverfront tenant was the targeted user for the and thought the Strip was the place to Landing, some five years earlier. new buildings. be,” Fox continues. “New construction requires higher rent and there has been RDC Star LLC is a partnership between “I was at Oxford Development for a rent appreciation in the CBD and in Bridgeville-based RDC Inc. and P & number of years and was part of the 3 Class A product in the Strip. Because S Equities, one of the Orangestar Crossings project from its inception,” of the type of product people are Properties companies owned by says Shawn Fox, president of RDC looking for, the project fell within the the Post family from Mineral Ridge, Inc. “We saw demand for office space parameters of what tenants would bear OH. Orangestar’s chief financial and in the market.”

www.developingpittsburgh.com 29 administrative officer, Brian Post, the approval process. If there was a them is to make the architecture fit in lives in Mount Lebanon and was the question Nick could say I wrote that with the Strip District. That is the style company’s principal in the RDC Star plan and you approved it.” of warehouses, with brick and steel. We venture. Convinced that the Riverfront started there and asked can we do a Landing development was the right Getting through the City of Pittsburgh’s new building that looks like someone spot for their project, the team began planning and zoning was but one of took a warehouse and made something negotiations for a long-term ground the steps needed to entitle the project. new from it.” lease with Buncher in 2017. By spring, For the developers, this process they had concluded the deal and represented the biggest challenge. To accomplish that the architects announced the new building. Even though the Buncher master plan chose an antiquated multi-toned brick had earlier been approved, District for the façade that mimicked the look “We have a very good professional 15 required separate reviews from of bricks that had been more roughly relationship with Buncher. They always several city departments, plus the fired and exposed to the elements that

Image courtesy RDC Star. Rendering by AE7 Pittsburgh.

tell you exactly where you stand, and neighborhood review and Riverlife. nature, and humans, would subject I appreciate that. I prefer to negotiate The property is in a Specially Planned them. Corners of the building have with people like that any day of the (SP) District, which overlaid additional large glazed sections that are meant week,” says Deklewa. “They were requirements beyond the city’s zoning to appear as though someone tore consistent throughout and extremely code. One of those dictated the size out those portions of the exterior to professional. I think they recognized of the building. Structure parking is let in more light. The end result is a that there was a higher and better use mandated for any building that needs new building that works in the context for that property. This parcel was an more parking than 150 cars. With 150 of the century-old brick and steel extension of all the planning they had spaces and generous bike storage, RDC structures that it neighbors. done in the riverfront district.” Star was permitted to build 105,000 square feet. “The way the building is configured “That is another reason we chose DLA,” it has very generous bay spacing to Deklewa continues. “Their principal, “There were a number of things accommodate open office plans,” Nick Doichev, really demonstrated to to consider. One important thing explains Deklewa “There are 25,000 us that he understood core and shell is that the development is in an square foot floor plates, which is a office buildings, things like column SP District,” explains Doichev, vice very standard corporate floor size. layouts and how to lay out your core president of architectural design and So, whether you’re coming from as efficiently as possible. They had principal at DLA+. “DLA did a master San Francisco or New York you can developed the master plan and were plan for the entire project for The identify with that. It sets up well for intimately familiar with the details Buncher Company. There are a lot of programming. On all four sides of the and the zoning. It was very helpful in requirements in the SP but the spirit of building, on all four floors, are really

30 DEVELOPING PITTSBURGH | Fall 2018 unique spaces with bump outs and glass curtain wall. There is a lot of opportunity for spectacular spaces. Each floor has that ‘wow’ factor and create four building fronts. Several tenants keyed in on the fact that the first floor has a 10-foot clear ceiling to be able to accommodate R & D functions or pilot manufacturing. Everybody we talked to had some sort of working space or maker space programmed for the first floor.”

RDC Inc. had developed other projects in the city, so the process was not unfamiliar. Still, the number of agencies that had to be satisfied, and the inconsistency of the When it comes to real estate, we see potential everywhere. requirements between agencies was a CBRE turns scale into strength, expense into performance, constant challenge. and property into prosperity. How can we help you “Every single review is a potential transform your real estate into real advantage? obstacle and not one of them has a clear path through. They don’t all come up with the same ideas,” recalls Deklewa. “When there was a conflicting comment about our plans from one Build on department or another it was difficult www.cbre.com/BuildOnAdvantage Advantage to get a resolution. There is no one agency to which you can go to get consensus. And some of the ideas aren’t practical.”

Deklewa cited an example of a comment from Riverlife, wanting them Smart Solutions to include public bathrooms and bike Applying today’s innovations to make repair stations. tomorrow’s world smarter. “If you think any technology firm today, with their security concerns, would allow public access to their building, that’s not realistic,” he said.

The other major obstacle to development was the financing. RDC Star’s partners believed strongly in the project’s concept and vision, but the project was purely speculative. It’s not that the developer would not have signed a lease during the initial stages, but as it developed District 15 was proceeding on its own merits. That meant convincing lenders to finance a spec building, a task that has never been easy. RDC Star found support from the Strategic Investment Fund and a banking partner in First Commonwealth Bank. PARTNERS FOR WHAT’S POSSIBLE “They were really smart. They took www.pennoni.com the time to understand the deal. They

www.developingpittsburgh.com 31 thought a lot about the market and what might happen if we build it on spec,” says Deklewa. “The thing about spec is that you have to show people what you are doing and assure them of the delivery date. That is really hard to do on paper. Not all bankers A Proven Team. look at a deal that way and First A Different Approach. Commonwealth did. They understood A ProvenAvison Team.Young’s integrated team approach to commercial real the deal. They understood the market. estateA Proven engages Team. deep expertise from a broad range of They understood the location and they A DifferentprofessionalsA Different Approach. across Approach. our organization. In a partnership, focused understood the borrower.” AvisonA Proven Young’sonAvison your ATeam. 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Deklewa’s residential construction Brad Totten, PrincipalBrad Totten, & Managing Principal Director & Managing Director Brad Totten, Principal & Managing Director company had assumed responsibility 4 PPG Place | Suite4 PPG 4300 PPG Place Place| Pittsburgh, | | Suite 300 300 | PA Pittsburgh, | 15222 Pittsburgh, PA | 15222 T 412.944.2132 | PA T 412.944.2132 15222 | T 412.944.2132 for during a workout situation with a lender for whom Howard had previously worked. Howard noted that Deklewa took over a project that was painful to complete, but that the builder met his commitments, even when it meant taking some lumps.

One of the key elements to the successful financing was a mezzanine loan of $5 million from the Strategic Investment Fund (SIF), which reduced Project success. the loan-to-value for It’s what our clients do. First Commonwealth.

It’s what we do. “The fact that the Strategic Investment Fund was able to come in and supplement the first lender is a big story in and of itself,” says Josh Lavrinc, CEO of Callay Capital LLC, the fund manager of SIF. “But for these economic development funds, projects

32 DEVELOPING PITTSBURGH | Fall 2018 Colliers International | Pittsburgh

The District 15 office building core and shell is specializes in adding value to our being prepared for tenant improvements. clients to accelerate their success.

like District 15 might not happen. You can spin the story of District 15 any number of ways but RDC Star didn’t have a tenant. It was speculative.”

Another factor strengthening the Commercial Real Estate Sales and Leasing Services financing package was the construction cost. District 15 was under construction > Real Estate Management > Valuation and Advisory during a period when inflation for > Corporate Solutions > Investment building materials was escalating but > Sustainability > Auctions RDC Design Build was able to bring the core and shell in for less than $104 412 321 4200 | www.colliers.com | @PghCRE per square foot. Deklewa says that working as builder and developer with Learn how we are living our values of service, expertise, the project’s architect from beginning community and fun at www.colliersinternationalpittsburgh.com to end allowed for the discipline necessary to stay on budget. The project’s architect agrees.

“Part of it was the process, but we were very conscious of the budget from the beginning. It was a good example of how design/build should be,” says Doichev. “From the beginning we knew what was allowed and what was not. It is a fairly simple steel structure with a brick veneer and punched windows. The windows are sizes that are not expensive to work with. But on the river side of the building, or in places where we wanted the building to pop, we designed a curtain wall or a bump out to be an accent.”

There were some unforeseen conditions under ground that caused change orders and some upgrading to the exterior lighting package that was planned before bidding, but virtually no other change orders after the construction documents were completed. Deklewa estimates that the total of all the change orders was less the $25,000 on an $11 million construction budget.

www.developingpittsburgh.com 33 Fox takes pains to note that the Local building will have improvements, like The two-building complex is the Economic Revitalization Tax Assistance more sophisticated security and more commercial anchor at the west end of (LERTA) was a critical piece of the gathering spaces and green space, that the Riverfront Landing development. project’s financing. He points out that the team learned from working with Rugby Realty and Al. Neyer are having certainty about the tax liability tech occupiers during the leasing of developing an office project of similar made financing and leasing easier. District 15. scope to anchor the east end at 21st Street. Nearly 1,000 units of apartments “We couldn’t have done the project The Beta version includes a nine-story, and townhouses are filling the without the LERTA,” Fox asserts. 210,000 square foot office tower, a space in between, with the Terminal “District 15 wouldn’t have happened 390-car parking garage and 5,000 Building and 1600 Smallman providing without it, or the mezzanine lender.” square feet of street front retail space. shopping, dining and boutique space. There will also be 20,000 square feet of Assuming all projects advance as ground floor high-bay space that can RDC Star closed on the financing planned, Riverfront Landing could be for District 15 in February 2018 and be flexed from R & D use to a grocery store. The parking garage is being built out roughly a decade after DLA+ started construction later that month. completed planning. They signed the lease for their anchor designed with flat floor plates tenant in September and completed in anticipation that future transit options will make some of the parking “It makes me happy that the master construction on the core and shell just garage obsolete. plan we developed that many years ago before New Year’s Eve. RDC Design is coming to fruition,” says Doichev. Build has a contract for the base Deklewa says that District 15 Beta building changes for its tenant and should be under construction in Shawn Fox says that people are hopes to compete successfully for the summer of 2019. While he again missing out on the development’s tenant improvement package, which declined to comment on whether or infrastructure, which is still privately should start by spring. With the building not District 15’s tenant was occupying maintained by Buncher Company. The completed, RDC Star announced the entirety of the building, he did not street that runs throughout Riverfront plans for a second building, branded dispute the fact that the website for Landing, Waterfront Place, is open District 15 Beta Version. Taking a nod District 15 shows no space available through to 10th Street and makes for from the software industry, Deklewa for lease. That would suggest that any easy access in three different directions says the beta version of the office further leasing activity would require a from the District 15 site. new building.

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34 DEVELOPING PITTSBURGH | Fall 2018 “The public needs to get familiar with Deklewa is excited to see the impact and business growth it is tough to do this development. Waterfront Place is of as many as 2,000 new jobs and speculative development. It’s great that now open and the best-kept secret in residents on the already booming Strip Pittsburgh has arrived at a place where the city,” Fox says. “It’s a flat, straight District. Josh Lavrinc echoes Deklewa’s there is confidence from lenders like street in the City of Pittsburgh. That focus on the economic impact. First Commonwealth, because if you street connects the convention center don’t build then you don’t have product right through to the 31st Street Bridge “That’s the point of all this. Why do available for companies to move into because it becomes AVRR. You can you do speculative development? and you may lose them.” DP connect all the way to Lawrenceville It’s to spur economic development,” without seeing a traffic light!” says Lavrinc. “In any market that is not experiencing rapid population growth

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www.developingpittsburgh.com 35 THETHE EVOLUTIONEVOLUTION OFOF OFFICE.OFFICE. Development Trend

Work Them to Life: Upgrade Your Office Space to Win the Talent War

To attract the most talented people, he believes, companies need to offer a workplace experience that is modern and rewarding. Work Them to Life is for sale on Amazon.com but Scalo gives away hundreds of copies each month, believing that eductaion will elevate the commercial real estate industry.

The following is an excerpt from Work Them to Life, a chapter that examines the value proposition that commercial property owners can offer their occupants.

CHAPTER 8: FLIP THE VALUE PROPOSITION

“The memory of bad quality lasts longer than the shock of high prices.” - Quote from a Fortune Cookie

Recently I had lunch with a friend who had just bought a new house. He and his wife had gone into the search knowing exactly what they wanted, so they’d assumed that they would quickly find the right place for their family. They were wrong. The process wound up being long and exhausting.

“There were just so many factors that meant more to us than we thought they would,” my friend explained. There were the obvious things like the number of bedrooms; the quality of the kitchen and bathrooms; the condition of the driveway, the roof, the windows, and the climate control; the size of the yard; and the number of luxury amenities. And then there were the other factors that limited their search in ways they hadn’t anticipated: the proximity to work; the commute times; the tax rate; and the quality of the im Scalo, CEO of Burns Scalo and has worked for the past year on a neighborhood, the school system, and Real Estate Services, was one of book that crystallizes his views about the the local government. Ja handful of developers and real future of the office workplace. Published estate professionals who revitalized the in fall of 2018, Work Them to Life, puts “When we started the process,” he dormant NAIOP Pittsburgh chapter in forward Scalo’s belief that real estate is said, “I had a number in mind for what I the mid-1990s. Scalo was an original integral to a culture that welcomes and wanted to pay for the mortgage.” That NAIOP Pittsburgh Hall of Fame inductee enhances the lives of the workforce. number helped him narrow the search, but in the end, the total mortgage

www.developingpittsburgh.com 37 payment wasn’t anywhere near the never ceases to amaze me how almost 3. Track record of the landlord top reason he and his wife made their everyone asks the same question first: final choice. Ultimately, they decided 4. Location that they were willing to pay more than “What’s the rent?” their original projection, because really, 5. Age of building what’s a couple hundred extra dollars It never fails. When considering the 6. Mechanical systems a month if it’s the difference between home they will buy, almost no one places the mortgage payment at the living in a house you kind of like and 7. Technology living in your dream home? “We figured top of their list of deciding factors. But when mulling one of the most we’re going to spend a huge part of our 8. Amenities lives in this house,” my friend said, important decisions they will ever make “so why not make it a place where for their employees’ quality of work 9. Wellness and Sustainability we’re comfortable and happy life, and for their company’s ultimate with everything?” productivity, most people primarily 10. Employee recruitment/ think about what it’s going to cost them retention Most people who have ever set out to (even if it’s only going to cost them an buy a new house can identify with my almost incidental 3% to 7% of their total Now, some of those factors are friend’s story. And I’d wager that most operating budget). As a result, everyone pretty well-placed. Obviously, space people do exactly what he did. It’s just from agents to brokers to consultants is a key component, and location so easy to justify going over cost when to occupiers frame the commercial is as important today as it has ever you’re talking about the quality of the office space value proposition pretty been (even if the way we think about place where you and your family will much completely upside down. Here is location has to change if we’re going spend most of your time each day. the order that most people rank to stay competitive for talent). Nobody We don’t usually think about our office the top ten items on a traditional wants a bad landlord. And the age space in the same light, even though value proposition: of the building, the quality of the many of us spend more of our waking mechanical systems, and the available weekday hours at the office than we 1. Rent (or price) technology are all significant factors, do at home. I’ve been involved in as well. The bottom three we can rank 2. Total space hundreds of these transactions, and it in just about any order according to

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38 DEVELOPING PITTSBURGH | Fall 2018 a company’s identity and culture. But see your rent bill. All they will see is the don’t necessarily need to invert the here’s the thing: those three at the quality of the building you put them list precisely, but we can certainly flip bottom are increasingly important to in. So, why allow rent to be such a key it (almost) on its head. The new value business success. And here’s the other (and often leading) determining factor? proposition should look something thing: anyone who allows rent or price like this: to drive this value proposition is going To make a strong choice in where to to get left behind. house your company, the first things 1. Location you should worry about are all those A huge part of the reason my friend elements that will a) help you attract 2. Total space was willing to pay more for the top talent, b) help you keep the talent mortgage than originally planned was you already have, and c) ensure the 3. Technology because of his kids. He and his wife highest possible quality of work-life and 4. Employee recruitment/ wanted them to be proud of their productivity from a happier, healthier, retention home, and to be as comfortable and more engaged, and more present staff. happy there as possible. That didn’t Don’t make your choice based first 5. Amenities mean negotiating and settling for the on the rent bill; make it based on how best mortgage they could get. The your people will respond to the space 6. Wellness and Sustainability kids would never even know what the you choose for them. Yes, business is mortgage was in the first place, and about making money, and the rent bill 7. Mechanical systems even if they did know, they wouldn’t plays a factor in that equation, but if it’s care. What mattered more than the the difference between improving the 8. Track record of the landlord mortgage was nearly every other item bottom line and doing the right thing on that value proposition list. for your people, why not do both? 9. Age of building

Now, the employees of your company A BRAND-NEW PROPOSITION 10. Rent (or price) aren’t your children, but they probably The first thing you’ll note is that care just exactly as much about These changes in how people work location and space maintain their your rent as your kids do about your and how they live have a clear impact positions near the top of the list. But mortgage. They aren’t ever going to on the traditional value proposition. We as we’ve seen already, the way we

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www.developingpittsburgh.com 39 assess them is drastically different, and Complicating the talent war is the keep in mind that 1) people prefer to the data we can use to make quality skills gap, which is widening with every work for companies that have their choices is far enhanced, thanks to passing year. “The National Federation wellness in mind, as well as the impact recent advances in technology. Like of Independent Business reports that they’re making on the environment and anything else in modern business, 45% of small businesses were unable the world at large, and 2) the customer it’s all about efficiency. New data- to find qualified candidates to fill job cares about these things, too, and often collection capabilities allow the openings and 60% of all employers lets you know with their wallets. design of more efficient layouts for have job openings that stay vacant contemporary office environments, for twelve weeks or longer, which To the first point, incorporating eco- including adaptable furniture systems costs them $800,000 annually in lost friendly and sustainable building and that maximize use of space. The effort productivity and advertising fees. With management practices is simply the streamlines the space dedicated to the constant flow of technological right thing to do, but by implementing common areas and can help reduce advancement, and the encroachment these practices, landlords and tenants overall space requirements by 10% to of automation on the jobs picture, both win. Landlords can certainly 20%. This is part of why considering roles change and then become promote their conscientious efforts rent or cost first is so problematic. Why obsolete at far more rapid rates than while employers realize that “eco- worry so much about rent when: 1) ever before. Companies that can use friendly” and “sustainability” are heavily at 3% to 7%, it’s such an insignificant their office space to help attract and embedded into the vocabulary of portion of your total operating budget, retain more talented people will find Millennials. While impacts of daylight 2) the cost difference in renting an themselves better equipped to train harvesting, lighting controls, air quality, outdated space and a premium space upward for these ever-changing and LED lighting, and Low-E glass are is so small, and 3) modern design can ever-more-demanding roles. Along the evident, low VOC’s (Volatile Organic save you up to 20% of the total space way, those with the best amenities will Compounds), solar energy, water you need. be in a better position to reduce costly collection, managed recycling, and absenteeism and turnover. more are also not only becoming Of course technology remains near corporate mandates, but highly the top of the list, and its impact will Next up is amenities, as they are one noticeable aspects for coveted only increase between now and 2030, of the most direct means to attracting employees considering places as connectivity grows ever stronger, and retaining talent, and also improving of employment. automation continues changing the the employee’s quality of work-life way businesses operate, digital mobility blend, and as a result, their productivity. On the second point, more than ever becomes more ubiquitous, and The key here is to consider the vibe of before, consumers place their trust in companies begin integrating Artificial both internal and external amenities. companies that do the right thing for Intelligence into the daily workflow. In Just because we’re talking about space their employees, and for the people many ways, we are facing cultural and efficiency and multi-use common they impact. Stories abound in social technological pressures that impact areas, that doesn’t mean spartan design media about how the employee the way we work on a level not seen features and layout compromises. experience can translate into either since the Industrial Revolution. In this a positive or negative response from data-driven, digital age full of rapid, Modern office space design can often a consumer base. If you treat your almost overnight change, only the allocate for collaborative meeting people well, and you demonstrate a most agile and adaptable companies areas, open cafés, multiple sizes of conscious effort to lower your impact will survive and thrive. Keeping that conference rooms, inviting reception on the environment, the public will agility and adaptability in mind when areas, and fitness areas with the open know about it, and the return will be choosing and designing an office space plan and natural light contributing to a measurable. is paramount. far more productive work environment. The size of the project or investment Mechanical systems come next Employee recruitment and retention usually dictates the extent that owners because no one wants to pay more comes next because, as we’ve of all new buildings or full-scale than they have to for optimal building discussed, the talent war will only renovations of existing properties performance. Technology plays a intensify in the years to come. Most recognize the importance for common major role in the way we think about employers expend considerable area amenities and strongly consider mechanical systems these days, as resources to attract, train, and retain additional amenities (such as integrated well. The Internet of Things allows us employees. A well-designed office classroom-style or auditorium to track power, light, and temperature space reflects not only the company’s conferencing with high-tech fluctuations and usage. Having this image and work ethic, but is a crucial connectivity, ground-floor restaurants data in turn makes it possible to adjust component of successful hiring or coffee shops, external patios, and and optimize these elements in ways practices, stable employee tenure, and rooftop decks). never before seen. These systems long-term retention of any company’s allow new buildings to outperform their or organization’s most valuable assets: For most, seeing “Wellness and aging counterparts. They also save on its people. Sustainability” so high on the list might operating cost, improve operational seem startling, but it’s important to efficiency, and help track and predict

www.developingpittsburgh.com 40 John L. Shetrone Jr. PRESIDENT AND CEO VISION TECHNOLOGIES

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18802 Vision Tech / trim 8.375”w x 10.875”h / bleed .125 NAIOP when maintenance will be necessary. foot. They’re using real estate as not just When it comes to deciding on the next More importantly, with modern an expense, but as a means to improve office space, we shouldn’t be looking mechanical systems, your people productivity, and as an offensive weapon for the lowest cost alternative or lowest enjoy better overall comfort levels, in that war for talent. rent. We should be searching for the which directly translate into lower space that best suits the vision of what absenteeism and turnover and “Anecdotally, we once worked with a our company does, what it stands for, higher productivity. company that opened a big office in and how it hopes to pass that message Pittsburgh with the plan to hire five onto employees and to the community. We close with the triumvirate of factors hundred employees. Their head of real that far too many decision makers estate told us his goal was to get the The ideal space isn’t the least still place at or near the top of their cheapest space possible. We got that expensive one. It’s the one that you value propositions. No one wants a for them, and they were happy about can see yourself in for at least ten years bad landlord, of course, so if all other the deal. But then, two years later, because: it serves as an extension of elements are equal, that begins to they had to close the office because your company’s cultural values; an factor into the decision. The same they couldn’t hire anybody. They’re the enhancement of your brand; a tool goes with the age of the building. Old perfect example of what can happen to help attract and retain talented buildings don’t tend to perform as when you get a great real estate deal, people; a sustainable and efficient well as newer ones, but with the right but a poor operations deal.” environment; a means to promote systems and the right planning, age can health and wellbeing for your people; be rendered a far less important factor. Of course none of this is to say that and a collaborative, inspiring, agile, Finally, there is the rent. higher rent always equals a better innovative, communal, and ultimately decision. Rather, instead of leading with productive space that everyone who “There will always be a certain subset of the question about the rent, we should contributes to your company can be the occupier population that is going to be leading with the efficiency of space, proud to call their workplace. With all have rental rates as their highest priority,” mechanical systems, and the dramatic these benefits come greater profits. said Dan Adamski, Managing Director of and measurable increase in employee the Pittsburgh office of JLL. “But there’s a productivity that comes from wellness, For a free copy of Work Them to Life, email trend that more and more companies are happiness, and collaborative work Ruby Scalo, [email protected] looking at more holistic measures instead opportunities. of thinking just about cost per square

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42 DEVELOPING PITTSBURGH | Fall 2018 EYE ON THE ECONOMY

s the economic expansion that One metric that should be ignored fixed-income investors, rather than began in 2009 closes in on the as an indicator of economic health is concerns for higher rates damaging Alongevity record for economic the stock market. Common wisdom economic growth. In fact, most of growth, several shocks to the economy holds that the stock markets are an the economic data during that period in the fourth quarter have experts indication of investor sentiment about suggests that the U.S. economy is equivocating about the chances of a the economy six months hence. If unaffected by higher interest rates. downturn in the next 12 months. While that were ever true, it is not a driver of few are willing to forecast a recession the market in 2019. What is generally For industries like commercial real outright, there is near unanimous overlooked about stocks is that the estate and construction, the danger agreement that 2019 will see significantly ultimate driver of price is supply and posed by higher interest rates is slower growth. demand. There is certainly a correlation more visceral, as higher borrowing between investors’ outlook on the costs put unwanted pressure on pro One of the firms that is clearly in the economy’s health and the amount of forma projections. Thus far, however, upbeat camp is The PNC Financial demand for stocks, but it is the latter the higher short-term rates haven’t Services Group. During a span of that pushes prices higher or lower. pushed the long-term rates that two weeks in January, PNC’s chief Over the past six months, it has been govern mortgages much higher. The economists and CEO all expressed the uncertainty of Trump Administration bellwether 10-year Treasury bill began confidence in the continued expansion policies and the of the U.S. economy, explaining that the steady increase financial services giant was seeing no in interest rates signs of an impending decline. During that have turned his January 17 presentation to NAIOP buyers into sellers. Pittsburgh and BOMA Pittsburgh, Senior And as fears of Vice President and Chief Economist continued rate Gus Faucher noted that there weren’t hikes lessen and the kinds of imbalances that trigger policy uncertainty recessions in the U.S. marketplace. abates, the relative calm brought “Absent a geopolitical shock – like an buyers back. extended government shutdown – we don’t see a recession coming in 2019,” Faucher expressed Faucher concluded. little concern about the stock The overused baseball analogy is no market’s volatility, longer relevant for the current business noting that the cycle. By all historical measures the U.S. relative calm economic expansion is in extra innings, of the previous but virtually all metrics for measuring 24 months was the economy remain positive in 2019. unusual. He Signals from global markets may be characterized flashing warnings but the U.S. economy the wide swings is still on green. in the major equity indexes at Gross domestic product (GDP), the the end of 2018 most widely-used metric of economic as “returning to activity, is going to slow down in 2019. normal levels” of After two strong quarters above three volatility. percent, GDP slipped back slightly to 2.7 percent in the fourth quarter, It’s also becoming according to the Atlanta Federal clearer that rising Reserve Bank’s estimate. That rate will rates have been a be fairly close to the full year growth in sell signal because GDP. The consensus forecast for GDP the risk-adjusted growth is in the 2.5 percent range. That return on short- is less robust than the growth over the and medium- past 18 months, but still represents solid term bonds expansion in a mature business cycle. has become attractive to more

www.developingpittsburgh.com 43 2019 at roughly the same level as the temporary and/or regional increases in meeting readout provided further beginning of 2017, within 20 basis bid prices, but the significant drop in comfort that it was holding off on points of the three-month bond yields. energy prices and the slowing of global further rate hikes for the time being. If borrowing costs remain as low in demand for construction should tamp 2019 as they were in 2017, interest rates down construction inflation. One of the concerns evolving from the shouldn’t spook development. steadily more aggressive posture of The upshot of this price certainty, the FOMC since December 2015 is the Another economic metric that has even though it signals more expensive inversion of the yield curve, as long- turned more favorable for commercial construction, is that commercial term rates have barely moved while real estate, and received less coverage real estate projects in development short-term rates have jumped 200 basis of late, is the easing of construction will have more certainty during points. It’s anticipated that a pause inflation. After prices popped by nearly development. Lenders will have in the hikes of short-term rates will ten percent in May 2018 in response confidence in costs. Developers allow the market to correct long- to Trump Administration tariffs, the will have more confidence that term yields, providing higher returns rate of year-over-year inflation eased rent expectations can cover costs for riskier bonds. Of course, the nearly every month since. The Bureau and provide competitive returns on demand for long-term instruments of Labor Statistics most recent data investment. will ultimately dictate whether or not showed that the cost of non-residential long-term yield investors ask for higher construction put in place remained five With inflation seemingly under control returns, which will result in higher costs percent higher in January compared again within the Federal Reserve Bank’s for long-term borrowers. to the same month in 2017. Tight guidelines, the outlook for short-term labor supply may continue to cause interest rates changed significantly The underlying U.S. economy in the fourth continues to show remarkable strength quarter. and resilience, regardless of what the Following the macroeconomic signals are flashing. anticipated In fact, a consistent bifurcation has 25 basis point developed in recent months between bump in the what consumers and business owners Fed Funds rate are saying and doing. Consumer in December, a confidence took a significant hit again majority of the in January but consumer spending Federal Reserve continued to grow. Despite early Bank regional indications of less buying at Christmas, presidents for example, spending for the 2018 offered opinions holiday season ended 5.1 percent about further higher than in 2017. rate increases that varied Business confidence has also eroded, from neutral to according to numerous surveys, but the dove-like. It’s key actions of businesses – hiring, pay expected that increases and purchases – continue this dove-ish to signal confidence in the next year. sentiment will In the area of capital investment, inform the Fed’s businesses have slowed or shelved Open Markets plans at a higher rate than in 2017, but Committee the trend in business investment is (FOMC) to diverging between private companies hold off on any and publicly-traded corporations. increases until the second half News of large layoffs, like those of 2019, giving recently announced at General Motors, the markets BNY Mellon and Ford in Europe, a couple of are indications that publicly-traded quarters to corporations aren’t seeing top line absorb the growth that will allow them to meet the current rate earnings that will satisfy shareholders. environment. Corporate layoffs are also a signal The Federal that new hiring has shifted to small Reserve Bank’s businesses. During 2018, it was the Private payroll growth remains above the monthly 200,000 bench- January small business sector of the economy mark. Private payrolls have added jobs for 72 consecutive months. that perpetuated the strong job

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factors can render any month’s data less than instructive. What is instructive – at least for now – is the data below the headline. Job creation in sectors that pay better – construction and manufacturing – were strong. Wages continued to grow faster than the rate of inflation, although at a rate that does not appear to be triggering higher prices. Perhaps the most important data was the significant increase in workforce participation, which indicates that the strong jobs market is bringing marginally-employed or discouraged workers back from the sidelines. These cohorts of workers are needed to engage in the workforce in order to allow growing businesses to keep growing.

The imbalance between retiring and new workers is one of the main reasons that hiring gains were modest in Pittsburgh in 2018. The government’s report on December job creation creation that drew more people into assertions of those who felt the stock was solid, with 17,100 more people the workforce than in many years. markets had overreacted, that the employed than the year earlier, but Small businesses were also better underlying economy was still strong. the one percent increase for the full stewards of the benefits received in the For those pushing the narrative that year of 2018 is half that of Pittsburgh’s Tax Cuts and Jobs Act of 2017. the economy was on the brink of benchmark cities. Job creation for the recession in 2019, the robust hiring full year is estimated to be 9,600. Absent PNC’s outlook on the economy was a dash of cold water. The January higher population growth, more robust may well have been influenced by jobs report, which showed a gain employment gains will be difficult. the very optimistic responses to its of 314,000, reinforced that more semi-annual Small Business Outlook positive narrative. The February 1 Demographics and stagnant Survey. The October 2018 survey found report adjusted the December hiring population growth may be limiting a slight erosion of the record levels back to 222,000, but the good news the employment gains in Western PA of optimism in the spring survey, but on wage growth (up 3.2 percent) and but the foundation of the regional small and mid-size business owners the strong hiring in the face of the economy has continued to strengthen. still overwhelmingly responded that government shutdown, are evidence There are four major economic their outlook was positive. Four out that businesses are still seeing strong engines – healthcare, energy/ of ten owners described their outlook signals in their markets. chemicals, emerging technologies as positive. Only 12 percent described and life sciences – that are all growing, their situation as negative, the second Payroll processor ADP added further with significant future upside potential. lowest in the 15-year history of the evidence that employers were still Should the more optimistic forecasts survey. Two percent of respondents expansion-minded when it announced for 2019 prove not to be true, it’s more said they planned to decrease staffing its January 2019 employment report, likely than not that Pittsburgh will be in 2019, another record low. which showed 213,000 new private insulated from the worst effects of a sector jobs were added to the payrolls. national or global slowdown. Businesses increased staffing at high The January report was significant levels again in 2018, and hiring in the because it spanned the full federal “Pittsburgh is so diverse from Pittsburgh metropolitan market government shutdown. Following an submarket to submarket, but holistically ended the year with solid, if increase of 271,000 jobs in December, its economy is strong. We’re cautiously unspectacular, gains. ADP’s most recent report suggests that optimistic,” says Steve Drahnak, market private businesses viewed the battle president, Western Pennsylvania, The January 4 announcement by between Congress and the White for S & T Bank. “I don’t have a lot of the Bureau of Labor Statistics that House as background noise. concerns about this market. I think employers hired 312,000 new workers energy is going to continue to grow in December seemed to change Following the monthly employment and I like the technology development the narrative about the economy. announcements is something of a that is going on.” DP The strong jobs data reinforced the fool’s errand, as too many irrelevant

www.developingpittsburgh.com 47 OFFICE MARKET UPDATE

oth CBD and suburban office and medical sectors, with companies trails) the Fringe markets capitalized in leasing markets in Pittsburgh competing to recruit and retain 2018. Several large tenants that were Bremained relatively stable in 2018. top talent in the growing millennial previously located in more traditional There was slight up-tick in Class A asking workforce. Both new and renovated office buildings in the CBD or suburbs rental rates, despite a nominal decrease (in some cases re-purposed) opted to make long term lease in real occupancy due to the influx of office buildings on the Fringe or commitments in these Fringe markets. several large blocks of sublease space. in urban locations have become Examples of leasing transactions that These spaces are still leased, but not increasingly popular and perceived support this noticeable shift in market occupied and therefore a competitive to be more easily accessible for activity include: Bombardier (90,000 factor impacting both landlords and younger employees who are more square feet) and Facebook in the tenants. Examples of such sublease frequently walking, biking, “Ubering” Strip District; the “ARM” Institute lead blocks delivered to the market in 2018 or taking public transportation to their by CMU’s investment in Advanced included the Westinghouse headquarters workplace. With landlords of these Robotics for Manufacturing leased in Cranberry for ±300,000 square feet, properties delivering more on-site approximately 90,000 square feet in the Allegheny Health Network space amenities (including fitness, wellness, Mill 19 at Hazelwood Green; and at at 30 Isabella Street on the near North daycare centers and programs) Bakery Square in East Liberty, Philips Side for 130,000 square feet and several in conjunction with “authentic” Sleep & Respiratory Care business blocks of space in various CBD buildings neighborhood amenities (coffee unit leased 230,000 square feet in a of 40,000 to 60,000 square feet that shops, cafes, bars, walking and biking building currently under construction collectively have weighed down that core submarket.

Despite these challenges, the CBD’s Class A asking rental rates and occupancy levels were nearly unchanged for the year, while occupancy and rental rates along the Parkway West increased. The historically wide gap in full-service Class A asking rental rates between office space in the CBD and Parkway West suburban buildings narrowed somewhat, but still weighed heavily in favor of the CBD in range of $5.00 to $6.00 per square foot per year. The East suburban office market continues to lag behind all other quadrants with a vacancy rate in excess of 22 percent, little leasing activity to speak of and a couple of sales of former Westinghouse properties that traded at discounted prices.

The most positive and definitive trend in the Pittsburgh office market for 2018 took place in the Fringe submarkets. Unlike recent years where the CBD was the focal point for leasing activity and positive absorption, the great majority of transaction volume took place last year in the Fringe or inner-city/ urban sub-markets. Examples of these areas include the Strip District, Lawrenceville, East Liberty/ Shadyside and Oakland/ Hazelwood.

The demand for these locations was driven primarily by the technology

48 DEVELOPING PITTSBURGH | Fall 2018 that will be ready for occupancy 2018 transactions indicates a clear cost often having an added advantage due late in 2020. For Philips, this move increase in the range of 15 percent to the value of “in-place” improvements involves relocating several hundred to 20 percent, on a per square foot for existing tenants, which may be more employees performing corporate, sales, basis. This rising cost for completing willing to renew at more affordable marketing and R&D functions that have interior construction is a challenge for rental rates in light of the increasing historically been located in the Eastern landlords competing for tenants, as cost to relocate and construct new submarkets, approximately 12 miles well as for the end-users/ tenants, as improvements. In either case, this from the new destination. it directly translates to an added cost on-going labor shortage will continue to of occupancy and paid often times put upward pressure on office rental rates From a market “shift” standpoint, it is by tenants either as a lump-sum at in 2019 and beyond. DP noteworthy that the full-service lease lease commencement, or amortized rates for many of these Fringe lease as “additional” rent for the term of the transactions were in the range of respective lease. $33.00 to $37.00 per square foot on an annual basis and in certain cases While a portion of these higher in excess of $40.00 per square foot. construction costs are the result of These rates are far above the asking inflating material costs, the majority of full-service rental rates for Class A high- the increase is attributable to the labor rise buildings in Pittsburgh’s CBD, with shortage for skilled building trades that a current average asking base rate of is currently impacting all of Western slightly less than $30.00 per square foot Pennsylvania. With the construction of the per year for a full-service lease. The Shell Cracker Plant in Beaver County now second most noteworthy trend that fully underway, the labor “employment” impacted office leasing during 2018 level at that site is now at peak capacity across the entire Pittsburgh market, with more than 5,000 workers across all was the measurable increase for costs trades and specialty fields actively working incurred for completing interior tenant at that site. That project along with Avison Young improvements, commonly referred in several other major developments, both 4 PPG Place, Suite 300 the industry as “T.I.’s”. An analysis and public and private, is driving the steep Pittsburgh PA 15222 comparison of similarly sized leased demand for laborers, which far exceeds 412-944-2130 transactions with a consistent scope the available supply. This dynamic has Brad Totten, Managing Principal of interior tenant improvements that had a measurable impact on the office [email protected] took place in 2016 as compared to leasing market, with incumbent landlords

www.developingpittsburgh.com 49 INDUSTRIAL MARKET UPDATE

ittsburgh’s 144 million square Westport, Findlay Commerce Center, vacating 265,000 square feet of fully foot industrial market completed Building 4000 at McClaren Woods conditioned space in the former Pa strong 2018 with expectations Business Park, Building 2 at Clinton American Eagle distribution center of solid activity in 2019. Market Commerce Park, and Imperial Business in Warrendale. fundamentals remain sound, investment Park. While there were only two activity for stabilized properties was active, new leases signed in 2018 for over Regarding the much heralded robotics the oil and gas sector is generating user 100,000 square feet (Kenco Logistics and technology growth in the region, demand, and workforce/labor’s role in for 455,000 square feet at Starpointe unlike some previous years, 2018 did the real estate decision making process Business Park and Shell for 265,000 not experience a wave of transaction has become much more important; all of square feet at Clinton Commerce Park), activity within that sector at industrial which should make 2019 an exciting year combinations of smaller leases resulted properties. 2019 should be a more in the local market. in meaningful steps forward for active year based on potential BTS several projects. projects and planned speculative “Tech/ Market Fundamentals Flex” development. The combination of solid bread and 2018 was another positive year for the butter (20,000 square feet – 50,000 Given current levels of supply and regional industrial market, recording square feet) user activity and the demand, we expect availability to net positive absorption of over 1.5 delivery of several BTS projects that remain compressed in 2019, and the million square feet. While the Pittsburgh started in 2018 (most notably Niagara market to continue to be characterized market is not seeing the explosive Water’s purchase of land for the by low vacancy and upward pressure growth of bulk distribution markets construction of a 465,000 square feet on pricing. such as Eastern Pennsylvania from bottling plant and the Kenco Logistics a new construction and absorption lease of 455,000 square feet) provides National Trends: Implications standpoint, vacancy rates (particularly a strong outlook for 2019 absorption. for the Regional Market for well located, functional product) On the other side of the ledger, two The national industrial market continue to compress and the notable vacancies that will provide continues to boom with many market has responded with strategic a check on net positive absorption markets seeing record low vacancies, speculative construction and a number are Siemens vacating over 400,000 coupled with high levels of speculative of notable build-to-suit (BTS) projects. square feet of quality crane-served construction. Industrial real estate’s 2018 saw absorption of first generation space in New Kensington as a part of rise in most markets across the country speculative construction projects their consolidation to New Stanton, is largely driven by e-commerce related including West Pittsburgh Business and Em Ache Productions (Netflix) Park, Building 100 at Chapman growth. Per CBRE Research, for every $1 billion increase in e-commerce sales, an estimated 1.25 million square feet of warehouse space is needed to keep up with demand. Thus, e-commerce generated warehouse demand could grow by an additional 191.2 million square feet from 2018 to 2020. This has driven industrial land prices to record levels as the average land price for single-story warehouse development in the U.S. has doubled in the past five years to $30 per buildable square feet (FAR). As land prices continue to rise, multi-story warehouses are underway or in the pipeline in New York City, Seattle and San Francisco. While efficiently accommodating the 53-foot trucks commonly used in U.S. logistics is a challenge (much smaller trucks are used in Asia and Europe), if successful, these new multi-story projects could set an example for developers in other cities that face similar land conditions.

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Industrial land prices continue to rise in the local market, particularly in infill locations with a constrained supply of existing industrial land, let alone vacant land. In many submarkets, there is currently a very limited supply of developable industrial land. Additionally, site preparation costs (for all sites) continue to rise, largely due to 1) more regulations regarding land development and storm water management, all of which contributes Photo: Charles Uhl to more time and higher costs; 2) excavation and sitework costs continue THE OVERLOOK to increase; and 3) many sites that are currently vacant often have major topographical, geotechnical, and development (utilities, easements, etc.) challenges, all of which makes land development, if feasible, very expensive. While industrial land prices will absolutely continue to increase in the local market, we don’t expect a scenario in the near term future where multi-story warehouse development Photo: Massery Photography, Inc. will become prevalent in Pittsburgh. PLEASANT RIDGE The market continues to see an increased number of e-commerce related requirements, with the majority being small to mid-sized “last- mile” third-party logistics (3PL) requirements. While sizeable fulfillment requirements have been the exception rather than the rule, the market is seeing an uptick in larger requirements including Photo: Charles Uhl

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www.developingpittsburgh.com 51 the 2018 announcement by Urban Outfitters of plans to build an 850,000 square foot fulfillment center in Indiana County, northeast of Pittsburgh.

Oil and Gas Impact

Shell Polymers continues to increase activity at its plant site in Monaca. The project’s long term implications regionally for industrial job growth and real estate demand are significant. At this time, demand largely continues to be tied to the construction of the plant. While there are other projects in the works in the Ohio River Valley, it is highly likely any major downstream demand directly related to the Shell cracker will come after the plant is fully commissioned, which is currently scheduled for 2022.

2017 and 2018 saw a return of transactions for service firms supporting the upstream and midstream energy industries. Companies in the energy completing acquisitions of five separate 2018 saw several instances of a space industry’s supply chain have been in buildings totaling nearly 1 million returning to the market being leased the market looking to upgrade and square feet. before the tenant in place vacated. often times, consolidate, facilities to However, it also saw the continuing 2019 is expected to be another active help facilitate growth. The market unexpected vacancy of numerous year for investment sales, with several experienced numerous energy related other buildings and projects across significant projects at various stages of transactions over the past 24 months, the market. the marketing and transaction process. including several BTS projects. A key item to watch in 2019 will be the Regarding scarcity of space in certain Lastly, a final investment decision number of unique buyers that make submarkets, there is some correlation is expected in 2019 for PTT Global successful acquisitions in the market. here tied to limited development Chemical America’s proposed ethane The Pittsburgh market is fragmented opportunities and entitled industrial cracker in Belmont County, OH. The and presents a number of complexities sites in many submarkets. As a result, project did receive an air-permit from from an underwriting standpoint, which the relatively low amount of speculative the Ohio EPA in December 2018, has served local operators and parties construction in the Pittsburgh market although several parties have since filed with significant holdings in the market has been pushed out beyond the core appeals. If in fact the project moves well. As cap rates continue to remain infill markets to the Airport Corridor, forward, as it is expected to, that will low in core markets and Pittsburgh’s Jackson Township north of Cranberry, result in additional long term growth in visibility continues to increase on Beaver County, and Westmoreland the region’s industrial market. a national and global stage, expect County. Even BTS projects, which the pool of groups investing in the currently make up the bulk of space Capital Markets Pittsburgh industrial market to grow. under construction, are largely being pushed to the perimeter markets as One trend in particular from 2018 that Challenges land pricing and availability forces we expect to see carry over into 2019 is tough decisions for users. historic levels of activity in the industrial Several question marks to watch in capital markets. With industrial real 2019 include uneven user demand, One challenge consistently heard estate arguably the darling of the scarcity of space in specific from users of industrial space (and capital markets on a national and global submarkets, limited infill development from developers related to rising scale, and significant compression on opportunities, and users facing construction costs) is the difficulty cap rates in core markets, investors workforce/labor challenges. of finding labor. This spans many are increasingly looking to secondary industries, ranging from manufacturers While overall user demand in the markets with strong fundamentals like to contractors to truck drivers. While market is solid, it is often uneven with the Pittsburgh region for opportunities. workforce questions have been it being concentrated among well STAG Industrial was the most active on the radar for the last few years, located, higher quality properties. buyer in the market in 2018 by far, its importance has increased for

52 DEVELOPING PITTSBURGH | Fall 2018

companies when making real estate decisions. Workforce/Labor questions will be a point to watch in 2019 both from a standpoint of availability and its impact on construction costs.

Summary

Overall, the local industrial market certainly has positive momentum with many indicators pointing in the right direction. Market fundamentals remain AmeriServ Trust And Financial Services Company – Trustee sound, capital remains available for PenTrust Real Estate Advisory Services, Inc. – Investment Advisor additional development opportunities, and the long term implications of the oil and gas industry are very strong. While certain challenges remain, the CONGRATULATIONS long term view of the regional industrial to all the market is overwhelmingly positive. . DP 2019 NAIOP Pittsburgh award winners!

CBRE 600 Grant Street, Suite 4800 Building Solid Investment Returns For Tomorrow Pittsburgh PA 15219 And Creating Union Jobs Today 412-471-9500 For more information call 412-279-4100. www.cbre.com

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Mateo Villa Senior Associate [email protected]

www.developingpittsburgh.com 53 CAPITAL MARKET UPDATE

here has been a measure of end of a three-year stretch of tightening other benchmark lending rates, is more anxiety about the future of interest monetary policy, it’s worth examining influenced by factors outside of the T rates in commercial real estate the alternative investment vehicles to real estate market,” notes Josh Lavrinc, finance since the Federal Reserve Bank commercial real estate to see whether CEO of Callay Capital LLC. “People fly began tightening rates and unwinding there is evidence that cash is being to the 10-year for safety from other its portfolio of mortgage-backed bonds. diverted to other asset classes. investments. That’s obviously going to Three years of steady 25 basis point hikes increase pricing and decrease the yield. by the Fed have had little real impact As of the first of 2019, the answer is no. The current situation is a reflection of on commercial real estate financing. The insecurity about the equity markets since real risk seems to be more psychological With the Federal Reserve Bank adding December. That makes the yield curve than financial. 225 basis points to its Fed Funds rate analysis a little less transparent.” since December 2015, a market for Commercial real estate has become a short-term cash investments has begun Thus far the demand for Treasury widely-accepted major investment asset to return, but investors have not yet bills has not come at the expense of class over the course of the last decade changed their appetite for long-term commercial real estate. Now that the or so. Once the province of the wealthy investments. And it is the long-term Fed has signaled a cessation of its or specialized risk-tolerant investor, investor that drives the allocation of quarterly rate hikes, the risk of asset flight real estate has become a vital part of a funds between stocks, bonds, cash and is reduced, especially since the central diversified portfolio. It is an asset class real estate. bank has also indicated that it is willing that has been vital to yield-seeking to respond to economic sluggishness by institutional investors, like pension funds “The end of last year really spooked lowering rates again. or life insurance companies, during the some people and it looked like the new extended low interest rate environment. paradigm was going to be an interest Corporate bonds have begun to see It would have been impossible for rate above five percent,” says Nick Matt, some upward movement since late 2017. funds such as these to maintain their senior managing director and co-head, But the yield on corporate bonds was distribution obligations since the financial HFF Pittsburgh. “Now we’ve slid back low enough that even a 20 percent jump crisis without increased allocations for to a 270-point Treasury yield and we’re in junk bond yields translated to only commercial real estate. still able to do deals in the mid-fours for an 85-basis point spread over Treasury apartments and a little higher for other bills. These aren’t yields that will send The downside of this heightened commercial properties. It’s silly but there investors selling off REIT shares. On a appetite for real estate has been a is a psychological barrier between 4.99 risk-adjusted basis, yields for commercial diminution of the perceived risk of percent interest rate and a 5.01 percent real estate still outperform corporate commercial real estate. Capitalization rate. As long as we’re in the fours bonds. rates on office buildings have been everyone feels a little better.” compressed to the levels of institutional U.S. stock markets have returned to a warehouses, even though the risk Investment psychology comes into level of volatility that often suggests a associated with office properties has not play in asset allocation. The fact that downturn is looming, although even the declined. The elevated risk of investors ten years is a common financing term 15 percent swings of recent months are chasing more real estate for yield is in for commercial real estate makes the historically normal for equities. After a the creation of a bubble, which inevitably 10-year Treasury note a benchmark for decade-long run that has seen the S & pops. Thus far, however, fundamentals gauging when investment assets might P 500 Index nearly quadruple, however, supporting real estate values have more be shifted to or from real estate. As the there is less new money willing to bet on than justified most investments. At the perception of the Treasury bill as a safe the upside of U.S. corporations. Overseas haven has grown over the markets are even less appealing at the past decade, the demand moment. The Eurozone is at risk of for U.S. treasuries has a significant economic shock from a been driven by factors badly-executed Brexit, and softer EU other than yield. More economies – like Italy’s – have begun to buyers mean lower yields. teeter on the edge of recession. Even the emerging market economies have “For a while we were seen growth pinched since 2015. China definitely tracking the and India are growing at rates below 10-year as an indicator seven percent. Consumer prices in most of future interest rates countries are below the rate of U.S. but anything that acts inflation. There are few, if any, economic as a security is subject environments that are enticing to market fluctuations. investment in I would say that the stock markets. 10-year, as opposed to

54 DEVELOPING PITTSBURGH | Fall 2018 So, while a significant increase in borrowing costs or decline in investment interest would dampen capital flows into commercial real estate, it seems there will be few impediments to financing commercial real estate in 2019.

For construction lending and semi- permanent financing, banks appear to be in a (HVCRE) regulations were softened as relatively low rent growth, less-than- supportive mode. Banks have more than part of the Economic Growth, Regulatory exciting economic prospects, and the recovered from the damage that the Relief, and Consumer Protection Act. general surfeit of transactions. As real financial crisis of 2008 inflicted. As 2019 Enforcement from the Consumer estate began to recover, the steadiness began, total assets in U.S. banks had Financial Protection Bureau has declined of the Pittsburgh market became more risen to $125 trillion, 28 percent higher precipitously. There are still potential attractive than markets that experienced than in 2009. The return on assets for changes pending from the so-called steep declines a few years earlier. banks had risen from 0.1 percent to 0.9 Volcker Rule, but in general the federal The coincidental shift in Pittsburgh’s percent; and the Tier 1 capital-to-asset regulatory environment has eased. But economy into a higher growth mode ratio was 6.7 percent. That’s six times the the impact of easing regulations hasn’t was icing on the cake. Property purchase ratio of a decade earlier. A combination been felt at the local level. prices jumped dramatically overnight, of self regulation and federal regulation as income investors from around the has healed the industry. From all “We’ve not seen deregulation trickle globe found Pittsburgh properties to be indications, bank lending conditions down to our level. As far as softening bargains. have tightened somewhat over the regulations, we have not seen a big past two years, but not so much that change,” says Drahnak. “We are still As 2019 began, there are real estate development has become constrained. looking at the commercial real estate success stories throughout the space with no more or no less interest region for developers and investors “Banks have been disciplined about than we did last year.” from outside Pittsburgh and major their underwriting and their leverage,” development deals in the pipeline. Nick says Steve Drahnak, market president, As enthusiasm for globalization wanes, Matt believes that will help the region Western Pennsylvania, for S & T Bank. there is a growing move away from when a downturn occurs. “I’m not seeing any indications of implementing synchronization of lending problems coming.” and accounting standards, like Basel III, “I know it may sound a little strange to allow individual countries to respond but we’ve gotten ourselves somewhat The Federal Reserve’s Senior Lending to individual economic growth needs. recession proof,” he says. “I think Officer’s Opinion Survey (SLOOS) Within the U.S. there is also an increase Pittsburgh will get as much interest, if reflects the mostly status quo market in state-level regulations that will replace not more, if there is a recession. The for banks. As the business cycle ages, some of the Dodd Frank rules that have issue in our market continues to be lenders are tightening standards on the been relaxed since 2017. the lack of deal velocity. We don’t have categories of loans that have higher a big institutional owner presence in Pittsburgh. We continue to entertain cyclical risks, commercial real estate Most of the conditions impacting investors who want to look at Pittsburgh among them. SLOOS respondents capital markets are macroeconomic in nature. Interest rates, terms and lending because of what they have heard but it’s also saw demand for commercial tough to find a deal here.” and industrial loans soften in the conditions won’t differ widely from market to market. If the global economy fourth quarter. Investors from outside the region may is pushing rates higher, borrowing costs have to be content with participating in Pittsburgh will go higher. What can One of the key factors impacting bank in projects with local developers lending for commercial real estate – vary from market to market, however, that have longer horizons than regulations – remains a barrier. Trump is the amount of capital seeking transactional developers. Administration policy has produced investment. legislation that has reduced some of “Think of all the speculative deals the more onerous regulatory burdens Pittsburgh was not a market that being done. That only happens when and aimed to make compliance less attracted commercial real estate developers are positive and they are burdensome for banks with assets investors from out of town until after able to communicate that to lenders, between $50 billion and $100 billion. the financial crisis in 2008. National because you can’t get a deal done High velocity commercial real estate investors weren’t moved by the city’s without a lender,” says Lavrinc. “In

www.developingpittsburgh.com 55 Pittsburgh right now I feel like things are One of the main drags on lending space in search of higher yields in recent good. You ask about impediments to volume is the decline in the number years. Traditional lenders are pushing lending and I don’t see many.” of maturing loans. Huge CMBS loan leverage higher and non-traditional volumes prior to the financial crisis led sources, like private equity, have Another indication that bumpier markets to five- and ten-year “echo” increases increased allocations for commercial aren’t on the horizon is when those loans matured, primarily real estate to boost yields. the weak demand for higher risk in 2011-2012 and 2016-2017. The peak financing vehicles. years for CMBS loan maturities have Troubles in the retail sector, long a now passed. The volume of maturities favorite for CMBS lending, will continue Uncertainty with the general economy dropped from highs of $136.0 and to increase defaults on loans. In 2019, created a slowdown in deals and CMBS $124.6 billion in 2016 and 2017 to $18.6 there is expected to be increases issuances in the fourth quarter and, as a billion in 2018, according to Trepp, a in defaults in two other segments result, the spreads on CMBS issuances transactional information service. The due to overbuilding. The increases jumped by almost a full percentage volume of annual maturities is set to in delinquency of office and student point. The fact that the 10-year Treasury increase somewhat in 2019 and 2020 housing loans in 2018 will translate bond remained stubbornly below three to about $40 billion, and isn’t going to into higher defaults on loans in those percent helped keep the effective exceed that mark for at least another property types in 2019. interest rate for CMBS competitive five years. with traditional financing. Ultimately, In general, there seem to be few however, competitive rates were not Competition from traditional lending forecasts of dynamic capital markets. enough to prevent a slowdown in the sources has also eroded demand for Underwriting standards are judged to CMBS market. CMBS issuances. CMBS has traditionally be stringent rather than loose. Forecasts been the dominant capital source for for flat long-term interest rates and a flat CMBS volume for 2018 fell below $80 higher leverage loans, since it offered the yield curve are reflections of the difficulty billion, declining from 2017 in a reversal opportunity for higher yields proportional of seeing a clear economic turning of the upward trend. Because of several to the increased risk. In today’s market point. History shows that markets rarely headwinds facing the CMBS market, it’s that would mean loan-to-value ratios of stay calm for very long. Capital market anticipated that volumes will decline in 70 to 75 percent. There has been more indicators are signaling uneasy stability. 2019 by another ten percent. capital moving into that higher leverage That may be the clearest signal available for 2019. DP

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ittsburgh’s office market has been “I think the trend in the CBD is flat,” should be the next available property a beneficiary of the rejuvenation McLaughlin predicts. “It will be flat in later this year but there are upwards Pof the regional economy during the suburban markets too, in some of one million square feet in the the past decade. After years of stagnant markets, maybe worse than flat.” development pipeline. Given the rent, little speculative construction, the success of the District 15 project and McLaughlin pointed specifically at the Pittsburgh metropolitan office market the well-known impatience of tech technology sector as the force driving companies, developers that take the saw growing demand from new sources the higher occupancy levels and rents risk of doing a spec office should be since the Great Recession. Energy, in the urban fringe. He contrasted the rewarded. The question is how many healthcare and emerging technology current technology industry growth truly speculative projects companies have driven office demand to that of the 1990s, when the boom get underway? faster than construction could keep up was driven by startups that ultimately for most of the past decade. The result left town. Now, large tech companies Owners in the Strip, Second Avenue has been office rents that have been on are establishing large presences in and the North Shore are jockeying a steady upward trend. With vacancy Pittsburgh and their site selection to position those properties as the increasing and significant spec projects is focused on the products coming outskirts of a new central business out of the universities. That talent district, but the existing CBD – the in the pipeline, the $64 million question attraction motive is making the lower Golden Triangle – is not quite as hot. facing the office market is: can rent rent and driving convenience of the Large blocks of space have been growth keep up? suburbs less of a factor now. unavailable for a decade in Downtown but that has changed in the past For developers of new speculative “There are properties that are 12 months. K & L Gates Center has projects throughout the city, the struggling a bit. I’m not talking just 200,000 square feet of availability. answer is a hopeful yes. Unlike at about the CBD, but also about the Renovations at One Oxford Centre any time in the past 20 years, there Parkway West and East,” Goetz says. are ongoing but the building is said to are numerous spec office projects “There are some “B” properties in the have as much as 100,000 square feet under construction and in the pipeline CBD where rents in the low $20s are of additional vacant space beyond the for 2019. The performance of spec still doable. And we have landlords 260,000 square feet that are being projects developed during the past in “A” properties getting rents in the marketed. At 525 William Penn Place, few years suggests that occupiers high $30s, especially from companies Pearson Partners is investing heavily have pent-up demand that hasn’t coming here from out of town. If but some 600,000 square feet of been met. Long-time observers of the I’m in one of those “A” properties do vacant former BNY|Mellon space will market have been surprised by the I really need to pay $12 or $13 more need to be backfilled. vigor of the office market and in rent? Well, maybe, if I need to be aren’t prepared to bet against there for recruiting talent.” Thus far, the only significant continued growth. new-economy occupier that has Goetz cited the examples of Evoqua embraced the CBD is UPMC, having “These are the highest rents and Bombardier as clients that were expanded their footprint by another I’ve ever seen,” says Tim Goetz, in suburban locations, with ample quarter-million square feet in the managing principal of Cushman & free parking, but which found the past 18 months. The energy sector Wakefield|Grant Street Associates. suburban headquarters weren’t has not leased in the city. And the attractive to the talent that was going emerging technology industries have Jerry McLaughlin, executive managing elsewhere to work. thus far located near their university Let’s Build director for Newmark Knight Frank, partners or in urban areas along the also expresses optimism about “Look at Robotics Row. They are Monongahela and Allegheny rivers. It the upward trend for rents, with getting near $40 per square foot for would be difficult for tech companies one reservation. McLaughlin sees the new development,” he notes. to locate high-bay research the demand for space and almost “Tech employees are looking for live/ Downtown but, for office or research immediate absorption in the urban work/play locations, so the employers in software or artificial intelligence, fringe neighborhoods as far from are willing to pay more in rent if they Downtown’s office buildings over. He points to the quick lease-up want to attract talent.” are suitable. of District 15 and 3 Crossings as examples of how developers will be The Strip District may become the “At some point, the technology sector able to justify higher rents for the litmus test for the Pittsburgh office will discover and utilize Downtown www.pjdick.com next projects. At the same time, the market. There is little or no office office space, its public transit, fundamentals in Pittsburgh’s other space available and nothing under restaurants, multi-family, and overall sub-markets aren’t as exciting. construction at the moment. Oxford A Drug-Free Equal Opportunity Employer walkability,” says Jason Stewart, Development’s Stacks at 3 Crossings executive vice president, director of

www.developingpittsburgh.com 59 years

GRANT STREET ating

ASSOCIATES, INC. elebr 25 c

GSA I F P A PG PM agency leasing at JLL. “Tenants chase “There’s a reason the Parkway West Robinson Township headquarters will existing inventory, and the most is the largest office submarket. There only add to the office inventory. The existing inventory right now is in are companies that still need to be in average Class A rate is $23.50 per the CBD.” close proximity to the airport and the square foot, about $4.50 less than I-79 corridor. But those companies the rent at the Boardwalk. Demand That available inventory is at least part have the same demands for attracting for new space is justifying higher of the reason that two notable lease and retaining talent,” Scalo says. rents in properties like Nova Place, deals were done with technology “Smart, well-run companies are on the North Side, and PPG Place, companies Downtown. Microsoft’s creating environments that make Downtown, which have had major 10,000 square foot space in Liberty their people want to come to work. upgrades and makeovers. Center was recently completed Walkability is a key ingredient, even in and Elite Transit Solutions agreed in the suburbs. Employers want amenity- Those same dynamics have proven February to take 31,500 square feet in rich buildings. They want buildings to be true in Pittsburgh’s hotter the renovated Frick Building. that enhance their investment in submarkets, where new construction technology and people. We can do has commanded higher rents Hot urban fringe and Downtown that in new construction. The rent than the existing space. Even in properties may be getting most becomes a secondary consideration space-constrained Oakland, with of the press for the escalating in the selection process.” its three percent vacancy rate, new rent conditions, but the trend is construction has commanded as not confined to the city. Burns & Burns & Scalo’s first 105,000 square high as 20 percent above the $30 per Scalo Real Estate Services has been foot building at Boardwalk is under square foot average rent. developing spec buildings in the agreement at $28 per square foot, a Parkway West and I-79 corridor with rate that easily tops the market in the Goetz also credits the developers that success during the past five years Parkway West. have come to Pittsburgh over the past or so. The most recent deals the five years or so with raising the bar on company has reached – particularly Those rents underscore the office expectations. at its new Boardwalk campus in North correlation between new and existing Fayette Township – have been for office product. The fundamentals “The owners from out of town have rental rates that are above the market of the Parkway West are hardly been willing to put their money where with aggressive annual increases. supportive for rent growth. According their mouths are. They aren’t taking Jim Scalo sees the motives of those to Newmark, the vacancy rate for a ‘wait and see’ attitude, but are occupants as similar to those renting space for rent in the Parkway West upgrading their properties and getting in the Strip or Oakland, but with a submarket was 18.8 percent at year’s higher rents,” Goetz says. “Take slight difference. end. Bayer’s decision to vacate its Shorenstein, Faros, Highwoods and Davis Companies. They are making investments and expect to get higher rents. They have created properties where tenants are willing to pay the rent.”

The answer to the question of whether or not rents will continue to climb seems to be an unqualified “it depends.” Like with most things real estate, it depends on location. More than any other factor it depends on whether the property is new or newly renovated, or not. For a time anyway, the rising tide of Pittsburgh’s economic success may no longer be lifting older Class B buildings. For those looking to build new or add value to a well-positioned neglected property, the rent growth trend still has some legs. DP

www.developingpittsburgh.com 61 BUILDING EXCELLENCE AT EVERY LEVEL

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What is your observation about the amount of investor capital or investor interest in Pittsburgh real estate relative to the past few years?

Autumn Harris J.C. Pelusi Claire Lobes Owner Market Director Hosteny Rose Finance LLC JLL Partner East End “It is my “Pittsburgh has Development observation that received a lot of Partners investor interest attention in the in the Pittsburgh past several years “From my market remains from outside perspective as strong. I think investment. a developer in that the most Looking back, in the East End of compelling depiction of this is that 2016 we saw a peak in total sales volume Pittsburgh, we are experiencing more outside investors who have invested of office, industrial, retail and multifamily interest from outside investors than ever within the Pittsburgh market over the at nearly a billion in total sales. In 2017 before. This surge of interest has been past few years continue to do so. A and 2018, total sales were a little less, generated both by national exposure BUILDING EXCELLENCE AT EVERY LEVEL notable example is McCaffrey. They but still relatively high compared to from local developers soliciting out of completed the historic re-use of the prior years. town investment for projects and by Cork Factory in 2006. This was one of out of town developers bringing new the first projects to be completed in Out of all the asset verticals, the most investors to the Pittsburgh market. I think OUR EXPERTISE Pittsburgh’s modern day renaissance pronounced spike in outside investment commercial brokers have also played a WE SOLVE PARKING and certainly one of the first in the sales volume was in CBD in 2016. That key role helping developers access the • New Construction renaissance of the Strip District. Fast year, One Oxford, Centre City Tower, national markets. Carl Walker Construction is the premier contractor for all your parking forward to today and this Chicago-based 420 Boulevard of the Allies, 525 William • Horizontal/Vertical Expansions Pittsburgh real estate deals offers good facility needs. We offer sustainable design, new construction/expansion, investor continues to modernize the Strip Penn Place and Liberty Centre all sold • Concrete Repair & Replacement District with the recently announced to investors from other cities. Last year, returns, a stable market without the restoration and preservation, as well as specialty concrete know-how, Produce Terminal project. This five- office investment sales took a breather, volatility of the coasts, and the typical • Traffic Coatings/Sealers block mixed-use project is projected which was to be expected. After the influx deal size is small enough to appeal to a through self-performed, single-source solutions, to exceed every new variety of investors that might not have • Expansion Joints/Sealants to result in a $100 million revitalization, of outside investment, new ownership project challenge. inclusive of construction and community has begun adding capital into their new enough money to be competitive in • Post-tensioning improvements. McCaffery is not alone. assets. Now we are entering the stage more expensive markets. However, some Over hundreds of projects, from conception to completion, we have Other out of town investors that entered where investors are evaluating the returns, national partners want to write checks • Maintenance Packages the Pittsburgh market over the past few but also available inventory is limited.” that are more appropriate for the size of demonstrated a commitment to quality, building an industry standard coastal deals but are too big for a well • Infrastructure Deterioration years continue to invest including, but that few others can achieve. Our experience, technical capability, proven certainly not limited to: Red Rocks Group constructed local deal. Sometimes local partners cannot write big enough checks resources, and a genuine passion for our work, continues to keep us • External Strengthening Systems from Philadelphia who completed their first multi-family project in 2014 and to get the big deals done. Therefore we BUILDING EXCELLENCE AT EVERY LEVEL™. • Stadium Rehabilitation are investing in two more buildings in need a balance of local and national partners to access all the financing tools • Carbon Fiber Reinforcement 2019; Chicago-based, M&J Wilkow; New York-based Faros Properties and New required to serve a dynamic and growing Jersey-based Rugby Realty. I think that real estate development market.” investor capital will continue to grow in the Pittsburgh real estate market relative to the last few years.” CARL WALKER CONSTRUCTION 935 VISTA DRIVE PITTSBURGH, PA 15205-1218 P: 412.490.2924 | F: 412.490.2928

CARLWALKERCONSTRUCTION.COm www.developingpittsburgh.com 63 Jason Campagna Anthony Rossi Jessica Jarosz Managing First Vice Executive Vice Director/Senior President President Advisor CBRE Capital Century Realty Markets LLC SVN | Three Rivers Commercial “2018 was a “I have been Advisors strong year for involved with 1031 investor interest exchange buyers “We have seen in Pittsburgh, a that sold property increased interest trend I expect in California from outside markets, both nationally to continue in 2019. Despite some and exchanged into higher CAP rate and internationally. We have several volatility in the global financial markets, properties in our region. foreign investment groups looking at our Commercial Real Estate Assets in market right now at projects that are not Pittsburgh continue to have strong relative I believe a lot of the outside investors major deals, but are in the $5 million to value compared to other MSAs in our are already here in Pittsburgh and are $10 million dollar range. Two-thirds of peer group. This relative strength results continuing to grow their real estate everybody we see looking at investing in from a stable underlying employment portfolio here. Globally, yes, outside Pittsburgh is either a 1031 exchange from base rooted in the Education, Medical and investors are continuing to invest in a primary U.S. market or it’s a Financial Sectors. Further strengthening commercial real estate. As compared foreign investor. the market is a growing Technology and to a few years ago, I think our market is Robotics Industry that continues to garner currently stable and will continue “I think local investors are being priced out national headlines. to attract investors, especially with the of the market. I always go through the list new Qualified Opportunity Zones in of transactions for the year to reach out Pittsburgh’s relative strength is not our region.” to buyers who I don’t know and there are only consideration for buyers of real a lot of new names on the list. I think the estate, but providers of debt capital as trend continues to be that in the primary well. Liquidity remains strong for well markets, although they are starting to positioned development projects with plateau, investors need to cash out and qualified sponsorship. For projects seeking re-deploy their capital. The Pittsburgh a permanent financing solution, the market may look to the local investors secondary market remains healthy and that prices are bubbled up, but that’s not competitive. Freddie Mac, Fannie Mae and the case.” FHA/HUD continue to provide excellent non-recourse options for multifamily projects and Life Insurance Companies, Conduit (CMBS) Lenders, and other boutique capital markets firms provide capital across all asset classes.

All these facts considered, it is no wonder why Pittsburgh ends up on the short list for investors looking to safely deploy capital as we enter the late stages of a historically long expansionary cycle.”

64 DEVELOPING PITTSBURGH | Fall 2018 SIOR of Western Pennsylvania would like to extend

Congratulationsto all of our 2019 award winners for Top Commercial Real Estate Deals of 2018 WESTERN PENNSYLVANIA CHAPTER

Office Lease of the Year – CBD Investment Sale of the Year 1001 Liberty Avenue - 37,600 SF Office/Suburban/Stabilized Jeremy Kronman, SIOR & 501 Technology Dr. Tim McCarthy of CBRE Mark Popovich, SIOR & Nick Unkovic Tripp Merchant & Carmine DiLucente of CBRE Investment Sale of the Year Office Lease of the Year – Fringe Office/Suburban/Speculative D15trict Fifteen (D15) - 101,000 SF 4350 Northern Pike Carmine DiLucente & Pat Greene of CBRE Gerry Dudley, Dan Sliger, Kyle Prawdzik & Brendan Bash Randall McCombs, SIOR & Sam McGill of Cushman & Wakefield | Grant Street Associates Investment Sale of the Year Industrial/Single Tenant Office Lease of the Year – Suburban 200 Simko Blvd. 100 Beecham Drive - 50,500 SF Louis V. Oliva, CCIM, SIOR of Newmark Knight Frank Jeremy Kronman, SIOR & Adam Viccaro of CBRE Investment Sale of the Year Robert Geiger of Industrial/Multi Tenant Cushman & Wakefield | Grant Street Associates Keystone Commerce Center Richard Gasperini & Mateo Villa of CBRE Office Lease of the Year Bakery Square - 208,000 SF Investment Sale of the Year Jeremy Kronman, SIOR & Andrew Miller of CBRE Industrial/Speculative Dan Adamski, SIOR, Nick Francic, & Schreiber Industrial District Mike Nelson of JLL Richard Gasperini & Robert Blackmore, SIOR of CBRE

Office User Sale of the Year Land Sale of the Year – Industrial 420 Blvd of the Allies Findlay Industrial Park Jason Stewart & Jeff Adams of JLL Louis V. Oliva, CCIM, SIOR of Newmark Knight Frank Jeremy Kronman, SIOR & Gerry Dudley of CBRE SIOR Co-Broker of the Year - Office Industrial Lease of the Year - Light Industrial The Freight House 663 Avenue A Jeremy Kronman, SIOR & Adam Viccaro of CBRE Brian Goetz of The Buncher Company Patrick Sentner, SIOR & Amy Broadhurst, CCIM, SIOR of Louis V. Oliva, CCIM, SIOR of CBRE Newmark Knight Frank SIOR Co-Broker of the Year – Industrial 149 Devereaux St. Industrial Lease of the Year – Warehouse Jack O’Donoghue, SIOR, Evan Cicirello, & John Jackson of Starpointe Blvd. Cushman & Wakefield | Grant Street Associates Richard Gasperini of CBRE Emerging Office Broker of the Year Industrial User Sale of the Year Geoff Greco of JLL 120 Beta Drive Robert Blackmore, SIOR & Mateo Villa Emerging Industrial Broker of the Year Jeff Prunzik & Chris Garrity of NAI Pittsburgh Mateo Villa of CBRE Investment Sale of the Year CBD 601 Grant Street For more information about earning your SIOR designation, Greg Broujos or Colliers Pittsburgh contact : Diane McQuade | SIOR of Western PA | Chapter Administrator Phone: (412) 391 2634 • [email protected] setting the performance standard for 25 years

One Call. One Source. Complete Satisfaction. Burchick Construction Company, Inc. 500 Lowries Run Road • Pittsburgh, Pennsylvania 15237 Telephone: 412.369.9700 • Fax: 412.369.9991 • www.burchick.com News from the Counties

LAWRENCE

NEW CASTLE

BUTLER

BUTLER

KITTANNING BEAVER ARMSTRONG

BEAVER INDIANA

INDIANA

ALLEGHENY

PITTSBURGH

WESTMORELAND

GREENSBURG

WASHINGTON

WASHINGTON

Local workers and companies are capitalizing on that success. Our unemployment rate recently reached an historic low, and we’ve become a leader in health care, finance, education, FAYETTE manufacturing, arts and culture, and emerging sectors such as robotics, artificial intelligence, WAYNESBURG UNIONTOWN autonomous vehicles, and clean energy. GREENE Our businesses and renowned colleges and universities are training the next generation of innovators, attracting young people and companies to our area as well as enticing our current residents to stay.

Those drawn here quickly see why longtime residents love this area so much. Allegheny County is one of the most affordable places to live, work, and play in the country. And whether Allegheny County it’s our emerging culinary scene, numerous arts and cultural amenities, one-of-a-kind Allegheny County Economic Development museums, or beautiful and accessible trails and One Chatham Center parks, there’s something for everyone in this 112 Washington Place, Suite 900 vibrant region. Pittsburgh, PA 15219 412-350-1000 (T) Our cutting-edge airport and public transit system 412-642-2217 (F) are making it easier to get to those attractions. Lance Chimka, Director A $1.1 billion terminal modernization project is in the works at Pittsburgh International Airport, [email protected] which continues to add national and international www.alleghenycounty.us/econdev nonstop destinations through carriers that see the importance of connecting our region to the By working together and investing in our local communities, Allegheny rest of the world. The Port Authority, meanwhile, County continues to thrive, and our institutions, amenities, and overall is embracing new technology and enhancing the quality of life are grabbing attention and accolades across the world. experience of riding on our buses and light-rail From our robust economy to our expanding transportation options, system, which helped it buck an industry trend we’re experiencing widespread success and have positioned ourselves and increase ridership last year. It’s also developing for sustained growth. a Bus Rapid Transit line between the area’s two largest job sectors.

www.developingpittsburgh.com 67 Allegheny County Economic Development is playing a big part in this region’s growth by making significant and strategic investments. Its Allegheny Together program offers technical assistance and planning resources to communities interested in working to revitalize their main street corridors. Its Allegheny Grows program, in partnership with the Western ALLEGHENY COUNTY Pennsylvania Conservancy, is further beautifying the area. Over the course of two years, the program has provided ECONOMIC DEVELOPMENT materials as well as technical, organizational, and educational …COORDINATING SUCCESS support to garden groups throughout the county. Vital investments in transportation and recreation are also The tremendous quality of life we enjoy taking place. Now in its third year, the Active Allegheny in Allegheny County has been getting a lot program is supporting the implementation of projects that of attention. Just in the past few months, will provide bicycle and pedestrian connections to important the Economist Intelligence Unit ranked community destinations and transportation systems, such as the Pittsburgh area as the most livable in trails and transit routes. Last year, related projects included the continental United States, and Forbes planning of segments of major trail corridors, such as on the wrote about this region’s “contagious Three Rivers Heritage Trail and the Montour Trail. Overall, the charm.” We’ve also received accolades from program has awarded $581,667 to 24 different projects. various publications recently about our growing culinary scene, world-class airport, Through public and private partnerships, including those abundant and beautiful parks and trails, involving Economic Development, this region is continually exceptional schools, and more. discovering new and innovative ways to grow and prosper. When you consider that we also boast Our ability to work hard and collaborate will no doubt help plenty of job opportunities in technology, us build on our accomplishments and pursue a future full of education, health care, banking, arts and promise and prosperity for all who choose to call Allegheny culture, tourism, energy, and other sectors, County home. and we have one of the lowest costs of living in the country, it’s easy to understand why so many businesses and young people have Armstrong County decided to relocate here. Yet there remain challenges to making sure Armstrong County Department of Economic Development that all residents reap the benefits of living Northpointe Technology Center Center II here, including the need for additional 187 Northpointe Boulevard housing, human service programs, Freeport, PA 16229 infrastructure upgrades, and workforce 724-548-1500 (T) development and training. By working 724-545-6055 (F) together with partners, Allegheny County Michael Coonley, Executive Director Economic Development is making significant [email protected] investments to meet those needs. www.armstrongidc.org Through collaboration, we will ensure that everyone – regardless of their social and Several economic development projects moved toward economic backgrounds – can take advantage completion in Armstrong County during the latter part of everything Allegheny County has to offer. of 2018. Chesapeake Controls, Inc., headquartered in Chesapeake, Virginia, opened their Pittsburgh division, Allegheny Technology in Northpointe Technology Center II, a multi-tenant office building owned and operated by the Armstrong County Industrial Development Council. Allegheny Technology and Chesapeake Controls provide professional HVAC services, integrated Building Automation Systems and energy related solutions to optimize building comfort, lower energy usage and proactively reduce equipment downtime. Chesapeake Controls is the largest independent provider of Honeywell Building Automation Systems in Virginia.

Rich Fitzgerald Britt Energies, Inc., a veteran owned and operated aggregate County Executive company, recently secured low-interest loans for their new operation, South Bend Limestone Company. The loans, ALLEGHENY COUNTY through various county, regional, state and federal low- ALWAYS INSPIRING interest loan programs, were used to purchase machinery and equipment and construct an aggregate testing facility Lance Chimka, Director Economic Development One Chatham Center – 112 Washington Place – Pittsburgh, PA 15219 412.350.1000 – www.alleghenycounty.us/econdev

68 DEVELOPING PITTSBURGH | Fall 2018 Board of Directors NAIOPDonald Pittsburgh Smith Jr., President Officers DavidRegional Weisberg, Industrial President BNYDevelopment Mellon Corporation DonaldJamie Smith White, Jr., Vice Vice President President RegionalLLI Engineering Industrial DevelopmentTony Rosenberger, Corporation Secretary TylerChapman Noland, Secretary Properties PenTrust Real Estate Advisory Services Inc. Valerie Voss, Treasurer ValerieBDO, Voss, USA Treasurer BDO David Weisberg, Past President BrianBNY Walker, Mellon Past President Millcraft Investments Inc. Brian Walker, National Board Domenic Dozzi, Corporate Board JendocoMillcraft Real Investments Estate Jamie White LLI BoardEngineering of Directors at Large Gregory Quatchak, National Committee CivilCecelia & Environmental Cagni Consultants Allegheny Conference on LouisCommunity Oliva, Advisory Development Board Liaison Newmark Grubb Knight Frank John Deklewa RDC Design+Build, Inc. BoardAlyssa of Kunselman Directors At Large Mascaro Cecilia Cagni AlleghenyTyler NolandConference on CommunityPenTrust Real Development Estate Advisory Services LindaRyan Fisher Schwotzer FarmersCrossgates Bank Inc. MaureenAnthony Ford “Tony” Rossi AlcoaCBRE Tony Rosenberger Jason Stewart Chapman Properties JLL Izzy Rudolph McKnightBrandon Realty Snyder Partners Al. Neyer Ryan Schwotzer CrossgatesMichael Inc. Takacs Bohler Engineering Jason Stewart JonesJim Lang Ambrose, LaSalle DL Representative Learn more about NAIOP, the Commercial Real Estate Development LarryDesmone Walsh Architects NAIOP in the western Association, is the leading organization for developers, RugbyPatricia Realty Farrell, Legal Counsel Pennsylvania tri-state region owners and related professionals in office, industrial JamieMeyer White Unkovic & Scott LLP LLI Engineering at naioppittsburgh.com and mixed-use real estate. NAIOP provides Anthony Rossi, DL Representative or 412-928-8303. unparalleled industry networking and education, and CBREAdvisory Capital Markets Board advocates for effective legislation on behalf of our PatriciaDavid Farrell, Weisberg Legal Counsel MeyerBNY Unkovic Mellon & Scott LLP members. NAIOP advances responsible, sustainable Brian Walker development that creates jobs and benefits the AdvisoryMillcraft Investments Board communities in which our members work and live. Dan Puntil SteveGrandbridge Thomas Real Estate Capital Chapman Properties Steve Thomas PeterChapman Sukernek Properties Hanna Langholz Wilson Ellis Paul Griffith PaulNewmark Griffith Knight Frank Integra Realty Resources Inc. Lou Oliva David Massaro MassaroNewmark Properties Knight Frank ThomasBarry Murphy Ford For more information on how you can develop JendocoContinental Real Estate Real Estate connections with commercial real estate through NAIOP, Dick Donley visit us online at www.naiop.org or call 800-456-4144. Richard Donley CranberryChaska Business Property Park Advisors, Associates Inc.LP Lynn DeLorenzo TARQUINCoRE, LLC at the new limestone mine in Armstrong County. The mine and aggregate crushing Beaver County Butler County operation, which opened in June 2018, currently employs eleven, and will create Beaver County Corporation for Community Development Corporation five new jobs over the next three years. Economic Development of Butler County Participants of the loan package, totaling 250 Insurance Street, Suite 300 112 Hollywood Drive #102 $1,050,000, included: Armstrong County Beaver, PA 15009 Butler, PA 16001 Industrial Development Council Revolving 724-728-8610 (T) T: 724-283-1961 Loan Fund; Catalyst Connection 724-728-3666 (F) F: 724-283 3599 Manufacturing Technology Loan Fund; James Palmer, President www.butlercountycdc.com Pennsylvania Industrial Development [email protected] Joseph Saeler, Executive Director, Authority (PIDA); and Southwestern www.beavercountyced.org [email protected] Pennsylvania Commission (SPC) Revolving Loan Fund with support from the Appalachian Regional Commission Mount Airy Pittsburgh announced its Butler County continues to attract new (ARC) and U.S. Economic Development intention to build a mini-casino in Big business as Mr. Medical Solutions, LLC Administration (EDA). Operations have Beaver Borough. The casino will be built recently purchased 2.553 acres at the commenced on 16 acres of surface on a 100-acre site at the intersection of Pullman Center Business Park Expansion. mining which is expected to produce I-76 and I-376. Plans include additional The company plans to build a 10,000 high-quality aggregates for up to five entertainment and recreational facilities square foot manufacturing facility on the years. Upon the completion of all surface as subsequent phases of development. parcel. Groundbreaking will get underway mining, operations will proceed on an The company expects several hundred this spring with a winter, 2019 completion underground mining phase. The current construction jobs and upwards of 700 date projected. Once completed the underground leasehold totals 950 acres. permanent jobs at the site once the firm will bring 30 new employees to Utilizing standard underground mining casino and complex are fully built. The Butler County. techniques, this acreage will yield in excess of 40 million marketable tons. casino will have 750 slot machines, 30 gaming tables, and include a sports bar Two new grocery stores have recently In December 2018, Senator Don White and restaurant. Mount Airy Pittsburgh opened in Butler County. A Save-A-Lot (PA-41st) joined other state, local and was the successful bidder on the license grocery store opened at the Pullman county officials as they celebrated offered by the Pennsylvania Gaming Square in the City of Butler. The Butler the completion of the Kittanning Control Board in February 2018. The Big location is the first corporately owned Market Street revitalization project. The Beaver location was selected over several Save-A-Lot in Pennsylvania. The 19,000 streetscape project took more than five competing sites. Subject to final approval square foot store offers fresh cut meats, years, four phases and close to $7 million by the Gaming Control Board, Mount Airy fresh fruits and vegetables and a full line to complete. The scope of the completed Pittsburgh hopes to open the casino in of groceries. It will employ between 15 work included removal and relocation of late 2019. and 30 people. A Fresh Thyme grocery overhead utilities, sidewalk replacement, store recently opened in the Cranberry construction of safer pedestrian crossing Millcraft Investments is constructing a Commons Shopping Center. The grocer areas, decorative historic-style street lights Hilton Garden Inn in Center Township. is based in the Midwest but has recently and mast-arm traffic signals, new street trees and landscaping, implementation of The 140-room facility will include a 3,000 expanded into Western PA with other two-way traffic on Jefferson and McKean square foot conference center/events locations in Pleasant Hills and Bridgeville. Streets, street resurfacing and signage. room that will accommodate up to 200 The chain’s goal is to make healthier people and a full-service restaurant. It products more attainable for members Also worth noting were the infrastructure is expected to open in May 2019. This of the community. projects completed in Armstrong is the ninth hotel to locate in Center County in 2018. The projects included Township and the second for Millcraft, The CDC has parcels available at both the water treatment plant upgrades (Ford which completed and opened a 107 room Victory Road Business (Clinton Township) City Borough), street reconstruction Home2Suites in Center in October 2017. and the Pullman Center Business Park (Kittanning Borough & Manor Township), Expansion (Butler Township and the City water line extension (Manor Township), The Beaver County Corporation for of Butler). If you are interested in parcels and water line replacement (West Economic Development (CED) sold at either of our business parks please Kittanning Borough) totaling in excess of its 67,000 square foot facility in New contact Executive Director Joe Saeler at $4.5 million utilizing CDBG, PENNVEST and other funding sources. PennDOT Brighton Borough and Pulaski Township (724) 283-1961. You can also view sites designed and or completed numerous to Creekside Springs, LLC. Creekside and buildings available for sale or lease bridge replacement projects throughout had been a tenant of CED at the site in Butler County by visiting the CDC the county, in addition to the almost since 2012. Creekside is a private label website, www.butlercountycdc.com. $11 million Route 422 realignment/ and contract packager of water-based relocation project located two miles east beverages. Acquisition of the property of Kittanning. solidifies the Creekside’s position as the company continues its rapid growth. For information about the services offered Creekside has been the beneficiary of by the ACIDC, or to search available land two major equipment financings at the and buildings in Armstrong County, visit site by CED and the Commonwealth of http://www.armstrongidc.org. Pennsylvania over the past several years.

70 DEVELOPING PITTSBURGH | Fall 2018 was involved. NiSource/Columbia Gas, participants. New to the program this year Fayette County Boeing and Contact US all expanded is a partnership with Penn State Fayette their facilities with projects totaling campus in which participants in the Fay-Penn Economic Development almost $2.8 million. Fayette Leaders Academy can earn up to Council 4.8 continuing education units. The group 1040 Eberly Way, Suite 200 Fay-Penn was able to give Fayette County also has chosen a service project assisting Lemont Furnace, PA 15456 businesses more than $35,000 to assist in the East End United Community Center 724-437-7913 (T) providing paid internships. Ten businesses in building a basketball court, fencing and 724-437-7315 (F) were given about $3,500 each to provide purchasing play equipment. Recruitment www.faypenn.org internships that are intended to result in a will soon be underway for the fifth cohort. Bob Shark, Executive Director, bobs@ possible permanent position. This funding faypenn.org was made possible through a Fayette Fay-Penn Economic Development County Local Share Account grant. Fay- Council assists in growing and diversifying In the last six months of 2018, Fay-Penn Penn is seeking additional funding to be the economy in Fayette County, Economic Development Council, able to continue this great program. Pennsylvania. We desire to be the through its ongoing $15 million revolving pre-eminent “1st stop shop” economic loan fund, approved two loans totaling The Fayette LaunchBox, which is development organization in Fayette $100,000 with $75,000 in pending an initiative of the Invent Penn State County by providing comprehensive loan closings. With this financing, area program, is a partnership between Penn business development services through businesses were able to get start-up State Fayette – The Eberly Campus and our staff or partners to make our clients funding as well as financing for projects Fay-Penn. The 6,000 square foot state-of- more competitive in a global marketplace. including building acquisitions and the-art incubator/accelerator/co-working renovations. Those businesses have space currently houses two tenants. Fay-Penn’s ultimate objective is to sustain projected creating or retaining 20 jobs These businesses have been able to take a supportive environment for business as a result of the funding. Economic advantage of Fay-Penn services such start-up, expansion, and attraction. investment of these projects total more as government contracting assistance than $665,000. and trainings.

Additionally, there were three large The Fayette Leaders Academy started expansion projects in which Fay-Penn its fourth cohort in September with 12

BUILDING THE ECONOMY Creating a Strong Foundation for Continued Growth

SERVICES PROVIDED: • Site Selection • Technical Assistance • Affordable Business/Industrial Site for Sale • Office/Warehouse Space for Lease • Competitive Financing Packages • Workforce Development If you are interested in starting or growing your business in our region, please contact us... we would be happy to help!

www.developingpittsburgh.com 71

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

The gas and oil industry continue to drive the economic engine in Greene County. The continued resurgence of the coal mining industry through CONSOL Energy, Inc and Contura Energy over the past few years additionally provides economic growth opportunities by way of employment and its corresponding supply chain. Come network with the WVU Medicine, which commenced construction in the second quarter of 2018 on a 24,300 square commercial real estate industry’s foot facility in Franklin Township, continues to finest! grow its foot print on the site with a 2019 opening. Sheetz opened its third Greene County location We hope to see you soon at one in the fall with a site along SR 0021 in Franklin Township. Arby’s was successful in its grand of our luncheon panels or other opening in Waynesburg during the third quarter exciting events. of the year. In December, Dunkin Donuts premiered its first Greene County operation also along SR 0021 in Franklin Township adjacent to the I-79 interchange.

Equitrans Midstream completed a 29-acre purchase in EverGreene Technology Park for a Save the Dates $100 million compressor station project to be completed in the fourth quarter of 2019. March 21 Connect with CREW NexGen, a Greene County construction company, Top Golf Pittsburgh completed a purchase of eight acres, also in EverGreene Tech Park, for a new headquarters April 29 Annual Golf Event and building location to house its 100 person operation. South Hills Country Club Ryerson Station State Park in the western part of Greene County had plans approved for a new Quality. Excellence. Integrity. June 21 Annual Sporting Clays Shoot swimming pool, a new water spray ground and Seven Springs bath house, upgraded parking facilities and road upgrades to the state park. For 67 years, A. Martini & Co. has been July 18 Connect with CREW GMS Mine Repair and Maintenance location in Mt. providing construction management and Morris was approved for an addition to construct a TRYP Hotel rooftop simulated mine facility to train new coal miners. general contracting expertise to meet your Over Eden Mackin Engineering completed work on the new project needs. Municipalities Planning Code required for the Greene County Comprehensive Plan that requires updating every 10 years with final adoption slated www.amartinigc.com | 412.828.5500 for the first quarter of 2019 Oxford Athletic Club Photography by: PCGRE www.crewpittsburgh.org [email protected]

72 DEVELOPING PITTSBURGH | Fall 2018 Quality. Excellence. Integrity.

For 67 years, A. Martini & Co. has been providing construction management and general contracting expertise to meet your project needs. www.amartinigc.com | 412.828.5500 Oxford Athletic Club Photography by: PCGRE The Pennsylvania Industrial Development Borough, Koppel, Perry, Wayne, Franklin, Indiana County Authority (PIDA) provides low-interest North Sewickley and Jackson Townships loans and lines of credit through certified in Lawrence County Beaver Counties. The Indiana County Center for Economic economic development organizations daily capacity will be expanded from 5.2 Operations for eligible businesses that commit to million gallons to 8 million gallons and 801 Water Street creating and/or retaining jobs in addition will be expandable to 16 million gallons Indiana, PA 15701 to the development of industrial parks with further construction. 724-465-2662 (T) and multi-tenant facilities. Contact Angela 724-465-3150 (F) Campisano, Economic Development Another exciting economic development Byron G. Stauffer, Jr., Executive Director Specialist, Indiana County Office of project in Lawrence County is the [email protected] Planning & Development, 724-465-3873. Ellwood Group’s construction of a new www.indianacountyceo.com 110,000 square foot, stand-alone building near the former A-Space in New Castle. Philadelphia-based retailer, Urban This $60 million project will house a steel Outfitters, Inc. (URBN) which operates Lawrence County re-melt operation for high alloy steels more than 600 stores globally, purchased Lawrence County Economic serving the aerospace and nearly 48.5 acres from the Indiana County Development Corporation defense markets. Development Corporation (ICDC) to 100 East Reynolds Street construct a 750,000 square foot fulfillment Container Services, Inc (CSI) of Plaza South, Suite 100 center at the Windy Ridge Business & Hillsboro, Kansas recently purchased a New Castle, PA 16101 Technology Park in Indiana County, 45,700 square foot facility from Wish 724-658-1488 (T) creating 225 permanent full-time jobs. In Development located in the Neshannock 724-658-0313 (F) preparing the site, the ICDC utilized various Business Park. CSI manufactures plastic Linda Nitch, Executive Director state programs including Redevelopment containers designed to meet the specific [email protected] Assistance Capital Program (RACP), requirements for a variety of packing www.lawrencecounty.com PENNVEST, Commonwealth Financing industry needs. This new facility will Authority Multimodal Transportation Fund serve customers in Ohio, Michigan and The Lawrence County Regional Chamber (CFA MTF), PennDOT MTF, and provided Pennsylvania. CSI will start with two shifts and Economic Development Corporation matching loan funds through local public at this location and may employ as many are ‘transforming lives’ as part of their and private bank sources. They will invest as 75 workers. $30 million into developing the fulfillment shared mission. We have begun to center. In addition to the 225 permanent accomplish this task by creating a new New York Blower put the finishing positions, as many as 600 temporary Leadership Lawrence County program. touches on their 30,000 square foot $4.7 construction jobs are expected to be Seventeen individuals from a variety million expansion project located in the created. The project began in October and of industries are participating in this Shenango Commerce Park. The addition the initial phase of the fulfillment center is nine-month program that includes the will increase the company’s facility to expected to open in the third quarter completion of a class project, mastering 45,000 square feet and will retain 18 jobs of 2019. six University of Georgia Fanning Institute and create 22 new full-time jobs. New training modules, and familiarizing York Blower is based in Willowbrook, Il A local steering committee comprised themselves with various locations in the and specializes in manufactured fans and of a variety of community partners, county. This is a first step in creating a blowers for the industrial and original including local government, IUP Penn vibrant group of leaders for the county equipment manufacturing marketplace. State Extension, and Mahoning Creek and the region. Far received technical assistance for Recent private investment in the county Steelite International is well underway agriculture and food production. The totals over $1 billion. The largest project with its expansion project in Millennium Sustainable Economic Development Task currently underway is Hickory Run Power Park, Neshannock Township. The Force wants to show aspiring growers Plant. This $863 million natural gas-fueled company embarked on a $4 million how to make a living farming and electric generation plant in North Beaver project a few months ago that will expand revitalize the downtown as a commercial Township is being described as a very their warehousing operation by 52,000 and social center. active construction site. With 500 full-time square feet. The project is being funded employees, Kiewit Contractors is one in part by a $1.5 million Redevelopment Local economic development leaders of the top ten employers in Lawrence Assistance Capital Program grant that reported Indiana Borough was one of the County. When the project is completed the LCEDC helped to secure and will first areas of Indiana County named as it will supply 1,000 megawatts of power administer on behalf of Steelite. Steelite an eligible site for a federal tax incentive to the region, which is enough to power expects to complete the project in 2019. program comparable to the Keystone more than a million households. Opportunity Zone programs sanctioned Commercial development continues by the state. Pennsylvania Department of At the end of 2018, PA American Water along the Route 18 corridor in Community and Economic Development had nearly completed their new $50 Neshannock Township. Wish designated several census tracts in million dual source, water treatment Development finished the new UPMC the borough among 300 statewide as facility in New Beaver Borough. The School of Nursing and Radiology. The Qualified Opportunity Zones. Developers plant will provide safe drinking water facility provides an enhanced, modern could earn tax credits for investing in the to approximately 18,000 consumers learning environment for students and designated areas. in Ellwood City, Ellport, New Beaver the additional space needed to support

74 DEVELOPING PITTSBURGH | Fall 2018 the school’s growing enrollment. This The strong economic growth in the first upcoming school year, the school Washington half 2018 continued throughout the year expects to have a class of 55 students and with robust activity in the manufacturing is aiming to further expand class size. and energy sectors, the attraction County of outside-investment dollars, and These projects are evidence that Washington County Chamber of investments made in infrastructure and development projects. Lawrence County has had a strong year Commerce for industrial and commercial investment. 375 Southpointe Boulevard #240 With new industrial and commercial Corelle Brands will spend $16 million in Canonsburg, PA 15317 the next few years at its plant in Charleroi projects being planned, the prospect of a 724-225-3010 (T) to rebuild a glass tank and incorporate prosperous year for 2019 is bright! 724-228-7337 (F) modern technologies to the facility. The Jeff Kotula, President state has committed a Redevelopment [email protected] Assistance Capital Program (RACP) grant in www.washcochamber.com the amount of $2.5 million to help with the project. The improvements are projected to create 40 jobs and help preserve the existing 350 jobs at the plant, where glass has been manufactured for more than 100 years and where Pyrex glassware is currently manufactured.

The Tech Met facility located in Donora, will receive a $1 million RACP grant to renovate its facility in the industrial park. The company will immediately use two-thirds of that building, leaving 28,800 square feet for growth, a project that is expected to generate more than 40 full- time jobs. Tech Met was honored recently by being featured on a segment of Fox Business News Manufacturing Marvels.

Apex N.A. closed on 13 acres of land in the Alta Vista Business Park to build a 100,000 square foot facility. The site will allow the company to consolidate its employees from the current operation in the Donora Industrial Park and its offices in Allegheny County and allow room for expansion. Construction is targeted to begin this year with a 2020 completion. More than 70 are expected to be employed there with room for growth.

Washington County’s dominance in the energy sector is evidenced by the Pittsburgh Business Times report that eight of the region’s top energy companies, ranked by number of local employees, are in Washington County. In addition, Washington County saw huge gains in shale gas production in the first aiello ays he egal roundwork M l T l g three quarters of 2018. The statewide For ConsTruCTion Business. production increased by 12.9 percent over 2017 production with 36 percent of the statewide increase being attributed to Washington County.

Steel Nation, a company that builds pre- engineered metal buildings for the energy industry, consolidated the 36 employees from its South Strabane headquarters A Firm Commitment to You location and an office in Wexford to a 412.242.4400 - mbm-law.net larger, newly remodeled office in Cecil Township at Southpointe Square Lane.

76 DEVELOPING PITTSBURGH | Fall 2018 Ground was broken at the Alta Vista facility in Chartiers Township and run Project, construction began in November Business Park for a new building that will through Washington and Allegheny for the improvements to Morganza be occupied by Nine Energy Service. The counties to the Shell Chemical Appalachia Road, as well as placement of two new move from Museum Road to the 38,000 Petrochemical Complex in Beaver County. bridges, a roundabout at Baker, Morgan square foot building at Alta Vista will and Morganza roads and a cul-de-sac on accommodate the company’s growth and The second half of the year saw outside- Morganza Road. increase the number of employees beyond investment dollars flow to the county as its current level of 125. well as investments in infrastructure and The Washington County Authority will development projects. Stag Industrial receive a $2.895 million grant from the Bestway Oilfield Inc. expanded its presence Holdings, a Boston-based company, Transportation Infrastructure Investment in Washington County by purchasing has purchased a 100,000 square foot Funds program for traffic improvements a 45,000 square foot building in the manufacturing building in the Alta Vista to two intersections with Morganza Starpointe Business Park. Business Park. The facility was built Road. The intersections need upgraded in 2011 for, and has a long term lease to handle the increased traffic flow the The 350-mile Mariner East 2 pipeline from agreement with, Gardner Denver Nash. Cool Valley project will bring to the area. Washington County to the Marcus Hook Global solutions integrator AGC Networks, T&R Properties Inc. of Dublin, Ohio was complex near Philadelphia officially went based in Singapore is acquiring Black Box, awarded a $1.0 million RACP grant to begin into operation in December. The pipeline a leading global technology solutions excavation, grading and installation of basic carries ethane, propane and butane from provider located in Lawrence PA. The infrastructure for the Cool Valley Project. the natural gas fields in this region to merger will add more than $600 million Marcus Hook for distribution nationally in annual revenue and about 3,000 Penn DOT, City of Washington and and internationally. This new transportation employees to AGC. Washington County are partnering on outlet will allow natural gas liquids to go a $12.6 million project in the Tylerdale to premium foreign markets and will bring Road projects led infrastructure section of the city. Jefferson Avenue from the intersection with Henderson Avenue higher revenue for producing companies investments with the award by the to Wylie Avenue will be resurfaced and a in the region. Turnpike Commission of a $116.2 million portion of East Wylie Avenue along with dollar contract for the construction of the Jefferson Avenue from that intersection to The Pennsylvania Department of next segment of the Southern Beltway, Tyler Avenue will be reconstructed. Environmental Protection approved permit a 13 mile stretch that will connect Route A turning lane will also be added near applications for the Shell Pipeline Co. 22 to Interstate 79. Also, as part of the Tyler Avenue for a right-turn lane onto Falcon project. The pipeline will begin ongoing $700 million Southern Beltway the I-70 ramp. at the MarkWest natural gas processing

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Westmoreland County Industrial Development Corporation WestmorelandCountyIDC.org 724-830-3061

www.developingpittsburgh.com 77 In addition to the transportation Development Corporation (WCIDC.) In investments made in roads, construction Westmoreland March, the WCIDC approved a resolution of a new lock chamber at Locks and Dam authorizing the sale of the property No. 4 in Charleroi was approved by the to Elliott. The company anticipates an U.S. Senate and the Washington County County increase to its workforce of approximately Commissioners are investing in the County Westmoreland County Industrial 110 to 140 as a result of this expansion. Airport to rehabilitate a runway and the Development Corporation Construction is expected to begin in 2019, main access road as well as to purchase 40 North Pennsylvania Avenue # 520 with operations to begin in 2020. property for the runway extension project. Greensburg, PA 15601 724-830-3061 (T) Adjacent to the Jeannette Glass site, Excel Finally, Running Brooke II Associates was 724-830-3611 (F) Glass, Inc. is undergoing their second awarded a $1.5 million RACP grant from Jason W. Rigone, Executive Director expansion at the Jeannette Industrial the state to redevelop and repurpose the Park. William P. Pecora, President of Excel site of the former Brockway Glass Plant [email protected] www.co.westmoreland.pa.us Glass, recently purchased a 3-acre lot in in Canton Township. Dilapidated metal the industrial park where he intends to structures and a sand silo will be removed, build a 32,000 square foot warehouse and the site will be prepared for a new Developments and expansions in facility. Currently, construction efforts are 130,000 square foot building with loading underway on a 3,500 square foot addition docks and parking for industrial and Westmoreland County were strong in the second half of 2018. on Excel Glass’ existing Granite Division manufacturing purposes. facility at the park. The first expansion took place in 2011, at that time the This momentum will carry Washington Elliott Group has officially announced company added 10,000 square feet of County into 2019 as a leader of economic their intention to relocate manufacturing warehousing onto its existing 10,000 growth in the region. and testing of cryogenic pumps and expanders to the City of Jeannette. square foot building. The cryogenic pumps and expanders will be manufactured at Elliott’s global WCIDC broke ground at Commerce headquarters at 901 North Fourth Street. Crossing at Westmoreland in October. The The testing will take place at a proposed 206-acre site will be developed into the facility located at the former Jeannette county’s newest industrial park and will Glass property, which is currently owned consist of five pad-ready sites each ranging by the Westmoreland County Industrial in size from 19 to 29 acres. The park will

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78 DEVELOPING PITTSBURGH | Fall 2018 accommodate the need companies have for pad-ready sites with direct access to active rail and the interstate highway system.

Infrastructure work and land site development began at the beginning of December and is expected to finish in the third quarter of 2019. The WCIDC received a $1 million grant from RACP in addition to a $3.8 million grant and $5.8 million loan through the Business in Our Sites program to support the development efforts. Visit www.westmorelandcountyidc.org to take a virtual tour of the site.

In November, Siemens celebrated the opening of the company’s new 300,000 square foot Pittsburgh Service Center, located at RIDC Westmoreland. The $32 million state-of-the-art facility is home to Siemens Turbine Generator Specialty Services (TGSS), which supports approximately 150 employees working in the company’s large-scale turbine and generator business.

Since moving into the new Mount Pleasant facility, Siemens has formed an apprenticeship program for machining and welding students with the Westmoreland County Community College’s (WCCC) Advanced Technology Center, also located at RIDC Westmoreland. The redevelopment of RIDC Westmoreland into a multi-tenant facility has been a joint effort between the Regional Industrial Corporation of Southwestern Pennsylvania (RIDC) and the WCIDC.

In December, the Westmoreland County Commissioners adopted the comprehensive plan update, Reimagining Our Westmoreland.

The overarching goal of the comprehensive plan is to enact strategies that attract, develop, and retain a diverse and stable workforce that will sustain a healthy economy. To get to this point, over the past two years, more than 5,000 people have been involved in the development of the plan. From this process, one goal, seven core objectives, and nearly 40 strategies were identified.

WCIDC is actively involved in supporting several strategies outlined in the plan, which include but are not limited to:

• Assisting small business by providing small business resources and supporting small business education.

• Advancing entrepreneurialism by identifying and preparing resources for individuals and entities. Along with regularly evaluating assets with the county for starting a new business and supplying space, such as The Corner, where startups work to form and operate their business.

• Provide development-ready sites across the county to help spur both large and small-scale developments.

• Invest in the next industrial revolution, Industry 4.0. To do this we must build a workforce for the future, develop digital maker spaces and smart city hubs; along with expanding opportunities to support Industry 4.0.

To learn more about economic development projects in Westmoreland County, visit WestmorelandCountyIDC.org.

www.developingpittsburgh.com 79 People & Events

(From left) Developing Leaders Ginny Loaney from HRG, JLL’s Ashley (From left) JLL’s Jackie Bezek, John Minarik from JT & Sons Construction, Koltonski, Kim Harkobusic from Anderson Interiors, CEC’s Kelsey Desmone’s Jim Ambrose and Core Realty’s Michaela Robbins. Kanspedos and Janae Shore from Providence Engineering.

(From left) Janae Shore from Providence Engineering, Pieper O’Brien Chapman’s Steve Thomas (left), Kris Volpatti from Key Bank and Chas- Herr’s Robin Zoufalik, Red Swing’s Matt Smith and Robert Smith, ka’s Dick Donley. Shannon McGuire from Burns & Scalo Real Estate at the NAIOP Pittsburgh holiday party.

80 DEVELOPING PITTSBURGH | Fall 2018

INDIANACOUNTYCEO.COM Indiana County Center for Economic Operations

(From left) Tony Rosenberger from Chapman Properties, RIDC’s Don Smith, Emily Sipes and COMMERCIAL REAL ESTATE Cameron Davis.  Windy Ridge Business & Technology Park  119 Business Park The Windy Ridge  Corporate Campus Business Park Business & Technology Park  Corporate Campus Office Building will be the home of the Urban Outfitters, Inc.  Interchange Center Indiana Fulfillment Center.  Highpointe at Indian Springs Projected Operation:

3rd Quarter of 2019 225 Jobs | $30M Investment

Newmark’s Paul Griffith and HFF’s Claudia Steeb. When our businesses grow, our communities flourish!

CREW Pittsburgh new board was introduced at the CREW holiday party on January 10. Pictured are (front row left to right) Alicia Smith, CREW administrator; Mimi Fersch from Chicago Title, past president; T Construction’s Angela Gillot, current president; and Virginia Weida, president elect. (Back row left to right) Rose Finance’s Autumn Harris, treasurer; Sarah Gianotti, secretary; MBM’s Missy Powell, events director; PJ Dick’s Jessica McKinney, community action director; LGA’sMary Rose Hopkins, membership director; Jamie Kusevich from Stephany Associates, communications director. Board members missing were Alicia Wolfe, programs director; Babst Calland’s Krista-Ann Staley, sponsorship director; and Cohen Grigsby’s Maureen Jordan, general counsel.

next-architecture.net ARCHITECTURE I INTERIOR DESIGN I STRATEGIC PLANNING (From left) Gateway Financial’s Dave Malone, Elhurst’s Bill Hunt and PenTrust’s Jim Noland.

www.developingpittsburgh.com 81 Civil-Site Design for 62-Acre Development Gordon Food Service Distribution Center (From left) Shannon McGuire and Ruby Scalo Professional Services from Burns & Scalo Real Estate, Berkshire ■ Commercial ■ Stormwater / MS4 Hathaway’s Marcy Pocci, and Burns & Scalo’s ■ Industrial ■ Green Infrastructure Kelley Hoover Heckathorne. ■ Institutional ■ Landscape Architecture ■ Residential ■ Planning ■ Municipal ■ Surveying ■ Water / Wastewater ■ GIS / Mapping / South Side Riverfront Park ■ Roadway and Pavement Asset Management The Soffer Organization and Environmental Planning and Design, LLC

Headquarters: 846 Fourth Avenue Coraopolis, PA 15108 (Allegheny County) 412-264-4400 | www.lsse.com Branch Office: (From left) Chip Desmone, Von Fisher from Greensburg, Westtmoreland County, PA Value Ambridge Properties at the Allegheny Conference’s annual meeting. Managing Principals: Kevin A. Brett, P.E.; Ned Mitrovich, P.E.; Jason E. Stanton, P.E. Civil-Site Design for 125,000 SF Facility GE Additive Technology Advancement Center

David Storer from the Allegheny County Airport (left) with Columbia Gas’s Mike Belsky and Garrett Krummert (right) at the 2018 Night at the Fights.

(From left) Mary Rose Hopkins from LGA Partners, MBM Contracting’s Andrea Babb, Dollar Bank’s Sandra Wise and Matthew Bright.

82 DEVELOPING PITTSBURGH | Fall 2018 A Certified DB/DBE/WBE Surveying for Real Estate & Site Development Construction Management & Inspection

100 Ryan Court, Suite 9 State Representative Austin Davis (left) with Pittsburgh, PA 15205 BNY|Mellon’s David Weisberg, past president of NAIOP Pittsburgh. 412-276-2027

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Jeffrey Shelton and Jennifer Portaro from ECS Mid-Atlantic.

CongratulationS Center Square Investment NAIOP Pittsburgh members spent time with Congressional representatives in Washington Management and DC on February 4. Pictured from left are Mas- caro’s Alyssa Kunselman, JLL’s Jackie Bezek, M&J Wilkow, LTD. NAIOP’s Erica Loftus, NAIOP Pittsburgh presi- dent Don Smith from RIDC and LLI Engineer- ing’s Jamie White. NAIOP Pittsburgh Award 2018 Best Office Renovation 420 Boulevard of the allies

At the Developing Leader Mentorship kickoff were (from left) Desmone’s Jim Ambrose, DL chair, RIDC’s Don Smith, event host Jim Scalo, and Brandon Mendoza, NAIOP Pittsburgh ex- Privileged to have been the ecutive director. General Contractor for this project. Shannon1.com | 412-341-1155

www.developingpittsburgh.com 83 80 % LE AS ED

Chapman Westport is Chapman Properties' premier 300-acre mixed use business park ideally located in Findlay Township at the Westport Interchange of PA Turnpike 576, just 3 miles from I-376 and Pittsburgh Int'l Airport. This master planned site, home to General Electric's Center for Additive Manufacturing, is permitted for 2.5 million SF of Class A industrial, flex, office and retail space, with fully entitled footer-ready sites ready for immediate delivery. 110 South Campus Drive

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200 South Campus Drive 724-318-8706 • Chapman Properties • www.chapmanprop.com Women of Distinction Honorees Carolyn Duronio Partner Ree Sith ARIL 26 201 FAIRONT ITTSBURG 1030A-1-30 The iin the Crhn Citi unatin i t cure Crhn ieae an uceratie citi an t ire the uait ie chiren an aut Janera Solomon aecte thee ieae. Crhn ieae an uceratie citi are Executie Directr cectie nn a inaatr e ieae ID. e Strahrn Theater Hope Diamond Presenting Sponsor THE GIANT EAGLE FOUNDATION Rebecca Harris Sapphire Sponsor Executie Directr Center r en Entrereneurhi at Chatha Unierit

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84 DEVELOPING PITTSBURGH | Fall 2018 TRUSTED RELATIONSHIPS

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