Developing Oakland: Divergent Visions 45 Office Market Update Grant Street Associates/ Cushman & Wakefield

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A FULL-SERVICE CIVIL ENGINEERING FIRM 412.921.4030 GatewayEngineers.com CONTENTS | Spring 2017

05 President’s Message 33 Developer Profile Faros Properties 37 Developing Trend Attracting Creative Workers to Pittsburgh

41 Eye On the Economy 06 Feature Developing Oakland: Divergent Visions 45 Office Market Update Grant Street Associates/ Cushman & Wakefield

49 Industrial Market Update CBRE

55 Capital Market Update 19 2016 NAIOP Pittsburgh Awards 61 Legal / Legislative Outlook Revisions to the Mechanics Lien Law

64 Voices Developers Respond to the New Administration

67 News from the Counties

25 Development Project People / Events Schenley Place 74

www.developingpittsburgh.com 3 Commercial Construction | Service | Power & Industrial | Metal Fabrication www.mckamish.com

Building Excellence in the Pittsburgh region for over 40 years President’s Message

PUBLISHER It is with great enthusiasm and great A very important part of NAIOP Pitts- Tall Timber Group humility that I take over the post as burgh’s future and that of the region www.talltimbergroup.com NAIOP Pittsburgh president. I have had are our Developing Leaders. A focus of the privilege of serving in a leadership my presidency will be strengthening the EDITOR position for many years and have seen DL group. They are currently planning Jeff Burd the tremendous effort expended by my mixer/site visits to new developments 412-366-1857 predecessors. They have laid a solid in the region; working on a mentorship [email protected] foundation upon which the chapter program; exploring ways to increase can build in 2017. A special thank you the value proposition of DL member- PRODUCTION to Brian Walker who spent two years ship and working with Habitat for Carson Publishing, Inc. in this position and advanced the Humanity Greater Pittsburgh. Kevin J. Gordon chapter’s advocacy initiative in addition [email protected] Of course, the most anticipated event to many other things. for western Pennsylvania’s commercial GRAPHIC DESIGN I am excited to announce that we have real estate industry is upon us. It is 321Blink created partnerships with the Regional NAIOP Pittsburgh’s Annual Awards Industrial Development Corporation banquet that will take place on March 9, CONTRIBUTING PHOTOGRAPHY and the Greater Pittsburgh Chamber of 2017 at the David L. Lawrence Conven- Jim Judkis Commerce that will enhance our advo- tion Center. The banquet is the best Roy Engelbrecht cacy efforts. This year we plan on con- annual opportunity to celebrate excel- Massery Photography tinuing our work on a local, state and lence in development and network. Rob Larson federal level. We are involved in such Elaine Zhou Consider this as your invitation to issues as affordable housing, permitting Dennis Marsico join me at the banquet and become and the environment. Our efforts in this CBRE involved in NAIOP Pittsburgh. area have one goal and that is to create Tall Timber Group a positive environment for commercial Thanks, CONTRIBUTING EDITORS real estate development. Karen Kukish Another hallmark of NAIOP Pittsburgh is our educational programming. I am ADVERTISING SALES happy to say that, while we are only Karen Kukish a little more than a month in to 2017, 412-837-6971 we have had two amazing offerings in [email protected] this area. Our “Economic Update” in partnership with BOMA featured Stu MORE INFORMATION: Hoffman of PNC and “Uber: The Pitts- DevelopingPittsburghTM is published by Tall Timber Group for NAIOP Pittsburgh burgh Strategy” featured David Richter, 412-928-8303 Vice President, Strategic Initiatives. The www.naioppittsburgh.com latter was a rare opportunity to look inside a company on the forefront of No part of this magazine may be repro- Pittsburgh’s new economy and under- duced without written permission by the stand why this region is so important to Publisher. their future. All rights reserved. I am sure that upcoming programs will be as enlightening and pertinent to our This information is carefully gathered industry. Collaborative programming is and compiled in such a manner as to an important part of our plan. We want ensure maximum accuracy. We cannot, to broaden our reach through affiliated and do not, guarantee either the cor- organizations and geographically. In rectness of all information furnished David Weisberg this regard we are working with CREW nor the complete absence of errors and omissions. Hence, responsibility for same and the Washington County Chamber NAIOP Pittsburgh President neither can be, nor is, assumed. of Commerce on two exciting events for 2017. Keep up with regional construction Of course we are always interested in and real estate events at: your ideas for education programming. www.buildingpittsburgh.com Please send them to leo@naioppittsburgh.com

www.developingpittsburgh.com 5 Developing OAKLAND

6 DEVELOPING PITTSBURGH | Spring 2017 OAKLAND

ould Oakland be the next East Liberty? The question strikes most real estate professionals C as absurd. The remarkable turnaround in East Liberty transformed a blighted community – cut off from the bustling neighborhoods surrounding it – into the hottest part of town. Oakland has the lowest vacancy rates of any Pittsburgh sub-market. As of January 2017, the highest office rent in the city was being asked – and accepted – in Oakland. Residential FEATURE rentals are in such high demand that landlords in some of Oakland’s neighborhoods can neglect properties and still have waiting lists of tenants. Those aren’t the earmarks of a neighborhood in distress.

www.developingpittsburgh.com 7 The first phase of apartments is the only piece of a $100 million mixed-use development proposed by L. W. Molnar at the western gateway to Oakland.

es, it is a bit absurd to think of healthcare and technology is even greater The Visions for Oakland Oakland as a market in need than during the past decade. of revitalization. At the same “I think what is limiting development in time, there are signals that Yet for all its economic potential, Oakland Oakland is competing visions. When you the Oakland market is ready offers some daunting challenges to the have a planning group whose vision is forY a boost. Its bellwether employers are developer. An old, densely populated different than the market, it’s a problem,” leading the region’s economy; yet, two neighborhood, Oakland has little declares Chip Desmone, principal/ of the three – UPMC and the University vacant land. Prices for land and/or president of Desmone Architects. of Pittsburgh – have been enduring property are extremely high. Residential transitional periods that have dampened neighborhoods to the west blend into Desmone’s observation crystallizes the their growth. That’s about to change. one of Pittsburgh’s poorest communities dynamic tension between the demands and to the south, the vast majority of of the marketplace and the vision of those In 2003, Richard Florida wrote The Rise of the residential properties are for rent. who are trying to plan for Oakland’s future. the Creative Class, a book that put forth Regulatory and review agencies are the notion that the economic health of an fiercely protective of the plan to develop A recent failed development by Campus area was related to its creative workers. Oakland’s residential communities but the Village Communities is prototypical of Florida, who is the director of the Martin plan may be out-of-sync with the realities the divergent visions for Oakland. The Prosperity Institute at the University of of the marketplace. And commercial student housing developer had contracts Toronto and Global Research Professor properties are tied to two or three major to buy two vacant commercial buildings at New York University, studied industries users, none of which like to commit to and had several adjoining residential and cities where innovation was thriving pre-leasing. There are challenges. properties under agreement on Bates and concluded that employing creative Street between Semple and McKee. workers was a key element to inspiring On the other side of the coin, property Campus Village proposed a mid-rise innovation. owners in Oakland enjoy the benefits of student housing development with four being in a market that is unusually diverse or five floors of apartment above several Several economic drivers helped cushion for Pittsburgh and in high demand. There levels of parking. The 200-bed complex the blow of the 2008 financial crisis is reward for those who overcome the required zoning variances for density and for Pittsburgh. The arrival of the natural challenges of development in Oakland. height but strong preliminary opposition gas industry, strength in education, As the drivers of growth shift into a higher to the plan from Oakland Planning and healthcare, and technology research gear in its neighborhoods, Oakland Development Corporation (OPDC) and development lifted the Pittsburgh is poised for more development. The convinced Campus Village to abandon economy into a recovery that the rest tension that exists in this opportunity is the project before going to the city. of the country envied. Three of those between what Oakland should be and four critical sectors have their homes what it will be. Campus Village’s vice president of in Oakland. Moreover, as 2017 begins, business development, Greg Schaefer, the economic impact of education, expressed understanding that the community wants to preserve and

8 DEVELOPING PITTSBURGH | Spring 2017 FEATURE encourage single-family home ownership Bates corridor until I get up to Forbes.” regional economic activity. Visitors from in the neighborhood but also noted that Downtown to Carnegie Mellon follow the cost of real estate made lower-density The area of which DeLorenzo speaks the Boulevard around Central Oakland development unfeasible. The Catch-22 lies in the middle of a pie-shaped set to avoid Pitt’s campus on the way to is one that is commonly faced by of blocks bounded by Forbes Avenue CMU’s. Commuters and visitors from developers looking at that neighborhood, and the Boulevard of the Allies. The South Side and now Almono use Bates which is predominantly made up of neighborhood is usually referred to as Street to reach Pitt’s campus and UPMC’s homes operated as rentals for students. South Oakland but is really known as flagship hospital. These corridors and their Central Oakland to planners and locals. intersection are the logical sites for the Lynn DeLorenzo, principal with Roughly eight blocks long and four blocks next round of development that should TarquinCoRe, consulted on the Campus deep, this neighborhood is ground zero follow the continued expansion of the Village project and sees the South for the divergent visions of Oakland. Only economies of Oakland. It’s where the Oakland dilemma becoming more a few blocks from the “Cardiac Hill” of market wants to go but that demand runs exaggerated as development at Almono Pitt’s upper campus, Central Oakland headlong into the long-range design for gathers momentum, noting that the Bates is mostly level. Although the grid of the community. Street corridor is the connection between the neighborhood includes the Forbes the Hazelwood development and the Avenue commercial corridor, Central Oakland Planning & Development likely users from Pitt and Carnegie Mellon. Oakland becomes densely residential just Corporation is a non-profit economic and a few steps south of Forbes. community development organization “If you think of Almono and its connections that is committed to making Oakland to the universities, that’s along Bates But the conundrum for Oakland residents a great neighborhood for residents Street,” DeLorenzo notes. “When I bring my and developers alike is that the major and businesses. In August 2012, clients from out of town, who can’t wait to streets in Central Oakland – Bates OPDC produced a lengthy study that see Pitt and CMU, I have to apologize for and the Boulevard – have become documented its vision for development, the area where the students live along the connections to what are now hubs of called Oakland 2025 Master Plan. Led by

The Oakland 2025 plan developed by OPDC incorporates long-term goals for the key Central Oakland neighborhood that are at odds with market conditions. Image courtesy Oakland Planning & Development Corp.

www.developingpittsburgh.com 9 FEATURE

Pfaffmann + Associates and Studio for and public art into all economic Oakland 2025 is a thoughtful, long-range Spatial Design, the Oakland 2025 plan development initiatives vision for an Oakland that has a more envisioned ten “big changes” for Oakland diverse demographic makeup and more that would be manifest in four major • Community Building: Reinforce sustainable, owner-occupied residential projects. The goals of the master plan fell neighborhood identity and increase neighborhoods. The plan envisions into five areas: social capital through community neighborhood retail districts and a more consensus, social networks, diverse style of shops on Forbes and Fifth. • Housing: Provide innovative, stewardship, gathering places, and The ideal outcome of the Oakland 2025 sustainable housing choices for diverse increased connectivity master plan would be for more people to new generations of residents who live and work in Oakland. choose to live where they work. Do One notable characteristic of the this through rehab, conservation & Oakland 25 plan is that it is weighted “Definitely we’ve been challenged with our innovative new housing choices and towards residential development issues. goal of improving the residential quality financing incentive. The planning process was exhaustive of the neighborhoods. We’re still working in engaging with community residents to stabilize the residential sections of • Transportation: Develop a multimodal and businesses but by sheer numbers, the neighborhood,” says Wanda Wilson, transportation network that incorporates individuals would have a disproportionate executive director of OPDC. “What we’re “complete streets” principles level of input compared to the institutions looking at now is launching a community (accessibility and safety for pedestrians, that dominate the neighborhood. By land trust for some of those target areas cyclists, automobiles and transit) and statute, the three institutions in Oakland for investment. That would involve the land connects all parts of the neighborhood – UPMC, Pitt and Carnegie Mellon – must trust holding the title to the property and maintain and update institutional master the owner would lease the property for a • Business and Development: plans with the city. Moreover, those nominal amount.” Maintain local, unique and diverse institutional master plans both conform businesses that grow from Oakland’s with and drive the city’s zoning for the Wilson explains that OPDC’s more innovation economy and support the areas in which the institutions exist. These proactive role is an attempt to shift the neighborhood health plans are public documents and provided balance in the residential stock from OPDC with the institutional framework for investment rentals to ownership. OPDC • Open Space and Art: Weave green the Oakland 2025 plan. aims to keep affordable housing in the infrastructure (trails, parks and hillsides) mix of homes.

10 DEVELOPING PITTSBURGH | Spring 2017 FEATURE

The intersection of Bates Street, Zulema Street and the Boulevard of Allies is a key corridor for future development and a battleground for developers and the community.

“The land trust would control how that “We just have to have that involvement in of Oakland is also home to the kinds of property would be used, with the goal the market right now because there is so residential property that most parties want of maintaining home ownership in the much investor speculation that the average to see replaced: the student rental owned neighborhood and expecting that the person who might want to live there can’t by an absentee landlord. If the Oakland homes would be sold at an affordable really get in the market right now.” 2025 plan is to succeed, these rentals price for a low-to-moderate income will be converted to single-family homes home buyer so that we can have some The problem is that a significant piece owned by a broad demographic range. affordable home ownership options in the of the Central Oakland residential area But there isn’t a clear plan as to how that neighborhood as well. is located between the Forbes Avenue social change will occur and it’s difficult commercial/institutional corridor and the to engage developers who don’t see how “We really do believe that there’s great Bates/Boulevard corridor, an area that the plan can work. possibility for a lot of new investment and looks ripe for more dense office, research to attract new home buyers,” she says. or apartment development. That section

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In fact, real estate professionals reinforce The City of Pittsburgh naturally gets of Pitt, CMU and UPMC leave little doubt the point made by Campus Village’s much of the heat for the perceived about their collective – and collaborative Schaefer, that prices in Oakland have risen disconnection between the zoning and – visions. The tough question for planners to the point that single-family homes aren’t the marketplace needs but the dynamics and the Oakland community is how to practical to build. Renovation is made of Oakland – and the institutions located reconcile a residential vision with an difficult by the fact that the purchase price there – have been evolving rapidly over innovation corridor. will have to reflect a landlord’s perception the past decade. Even today, a discussion of the lost rent in selling an income- about the need to re-examine zoning in The Institutional Neighbors producing property. The solution in most Central Oakland is stymied by the fact cases would be higher density, but the that the University of Pittsburgh is nearing Any plan for development in Oakland planning and zoning are at odds with the the end of updating its institutional master must take into account the capital plans market on that. plan. Until that plan has been presented, of the three major institutions that share vetted by officials and community groups, the community. The problem is that those “Zoning hasn’t caught up with the realities and then approved, discussions about the institutions are so dynamic, with different of the market. There are areas still zoned future of Central Oakland are moot. leadership and visions now than when the as single-family where in the past homes Oakland 2025 plan was done in 2011-2012. were owned by families, but there is very Ray Gastil, director of planning for the City little of that left,” notes Todd Reidbord, of Pittsburgh, says that his top priority with One of the surprising differences between president of Walnut Capital Group. “All respect to Oakland is to listen to what now and just five or six years ago is that the new development has occurred Pitt has planned. He does understand the UPMC is having the smallest impact of between Fifth and Forbes, particularly on limitations and development problems the three. The region’s largest employer, the residential side. That may not be the that the neighborhood has. UPMC began reducing its footprint in highest and best use of that property.” Oakland in 2009, when the healthcare “I understand the goal to maintain the provider moved its administrative DeLorenzo relates that the price agreed to residential quality, to not make the headquarters to leased space in 600 for the Campus Village property equates to area a university district,” Gastil says. Grant Street. In the intervening years, $5 million per acre. That land cost makes “It’s important that the university has to changes to the healthcare laws and a small scale development, like the type that coexist with its neighbors but at the same dispute with Highmark prompted UPMC the Central Oakland district is zoned for, time we have to consider the economic to re-examine its size and priorities. virtually impossible. Even a project that was impact that the university has, the jobs Not long ago, 2017 looked like it could low-density and high-end, which still might created by its work.” be the year that work would start on a not pencil out at $5 million an acre, would new 1000-bed flagship hospital where surely encounter problems marketing That work, and how the institutions will Children’s Hospital once stood along Fifth luxury in a neighborhood of undergrads. benefit from it, is the source of the vision Avenue. Instead, 2017 will be a year when That same problem extends to the that competes with that of the Oakland UPMC doubles its capital spending on plan for neighborhood “Main Street” 2025 Master Plan. While there can be construction, but allocates little of that retail and services development along debate about the vision that the market spending to its Oakland campus. Atwood and Semple. has, the pronouncements from the leaders The institution that has made most of the expansion noise during Market rate and subsidized houses, along with apartments, were built the past decade has in the late-1990s to replace the aging Allequippa Terrace project. been Carnegie Mellon Two decades later, the Oak Hill neighborhood is a well-maintained University. CMU already transition between the Pitt campus and the Hill District. had an ambitious master plan prior to the tenure of Dr. Subra Suresh but since his arrival in July 2013, the university has become even more dynamic. Access to CMU’s students and research facilities for software, artificial intelligence and robotics is what is drawing corporations to the city. That 2012 master plan has already shifted more than once because of advances in technology, as well as Dr. Suresh’s ability to attract support.

12 DEVELOPING PITTSBURGH | Spring 2017 FEATURE

Its current ten-year plan marked some new Pittsburgh. Like Suresh, Gallagher came Associates at the corner of Forbes and ground for CMU. This plan calls for the first from Washington, DC and has ambitious Coltart. This building, which is being push of new academic buildings north of plans for how Pitt will engage in its own proposed as a spec or mostly spec office Forbes Avenue. Currently, the $100 million- technology transfer and collaborate building would be a welcome addition plus Tepper School of Business is under with CMU to enhance the experience of to the supply in Oakland. The developer construction. Plans call for three more students from both universities. is anticipating demand from these same academic buildings north of Forbes, the institutional users and with Oakland’s first of which should begin moving forward As of mid-February, Pitt’s own updated vacancy rate at between two and five at the end of 2017. Also under construction institutional master plan was beginning percent, most observers see the project is a renovation to the former Cardinal the process of the rigorous review with as a slam dunk. Deardon Center, which marks CMU’s first city and community groups. While details push north of Fifth Avenue. won’t be known until after that process “Our interest in Oakland started about six is completed, there are some aspects years ago when we tried to buy the health As a job creator and technology transfer of the plan and how the Gallagher department building,” says Steve Guy, CEO partner, CMU has a significant impact administration will operate that have of Oxford Development Co. Guy notes on the commercial real estate market filtered out into the public. One significant that there is a shortage of parking, a battle (see Google, Uber, etc.). The current difference in modus operandi seems for parking licenses and too little flexibility institutional master plan also shows to be that Gallagher likes the university in zoning, all of which make development that the university also expects to get to be a landowner. The story goes that difficult. He nonetheless is bullish on the involved directly in expanding Oakland’s he inquired about the ownership of community. “Oakland is a great place to commercial real estate footprint. In 2015, the former Syria Mosque site during his develop. We would have done the project CMU engaged JLL to lead development interview visit, and initiated the process of on Craft but ten months in we discovered of a project that would have resulted in reacquiring the property soon after taking a defect in the title.” 425,000 square feet of hotel, office and the reins. Quietly, Pitt has been acquiring exhibition space just west of campus in other properties throughout the Forbes/ “When you find a site in Oakland that is Junction Hollow. After narrowing the Fifth and Central Oakland areas. What properly zoned and properly vetted, a search to three development teams, CMU is planned for those properties will be project has tremendous potential,” claims put the project on hold. The project, revealed with the master plan but it seems Jim Noland, chairman of PenTrust Real referred to as the “Gateway” was not the likely that some of the property being Estate Advisory Services. PenTrust’s ERECT only such development planned outside purchased has a longer-term purpose. Funds financed the last two spec office the academic campus. Directly across projects in Oakland, Elmhurst’s Schenley Forbes Avenue, the master plan includes One project that has been reported to Place and the Rand Building. another mixed academic/commercial be in development is a new academic building of 385,000 square feet, right building at the former Syria Mosque Dave McSorley, president of Sterling Land next door to the 40,000 square foot Tata site. Pitt is expected to begin the design Consulting Services building that will get process on a 350,000 square foot building that will house the School of Computer underway this year. The Forbes Avenue corridor is being trans- Science, along with other functions. formed slowly, as mid-rise buildings replace Ralph Horgan, associate vice president, low-rise retail like the Arby’s and CVS. Campus Design and Facility Development, For the time being, most of the explains that the east-west border marked development and new construction at by Junction Hollow is a demarcation Pitt’s end of the Fifth/Forbes corridor between the kinds of projects planned by has been for new student housing or Carnegie Mellon. hospitality. Construction is well along at the site of the former Allegheny Health “The Hollow is the divider. East of the Department, where MWK Development Hollow will be academic buildings. Mixed is building the Skyvue Apartments for academic and commercial buildings will student housing operator Rise, along with be to the west of the Hollow,” he says. a Marriott Hotel. Construction is about to begin on one of Marriott’s “autograph Those buildings west of the Hollow would collection” hotels, being developed by be a sort of transition from Carnegie Concord Hospitality behind the Pittsburgh Mellon’s campus to its neighbor to Athletic Association on Fifth Avenue. the west. The physical corridor that is More student housing is planned at envisioned would be a remade Forbes 3407 Forbes, where Campus Advantage Avenue. On the western end of Forbes, has proposed a $50 million, 13-story Pitt’s activity level has been much more apartment. The other major housing subdued compared to CMU’s, but that is project under construction is The Empire, about to change. an $85 million apartment located at Centre Avenue and Craig Street. A year after Dr. Suresh was hired at CMU, Dr. Patrick Gallagher was installed as Also in the planning pipeline is a seven- the 18th chancellor at the University of story office building proposed by Murland

www.developingpittsburgh.com 13 FEATURE

Company, has had an approved six-story, 110,000 square foot office building in the planning stages for a decade. The building, called Sterling Plaza II, will be built on Craig Street in the collaboration zone between the two universities and McSorley says there is interest again in the property.

“We’ve had some inquiries and there seems to be interest. We frequently get calls from the University of Pittsburgh and CMU asking about what is available,” McSorley says. “I do think there’s demand and room for growth. I’m not sure how much more demand there is for apartments but for commercial office property I think there’s interest.”

McSorley admits that Sterling’s risk profile makes a speculative VALUED Sterling Plaza II unlikely but he says with a pre-lease of 40 or 50 percent, the project would go ahead quickly. The obstacle for Sterling or anyone looking at office development in Oakland RELATIONSHIPS faces is the nature of the institutional demand.

“One of the issues is that Pitt and Carnegie Mellon will never ... built on our commitment commit to being the first tenant. When you look to other tenants out there, how deep is that remaining market,” asks Paul Griffith, to client service. president of Integra Realty Resources.

That reluctance was manifest in the development of Schenley • Construction Place. While it was ultimately built on spec, Elmhurst also hoped to get pre-leasing commitments from one of the many • Corporate & Business Law users from the institutions that were keenly interested in the • Creditors’ Rights & Bankruptcy project. No leases were signed in advance, yet once the project was completed and the first lease was inked, the property • Employee Benefits stabilized within nine months with users from the universities.

• Employment Law Pre-leasing reluctance isn’t the only variable to consider with • Energy, Utilities & Mineral Rights the institutional users. Much of the success that UPMC, Pitt and CMU have had is a result of their ability to attract research • Immigration grants. There are risks inherent in that strategy. The institutions • Insurance Coverage could become less favored or the granting agencies can become less active. Cutbacks in National Institute of Health • Intellectual Property research grants scuttled UPMC’s plans for its Center for • International Law Innovative Science in Shadyside and the increased austerity of the past administration did slow down Pitt’s research. Financing • Litigation & Dispute Resolution based on research-dependent tenants is similarly tenuous. • Private Clients • Real Estate & Lending • Sustainable Development Single-family homes on Parkview Avenue in South Oakland with the Cathedral of Learning looming behind. Photo courtesy Oakland Planning & Development Corp.

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14 DEVELOPING PITTSBURGH | Spring 2017 FEATURE

“Part of the problem is the research is so dependent upon grants and lenders aren’t crazy about leases based on research facilities because grants can’t be counted year in and year out,” says McSorley.

For all the excitement and growth of the institutions in Pittsburgh in recent years, this dependence on grants is a source of concern in Oakland. Observers seem to feel that the Washington experience and connections of both Gallagher and Suresh will serve Pittsburgh’s bellwether universities well; however, there remains a level of uncertainty, especially with an administration that is an unknown quantity.

Horgan described the education community overall as “on pins and needles” about the future of funding for the arts, sciences and research funding for science and healthcare. He’s quick to point out that the uncertainty about funding is not limited to the Trump administration but is rather a fact of life in higher education.

“Trump isn’t the history of this. The ebb and flow of funding is the history of higher ed,” Horgan observes. “We had a provost here who liked to say that we do education and we do research; and they both lose money.”

Fitting into the Regional Vision

Whatever challenges exist for development in Oakland, sufficient demand is not one of them. As you look to the future, it’s not hard to see how Oakland’s institutions are positioned to be at the center of creating solutions for problems that will be plaguing society. It seems the number one issue for enhancing development in Oakland is aligning the enormous potential for demand with the priorities of the community, the city and the region.

Pittsburgh’s civic leaders and business attraction agencies have hitched the region’s future to a significant degree to the innovation that will come from Oakland. Aside from the energy sector, virtually all of Pittsburgh’s other growth engines emanate from Oakland. It’s not necessary that development occur adjacent to the centers of innovation. The successes of Bakery Square, Lawrenceville, and now Almono, are directly tied back to Oakland’s institutions. With a bit of optimism and imagination, it’s not hard to see how the successes of the past five years represent only the beginning of that trend. It’s possible to see innovation corridors stretching from the Strip to Almono and from East Liberty to Downtown, with Oakland at the heart of the innovation.

If that’s the case, it would be foolish not to plan for more demand in the heart of Oakland itself. That would mean more density in Central Oakland for residential and a remaking of the “skyline” of the Fifth and Forbes corridor. Much of Forbes Avenue between the western portal and Bouquet Street consists of three- or four-story buildings. If Pitt – or a private entity - were to assemble a block of those buildings, wouldn’t it make sense to replace the low-rise structures with buildings that took full advantage of the entitlements to go to eight or even 12 stories? How would such a change impact the blocks of rentals and single-family homes just south of Forbes?

For the City of Pittsburgh, the challenge is in aligning the

www.developingpittsburgh.com 15 FEATURE

zoning with the market without ignoring The problem of Central Oakland’s Washington University is fantastic – but at the community. Political leaders set the zoning is at the heart of future Oakland Pitt that’s not the case,” notes Reidbord. agenda for such things and those leaders development. The Fifth and Forbes are voted in by residents, not institutions. corridor may not be sufficient for meeting “[Oakland’s] community groups are difficult At the same time, Pittsburgh’s political commercial demand. Getting agreement to navigate. They know what they want leaders have expressed a desire to foment between residents, property owners and and it’s not up to me to say if they are right the innovation that has brought the city – developers will be difficult but without or wrong,” acknowledges Guy. “I think and them – such positive press. some long-term solution, there will be a there needs to be more flexibility around hole in the innovation corridor. the Fifth and Forbes corridor. There needs There’s logic in waiting to hear Pitt’s to be more compliance in zoning and fully-developed plans before reacting “In other cities there have been innovation permitting in the residential properties so to any zoning issues but the city may districts developed where nothing existed that the owners look at their property in not have that luxury. Developers are before. This is not one of them,” says Gastil. another manner than keeping a low cost advancing plans for projects that require “The University of Pittsburgh doesn’t have basis to throw off the most cash.” zoning variances, as virtually all Oakland many opportunities up the hill, so to speak, commercial projects do, and the so I’m sure they are looking creatively at Real estate markets, like water, tend to perceived demand is unlikely to slow that [Central Oakland] for opportunities.” find their own level. Demand for space is down. OPDC is strongly opposed to the difficult to resist or neglect. In Oakland, most aggressive of these projects, the Developers will continue to look at that the organic growth of academics and 16-story mixed-use Gateway Ventures neighborhood anxiously, regardless of the research, coupled with a proximity to development at Bates Street and the challenges. With the highest rents and the other economic hotbeds, will drive Boulevard, and at public meetings there lowest vacancy rates, Oakland is attractive demand for more space. The universities have been suggestions of a moratorium for investors and its potential is perceived and UPMC are set on paths that will on development to assess the situation to remain pent-up. require more facilities to perform the in Oakland. Such action would cease work that is driving growth. Because those commercial activity at a time when “In other cities the area around the institutions have their own physical plant demand for more activity is building. university is beautiful – I was just in and footprint, as well as very well-defined St. Louis and the area surrounding master plans for expansion, there will be

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16 DEVELOPING PITTSBURGH | Spring 2017 FEATURE

continued new construction in Oakland. Southpointe will happen, retail companies universities can self-sustain their success But expansion of the institutional footprint didn’t buy into the notion that people and growth. The regional benefits from is not the only recipe for success. would shop Downtown just because the the economic drivers located in Oakland, stores were there. It wasn’t until people however, have come as much from Oakland’s situation is reminiscent of the began to move by the thousands into the the private investment that academic Fifth/Forbes corridor in the 1990s. The Central Business District that the shop and medical research has attracted. Murphy Administration spent millions keepers and restaurateurs followed their Technology transfer relies on private of dollars and a number of years trying customers there. development to provide the facilities to put its vision of a vibrant Fifth and that the transferees require. And that is Forbes into action. Multiple developers Wanda Wilson’s vision for the business not guaranteed. Just because private and designers were engaged to create a district is similar to what worked Downtown, companies want to be near Pittsburgh’s commercial corridor that would attract but the lack of density could be an issue. institutions, they do not have to come. residents and visitors. With significant subsidies, the city attracted two major “If we have a diverse mix of residents that “An example of that is Rand,” notes Noland. department stores to invest in Downtown really supports a more diverse mix of “They did not want to be on Pitt’s campus; locations. Both Lazarus and Lord & businesses in the business district,” she they did not want to be on CMU’s campus. Taylor had relatively risk-free deals as asserts. “It’s not that the businesses are If Bill Hunt’s building wasn’t there, Rand incentives to build. Both of the locations going to lead. It’s really attracting a diverse could have gone to another city without are successful today, but as the mixed-use residential mix around the business district anyone taking notice.” DP office/condo/retail Piatt Place and as a that’s going to change that.” PNC service center respectively. Some of the economic success in Murphy’s vision for Downtown bucked Oakland is the result of irresistible forces. the market’s vision, wasting time and People are getting older. There exists the money in the process. Just as big box desire to support better health and longer retailers don’t plunk down superstores life. The “meds” part of the Oakland in the middle of farmland in the hope economic equation will thrive so long that the next Cranberry Township or as the will to fund it exists. Likewise, the

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DEVELOPER: Al. Neyer Inc.

CONTRACTOR: Al. Neyer Inc.

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BEST SPECULATIVE - OFFICE Schenley Place 4420 Bayard Street, Pittsburgh The 105,000 square foot office was the first speculative project developed in Oakland for more than a decade. The project was built in the heart of the University of Pittsburgh’s campus, fit onto a parking lot adjacent to the First Baptist Church and the Schenley Farms residential neighborhood.

DEVELOPER: The Elmhurst Group

CONTRACTOR: Burchick Construction

ARCHITECT: Stantec

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BEST RENOVATION - OFFICE Union Trust Building 501 Grant Street, Downtown Pittsburgh The project was a $100 million renovation to the 517,000 square foot office building designed for A. C. Frick by Frederick Osterling in 1915. Major renovations were complete in 2016 with tenant improvements ongoing.

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BEST RENOVATION - INDUSTRIAL Photo by Dennis Marsico Uber Advanced Technology Center 32nd Street Business Center, Pittsburgh

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20 DEVELOPING PITTSBURGH | Spring 2017 NAIOP PITTSBURGH AWARDS

BEST MIXED-USE Photo by Elaine Zhou DEVELOPMENT JLL Center at Tower Two-Sixty 260 Forbes Avenue, Downtown Pittsburgh The project is new construction of 252,000 square feet with an additional 48,000 square feet constructed to accommodate a single tenant. The building was completed in fall of 2016.

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DEVELOPER OF THE YEAR department store, Millcraft transformed the space into offices, retail, and condominiums. Dubbed as an ambitious project Millcraft Investments during the economic recession, the building currently boasts 100% occupancy in all of its elements. Coming into its 60th year, Millcraft is growing, and is still very much a family business. Started in 1957 by Jack B. Piatt - who still Millcraft continued its progress in Pittsburgh with Market Square comes to the office daily – Millcraft is now managed by his sons Place, a historic renovation of the G.C. Murphy building, and Lucas and Marcus, who manage the corporate and hospitality River Vue, a renovation of a former state office building. Both divisions respectively. Millcraft’s development portfolio has an offer apartments and retail space. In 2016, Tower Two-Sixty, impressive range of office, retail, residential, hospitality, and alternatively known as the Gardens at Market Square project, mixed-use projects throughout Western Pennsylvania. reached substantial completion after three years of construction. The high-rise replaced dilapidated buildings on Forbes Avenue Millcraft is headquartered in Washington PA, close to Mr. Piatt’s between Wood Street and Market Square, and is estimated to home in Meadowlands. In the 1990s, Millcraft’s notoriety provide approximately $12 million in new net annual tax revenue began with the development of Southpointe Business Park in from all operations. The building’s office spaces are 90% leased Canonsburg, one of the largest suburban office parks in Western within its first year. Tower Two-Sixty hosts a Hilton Garden Inn, Pennsylvania. Also in Southpointe are Millcraft’s two successful 330-space public parking garage, and four local restaurants. hospitality entities, the Hilton Garden Inn Southpointe and Adding new elements to Market Square, this project provided Jacksons Restaurant + Bar. Class A office space for companies, plus new dining, lodging, and parking options for Downtown patrons. In 2006, the developer finished Crossroads Center, a LEED- certified office and retail building as an effort to invigorate Simultaneously, Millcraft’s hospitality division rapidly expanded Downtown Washington with new office space. Shortly with the additions of the Hilton Garden Inn Pittsburgh after, Millcraft continued its urban foray into Pittsburgh with Downtown and Revel + Roost, both in Tower Two-Sixty. In 2016, the development of Piatt Place. Once the Lazarus-Macy’s Hospitality opened two more hotels: Microtel Inn & Suites in Beaver Falls, and Hampton Inn & Suites in North Huntingdon. The division also renovated Jacksons Restaurant + Bar Photo by Elaine Zhou in Southpointe from January to March. In 2017, Hospitality’s pipeline includes a Home2 and Hilton Garden Inn in Beaver.

Currently, Millcraft is making progress on 350 Oliver, a mixed-use project at the former Saks Fifth Avenue site in Downtown Pittsburgh. This project marks Millcraft’s third project with a department store site. The building will host parking, ground-floor retail, apartments, and a hotel. Also in the works is Esplanade, a large mixed-use endeavor in Pittsburgh’s North Side.

Although Millcraft evolved from a steel company to a top-tier real estate firm, its long withstanding principles of sustainability, creativity, integrity, community, philanthropy, and ideas have kept the company grounded and prosperous. Millcraft’s drive to create quality properties and bring innovative ideas to the Pittsburgh region will remain, perhaps even with the next generations of Piatts.

www.developingpittsburgh.com 23 NAIOP (´na-äp) noun.

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a few others – but clearly we were asked needs for a church are usually Saturday SCHENLEY PLACE because we had successfully completed afternoons for weddings – and potentially the Rand Building not far away. We Friday nights – and Sunday mornings. egardless of outward appearances, there are understood the machinations of Oakland That’s when a hotel really needs the few overnight successes and how all that process works.” parking and that’s when an office building in commercial real estate. really doesn’t. Our presentation, much of Armed with the Rand Building Projects have measured it, focused on providing the parking that gestationsR periods, as developers guard experience, Elmhurst developed a plan they wanted over the long haul and the against misjudging the market and for a multi-story Class A office at the site. church getting some long-term revenue government approval processes evolve They put on presentations for the board, to maintain the church.” on their own schedule. But few projects working with Stantec (at that time Burt have the life-cycle that Schenley Place at Hill) on several schemes to make sure The original design was 130,000 square feet 4420 Bayard Street can claim. the church was comfortable with the and ten stories. Architecturally, it featured architecture. The development Elmhurst a step back at three stories to accommodate According to Elmhurst CEO Bill Hunt, arrived at had a couple of key advantages the zoning requirements for a building the project began routinely enough, with over their competition. adjacent to a residential neighborhood. an opportunity arising out of a unique situation for one of Oakland’s oldest “There was another developer that was “It was a bit monolithic but it was a nice- property owners. interested in doing a hotel but a hotel had looking building. We had to go through two things working against it,” says Hunt. the Historical Review Commission “It was 2004 and Ralph Egerman from “One was that it’s hard to have a hotel because we were adjacent to a historic Colliers was working with First Baptist without serving alcohol, so there would district – not in one – but as part of Church on highest and best use,” Hunt be alcohol on site by a Baptist church; the process as part of the getting the recalls. “He approached us – and I think and number two was that the parking original building permit,” Hunt explains.

www.developingpittsburgh.com 25 “And then we got blindsided by the how many cities have a Schenley Farms Stantec to do drawings of what at least neighborhood in what was probably that is not only so close to the urban we thought that would look like.” year two of the process.” core but has maintained itself and hasn’t eroded its integrity. At Elmhurst we The revised building was reduced in size Located directly across Bayard Street is one respected that but at the same time we from 130,000 to 105,000 and the height of Pittsburgh’s oldest and most prestigious had a job to do.” was lowered by three floors. The design neighborhoods, Schenley Farms. It is one was changed so that the building looks of Pittsburgh’s limited designated historic The negotiation process between like it is two buildings rather than one residential districts and its residents have Elmhurst and the Schenley Farms structure. The taller back section was experience protecting the neighborhood residents was protracted, taking about wrapped in brick to match the adjacent from the encroachments of the universities. 18 months. Hunt candidly reflects Ruskin Hall and the three-story section Community opposition to the height and that his decision to let his lawyers and fronting Bayard Street had a stone exterior mass of the building was voiced as Schenley construction staff lead the process was a to match the church. The windows of Place made its way through the public mistake. While he thought he could make the front section and the corners were hearing process, slowing the entitlement. the process go smoother by working softened and made to resemble a condo behind the scenes, Hunt ultimately or residential building. “I’ll go on record as saying that I respect realized that he would need to be in front the neighborhood and what they had to of the project to get a resolution. “Our intent was to surprise them but in a go through. This is their home. This is an good way. We didn’t want to do one or important thing to them. They need to “I should have been front and center. I two things and say this is it but to say we be very careful about how far Oakland know a lot of the neighbors personally hear you and this is a win-win,” explains encroaches and they didn’t want a large and we worked through it,” he recalls. “We Hunt. “In my heart of hearts, we always urban wall with these beautiful homes,” worked through it by several means but felt that everyone knew that someday asserts Hunt. “I will also say that Schenley we didn’t go to them and ask what they this was going to be developed and if Farms is a one-of-a-kind neighborhood. I wanted. We proactively tried to anticipate it’s not us then it’s probably going to be really have to think long and hard about what they would want and went to a medical building. Then it would be a

Photo by CBRE.

26 DEVELOPING PITTSBURGH | Spring 2017 Photo by Andy Rose.

monolithic building, like Clapp Langley crisis hit, making lending more tenuous. As they worked to bring the project across the street or a research building. What followed was a steep recession in line with the pro forma, Elmhurst So I think we all had the same goal. It was that dampened interest in commercial sought some help with the challenge just a matter of how we do it.” real estate development for a few years, of providing structured parking. At 170 regardless of the quality of the project. spaces, the garage was going to be Hunt recalls that a lunch meeting two-and-a-half stories below grade and Downtown seemed to break the ice After the downturn in the economy was a disproportionately high cost. To finally. He believes that the Schenley eased, restarting the process from where make the project work Elmhurst sought, Farms residents came to appreciate it stopped wasn’t a sure thing. Elmhurst and received, grants that Hunt says the that Elmhurst was really extending itself. had selected Burchick Construction to county economic development office build the project when the negotiations Paying for new drawings was expensive and the Urban Redevelopment Authority with the community were completed but and giving up three floors of office was a worked well to facilitate. These include the two-year hiatus meant revisiting the sacrifice of revenue for the long term. a $1 million Redevelopment Assistance pricing, which hadn’t gone down with the Capital grant and a grant from the passage of time. Elmhurst was hopeful of getting a lead County Infrastructure and Tourism Fund. tenant ahead of construction but was “Our first estimate is from 2007,” recalls Hunt says that there was widespread prepared to proceed without one. The acceptance that the project was providing agreement about the design with the Joe Burchick, president of Burchick Construction. “We were awarded the much-needed space in Oakland but that Schenley Farms residents and the church project in August 2009 and agreed to the grant process continued until 2012. concluded in 2007; unfortunately, as the hold our price through December. But During that time the development team final construction documents were being then they went into some design changes continued to work with the design and prepared, the early stages of the financial and it pushed well into 2010.” with Burchick Construction to keep to the

www.developingpittsburgh.com 27 During the planning process, Elmhurst worked closely with the residents in Schenley Farms to create a project that was sensitive to their concerns.

28 DEVELOPING PITTSBURGH | Spring 2017 nearly $20 million construction budget. manager for Burchick Construction. “We monitors that would set off alarms at the were preparing to drill for the pilings offices of both Burchick and Elmhurst. “We re-priced it a couple times; got new when a Verizon guy came out spraying Those alarms sounded just a few times subcontractor prices and labor costs,” orange paint right where we were to drill. during the construction. explains Burchick. “When you do that I told him that we had been given the you’re always cautious. We took some green light and he told me he was certain “There was never a problem with the additional risk to keep the number close that there was a 1,200-pair cable running foundations,” says Meuschke. “When the to what we agreed.” below where he was marking.” alarm went off it was because a heavy truck had gone by or because someone Work finally commenced in October Burchick was able to engineer a solution on our site had dropped off heavy 2013. Construction wasn’t as difficult in with the structural engineer that shifted material, like a load of stone.” the way that the lengthy preconstruction the lagging a few feet, creating a 100+ process had been, but there were plenty foot wall shoring wall that avoided the The weather also complicated those of challenges to working on a site that cable but held back the excavation at first phases of construction. Starting was tightly surrounded by occupied the boundary of the church. Burchick in October 2013, Burchick had to drill buildings. The only access for the project also helped with the cost of the parking foundations during the “polar vortex” of site was Ruskin Avenue. Subgrade garage by recommending that the lowest January 2014. The concrete pours for the construction was complicated by the floor of the structure be eliminated to slab-on-deck were also done during the proximity of the residential neighborhood avoid digging into the high water table at winter, necessitating complete tenting and the age of the adjacent buildings. the site. and heating of the structure. As often happens in old Pittsburgh neighborhoods – and Oakland particularly Working with a high water table created The length of the approval process had – there were a few surprises. a risk for the foundations of First Baptist an impact on the marketing and leasing Church, which was built in 1890. The of Schenley Place. One full building One early surprise was the discovery pilings are made of wood – trees medical tenant needed to occupy sooner that a main fiber optic trunk was located actually – and are dependent upon the than the building would be ready and a on the property that had not been moisture from the water table to maintain couple of others decided against locating documented previously. structural integrity. Were the timbers to in Pittsburgh while the project was on dry, the pilings would shrink and move. hold. Beyond the obvious loss of potential “We put a PA One Call in and Verizon To monitor the situation, Elmhurst had occupants, the delay had a subtle effect gave us an all clear,” recalls Dave Burchick install ultra-sensitive vibration a bit like the Boy Who Cried Wolf and Meuschke, vice president and project

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30 DEVELOPING PITTSBURGH | Spring 2017 prompted a response that Hunt found to Sentner from Colliers, that was interested of the overlay district. That scarcity added be interesting and humorous. in 6,000 square feet. When they made urgency to the lease-up for prospective the visit, the user revealed that it was tenants. Once Oculus agreed to move “By 2011 or 2012 we started to have Facebook Oculus interested in Schenley into Schenley Place, the remaining users neighbors contact us to ask when we Place. During the nine months needed to came on board in quick succession. As were going to start,” he chuckles. “They negotiate a lease and complete a design, of January 2017, Schenley Place stood at start realizing that the parking lot was the space requirement grew to 20,000 95 percent leased, with only 6,500 square pretty ugly and it would be nicer to have square feet, with Oculus taking part of the feet remaining that is contiguous to an improvement. They began to think, first floor and most of the second floor. Oculus’ leasehold. That means the space it’s going to happen anyway so why is it likely won’t get in the market. taking so long.” “They were looking for top of the market quality. They were looking for reputable “The leasing momentum, in my opinion, The building’s leasing representative, landlord, reputable developer with a really took off when we were able to say Patrick Greene, says that the start of track record of success. They got very we can deliver finished space in 60-90- construction helped focus the market on comfortable very quickly with Bill and 120 day’s time,” notes Eric Schindler, the project again as construction began Elmhurst,” Greene says. Elmhurst’s director of leasing. in earnest. Oculus was the anchor tenant for After nearly a decade of fits and starts in “Pre-marketing as the announcements Schenley Place. At the same time Oculus planning and two years of construction, were going forward, and then once was moving towards becoming a tenant, the rapid lease-up of Schenley Place the hole started being dug, that really the University of Pittsburgh developed a validated the patience and perseverance proved to the public that the project was heightened interest in the project. Located Elmhurst Group needed to get to the going ahead,” observes Greene, who physically on its campus, Schenley Place marketplace. Having the confidence that is senior vice president at CBRE. “We was viewed very favorably by Pitt’s real Oakland’s dynamics would ultimately probably had some soft marketing out estate staff and they began the process of reward that patience didn’t make the there in 2014 and then in 2015 we were identifying university user groups that had process easier, however. marketing pretty aggressively because either pent up demand for more space or we anticipated a 13-month delivery from non-academic users that were anxious to “Kudos to Elmhurst for having the vision that point. The building came on line move out of academic facilities like the and stomach to pull the trigger on a technically in late December but by the Cathedral of Learning. Ultimately a half- speculative project that was this expensive time all of our occupancy permits came dozen user groups from Pitt signed leases to pull off,” Greene in and we were able to accept tenants it in the building, now occupying almost 80 was probably January 1 of 2016. percent of the space. Hunt made a point of praising the ERECT Funds and First National Bank as equity “The really tremendous story behind the “I give credit to the University of partner and lender, musing that it couldn’t project is that in December 2016, having Pittsburgh. They were very professional have been easy to take a spec office to a just had the building delivered 12 months in how they worked with us. They were loan committee in 2013. ago, we have a new lease that puts the very strategic. For a large organization, building at 94 or 95 percent leased.” their real estate group was right on. I don’t Asked if he ever thought about normally say that but it was very well abandoning the project, Hunt laughs. “The process early on involved done. I was really impressed,” notes Hunt. approaching the usual suspects. We’re in “No. We also went through a lot at the the university district,” Greene continues. “Their board was supportive too,” agrees Rand Building. My motto was always that “If you look at the Fifth/Forbes corridor Greene. “They realized the value of if it was easy, everybody would do it,” he and you ask who the big citizens are, being in the building. With the scarcity says. “Also, the harder it is, the harder it there’s Carnegie Mellon and then there’s of product, they realized that this was will be for anybody to ever compete with Pitt. There’s also all this technology probably a one-shot opportunity and if us. We have a brand. We have a franchise. surrounding the universities. There are they missed their window of opportunity, We have a unique location. That’s a lots of companies who want to partner I don’t know when the next private one-of-a-kind building and we have two with Carnegie Mellon and Pitt that have development is going to happen in the of them in Oakland! So the answer is, no, a vested interest in being located close University Overlay District.” unequivocally no.” DP to them. They work with their PhD’s every day. Then you also take a look at The proximity to the universities and the technology transfer coming out of the quality of the building has allowed both universities and how many spinoffs Elmhurst to ask and get $37 per square coming out of the universities, they foot rents, net of electricity. Those are top have a desire to be close the University of the market rates, not just for Oakland Overlay District.” but for all sections of Pittsburgh. The lack of land and the difficulty in developing Greene recalls that the first big break mean that Greene is probably correct in came when they were approached by his assertion that Schenley Place will be an anonymous tech company from the last Class A new office building built California, represented locally by Patrick within the University of Pittsburgh’s part

www.developingpittsburgh.com 31 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 Developer Profile

The concourse at Nova Place. Photo by Rob Larson.

Faros Properties is a relatively new office buildings outside New York, buying FAROS PROPERTIES venture but the Leventhals have a family properties in downtown Boston and then s can happen, it often takes legacy that goes back 70 years. Their started acquiring property in Pittsburgh someone on the other side of grandfather, Norman Leventhal, founded in 2013. the fence to notice how green Beacon Construction in Boston with his “We started with a single property, which the grass is in your yard. That’s brother Robert in 1946. By the 1960s, was at the time Washington Plaza, a certainly been the case for the two brothers moved into real estate FarosA Properties, a developer and property development and worked throughout the 388-unit apartment building up by PPG owner based in New York that has found country doing fee-driven development Paints Arena,” recalls Jeremy Leventhal. green grass growing in Pittsburgh where that ranged from post offices to hotels “Originally it was a market we didn’t others have overlooked it. to single-family communities. Norman know much about so it was about Leventhal grew the Beacon Companies to understanding the building, understanding Alexander and Jeremy Leventhal, along the point of going public in 1994, before the opportunity and then really digging with partner Elliot Gould, founded Faros selling the company in 1997. Jeremy’s into the market and understanding it. We Properties in 2009. Prior to starting and Alex’s father Alan had been CEO of did that in order to bid on the project and Faros, Alex Leventhal worked at Jones the business at the time of the sale and thought it was a great market.” Lang LaSalle, RM Bradley Real Estate and formed Beacon Capital Partners, which had been managing director of Boston invests in Class A trophy office buildings in Aside from having properties of interest, Realty Advisors. His brother Jeremy gateway cities across the U.S. Pittsburgh has other qualities as a market had worked for Morgan Stanley’s Real that fit the profile Faros had for investing. Estate Investment Banking Division and From the outset, Faros Properties began Elliot Gould started his career with Winn by acquiring distressed office buildings “In general we’re trying to target investing Development, Cummings Properties in the New York market. They expanded into markets or submarkets with strong and Archstone Communities in property on that portfolio with acquisitions of concentrations of universities, teaching management and leasing.

www.developingpittsburgh.com 33 hospitals, generally access to intellectual into a hub for technology businesses. at Allegheny Center. For the small-scale capital, which is here in Pittsburgh,” Jeremy Leventhal presented the plan, development, people were waiting for explains Leventhal. “We look for a which included weaving the former somebody to really tackle the project. I diversified economy, which is here in Allegheny Center into the communities think that’s opened the door, hopefully, Pittsburgh since steel collapsed and the that surrounded it. for others to see what we’re doing on city reinvented itself. Once we acquired these 30 acres and say they are going to that property and we were spending time “We define Allegheny Center between acquire this building over here or build here, we really liked the city and began the office and residential as an urban this new building over there, and invest looking to do more.” renewal project. A lot of people put the capital.” it together as just Allegheny Center, The enthusiasm for the Pittsburgh market whatever that was in people’s minds. Faros’ investment in Nova Place goes hasn’t been strictly academic. Since the We’re looking at it as a complete urban beyond the millions being spent to renovation and lease-up of City View renewal project of corner-to-corner renovate the office and commercial space in 2013, Faros has acquired at least 30 acres,” Leventhal explains. “People in the buildings. Exterior lighting, branding, two properties each year. It bought the use the terminology of live-work-play; streetscape and plaza renovations are Carson Street Commons on South Side, so the concept of having retail-type meant to bring the public into the space. along with a 38,000 square foot office experiences, having living on site, having The renovation of the massive concourse building, Birmingham Place. In summer commercial office space on site, all of the mall into various collaborative work 2016, the company bought the 105,000 within walking distance of itself and the spaces is also meant as a public amenity, square foot office building at 106 Isabella surrounding neighborhoods is the goal.” as Faros welcomes the community – not Street, a historic structure that has been just tenants – to share in those spaces. Burns White headquarters. And it was Allegheny Center had been lightly Leventhal says they are also working with the acquisition of a troubled apartment occupied in recent years, although the city for sidewalk improvements and complex on the North Side that led Faros PNC Financial Services (and before that a plan to change the traffic pattern so into its signature project in Pittsburgh. National City) had a large leasehold for an that the streets surrounding the former operations center. Pittsburgh companies Allegheny Center property allow two-way Faros Properties acquired the 810-unit and realtors viewed the complex as traffic. All of these investments of time Parkview Apartments in March 2014. The too far removed from town, even after and money are meant to connect the four-building complex was 50 percent the new development on the North North Side community to Nova Place and vacant and needed both cosmetic and Shore took place in the early 2000s. the Parkview Apartments, and to connect remedial renovations. Home of many The perception of the North Side wasn’t those properties to the city beyond. of the Steelers and Pirates in the 1970s, positive either. But the New York-based Parkview Apartments had followed a Faros saw the bridges as connections On February 14, Faros announced that similar trajectory to its neighbor, the rather than barriers and expected to have the community connection at Nova Place Allegheny Center Mall, during the years a positive impact on the community as it would be strengthened by commitments that followed. Within 18 months, Faros invested there. from the Buhl Foundation, Comcast and gave new life to the apartments, bringing Urban Innovation 21 to invest $8.8 million the project to full occupancy. “Certainly I think [the perception] in communications improvements in is starting to change for the better. the concourse to bring public Wi-Fi to During that transformation, in February I would qualify change as capital the space and to spark entrepreneurship 2015, Faros bought the mall and office improvement, people investing money at the facility. The grants will enable buildings of Allegheny Center with the in the neighborhood,” says Leventhal. “I collaboration among members of the plan of creating a 1.2 million square think it took somebody willing to take a community whose ideas or businesses foot workplace. In May of that year, crack at Allegheny Center because it sits are not yet to the point where they can Faros announced its plans to make the at the doorstep of the North Side. You reside in an incubating co-working space complex, now re-branded as Nova Place, cross over all three bridges and you land like Alloy 26 in Nova Place.

Alexander Levanthal Jeremy Levanthal Elliot Gould

34 DEVELOPING PITTSBURGH | Spring 2017 Alloy 26 is a separate company but Faros Looking for Commercial Space in Beaver County? was directly involved with the concept Call Avison Young Commercial Real Estate and design/construction of the space. Leventhal says the concept was exciting 11 miles to Faros and they wanted to be part of 602 Morris St. making the space function well as the Darlington, PA landlord. Industrial Space 40 acre site For Sale “It goes beyond being a lead generator 5 miles of tenants, which it certainly has and can th be. More than that, it really helped this 850 4 Ave. entire complex in terms of creating a real New Brighton, PA Office Space heartbeat in the center of it, a real sense of AVISON entrepreneurship and energy that wasn’t + 13,800 sf For Sale otherwise here,” asserts Leventhal. “These 5 miles are people who are really aspirational. A 800 5th Ave. lot of people work here. They’re studying YOUNG New Brighton, PA companies. They are growing quickly. Flex Space They are showing up early and staying late + 38,000 sf For Sale at night. Those kinds of people are great for the whole complex.” Proposed Cracker 3.5 miles 350 Kentucky Ave. Jeremy Leventhal notes that Nova Place Rochester, PA and a space like Alloy 26 are the kinds of Industrial Space projects that he and the other managing + 24,500 sf For Sale partners at Faros Properties set out to do.

“We are focused on the Northeast and are looking for opportunities to create and add value through inspirational design and 4 PPG Place | Suite 300 | Pittsburgh, PA 15222 | T 412.944.2130 capital improvements in great dynamic B&G Breaking Ground Ad:Layout 1 7/2/14 11:58 AM Page 1 spaces,” he explains. “We’re generally not trying to buy stabilized properties – we have in the past – but we invest in everything from stabilized property to more dynamic opportunities to Real Estate I Construction I Manufacturing re-imagine spaces that are underutilized. P. 412-227-2500 • F. 412-227-2050 That’s what you’ll see in Nova Place.” DP www.BlumlingGusky.com New York Office 551 Fifth Avenue, Suite 413 New York NY 10176 T: (212) 299-8700 www.farosproperties.com

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research was the discovery that creatives Creative companies in cities innovated ATTRACTING working for non-creative companies at roughly the same rate as their country were instrumental in innovation at those cousins but creative workers in cities CREATIVE WORKERS firms, whereas creative companies would tended to take advantage of the density not automatically be innovative. (Movie of businesses to increase their creative IS A KEY TO industry anyone?) Creative workers interaction and even change jobs more possess qualities that the creative readily. This gave companies better PITTSBURGH’S business does not automatically inherit. access to creative talent and allowed the PROSPERITY For example, creative workers can creative worker the opportunity to pick up leverage learned process innovations best practices and innovative techniques that are absorbed in their interactions that could be shared with other creative reative people drive workers at their new workplace. innovation, not creative with other creative workers from across industries. That simple, their experience. Companies are much With the latter finding in mind, PTC is common sense assumption less likely to adopt learned innovations championing the creative worker and represents a change in from other organizations. An engineer has been instrumental in studying where thinkingC about economic development doing business with Apple can be inspired and how creatives impact Pittsburgh. To and there are Pittsburghers committed to to incorporate that company’s design that end, Kim Chestney has been hired as making the region a magnet for creatives. process rigor into their own work; that director of creative industries acceleration engineer’s employer will likely have at PTC. Chestney is an artist and writer In 2003, Richard Florida wrote The Rise of cultural (or even legal) restraints from who founded Art + Technology Initiative, the Creative Class, a book that put forth absorbing Apple’s best practices. the Creative Industries Network and the the notion that the economic health of CREATE Festival. She embodies the values an area was related to its creative workers. Another important revelation that that the creative worker brings to a city. Florida, who is the director of the Martin came out of the research on creative Her week is filled with the kinds of cross- Prosperity Institute at the University of workers was the importance of an urban curricular interaction that Florida believed Toronto and Global Research Professor at environment to the process of innovation. triggers innovation. New York University, studied industries and cities where innovation was thriving and concluded that employing creative workers was a key element to inspiring innovation.

This idea is at the heart of the Pittsburgh Technology Council’s (PTC) Creative Industries Network, an effort to accelerate the pace of innovation in Pittsburgh by attracting creative types and fostering environments where creatives can best work.

Governments and economic development agencies didn’t readily embrace Florida’s thesis. As an alternative, the attraction of companies and industries that employ creative workers is favored by many who see the clustering of innovative firms as the essential strategy. Pittsburgh has employed this strategy too. The cluster theory views creativity and creative workers as incidental to innovation but focuses on the activities of the businesses or industries as the drivers of innovation. Strategies for attracting companies were also easier to employ and to measure results.

But research done in the intervening years suggests that it is indeed the creative people within the firms that do A 2016 study of the work/live trends of creative workers shows where creative workers are living the innovating. At the heart of this later in the region. Source: Pittsburgh’s Creative Assets Corridors and Convergence Centers.

www.developingpittsburgh.com 37 Chestney, like many of today’s artists, “Pittsburgh has a history of philanthropy, 200,000 people by 2020. These people operates at the intersection of art and so we have these foundations that help earn $19.6 billion, which is 20 percent technology. Many of the people who with attraction and universities that attract of the region’s overall workforce would be considered creative workers those kinds of people,” she remarks. income. work in the technology field and express “We’re in that next wave of place to their creativity outside of traditional arts. be. Pittsburgh is doing better at it than • From an industry perspective, Chestney explains that her efforts to Portland or Austin.” more than 11,000 creative sector attract people who live at that art and establishments directly employ more technology intersection comes from the One of Pittsburgh’s foundations, than 280,000 people. desire to help people express themselves the Claude Worthington Benedum while making a living at it. She says the Foundation, was a funding supporter • Pittsburgh’s Design cluster employed trick is finding opportunities to express a of two studies done by the PTC in over 50,000 people and Pittsburgh was passion and get paid for doing so. partnership with Carnegie Mellon to look 34 percent more densely-populated with at Pittsburgh potential for creative workers people in this segment, which included “The International Economic in 2020. The 2014 study examined the engineering and manufacturing. Development Council has an interesting creative workforce and a 2016 study conversation on this subject. There’s a looked at where creatives lived and • The Creative Industry Support cluster lot of talk about talent attraction because worked in the region. Some of the key (which includes R & D, universities, wherever creatives are, culture and talent findings were: services, consulting and associations) seem to follow,” Chestney says. was growing in Pittsburgh at a rate that • Creative industry clusters that were was 14 times faster than the national rate She talks about cities around the country identified included Creative Industry that are “putting all their eggs in one Support; Data Sciences; Design; • Pittsburgh’s Technology talent included basket” by attracting creative talent, citing Entertainment; Fine Arts; Media 35,000 people in 2012 (nearer to Detroit specifically. Chestney says Toronto Communications; and Software/ 40,000 today) and was growing three has also seen interesting economic Hardware. times faster than the national rate. feedback by ramping up its efforts to • Compared to 19 other benchmark attract creative workers. She also likes the • As of 2012, more than 176,000 people cities, Pittsburgh ranked 20th for position Pittsburgh is in. have occupations related to the creative clusters, a number expected to exceed number of foreign-born residents,

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38 DEVELOPING PITTSBURGH | Spring 2017 18th for the concentration of the gay seen above-market response whenever and lesbian community, and 13th for we advertise.” the percentage of population that is non-white. Topoleski also says that the Conference is working with major corporations For creative talent to thrive and grow, looking for IT talent, along with other there needs to exist an ecosystem of entities that promote Pittsburgh support, something that is only emerging throughout the country (like PTC), to in Pittsburgh. Incubators and accelerators refine the way they are going to market. are part of that ecosystem but so are It’s a bit of unifying a message, garnering access to capital, training, co-working resources and learning lessons from space, interconnectivity with other each other so that each group puts creatives and inclusiveness. its – and the region’s – best foot forward. Whether the target audience is IT talent The 2014 Regional Creative Clusters or fine artists, Pittsburgh is not alone in Study highlighted that Pittsburgh has the realization about the value of creative weakness in the diversity of its workforce people to the region. and population, as well as a limited support infrastructure for creative talent. “We have been benchmarking other Chestney was quick to point out how regions that are attracting talent and quickly this was changing, with a handful everyone has stepped up their game,” of national co-working companies warns Topoleski. United Hospital Center Orthopaedic and Spine Center moving to Pittsburgh in the wake of Alloy 26’s opening in Nova Place. The Creative Unlike five years ago, the environment to Industries Network is accelerating that which creative workers may be attracted in creative ecosystem through a program Pittsburgh has become more supportive. called Co-CREATE, which will use the Chestney points out that several experience of established Pittsburgh- technology companies have created artist based creative talent to support startups in residence programs to let creatives through the early stages of growth. work in an environment in which there is no direct correlation to the outcome of “Co-CREATE will select six companies to the work. Such a program acknowledges go through ten months of incubation,” the theory that creative workers need to Chestney explains. “They will get start-up interact with other creative people outside advice about legal, marketing, and other their assigned spheres. The contribution business issues so they can grow here in of the artist in residence is simply to add Pittsburgh instead of going elsewhere.” creativity to the workplace. It’s not an idea

without support. Rivers Club Renovation Keeping talent in Pittsburgh is a major civic effort. Inflection Point, the 2016 report by “Results indicate how important the Allegheny Conference on Community collaboration is to innovation,” explains Development on the future of Pittsburgh’s Chestney. “Two factors are most workforce pointed out the need for a important: you have to have a diverse skilled workforce that was going to be group of people; and they have to have a facing Pittsburgh over the coming decade. chance to work together.” Among the key skills needed for the future workforce were many that parallel the skills She suggests that having a software of creative workers, particularly in the area developer interact with a fine artist isn’t of information technology. just to make the workers feel better.

Linda Topoleski, vice president, workforce “Companies that collaborate with others operations and programs at the Allegheny outside their silos do better, grow faster Conference, is one of those charged with and are more profitable than those that creating initiatives to bring skilled workers don’t” DP to the region. The IT space is one which is Allegheny Country Club, Phase I Renovations getting support already.

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s the final tallies of the first quarter gross domestic product (GDP) the first six months – especially in energy- economy were wrapped up should be obvious. related investment – held GDP growth to in February, data showed a level that was the weakest since 2011. what most economists had GDP for the fourth quarter grew by a expected of the year 2016: mildly disappointing 1.9 percent, following Economists are nearly unanimous Athe U.S. economy was in good shape a 3.5 percent jump in third quarter in predicting a return to higher GDP but with growth that was mediocre. GDP. While the growth in the fourth growth in 2017. With the near-certain The outcomes in the major metrics of quarter was a few basis points lower prospect of tax cuts for both individuals the economy were within the predicted than expected, the narrative behind the and businesses, disposable income for ranges, giving a sense of certainty about numbers was on script. spending and business investment should expectations for 2017. boost output. Likewise, an infrastructure Third quarter economic output was spending package is also expected, Whatever uncertainty exists is rooted exaggerated by consumer spending although the impact of such a stimulus mainly in the unilateral and unpredictable that grew at an unsustainable rate of 3.5 won’t be felt until 2018. The eventual size governance of the Trump Administration. percent and exports that popped ten of such a government spending package is Even that unpredictability is buttressed percent, driven mainly by an unusual less certain. Higher infrastructure spending by the sense that Trump’s promises surge in soybean exports. Continued was part of both the Clinton and Trump about his economic policy will lead to strength of the U.S. dollar tilted the platforms, making Democratic support improvements in the tax and regulatory balance of imports back towards the U.S. for a stimulus package likely. President environment. Early surveys of consumers in the fourth quarter. The 8.3 percent Trump’s opposition could be stiffer within and businesses show that while surge in imports translated to a drag that his own party, as Republican disdain for consumers are nervous about President lopped 1.7 points off the top line GDP higher deficits and increased borrowing Trump’s style and civil liberties approach, number. Consumers spent at a healthy was demonstrated clearly in 2013. Fiscal most believe that their economic outlook 2.5 percent higher pace in the fourth hawks, many of whom have little other will improve under his administration. quarter but spending wasn’t enough to affinity for Trump, may choose to tie any Businesses have responded to the new offset the trade imbalance. infrastructure bill to a defined funding administration with markedly increased plan. Such a plan will be hard to design, optimism, especially for the coming two For the full year of 2016, GDP growth especially if tax revenues are set to fall. years, a prospect that should result in averaged 1.6 percent – although year- increased business investment. If that over-year GDP growth in December was The consensus forecast for GDP growth optimism translates into more business 1.9 percent. Growth was 2.7 percent in is between 2.1 and 2.5 percent in 2017 spending early in the year, the impact on the second half of 2016 but significant and between 2.0 and 3.0 percent in declines in business investment during 2018. These growth scenarios are reliant

www.developingpittsburgh.com 41 upon the Trump administration securing The expected expansion for business expanded by 4.5 million people. support for infrastructure investment of should be a positive for leasing and $100-$200 billion and a tax environment occupancy levels. Increased spending That leaves little slack in the labor force that is an incentive to expansion. at a time when labor markets are tight to meet demand for new jobs that result will also trigger higher inflation, which from growth. We are beginning to see the Employment – the economy’s other in turn will prompt higher interest impact of the tightening labor market with headline metric – fared better than rates. That’s a bit of a double-edged increasing average wages, which reached expected in 2016. Employers added sword for real estate. Inflation helps 2.9 percent in 2016. nearly 2.2 million jobs to payrolls – the property appreciation but also boosts vast majority of which were private sector interest rates, which raises cap rates, One possible response to this scenario – and unemployment fell to 4.6 percent. putting downward pressure on values. for more limited GDP and employment Payroll expansion is expected to slow in Higher rates raise the cost of borrowing growth would be more spending and/or 2017 but unemployment is forecasted and inflation boosts the cost of deeper tax cuts proposed by the Trump to be 4.4 percent at year’s end. Although construction, neither of which is good administration. But with the budget deficit several measures of unemployment still for development. expected to push $1 trillion in 2018 as a show the workforce lagging in health result of the proposals anticipated by the compared to the peak of the previous Another risk facing the implementation administration, fiscal conservatives would business cycle, the U.S. economy is very of a large stimulus program to spur seem unwilling to add to that deficit. close to conditions that would qualify growth is the limited workforce available as full employment. And that will have to respond. Following a presidential Global economic conditions have begun implications for real estate. campaign during which the successful to stabilize and data at the end of 2016 candidate pledged to put Americans suggests that global GDP growth is Newmark Grubb Knight Frank’s chief back to work, the reality is that employers better than expected. Even a nominal economist, Robert Bach, addressed the overwhelmingly list the inability to find improvement in the European Union impact of the Trump Administration’s qualified workers as one of their main economies or an uptick in China’s proposals in his weekly update on drags on growth. Whether in response to growth would be accretive to the U.S. February 10, noting that if the economy a stimulus program or just an improved companies that rely on trade with other was closer to recession than many think, business and consumer spending countries for a significant portion of “It could be that, in an accident of good environment, growth is going to be their sales. The risks to global recovery timing, the tax cuts and infrastructure limited by the workforce that is available. do exist. Great Britain’s exit from the program coincide with the onset of EU has not been detailed yet and the the next recession, right when they are Data released at the time of the potential for a divorce that damages both most needed. Regardless, the rate of December jobs report on January 6 sides is real. The prolonged European change will accelerate over the next shed some light on the potential for downturn is putting pressure on the debt few years, both in terms of economic employment growth in the coming repayments from weaker EU nations like policies and technology, creating new year or two. While job growth averaged Greece again. And, of course, threats of opportunities for the commercial real 180,000 per month in 2016 – higher more isolationist trade policy from the estate industry.” than forecasted but off from 229,000 in U.S. also pose a risk to the American 2015 – the working age population grew economy, which will see its costs rise Government stimulus, coming eight by just under 80,000 per month. That’s should tariffs on Mexican or Chinese years into an economic expansion, a continuation of a five-year trend that goods rise. could be very well-timed to ward off any finds employment grew by 11.2 million possible recession 12-24 months out. jobs while the working age population On balance, though, the economic

42 DEVELOPING PITTSBURGH | Spring 2017 conditions nationally and globally operating in Pennsylvania, marking the development of a second cracker in look favorable for 2017 and 2018. One low point in the downturn. According to Dilles Bottom, OH, Shell’s cracker is the reason for that stability has been the Baker Hughes weekly count, however, foundation of a petrochemical industry improved conditions in the energy the number of rigs operating January 1, that will be built up over the next two market, most notably the rebound in the 2017 was 32. That is the highest since decades. The 2021 startup date for the prices of oil and gas. That improvement September 25, 2015. Shell plant means that the supply chain will likely play a key role in the economy and downstream businesses may not of Western PA too. Another indicator of the recovery in need to be in place in the next couple the energy sector has been the growth of years but the site search activity going A key measure of economic health – job in positions open in a variety of gas on now is a clear indication that other creation – in Pittsburgh ended the year midstream and downstream businesses. industries are preparing to follow. 2016 in the same fashion as 2015: flat. Renewed investment in the midstream There were 4,400 net new jobs created capacity to gather, process and transmit The revitalization of the energy industry in 2016 in the seven-county metropolitan natural gas and its byproducts was and the nascent petrochemical industry Pittsburgh market, an increase of 0.4 visible at the end of 2015. Key pipeline in Western PA will be a boost to the percent. That was well short of the 1.7 projects are driving capacity expansion industries whose growth allowed percent forecast. in the Marcellus footprint, as well as the Pittsburgh to redefine itself. Because southeastern portion of the Utica Shale the energy-related businesses slowed in Behind the numbers, the story of play in Ohio. Expansion of the Bluestone 2015 and 2016, the economic impact Pittsburgh’s employment situation processing plant in Jackson Township and of emerging technologies and financial was also a repeat of 2015. Weakness construction of the $500 million Revolution services were blunted. That won’t be the in manufacturing and energy sectors plant outside Burgettstown will allow the case in 2017. was offset slightly by more hiring in oversupply of gas to be separated and information technology, financial services processed. The Rover pipeline project that Uber executives recently presented the and hospitality. While it’s anticipated Energy Transfer Partners is building out in story of the ride-sharing company’s that the erosion of the workforce in Ohio (for which the capacity of Revolution foray into automated vehicles to manufacturing and energy has slowed plant is needed) and the Keystone II a NAIOP Pittsburgh audience. The or reversed, and that most sectors will pipeline will allow producers in Western PA company has invested nearly $100 be adding jobs in 2017, it’s also worth access to markets where suppliers can get million in facilities in Lawrenceville and remembering that economists viewed the spot price for the commodity. at Almono in Hazelwood; and Uber has 2016 that way. One big difference hired 550 people as of January 31, with between the outlooks for the two years By the end of 2017, the progress on 100 open positions. The race to develop is that while the macroeconomic picture Shell’s new polyethylene plant in a mass market self-driving vehicle got is roughly the same, confidence in small Monaca should be visible, with the peak a boost a couple of weeks later when business is markedly higher. construction years to follow in 2018 and Ford announced it was investing $1 2019. Combined with the anticipated billion in Pittsburgh-based startup Argo “Job growth in Pittsburgh the last couple years was disappointing but there was still job growth in financial services, in medical care, in professional and business services, in engineering, and probably in real estate,” reports Stu Hoffman, senior vice president and chief economist at PNC Financial Services. “But we lost jobs in manufacturing and energy. We lost a lot of jobs in energy and we still have many people working in basic manufacturing. Twenty years ago, if we lost jobs in those basic industries there was never enough in other industries to make them up. We just lost jobs. Now it’s neutral. The gains in the growing industries offset the losses in others.”

There is evidence that the recovery in the energy sector has taken root. One barometer of the Western Pennsylvania energy sector that is bullish is the natural gas rig count. A metric that Pittsburghers are not accustomed to following, the rig count plummeted after the price of oil collapsed in the second half of 2014. In Job growth in Pittsburgh lags that in benchmark cities since the downturn in energy. Image June and July of 2016 only 13 rigs were courtesy Integra Realty Resources.

www.developingpittsburgh.com 43 AI, which was co-founded by two year or two are expected to lead to economic foundations that have developed Carnegie Mellon graduates. expansion of employment and investment. over the past decade as a bulwark against future economic disruption. Carnegie Mellon’s leadership in Pittsburgh’s story has reached a broader robotics is the reason that research U.S. and global audience. Investment in the “Pittsburghers are still shortsighted. We in self-driving vehicles is gravitating to companies and real estate in Pittsburgh is wake up waiting for the other shoe to fall Pittsburgh. The advances in research on the rise. Sustaining that feel-good story when we’re doing the things needed to into artificial intelligence and cyber will require that business investment in build economic depth,” notes Jack Shelley, security at CMU are also acting as Pittsburgh translate to more employment senior vice president for real estate and magnets to private industry. In fact, than has grown since 2013. Efforts to services at Dollar Bank. “Depth will allow us the next two buildings planned for attract people generally and skilled workers to weather the ups and downs much better construction at CMU’s campus will be specifically are long-horizon strategies, than in past.” DP for Tata Consulting Services and ANSYS, which will be enhanced by greater private companies looking to leverage employment opportunities. Pittsburgh the university’s talent. saw how that can work as the natural gas industry began its build in 2009. With the Similarly, leadership in life sciences decline in that industry reversing in 2017, the and medicine are drawing industry to stage is set for expansion across multiple partnerships at the University of Pittsburgh fronts to occur. Perhaps because growth and UPMC. The healthcare giant has forecasts over the past couple years have weathered several difficult years for its proven overly optimistic, forecasters are industry and is emerging with expansion staying with the gentle one percent job plans throughout the region outside of growth for 2017. But the prospect of a its Oakland urban campus. Pitt’s new handful of stronger industries without a administration is also poised to begin serious drag may well be a recipe for the translating its heightened perception as a 18,000 to 20,000 jobs that were expected research university into more partnerships to grow in 2015 or 2016 to materialize. with private industry. Whether that optimistic scenario comes In both cases, the efforts of the coming to fruition, one Pittsburgh banker sees the

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P M A NAIOP PM 44 DEVELOPING PITTSBURGH | Spring 2017 Office Market Update

approximately 150,000 square feet, The market’s leasing story has centered reporting that its management views on the premise of relocation more than Pittsburgh as a growth driver for the new business activity. Top leases for company. Argo AI sealed a $1 billion deal 2016 included People’s Gas Company’s with Ford Motor Company to expand its relocation and consolidation from research and development of self-driving suburban markets to approximately cars. The company already employs 153,000 square feet (SF) at the former Del more than 550 associates in advanced Monte Center; and United Health Care’s technology and expects to hire more move from the Parkway East submarket than 100 additional positions in the next to just over 71,000 SF at Nova Place. 18 to 24 months Uber now occupies The argument could be made that the over 100,000 square feet in the Greater North Shore is the new Downtown as Downtown submarket.

Meanwhile, Amazon followed up its entrance into the Western Pennsylvania market with a new corporate Tim Goetz office at SouthSide Works. Economy The 15,000-square-foot office brings Amazon’s he Urban Land Institute (ULI) recent acquisitions – Safaba listed Pittsburgh among its top Translation Systems, LLC and T five markets to watch in the Shoefitr – under one roof 2017 Emerging Trends in Real Estate and allows the company to Report. Pittsburgh ranked third behind expand from its current 50 Columbus, OH, and Richmond, VA, and employees. Growth plans just ahead of Charleston, SC, and Salt include the addition of up Lake City, UT. The Pittsburgh region to 5,000 new jobs in the made the list due to its low cost to Commonwealth. do business; access to talent via four major universities; and, its status as an emerging tech hub with the likes of Uber, Market Overview Google, Facebook and most recently, espite the region’s Amazon, establishing regional research growing popularity as and development centers in the city. Da tech hub, leasing Pittsburgh also made Travel + Leisure’s activity for 2016 reported a list of America’s 20 Most Charming Cities. 6.3% drop from 2015, ending Ranked 19th on the list, the region is the year at just over 3.0 growing in popularity among Philadelphia million square feet, while natives in particular, gaining an annual average overall asking rental average of 2,165 people over the span of rates dropped 3.0% to $19.12 2010-2014, according to the U. S. Census per square foot (PSF). Class Bureau’s American Community Survey. A space remains in high Pittsburgh has gained more residents demand as leasing within the from Philadelphia than in net exchange sector jumped nearly 10% with any other region, with New York City year-over-year at the close and Youngstown, Ohio, rounding out the of 2016 at an average asking top three. rate of $24.57 PSF. The rental rates for Pittsburgh’s Though the region added just 4,400 new trophy office projects range jobs in 2016, Pittsburgh remains poised from just over $30 PSF in for growth in its strongest economic the CBD to near $40 PSF in sectors. Citizens Bank announced the neighborhoods just east that it would remain a tenant in 525 of downtown, the region’s William Penn Place, where it occupies epicenter of education and innovation.

www.developingpittsburgh.com 45 developers, investors and occupiers are USA and has undergone significant Outlook growing increasingly more interested in renovations with previous ownership the area just across the Allegheny River Rugby Realty Co. and GLL Real Estate ittsburgh is expected to remain on from the CBD. Partners. This purchase adds to Wilkow’s the radar of national and perhaps Mon River portfolio, as the group also P even international investors in the With support from Governor Wolfe’s owns neighboring 20 Stanwix Street. coming months. With the city’s largest administration in the form of $1.76 office tower and a pair of fully-occupied million in job-creation tax credits and a CBRE Global Investors, Inc., who until North Shore properties now on the $600,000 Pennsylvania First grant, SAP now have not expressed interest in the market, 2017 is poised for record sales announced plans to construct a 182,700 Pittsburgh market, picked up the 27-story activity. Rental and vacancies rates square-foot, seven-story office building Liberty Center from Starwood Capital. The have stabilized, though consolidations on one of two remaining parcels on the property remains one of Pittsburgh’s top and relocations will lead to negative North Shore. The company, who currently Class-A towers and is home to Federated absorption and larger blocks of space occupies more than 100,000 square feet Investors, who extended its lease term returning to the market within the next in K&L Gates Center and 20,000 square through 2030. 12 to 18 months. feet in Pittsburgh’s Strip District, plans to consolidate operations in the new Another first-time investor in Pittsburgh Grant Street Associates/ building and add 242 new positions over was Stark Enterprises, a Cleveland-based Cushman & Wakefield the next three years. The long-term lease group that maintains a diverse portfolio 310 Grant Street, Suite 1550 for the new building to be constructed by of mixed-use product throughout the U. Pittsburgh PA 15219 Continental Real Estate Cos. is valued at S. Stark reached agreement with Oxford T: 412/391-2600 over $70 million. Development Company to purchase 441 www.gsa-cw.com Smithfield Street, a 200,000 square-foot [email protected] The region experienced a flurry of office building across the street from out-of-town investment activity in 2016 the Macy’s redevelopment project, with the acquisitions of 11 Stanwix Street, Kaufmann’s Grand on Fifth. Stark plans to Allegheny Center, 525 William Penn Place, renovate the existing building into fresh Liberty Center and the former Heinz office space with street-level retail. This offices by New York-based investors. investment came after Oxford failed to secure an anchor tenant and abandoned M & J Wilkow Ltd. Is scheduled to close the plan for its 350 Fifth redevelopment on the purchase of 11 Stanwix Street in Q1 project on the site. 2017, marking its sixth major purchase in the market in recent years. The 467,843 square-foot office tower is home to prominent tenants Key Bank and Skanska

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Industrial Market Update

Pittsburgh’s 142 million square foot for lease as a result of Veritiv’s move to National Trends: (SF) industrial market completed 150 Thorn Hill Road, Berlin Packaging’s owned facility in Chartiers Industrial Implications for the a strong 2016 with expectations Regional Market of solid activity in 2017. Market Park coming on the market for sale, and Philips Respironics vacating multiple fundamentals remain sound, warehouses in Westmoreland County, he national industrial market is industrial property continues its rise etc.). Overall, given current levels of booming with many markets as a highly sought-after asset class supply and demand, we expect vacancy T seeing record low vacancies, on a national level, the oil and gas to stay stable or decrease slightly in coupled with high levels of speculative sector has positive momentum, new 2017. In addition to several large active construction. Institutional capital is construction should decrease this requirements in the market, demand currently very comfortable investing in year, and labor questions abound; among the typical bread and butter deals industrial assets, both speculative and in the market (20,000 SF – 50,000 SF) stabilized, and industrial product nationally all of which should make 2017 an is increasingly viewed as a preferred interesting year in the local market. has increased and should continue to increase in the first half of 2017. asset class for investment. High interest in industrial product from the capital Market Fundamentals Continued upward pressure on rental markets is expected to continue, buoyed rates is expected, particularly in several by strong user-demand fundamentals 016 was a good year for the submarkets (City of Pittsburgh, Cranberry, driven largely by e-commerce supply market, recording net positive and Beaver County) where vacancy chain requirements. Further strengthening absorption of over 2 Million SF, 2 rates are at low levels. Additionally, the case for industrial product in capital which is the highest total on record construction deliveries are expected to be markets is the growing oversupply of since 2007. Much of the absorption was down from 2016’s 2.4 Million SF of new multi-family product in many markets, comprised of large build-to-suit projects, deliveries. Lastly, expect more industrial long the darling asset class after the 2008 namely FedEx Ground’s 305,000 SF properties in the City of Pittsburgh to recession. Many funding sources are facility in Jackson Township, Philips be converted to other uses. This not looking for other asset classes to invest in. Respironics 260,000 SF build-to-suit only removes existing inventory from Lastly, the trend of institutional investors in East Huntington Township, Leeds the market but forces users to find new looking to place capital in secondary and 265,000 SF warehouse in Upper Burrell spaces. This should add additional upward tertiary markets with good fundamentals Township, Shell’s 200,000 SF warehouse pressure on rents in certain submarkets. was born out in notable 2016 transactions in Aliquippa, General Electric’s Additive including investor acquisitions of 460 Manufacturing facility in Findlay Vacancy should stay relatively stable. New Nixon Road in Harmar Township, Township, etc. Some of these projects speculative deliveries and existing space Keystone Commerce Center in Cranberry, were pure absorption (Leeds, General returning to the market should partially and GE CATA in Findlay Township. Electric, Shell), while others will result offset new demand. in large blocks of space returning to the In addition to capital markets market in 2017 (2920 Beaver Avenue activity, national trends including

Source: CBRE Econometrics

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50 DEVELOPING PITTSBURGH | Spring 2017 Producers active in the Appalachian Basin have increased their capex budgets for 2017, resulting in more drilling activity and as a result, companies in the industry’s supply chain are back out in the market looking for more space, better facilities, consolidating facilities, etc. This is a welcome trend after a period of minimal positive transaction activity within the industry. All signs point to activity continuing to increase in the oil and gas industry throughout 2017.

Lastly, a final investment decision is expected in 2017 for PTT’s proposed ethane cracker in Dilles Bottom, OH. If in fact the project moves forward, as it is expected to, that will result in additional long term growth in the region’s industrial market.

New Construction

016 was an active year for industrial Build-to-suit development still outweighs speculative development. construction, with speculative development deliveries rivaling the automation and potential re-shoring of expected to ramp up in 2017. While there 2 2007 pre-recession peak and a number manufacturing are expected to play out are some other projects in the works in of large build to suit deliveries. While our in the local market in 2017. The growing the Ohio River Valley, it is highly likely market does not see the level of new global focus on automation, robotics, any major downstream demand directly development of some of our neighbors and advanced manufacturing is already related to the Shell cracker will come after like Columbus (5.8 Million SF delivered in being felt in the local market. Carnegie the plant is fully commissioned, which is 2016), Central PA (7 Million SF delivered Mellon University and a strong regional currently scheduled for 2022. in 2016) and the Lehigh Valley (8.1 Million talent base are attracting a growing SF delivered in 2016), the 2.4 Million What has been very encouraging is the number of companies to locate and SF of 2016 deliveries in the Pittsburgh increased activity in the industry in both expand in the region. market well outpaced any year during the the upstream and midstream sectors. previous ten-year period. Despite the attention garnered by robotics and advanced manufacturing, heavy manufacturing and mining remain a critical component of the regional economy. Potential re-shoring of manufacturing is an intriguing trend to watch on a local level this year. 2017 is expected to see the re-start of two regional mills (McKeesport Tubular with Dura-Bond Industries and Mingo Junction with ACERO), and many manufacturers are reporting increased capex budgets this year.

The Return of the Oil and Gas Industry

hell’s June 2016 final investment decision to move forward with its Sworld-scale petrochemical complex in Monaca will result in some local demand for industrial space. At this time, the demand is primarily going to be tied to the construction of the plant, which is

www.developingpittsburgh.com 51 While some of the speculative Summary development momentum from 2016 will carry over, the amount of product verall, the local industrial market delivered is expected to be more modest certainly has positive momentum in comparison as there is currently Owith many indicators pointing in 743,800 SF of space under construction. the right direction. Market fundamentals In addition to the multi-phase spec remain sound, capital should increasingly We build lasting projects at Imperial Business Park (Ashford be available for additional development relationships Capital Partners) and Clinton Commerce opportunities, and the long term Center (Al. Neyer), Chapman Properties is implications of the downstream oil with clients starting site work on a 74,400 SF building and gas industry are very strong. While at Chapman Westport and the Buncher certain challenges remain, the long term and their Company has begun sitework for an view of the regional industrial market is 80,000 SF building in Findlay Industrial overwhelmingly positive. communities Park. Additionally, Al. Neyer is joint venturing with a private landowner with Rich Gasperini Proud to provide plans to develop a 200,000 SF building at First Vice President, Business design services with the a pad in Jackson Township, and Wesex/ Advisory & Transaction Services Castlebrook has a 97 acre site under CBRE Elmhurst Group Team agreement in Shenango Township (Beaver 600 Grant Street, Suite 4800 County) with the first building planned for Pittsburgh PA 15219 400,000 SF. T: 412/471-9500 [email protected] www.cbre.com Challenges

hile a supply constrained environment with steady W and growing user demand is certainly good news in many ways (particularly for developers), it also presents certain challenges. Several challenges to watch in 2017 include scarcity of space in specific submarkets, limited infill development opportunities, and users facing labor challenges.

Scarcity of space, a disconnect between the type of space available and user Learn more about NAIOP, the Commercial Real Estate Development requirements, and upward pressure NAIOP in the western Association, is the leading organization for developers, on pricing can negatively impact the growth of the market. For users vacating Pennsylvania tri-state region owners and related professionals in office, industrial inexpensive legacy space (by choice or at naioppittsburgh.com and mixed-use real estate. NAIOP provides because of redevelopment in the City of Rich Gasperini or . Pittsburgh), current market conditions 412-928-8303 unparalleled industry networking and education, and often result in substantially increased advocates for effective legislation on behalf of our occupancy costs. In certain cases, users are being forced to alter their business members. NAIOP advances responsible, sustainable plans to respond to the realities of tight development that creates jobs and benefits the markets like Cranberry and the Strip District/Lawrenceville. communities in which our members work and live.

One challenge consistently heard from users of industrial space (and from developers related to rising construction costs) is difficulty of finding labor. This spans many industries, ranging from manufacturers to contractors to truck drivers. As the economy continues to expand, construction of Shell’s cracker ramps up, and the oil and gas industry For more information on how you can develop Design with community in mind gets back into hiring mode, this is a trend connections with commercial real estate through NAIOP, stantec.com to watch. visit us online at www.naiop.org or call 800-456-4144.

52 DEVELOPING PITTSBURGH | Spring 2017 NAIOP Pittsburgh Officers

David Weisberg, President BNY Mellon Donald Smith Jr., Vice President Regional Industrial Development Corporation Tyler Noland, Secretary PenTrust Real Estate Advisory Services Inc. Valerie Voss, Treasurer BDO Brian Walker, Past President Millcraft Investments Inc. Domenic Dozzi, Corporate Board Jendoco Real Estate Jamie White LLI Engineering Gregory Quatchak, National Committee Civil & Environmental Consultants Louis Oliva, Advisory Board Liaison Newmark Grubb Knight Frank

Board of Directors At Large

Cecilia Cagni Allegheny Conference on Community Development Linda Fisher Farmers Bank Maureen Ford Alcoa Tony Rosenberger Chapman Properties Izzy Rudolph McKnight Realty Partners Ryan Schwotzer Crossgates Inc. Jason Stewart Jones Lang LaSalle Learn more about NAIOP, the Commercial Real Estate Development Larry Walsh NAIOP in the western Association, is the leading organization for developers, Rugby Realty Pennsylvania tri-state region owners and related professionals in office, industrial Jamie White 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 CBRE Capital Markets advocates for effective legislation on behalf of our Patricia Farrell, Legal Counsel Meyer Unkovic & Scott LLP members. NAIOP advances responsible, sustainable development that creates jobs and benefits the Advisory Board communities in which our members work and live. Steve Thomas Chapman Properties Peter Sukernek Hanna Langholz Wilson Ellis Paul Griffith Integra Realty Resources Inc. David Massaro Massaro Properties Thomas Murphy For more information on how you can develop Jendoco Real Estate connections with commercial real estate through NAIOP, visit us online at www.naiop.org or call 800-456-4144. Richard Donley Cranberry Business Park Associates LP Gerard McLaughlin Executive Managing Director [email protected] Louis Oliva Executive Managing Director [email protected] 210 Sixth Avenue, Suite 600, Pittsburgh, PA 15222 T 412.281.0100

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Equal Housinghe yearLender. Member2017 FDIC. may Copyright be viewed© 2012, Dollar Bank,and, Federal while Savings Bank.economists stress that cycles see a lot of unfavorable policy,” jokesBUS037_12 Nick in years to come in the don’t have expiration dates, the longer Matt, senior managing director at HFF. way 2007 has been: as the growth goes on the more caution creeps year the capital markets in. Certainly, the influence of higher rates Observers are almost unanimous in tipped. There are legitimate in a compressed cap rate environment agreement that the new administration BUS037_12.indd 1 2/14/12 11:08 AM concernsT about the impact of continued also inspires caution. But perhaps no will ease or reverse some of the regulations, declining demand, possible variable is more uncertain than that of a conditions and regulations imposed upon oversupply of property types, and the new administration in Washington, DC led lenders in response to the financial crisis risk of higher defaults on maturing ten- by a most unorthodox president in Donald of 2008. Not surprisingly, most lenders year loans. As the first quarter unfolds, Trump. While Trump’s unpredictability and mortgage brokers see economic however, those concerns don’t look as if could impact the overall economy cyclical issues or specific market issues they will be realized. negatively, it seems likely that his policies as greater concerns than a more rigorous will be more favorable to the commercial government; and most don’t see any There certainly have been changes in real estate industry. issue as causing great concern. commercial real estate and the economy in general that give lenders pause. The “We have a real estate developer who loves The regulation that had been concerning current business cycle is long in the tooth debt in the White House. I don’t think we’ll many lenders over the past two years is

Single tenant net lease (STNL) cap rates increased in the fourth quarter for the first time since 2015. Like with all property types, the spread between STNL cap rates and 10-year Treasury bills narrowed post-election. Source Cailkin Research.

www.developingpittsburgh.com 55 COMING SPRING 2017

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56 DEVELOPING PITTSBURGH | Spring 2017 the next few years. Puntil believes that construction lenders will determine the size of the market over the coming years.

“I think there’s more caution [about multi-family],” agrees Matt. “One thing that will help is banks have pulled back on construction lending and that should help the cause of oversupply.”

The attraction of apartments and hotels for investors and lenders held up for an extended period. Performance in these categories was strong with steady apartment rent increases of four or five percent over a five-year period and increases in both occupancy and revenue per available room (RevPAR) for hotels. Sales of apartments and hotels were strong and prices rose. The trends reversed for both property types in 2016, however, with supply finally outstripping demand. Unlike a decade earlier, when demand for debt overwhelmed any underwriting caution, lenders took note CMBS volume declined again in 2016, falling more than 30 percent when pricing increased in spring. of the changes in trend and reacted accordingly. that involving High-Velocity Commercial in apartments thereafter, with rents rising “In the last year, we have seen a flight Real Estate (HVCRE), which was enacted between four and five percent each of away from multi-family and hospitality,” to make developers put more equity into the next five years. By 2016, however, asserts Tyler Noland, chief operating projects and for banks to reserve more apartment supply has become overbuilt officer of PenTrust Real Estate Advisory capital against loans in that category. in most markets. Overbuilding is typical Services Inc. “Especially in hospitality HVCRE rules require 15 percent equity on in the later part of the multi-family cycle we’ve seen bank lending essentially dry most commercial real estate deals. The and the market’s reaction in 2016 was up and even seen a decline from the conservative nature of the developers also typical of the cycle. Rents rose 1.8 investment markets as well.” in Pittsburgh, however, seems to have percent (2.6 percent in Pittsburgh) but the rendered HVCRE regulations less rates remained flat or down after May. As Reduced appetite for multi-family and obstructive than inconvenient. a result, both debt and equity turned cold hotels is visible at the local level. The on apartment development. pipeline for apartments is smaller. “In Pittsburgh, our developers have been The luxury Marriott hotel proposed pretty conservative. I don’t think the 15 “The term we’re hearing is ‘cautious’ in by Concord Hospitality adjacent to percent is causing a major problem,” certain markets, that certain markets are Oakland’s Pittsburgh Athletic Association observes Bob Powderly, senior vice getting overheated,” says Dan Puntil, found less financing enthusiasm than president of investment real estate at senior vice president for Grandbridge Real would be expected, given the market First National Bank. “The one area of Estate Capital. “But I don’t believe the conditions and strong track record of concern has been the cost basis valuation appetite for strong multi-family property the developer. But hotel fundamentals in of land contributed to the equity base but has diminished.” Pittsburgh are weaker. we haven’t see a problem with that for any of our customers.” Puntil points out that roughly 50 percent “Everybody hears across all markets of the mortgage volume Grandbridge about the influx of multi-family and we’re As expected, the market concern that originated in 2016 was for multi-family. taking a more conservative approach [to is most pressing is the condition of He also notes that as a permanent lender, multi-family],” notes Powderly. “We’re the multi-family market. Sparked by Grandbridge is looking at deals that are looking at projects under construction fallout from the financial crisis – higher usually three years beyond the start of to see if they hit their occupancy levels unemployment and ultra-tight credit – construction so many of his firm’s deals and rental rate targets that were planned. and the entry of the Millennial generation were for projects that started in 2014. We’re holding the line on the hospitality into the workforce, apartments were side. There has been a lot of inventory Concerns about apartment overbuilding the first property type to take off after added to the Pittsburgh market and we’re began in 2015 and construction of the recession. In 2010, credit conditions taking a wait-and-see attitude.” made multi-family almost the only multi-family units slowed in the final half property type the lenders wanted to see of 2016, so it’s likely that the market for Powderly is more enthusiastic about the developed. Market forces created a boom permanent financing will also slow over prospects in Pittsburgh’s office market,

www.developingpittsburgh.com 57 seeing stability returning in the suburbs the impact of the election, we are starting to nothing and it won’t affect commercial that have been weaker in recent years to see pricing contract.” real estate.” and noting the continued demand from users for space in the city. The growth of CMBS market observers aren’t optimistic Puntil admits that rising rates are one online fulfillment users and supply chain about a rebound in 2017. The opportunity thing that gives him pause going forward. moves Powderly to be bullish on industrial for refinancing 2007 ten-year loans will “The Fed’s talking about three increases property as well. be even higher than in 2016 – some $89 – and I know that’s short-term debt – but billion will mature – but there is little to rising rates tend to be a tide that raises Noland sees demand for offices and expect a boost that exceeds the share all rates.” industrial in the suburban locations but is that qualified for refinance last year. less sanguine about opportunities in the Consensus forecasts see $65-70 billion in But while the prospect of rising rates Central Business District. After almost a CMBS issuance in 2017. long-term should be a concern for those decade of repurposing Class C offices looking to see transactions occur, it into apartments or hotels, Noland thinks One upside about the lower volumes in appears we are several years away from the candidates for buy-and-upgrade are 2016-2017 is that fears of defaults from such a prospect. For the foreseeable dwindling. That could have consequences the ten-year-old loans proved unfounded. future, real estate still has advantages for for new owners like Stark Enterprises at Many of the projects financed in the investors on several fronts. 441 Smithfield Street or Pearson at 525 frothy market conditions of 2006-2007 William Penn Place. have rebounded since the crisis, allowing “I’m not seeing our lenders ratchet for property values to justify refinancing back at all. There is still the strong belief “I’ve talked to brokers and they think by banks or insurance companies. Despite that commercial real estate is the best that the opportunities to buy low [in the fact that a much higher share of investment for fixed income,” notes Puntil. Downtown] are pretty much exhausted,” those loans was under water during the Noland says. “When you get upwards of recession, there was a minor bump in Perhaps the supply-and-demand 300,000 or 400,000 square feet, banks defaults during 2016 and the same should fundamentals are ultimately the biggest get pretty cautious. There are plenty of hold true in 2017. market differences between 2017 and alternative lenders who will do those 2007. Investors are accepting returns kinds of deals but they are looking at Asked about concerns that the last of the that are conservative by historical higher yields.” legacy loans from the end of the bubble standards. Returns are the result of might poison the market ten years later, income over expenses and reasonable The alternative financing source that Nick Matt’s observation was typical of appreciation at exit, rather than from is not likely to pick up the slack is the most lenders and brokers. unsustainable appreciation or the sale commercial mortgage backed securities of derivative financial instruments based (CMBS) market. Owing to volatility “There is some concern but it’s not the on real estate loans. There are soft spots during the first quarter of 2016 and catastrophe everyone was expecting,” in the market but the lenders are pulling risk retention regulations that required he notes. “Low interest rates and strong back from those spots. Moreover, there CMBS originators to retain five percent values have helped.” remains a significant reserve of cash to of the deal for five years, CMBS volume lend or invest. plunged by 30 percent in 2016, to The prospect of rising rates hangs over $68.2 billion. CMBS pricing increased the market now that the Federal Reserve “Across our footprint, there are some significantly as the perception of risk seems more resolved to add 25 basis difficult dynamics but there is sufficient increased, resulting in fewer issuances. points several times over the next couple capital in the market. There are plenty The decline was more surprising because of years. Such a prospect is both a of banks in the market. For developers, some $87 billion in maturing ten-year blessing and curse for those who finance there is plenty of capital for their projects,” loans came due in 2016. That was a commercial real estate. For lenders, asserts Powderly. “Terms are remaining refinancing opportunity that should have especially banks, the increased interest relatively stable. I don’t think we’ll see lifted CMBS volumes higher, but fewer of rate means more income. For brokers, banks being more aggressive.” those loans were available for financing gently and gradually raising rates are an Dollar Bank’s Shelley sees the underlying at maturity than expected. incentive to get deals done. But higher rates also mean higher cap rates and, strength of the economy buttressing “Last year was a bumpy road for CMBS therefore, lower property values. And, at commercial real estate, which wasn’t the market, as some issuers exited the market some point, higher rates will tip income case in 2007. while others worked throughout the year investors away from commercial real “I continue to see companies hiring, to fully understand the impact of Risk estate towards lower-risk debt. No one expanding, and doing all the things that Retention rules that took effect December expects any of those outcomes to be make us feel comfortable that business 24, 2016,” explains Jamie Schafer, first manifest in 2017. is on the right path,” Shelley says. “What vice president at CBRE Capital Markets. gives me pause is what’s outside the “The result was global issuance of $77.7 “How long have we sat in this interest region, that the people who make the big billion in 2016, down from $106.2 billion rate trough?” asks Jack Shelley, senior decisions on interest rates or trade don’t in 2015. Deals that failed to securitize prior vice president for real estate lending upset the apple cart.” DP to the Retention Rules were priced at a and services at Dollar Bank. “I get tired premium. As the markets continue to gain of hearing people worry about a quarter an understanding of the new rules and percent hike in interest rate. That’s next

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60 DEVELOPING PITTSBURGH | Spring 2017 Legal / Legislative Outlook

Commencement and Notice of remains posted at the project site THE PENNSYLVANIA Furnishing, the lien law now allows for until project completion, including STATE CONSTRUCTION the filing of a Notice of Completion and a reposting of the notice within 48 Notice of Nonpayment with the Directory. hours of becoming aware of, or NOTICES DIRECTORY: The Notice of Completion and the Notice being notified that the Notice of of Nonpayment are for informational Commencement is not posted. ADDED PROTECTION purposes only and do not impact lien rights and defenses as they existed prior 3. The owner and the contractor must FOR OWNERS FROM to December 31, 2016. both make reasonable efforts to ensure that the Notice of Commencement is MECHANICS’ LIENS, The Notice of Commencement – an made part of the contract documents Owner’s Choice provided to all subcontractors who are BUT IS IT WORTH THE awarded work on the project. An owner of a searchable project has ADMINISTRATION? the option – not the requirement – to The owner can delegate its responsibilities file a Notice of Commencement related to filing of the Notice of By Dusty Kirk, Ron Hartman with the Directory for its project. If Commencement to a contractor, if the and Eric Kimbel the owner chooses to file a Notice of contract specifically authorizes such Commencement, and take advantage of delegation. However, the owner assumes s of December 31, 2016, the added protections provided thereby, responsibility for the contractor’s actions the Pennsylvania State the owner must comply with several as part of this delegation. Construction Notices procedural steps. Directory, located at https:// The Notice of Furnishing – Not a apps.pa.gov/scnd, is online The owner, or its agent, must file a Notice Subcontractor’s Choice when a Notice Aand accepting the four Construction of Commencement with the Directory of Commencement has been Filed Notices authorized by the 2014 prior to commencement of any project Amendments to the Pennsylvania activities that may give rise to mechanics’ If a Notice of Commencement for the Mechanics’ Lien Law. The Amendments lien rights. The information required to project has been properly filed with made several changes to the mechanics’ be in the Notice of Commencement the Directory and posted at the project lien law – two of which are of critical includes: prime contractor information; site, a subcontractor must file a Notice importance after implementation name, location and county of the project; of Furnishing within 45 days after first of the Directory: a possible loss of legal description of the real property, performing work or services at, or subcontractor lien rights, and possible including the tax identification number providing materials to, the job site. Failure civil and criminal penalties under certain of each parcel included in the project; of a subcontractor to “substantially circumstances. owner contact information; surety and comply” with the Notice of Furnishing bond information, if applicable; and, the requirements forfeits the subcontractor’s First, a subcontractor can now lose its project identification number, as assigned lien rights. It is important to remember right to lien searchable projects, defined by Directory. that the definition of a subcontractor, as those projects costing at least $1.5 pursuant to the Act 52 Amendments million, if the subcontractor fails to timely In addition to filing the Notice of of 2006, includes first and second tier and properly file a Notice of Furnishing Commencement, the owner must also subcontractors, and certain suppliers with the Directory when a Notice of include written notice in its contract that in specifically designated contractual Commencement for the project has been a subcontractor’s failure to file a Notice of privities. properly filed with the Directory. Furnishing on the project will result in the loss of lien rights. The required wording The Notice of Furnishing must include Second, an owner, an owner’s agent, and form of this notice is included in certain information, such as: a general a contractor, or a subcontractor who Section 1501.2 of the lien law. description of the labor or materials encourages, requires, requests or furnished; the name and address of the suggests that a subcontractor not file The owner must also: person supplying the labor or materials; a Notice of Furnishing in exchange the name and address of the contracting for obtaining or continuing work on 1. “Conspicuously post” a copy of the party; and the project description. a searchable project, when a Notice Notice of Commencement at the site of Commencement has been filed, of the project before physical work The Notice of Completion and the commits a misdemeanor of the second commences, which must include the Notice of Nonpayment – Optional degree and can also be subject to civil project identification number. Only suit for such actions. 2. Take reasonable measures to ensure The Notice of Completion is for In addition to the Notice of the Notice of Commencement informational purposes and is filed by

www.developingpittsburgh.com 61 the owner, or its agent, within 45 days violation prevented the subcontractor are forfeited only if the subcontractor of the actual completion of work. The from filing a Notice of Furnishing, the does not timely and properly file its Notice of Completion is not to be subcontractor’s lien rights are not Notice of Furnishing. Further, even when considered by a court in determining forfeited. This saving provision only a subcontractor does not strictly comply compliance with timing under the lien applies if the failure to file was “directly with the requirements for the Notice of law or in determining a completion date the result” of a violation by the owner, the Furnishing, lien rights may still be preserved for the project, for statutes of limitations owner’s agent, or the contractor. Notably, through application of the substantial purposes, or for warranty purposes. based on the language of the section, compliance standard. it does not appear that a subcontractor A subcontractor may file a Notice of will benefit from this saving provision to Owners must weigh the added level of Nonpayment when it has not received the extent that the violation causing the administration to employ the Notices payment in full. Like the Notice of failure to file a Notice of Furnishing was procedure against the likely benefits Completion, the Notice of Nonpayment caused by another subcontractor. of the procedure. Furthermore, if an is merely for informational purposes. A owner designates an agent to undertake subcontractor must still comply with all Directory Abuse the administration of the Notice of other requirements of the lien law, and, if a Commencement requirements, the owner Notice of Commencement has been filed, To prevent frivolous filings in the Directory, is still responsible for the agent’s actions and with the Notice of Furnishing requirements. the amendments impose a penalty of inactions/omissions. actual damages or $2,000.00, whichever Building Permit Number and is greater, upon a person who abuses the Informational Benefits Additional Information Required in Directory. Abuse occurs when a Notice is All Filings filed without a good faith reason, to exact Perhaps the most important benefit to more payment than is due from a party, owners, and all project participants, is the The provisions providing the requirements or to obtain an unjustified advantage or readily available listing of the subcontractors for the four Notices do not include the benefit. on a project, if the Construction Notices specific requirement that the Notices procedure is being properly followed. include the project’s building permit Owner’s Considerations Unlike the pre-Directory law, an owner number. However, this is a requirement should be able to view the Directory and under Section 1501.5(f). This Section acts Given the protections for owners that determine the potential pool of claimants as a catch-all of sorts for all Notices and existed prior to implementation of the who may have lien rights on the project. documents filed with the Directory and Directory, is a Notice of Furnishing advisable Similarly, if there is a nonpayment situation, each must include: the county of the when considering the administrative the information for filing a lien is readily project, the tax identification number of requirements of the procedure? Owners, available to a subcontractor. each parcel for the project and the building without employment of the Notice of permit number for the project. Furnishing, have the ability to require waiver As explained in the memorandum in of subcontractor lien rights by requiring support of the Amendments submitted to Possible Criminal and Civil Penalties the contractor to post a payment and the Pennsylvania House of Representatives and Other Remedies performance bond. Owners can also by Representative Thomas H. Killion on require prime contractors to defend and January 9, 2013: The implementation of the Directory indemnify against lien claims from lower brings with it possible criminal and civil tier project participants through the prime Unfortunately, under current law, there is liability if an owner, an owner’s agent, a contract provisions. no way for an owner to know the entire contractor or a subcontractor suggests, universe of subcontractors that could requests, encourages or requires that In contrast to these two protections, for a potentially file a lien against their property a subcontractor not file a Notice of forfeiture of a subcontractor’s lien rights . . . . Furnishing as a condition of obtaining to occur under the Directory Notice or continuing a contract for work on a procedure, the owner, or its agent, must If the owner knows who all of the searchable project. A person who violates comply with the various steps set forth subcontractors are who worked on his this provision commits a misdemeanor of above, including changing its prime project, he can take positive steps to see the second degree. contract form to include the required notice that they were all paid, or to determine if and the flow-down requirements. there are any lingering disputes. It is in his In addition to the criminal penalties, a commercial interest to do this to prevent subcontractor harmed by violation of The owner, or its agent, must also take liens from being filed. this section has the ability to bring a reasonable efforts to ensure that the civil cause of action against the person Notice of Commencement is provided to Uncertainties in Application committing the violation for recovery all subcontractors as part of the contract of actual damages due to loss or injury documents. By definition, this includes first The Directory and the related procedure sustained, and the court may award and second tier subcontractors and certain under the Amendments will obviously be reasonable attorneys’ fees and court costs material suppliers, some of whom may only subject to interpretation in the coming in such an action. be under a purchase order agreement. years. Some areas where disputes in interpretation will likely arise are as follows: If a subcontractor proves that such If the owner complies with all of the a violation has occurred and that the requirements, a subcontractor’s lien rights If a Notice of Commencement is not included in a subcontractor’s contract

62 DEVELOPING PITTSBURGH | Spring 2017 documents, will the “reasonable efforts” practice includes representation of defeating the very protections that the of an owner to require such inclusion be buyers, sellers, owners, developers, Amendments were designed to provide? sufficient to forfeit that subcontractor’s lien lenders, lessors and lessees on rights when the subcontractor does not file transactions in multiple areas of real Owners as well as other project a Notice of Furnishing? estate law. participants may also use the Directory as a potential new means of supplementing If an owner includes in its contract the Eric Kimbel is a Partner in Reed Smith’s their existing credit and due diligence required notice concerning the failure Energy and Natural Resources Group. His facilities based upon reviewing Notices of of subcontractors to file a Notice of practice focuses on construction contract Non-Payment filed against a project, and, Furnishing and forfeiture of lien rights drafting, project counseling and resolution thus, against particular contractors and/or thereby, but the owner does not file a of construction disputes for companies subcontractors. Therefore, in addition to Notice of Commencement, what effect, if operating across the U.S. and internationally, providing significant new legal protections, any, does the contractual notice have on and includes representation of owners, the Directory may become even more subcontractor obligations? design-builders, construction managers, valuable from a commercial standpoint. contractors and subcontractors through all If an owner does not include in its contract phases of construction projects. One thing is certain, owners, contractors the required notice for the Notices and subcontractors of all tiers will have procedure, but the owner later decides to Possible Commercial Uses of the opportunity to use the search option file a Notice of Commencement before the Directory: Unintended to review the information contained in the the start of work on the project, can the Consequences? Directory. How this will affect projects, owner then require that the contractor and competition and the use of the Directory any subcontractors amend their contract The Directory is a searchable index. By remains to be seen. DP documents to include the required notice? completing a simple form, registered Could this be achieved by a change order? users are able to conduct searches of Dusty Kirk is a Partner at Reed Smith the projects listed in the Directory with and former co-chair of the firm’s Real What does “conspicuously post” mean relatively few restrictions on access. Estate Practice Group. She concentrates for compliance purposes? Is a Notice This very accessibility, and the ability her practice on all aspects of real estate of Commencement on a project trailer to conduct due diligence, creates both development, acquisitions and economic posting board sufficient? If the Notice opportunities and potential issues for incentives, with an emphasis on real of Commencement is subsequently searchable project participants. estate litigation, including real estate tax- covered by another posting, is assessment appeals, land-use and zoning compliance thwarted? For example, owners will be able to appeals, and eminent domain proceedings determine the universe of subcontractors Even though an owner is still responsible and suppliers contractors are using on Ron Hartman is a Partner at Reed Smith for its delegated agent’s actions, can an their projects that may be able to file in the Real Estate Practice Group. Ron’s owner require contractual indemnification liens against the project. The trade-off is practice includes representation of buyers, from its delegated agent for those that the owner needs to disclose detailed sellers, owners, developers, lenders, lessors actions? information about its project, including and lessees on transactions in multiple location and Tax ID parcel information areas of real estate law. Does the Directory allow for, or require, in the Notice of Commencement, multiple Notices of Commencement which it may prefer not to disclose. For Eric Kimbel is a Partner in Reed Smith’s when a project is located in more than certain privacy-minded owners seeking Energy and Natural Resources Group. one county, or will the Directory permit anonymity, such disclosure requirements His practice focuses on construction for the filing of multiple Notices of may be viewed as problematic. contract drafting, project counseling and Commencement for a single project? resolution of construction disputes for Owners may also search the companies operating across the U.S. and If an owner uses more than one prime index, without filing a Notice of internationally, and includes representation contractor for a project, does the splitting Commencement, to determine what of owners, design-builders, construction of the packages impact the Notice of other searchable project owners are managers, contractors and subcontractors Commencement procedures? commencing work and the contractor through all phases of construction projects. for those projects, if those owners Dusty Kirk is a Partner at Reed Smith have chosen to use the Notice of and former co-chair of the firm’s Real Commencement process. They can also Estate Practice Group. She concentrates determine which subcontractors are on her practice on all aspects of real estate those projects, if the subcontractors have development, acquisitions and economic filed a Notice of Furnishing. incentives, with an emphasis on real estate litigation, including real estate tax- Query: what kinds of disadvantages and/ assessment appeals, land-use and zoning or advantages occur from listing a project appeals, and eminent domain proceedings in the Directory? Is the information required to be included in the Notice of Ron Hartman is a Partner at Reed Smith Commencement sufficient to discourage in the Real Estate Practice Group. Ron’s owners from using the Directory in effect

www.developingpittsburgh.com 63 Voices

WHAT ECONOMIC STIMULUS OR REGULATORY CHANGE COULD BE MADE BY THE INCOMING TRUMP ADMINISTRATION OR THE COMMONWEALTH TO HAVE THE MOST POSITIVE IMPACT ON DEVELOPMENT?

Domenic Todd Steve Dozzi Reidbord Thomas CEO President CEO Jendoco Walnut Chapman Real Estate Capital Properties “Some of the Management “We get biggest hurdles Inc. frustrated with are the numerous inconsistencies environmental “One of in agencies’ rules regulations that the biggest and methods Domenic Dozzi rarely seem to be Todd Reidbord challenges Steve Thomas of dealing with applied the same way twice; that said, the for any archaeological, endangered species new Administration can only deal with the urban developer in undertaking a and other environmental issues, from EPA’s rules and the bigger problem here ‘transformational’ project that creates individual to individual, agency to agency, is with the Pennsylvania DER/DEP, so the the opportunity for job growth in an and even DEP district to DEP district. Too impact may be minimal unless we get our environmentally sustainable and sensitive much is left to the interpretation of the own house in order.” environment is to find a way to deal individual in each agency office. with the costly necessary infrastructure improvements. This is particularly difficult “My biggest hot button is with wetlands James Scalo in older cities with outdated buildings, mitigation. There seems to be little to no roads and utilities that were built for a President & differentiation between wetlands quality different era in our history. levels, or consistency in the extent to CEO which they can be mitigated. We should Burns & “While these are challenges, the have a much more development friendly opportunities are endless to create Scalo Real wetlands mitigation process that is great spaces in irreplaceable buildings reasonably consistent from jurisdiction Estate or locations. Congress and the new to jurisdiction. The time frames required Services administration need to understand to mitigate wetlands can be extremely that public dollars wisely invested in lengthy, to the point that a development “I think the infrastructure create huge multiple in project may be severely impacted. In prospect of a terms of economic development and some cases, wetland mitigation is only business-friendly job creation. This does not just mean possible if there is a named user and administration Jim Scalo bridges and highways, but includes building project specified. This means has already site preparation, environmental master planned developments without a been an incentive. All the corporations cleanup, utilities, smart transportation user, or spec buildings can be significantly we are meeting and polling with are improvements, parking garages, delayed or shelved. We would certainly bullish. The basis for that is taxes will transportation facilities and other public like to see much more pro-development be the same, if not lower, and stimulus amenities that improve the quality of regulatory change in this area, and capital in the form of infrastructure and life for all residents. The private sector much greater consistency jurisdiction to tax incentives to invest. The pent up cannot do it alone.” jurisdiction in the way it is enforced.” demand that we are experiencing in January feels as if 2017 will be a robust year for corporate growth.”

64 DEVELOPING PITTSBURGH | Spring 2017 Lynn DeLorenzo Partner TARQUINCoRE “A systematic streamlining of the bureaucratic quagmire in the overall regulatory system would be a huge impetus Lynn DeLorenzo to economic development. The president’s recent executive order to require agencies to finally take a look at the cost implication begins to change the playing field with the requirement to revoke two regulations for every new rule. While there is still red tape to cut through to commence the change, it is finally a step toward eliminating the constant ‘one step forward, two steps background’ process in development.

While various sources list the impacts of new regulations in the billions of dollars annually, there is no official accounting of costs. For instance, the EPA has continued to generate new rules with no quantifiable cost or true value impact. We may hopefully begin to see this change under the president’s executive order.

Last year NAIOP Pittsburgh, through its Economic Development Committee (EDC) and the efforts of Tony Rosenberger of Chapman Properties, began to advocate for a more streamlined process and transparency to the Pennsylvania Code - Chapter 105 - Dam Safety and Waterway Management by bringing the overburdening of regulation to the attention of our state legislators. Often times, they may not be aware of the true costs of overregulation and how it impedes development.

It is tiresome and often unfair to hear that developers do not care about sustainability or the environment when we seek to either streamline or reduce the costs of regulation. The real risk today is the burden of time and money - not the bricks and mortar of a project. And while the president’s goal of seeking a 75 percent reduction of rules may be a bit over the top, it may finally get the attention it deserves.”

www.developingpittsburgh.com 65

News from the Counties

as well as the service, supply, and hospitality industries and investment that will accompany the Shell Chemical petrochemical complex investment. ACED is working with partners to market and attract business to the 4,000 acres of developable land and the 30 million sq. ft. of available building space. To date, over $350 million has been invested in more than 3 million sq. ft. of manufacturing, office, industrial, and cargo space.

As the Pittsburgh International ALLEGHENY COUNTY Airport (PIT) continues to grow, more companies are seeking the close Allegheny County proximity to air transport service. Economic Development The continued growth of PIT, as Chatham One, Suite 900 evidenced by the 80% increase in 112 Washington Place nonstop destinations to include 68 markets, is a sign of the work that Pittsburgh, PA 15219 the Airport Authority, along with 412-350-1000 (T) its partners, is doing to attract and 412-642-2217 (F) grow business in southwestern Robert Hurley, Director Pennsylvania. [email protected] www.alleghenycounty.us/economic ACED continues to initiate and support development and investment he continued growth and throughout the county with a focus maturation of the airport on redeveloping severely blighted T corridor remains a priority areas of the Monongahela River for Allegheny County Economic Valley. In particular, significant Development (ACED). Particularly, process has been made at the former the corridor has been identified as a Carrie Furnace site – a 168-acre key site for the downstream activities, former steel mill located across many

www.developingpittsburgh.com 67 municipalities along the Monongahela River. Following the completion of the flyover bridge in late 2015, the Redevelopment Authority of Allegheny County (RAAC) continued the redevelopment of the site by constructing an 1,800 foot road that connects the bridge to the historic Allegheny County Economic Development (ACED) is the portion of the site. RAAC has worked with Rivers of Steel, county’s lead economic and residential development agency. Duquesne Light, and CSX Railroad to bring electricity across the railroad tracks to connect to both the historic Our six authorities assist manufacturers, businesses, portion of the site and to the developable parcels. The municipalities, health care facilities, nonprofits, and homeowners site now offers access to water, gas, and storm water with funding for land development, improvements, acquisitions, hook-ups. In late 2016, RAAC was awarded a $313,305 DCED Multimodal Grant to assess the environmental expansions, and renovations: and structural condition of the Hot Metal Bridge with plans to redevelop it into an additional point of access to the site for both vehicles and bike/pedestrian traffic. By the conclusion of 2017, Allegheny County expects to have 70 acres of land ready for development with the goal of creating 1,000 jobs in a light industrial, flex space environment.

ARMSTRONG COUNTY Armstrong County Department of Economic Development Northpointe Technology Center Center II 187 Northpointe Boulevard Freeport, PA 16229 724-548-1500 (T) 724-545-6055 (F) Michael Coonley, Executive Director [email protected] www.armstrongidc.org

conomic growth in Armstrong County was tied to several success stories during the second Ehalf of 2016. However, the announcement from Iowa-based Involta, LLC grabbed most of the attention. Involta announced plans to build a 40,000 square foot multi-tenant data center on a five acre pad-ready site in Northpointe. Involta broke ground in October 2016 along To learn more about how ACED can support you and your with representatives from UPMC, the data center’s anchor tenant. project, visit www.alleghenycounty.us, or contact us at 412-350-1000. Bruce Lehrman, Involta’s Founder and CEO, described the investment decision. “As Involta considered markets for We look forward to partnering with you. expansion, the opportunity to work with UPMC presented itself. In addition to being UPMC’s hometown, Pittsburgh has a growing tech community, world-class universities Robert Hurley, Director and a large, diverse client pool for our business. Armstrong Allegheny County Economic Development County’s Northpointe technology park is only 30 minutes from downtown and home to other data firms – an ideal One Chatham Center • Suite 900 location to position Involta for growth in the region.” 112 Washington Place • Pittsburgh, PA 15219 Phone (412) 350-1000 Involta’s assets now include 14 data centers in six states, www.alleghenycounty.us/economic/ more than 5,500 fiber miles and nearly 200 employees. Its Pennsylvania footprint includes connections to the company’s Ohio data centers in Akron, Columbus and

68 DEVELOPING PITTSBURGH | Spring 2017 Youngstown. Involta’s capital investment counties and states but selected Hopewell ahead of schedule and is expected to in the greater Pittsburgh market will as its preferred site. The purchase will be completed sometime later this year. total nearly $16 million. The Northpointe insure the retention of approximately 100 Community Development Corporation data center will be ready for occupancy family-sustaining jobs in Beaver County. of Butler County, (CDC), managed the during the fall of 2017. A live streaming construction of the recently completed construction camera is available at http:// As administrator of Commonwealth 230 space parking garage, built as www.armstrongidc.org. of Pennsylvania’s Enterprise Zone part of the City of Butler’s Centre City program in Beaver County, CED revitalization project. As part of the The ACIDC continues to promote the secured a $78,000 tax credit for revitalization, a 76-room Marriott Springhill Keystone Opportunity Zone (KOZ) Healthcare Support Technologies Suites is under construction and expected sites located in Armstrong County. For (HST) for its project in New Brighton. to be completed in June 2017. CDC is information about the services offered by HST is a medical billing company also managing the renovation of Butler the ACIDC, or to search available land and providing services to private physician County’s existing government center buildings in Armstrong County, please visit groups, independent doctors, and build-out of the second floor of the http://www.armstrongidc.org. and hospital systems. This project new annex, with bids for construction involves acquisition and renovation anticipated to go out this spring. Butler of a 100-year-old, two story, 13,800 School District sold four empty buildings BEAVER COUNTY square foot brick building in New – the new owners are in various stages Brighton’s central business district. The of planning and renovation. CNC Malting Beaver County Corporation for building has been vacant since 2012. Co. purchased the former Clearfield Total project cost is estimated to be Economic Development Elementary School to make malt for $390,000. HST currently employs 20 PA grown grains, which can be used by 250 Insurance Street, Suite 300 in Beaver County and this project will breweries and distilleries. Beaver, PA 15009 allow the company expand employment 724-728-8610 (T) by an additional 13 jobs. A sales agreement was recently 724-728-3666 (F) negotiated for the sale of 6 acres at James Palmer, President CDC’s Victory Road Business Park, Clinton [email protected] BUTLER COUNTY Township, which will be an additional www.beavercountyced.org location for a company already engaged Community Development in doing construction work in Butler County. CDC is also working with a he Beaver County Corporation Corporation of Butler County for Economic Development newly formed partnership to purchase 112 Hollywood Drive #102 T (CED) awarded a contract for site 9 acres to be used for manufacturing at work at its WestGate Business Park to Butler, PA 16001 Pullman Center Business Park Expansion. Elite Earth Services of Waynesburg. The 724-283-1961 (T) For information on land still available at work includes clearing, grading, and 724-283 3599 (F) Pullman Center Business Park in the City storm water management controls for a Ken Raybuck, Executive Director of Butler; and land available at Victory 14-acre site. CED will construct a 30,000 [email protected] Road Business Park in Clinton Township, square foot multi-tenant building once www.butlercountycdc.com contact Ken Raybuck at Community site work is complete. The master plan Development of Butler County for for the site calls for expanding initial he southwest area of Butler information: 724 283 1961. CDC also construction by 15,000 square feet and County continues seeing high has a link for all known available sites construction of an additional 30,000 T growth. Construction activity is and buildings in Butler County at www. square feet on adjacent land. Site work is most active in Cranberry Township, along butlercountycdc.com. expected to be completed in the spring with increasing activity in nearby areas and vertical construction will begin including Jackson Township – where Al. immediately thereafter. Neyer Inc. was recently reported as being close to a deal for a 200,000 square CED sold property at its Hopewell foot warehouse. Adams Township, just Business and Industrial Park development east of Cranberry, is building a new $5.2 to PGT Trucking. PGT headquarter million Area Fire District Building. Mars facilities were in Potter Township but Area School District is also growing relocated as a result of Shell Chemical with a $1.6 million addition to its Appalachia LLC’s ethane cracker Administrative Offices. development. The company is a full-service transportation firm with 28 One of the top construction projects in terminals located throughout the United the region is in Butler County - Center States. PGT has called Beaver County Township’s new 168,000 square foot home since founded in 1980 and was Veterans Administration (VA) Butler considering locations in surrounding Healthcare facility. Construction is

www.developingpittsburgh.com 69 Fay-Penn has partnered with the Fayette business talent through a 9-month FAYETTE COUNTY Chamber of Commerce, Greene County session of training in leadership tools and Department of Economic Development, networking exposure to the community Fay-Penn Economic Greene County Industrial Developments leaders in the county. Development Council and Catalyst Connection to establish 1040 Eberly Way, Suite 200 a Fayette-Greene Manufacturers Fay-Penn Economic Development Lemont Furnace, PA 15456 Consortium. Goals of the consortium are: Council assists in growing and diversifying 724-437-7913 (T) the economy in Fayette County, 724-437-7315 (F) 1. Launch discussion topics for EDOs Pennsylvania. We desire to be the to subsequently work with interested, Bob Shark, Executive Director, pre-eminent “1st stop shop” economic individual manufacturers to pursue development organization in Fayette [email protected] increases in each manufacturer’s County by providing comprehensive, Lori Scott, Business Support bottom line. second-to-none business development Coordinator, [email protected] services through our staff or partners to 2. Introduce manufacturers to one www.faypenn.org make our clients more competitive in a another to determine partnering global marketplace. ay-Penn Economic Development opportunities either for supply chain connections or joint ventures (formal Council had a remarkable 2016 Fay-Penn’s ultimate objective is to or informal) to pursue business F closing 12 loans totaling $1.6 million sustain a supportive environment opportunities together. and resulted in 141 jobs created and/ for business start-up, expansion, and or retained. Currently, the staff is busier 3. Generate awareness of opportunities attraction. Intended targets of this than ever with six business loans in the for manufacturers to use resources approach include: Retaining and pipeline totaling $353,000. formerly associated with the coal growing existing businesses; Adding mining sector. new businesses; Creating and retaining In business support activity, Fay-Penn jobs; Developing the workforce; continues to meet with local companies Fay-Penn’s Fayette Leaders Academy Generating private and public business to better understand and address is in its second year with an 8-person investment; and Enhancing quality of their needs. As an offshoot to this, cohort. This program takes “younger” life amenities and services.

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70 DEVELOPING PITTSBURGH | Spring 2017 Although Fay-Penn’s efforts are broad The County of Greene completed a locations within Pennsylvania, as well as in scope, we focus on bringing the major transportation intersection project in New York and Florida that were under highest economic benefit return to our connecting Murtha Drive along with their consideration”, Baker said. community. Since its inception in 1991, airport property tying into SR 21, a major Fay-Penn has helped to create and retain east west corridor between Greene and “Gordon Sinclair started its search for a over 9,000 jobs and generate $1.5 billion Fayette Counties. new plant location,” said Robert Gluck, in business investment. founder and CEO, “with several states on our list.” Without any reservation, INDIANA COUNTY I can say that Indiana County worked GREENE COUNTY harder than anyone else to help us find Indiana County Center for a building, to connect us to numerous Greene County Industrial Economic Operations State of PA contacts for financing and Developments, Inc. 801 Water Street incentives, for equipment financing 300 EverGreene Drive Indiana, PA 15701 through the County and even to help us Waynesburg, PA 15370 724-465-2662 (T) find a local bank to work with.” 724-852-2965 (T) 724-465-3150 (F) Representative Dave Reed (R-62nd 724-852-4132 (F) Byron G. Stauffer, Jr., Legislative District) said: “I applaud our Don Chappel, Executive Director Executive Director state and county officials who see the [email protected] [email protected] tremendous opportunity to attract www.gcidc.org www.indianacountyceo.com Gordon Sinclair’s expansion here to Pennsylvania and more specifically he second half of 2016 saw a overnor Tom Wolf announced Indiana County. The 50+ jobs that will be pickup in the gas and oil industry recently that Robert Gordon injected into our labor force is fantastic in Greene County evidenced T GIndustries Ltd., doing business as and I am fully confident that all of our by an increase in truck activity and Gordon-Sinclair, will expand operations partners in the Indiana County Center for a major energy deal involving Rice with a new, state-of-the-art 60,000 Economic Operations, will work together Energy and Vantage Energy. Rice square foot manufacturing facility in in not only helping grow Gordon Sinclair, Energy, headquartered in SouthPointe in Indiana County and create 50 new Washington County, acquired Vantage but to attract other business opportunities jobs. Robert Gordon Industries Ltd. was to our region.” Energy which held vast mineral holding formed in 1989 and is a leader in high rights and drilling facilities in Greene quality customized promotional items by Senator Don White (R-41st Senatorial County. Vantage earlier won a bidding imprinting company logos, design and art process for the gas rights held previously District) commented, “This is positive on to custom decorated bags, drinkware, by Alpha Natural Resources that were economic news for Indiana County gifts and other assorted products. initially awarded to Rice Energy in May that is long overdue. Gordon Sinclair’s through a “stalking horse bid.” Gordon Sinclair will be located at 771 decision to invest in Pennsylvania instead Indian Springs Road, Indiana, PA in White of another state is most welcome Paisley Industrial Park in Carmichaels Township. and further demonstrates that Indiana saw Stahl’s Hotronix, maker of heat press County’s labor force, quality of life and machines, expand their building capacity Robert Gordon Industries Ltd. received a infrastructure are some of the best in and Royal Flush open their operation and funding proposal from the Department of the nation. I hope this is the first of many new building as well in the park. Community and Economic Development good economic news stories for our that includes a $200,000 Pennsylvania community in 2017 and beyond.” Bailey Mine, a Consol mining property, First Program grant, $22,500 in Wednet had plans approved by the Greene PA funding for employee training and The Indiana County Center for Economic County Planning Commission for an $200,000 in Job Creation Tax Credits Operations (CEO) is a countywide increased expansion of 110,000 square to be distributed upon the creation of public-private partnership serving Indiana feet to their existing prep plant operation the new jobs. The company has also County, and is dedicated to the overall and Bayles Energy, a subsidiary of IMG been approved for a low-interest loan growth and prosperity of the county’s Midstream LLC, received final approval of $1,448,500 from the Pennsylvania business community. The affiliate for the construction of a gas-fired power Industrial Development Authority leveraged members of the CEO are the Indiana generation facility in Greene Township. by $250,000 from the Indiana County County Board of Commissioners, the Revolving Loan Fund and CNB Bank. Indiana County Chamber of Commerce, EverGreene Technology Park had two ground breaking ceremonies coinciding the Indiana County Development Indiana County Commissioner Chairman Corporation (ICDC), the Indiana County with the construction start on two new Mike Baker said: “I want to thank the buildings. Community Bank broke ground Tourist Bureau and Indiana University of Indiana County Office of Planning & on a new operations center and Greene Pennsylvania (IUP). Development and the Governor’s Action County Memorial Hospital Foundation Team for their leadership and hard work did likewise on a new 60,000 square For more information about Indiana foot indoor recreation center, including a in bringing Gordon-Sinclair to Indiana County, please visit fullsized playing soccer field. County. There were a number of other www.indianacountyceo.com.

www.developingpittsburgh.com 71 reliability and increase water flow for One of Washington County’s largest LAWRENCE COUNTY firefighting. In addition, the company will employers, The Meadows Racetrack & Lawrence County Economic be constructing a new water processing Casino, has a new operator; Pinnacle facility at a site near the New Beaver Entertainment Inc. of Las Vegas. Development Corporation Borough Industrial Park. The project will 100 East Reynolds Street increase the current water production M&J Wilkow Ltd., a real estate firm based Plaza South, Suite 100 from 5.2 million gallons per day (mgd) in Chicago, made an investment in New Castle, PA 16101 to 8.0 mgd with expansion capability Washington County when it purchased 724-658-1488 (T) to 16 mgd. The new plant, expected to the 108,000 square foot building 724-658-0313 (F) be completed by the end of 2018, will located at 275 Technology Drive in the Linda Nitch, Executive Director provide a dual source of water for the area Southpointe Business Park. with sufficient capacity for growth. [email protected] The largest retail transaction in Washington www.lawrencecounty.com TYR – Tyr Energy, Inc. recently acquired County in 2016 was the sale of the Hickory Run Energy Development Washington Crown Center from PREIT to PMC Jameson – Lawrence Project located in Lawrence County for Kohan Retail Investment Group of Great County’s largest, full-service development of a highly efficient natural Neck, NY for an estimated $20 million. community hospital system, U gas-fired combined cycle power plant has recently been acquired by UPMC with an electric generating capacity of Retail construction projects underway (University of Pittsburgh Medical Center) up to 1,000 MW. Originally developed by include the Win Development project at and is poised to deliver world-class health an affiliate of LS Power Associates, LP, the former Sharp’s furniture location and care for our residents and surrounding the project is ideally situated among the the additional build out at the Old Mill communities. UPMC will invest $75 Marcellus and Utica natural gas production project and the Park Place project. All million to develop services and facilities areas with access to Tennessee Gas three developments are located on Route in Lawrence County and provide an Pipeline Zone 4. When the project is 19 in South Strabane Township. additional $10 million dedicated to complete, electricity and associated physician recruitment for expansion of products generated by Hickory Run will be Food and Beverage continues to be a clinical advancements in the region. delivered in the PJM Interconnection. strong sector in the retail landscape of Facility improvements will include the county with three new restaurants upgrades to heating, ventilation and air opening; Bacon, Bourbon & Beer, Mad conditioning scheduled to begin this Mex Lakeside and Forty Bar and Grill. year, as well as the widening of patient WASHINGTON Dunkin Donuts opened two new stores, corridors, improved laboratory facilities with a third store opening in early 2017, and a new heart/vascular institute. COUNTY and Bethel Bakery opened a location in The merger and subsequent facility the county. In July, J&D Cellars officially improvements will assure that Jameson Washington County opened its new building containing a remains a vibrant acute care facility Chamber of Commerce tasting room and wine-making area at offering advanced services locally now 375 Southpointe Boulevard #240 290 Roupe Road in Eighty Four. The first and into the future. Canonsburg, PA 15317 brewery in Washington County opened in 724-225-3010 (T) November; Coal Tipple Brewery, located Butler Health Systems (BHS) – This 724-228-7337 (F) at 1905 Steubenville Pike, Burgettstown, growing, Butler County-based health Jeff Kotula, President shares a building with Kramer’s care system also sees opportunity in Greenhouse and Raccoon Creek Winery. Lawrence County. The organization [email protected] www.washcochamber.com Three more breweries were announced recently announced plans to construct for 2017; Rusty Gold Brewery is scheduled a 54,000 square foot two-story, ashington County, the Energy to open in the spring at 43 West Pike outpatient clinic on Wilmington Road Capital of the East, experienced Street in Canonsburg, Washington Brewing in Neshannock Township, Lawrence the re-awaking of the energy Company, a start-up Brew Pub, expects County that will be the new home of W industry in the second half of 2016. to open in June in the newly renovated Lawrence County Medical. In addition, Rice Energy increased its acreage in the building located at 28 East Maiden Street BHS will be constructing yet another Marcellus Shale when it acquired Vantage in Washington and Four Points Barbeque health care facility in Shenango Township, Energy in October. Construction of the and Brewery will open mid-year when Lawrence County at an estimated cost of Mariner Pipelines and the Rover Pipeline renovations are complete to the four-story $20,000,000. will provide the infrastructure to transport structure next door to the existing Fourth Street Barbeque in Charleroi. PA American Water Company – Recently, the natural gas and its byproducts to PA American Water announced a $4.5 markets in the east and Midwest. The new First Energy transmission substation near The state of the economy in Washington million construction project that is County is strong and 2017 promises to be replacing more than five miles of aging Burgettstown will support the mid-stream activities of Mark West Energy and Energy a year of positive economic growth. water mains in its Lawrence County Transfer Partners. service areas in order to improve service

72 DEVELOPING PITTSBURGH | Spring 2017 opportunities to new and expanding of sale between the WCIDC and Swank WESTMORELAND companies in the region as well as Young Developers for the purchase of a COUNTY supports the growth of substantial building and property in New Kensington. manufacturers in the immediate area. Along with being the property owner Westmoreland County Industrial This park will also be a prime location and landlord, the WCIDC will assist the Development Corporation for those companies locating to New Kensington campus in development Southwestern PA as a result of Shell’s services and project investment. A 40 North Pennsylvania Avenue #520 ethane cracker plant in Beaver County. $50,000 grant from Invent Penn State will Greensburg, PA 15601 help fund the project. The premise behind 724-830-3061 (T) Another area where the county is the Invest Penn State initiative is to involve 724-830-3611 (F) making a major investment is in the campus students, faculty and staff, and Jason W. Rigone, redevelopment along the Route 30 community members in generating ideas, Executive Director corridor in the City of Jeannette. then turning those ideas into promising [email protected] Demolition of the former Monsour new companies. The completion of the www.co.westmoreland.pa.us Medical Center was completed at the entrepreneurial center is set for fall 2017. beginning of 2016 and site development It is the hope that the center will not he Westmoreland County continues to take place. Opening up only become a unique addition to New Industrial Development acreage at this site is important because Kensington’s Fifth Avenue, but will also T Corporation (WCIDC) is in the final the area has been underserved by the spur development in the downtown area. permitting stages for the county’s newest lack of developed property. The WCIDC industry park, Commerce Crossing at will request site RFPs in the first quarter of Westmoreland. The 150-acre park is rail 2017. served and adjacent to Interstate 70, The WCIDC proudly partnered with Penn just southwest of the county’s major State New Kensington on developing an transportation hub at New Stanton. With Entrepreneurial Center in the City of New its direct rail access via the Southwest Kensington. In October 2016, the WCIDC’s Pennsylvania Railroad, the site gives board of directors approved an agreement

The right environment for business growth.

•Route 30 Corridor •Signaled Intersection •At the Gateway to the Commercial District •Request for Proposals Coming in First Quarter 2017

Parcel Area 1.2 +/- Acres

Parcel Area 5.5 +/- Acres 765 Feet of Frontage

Lincoln Highway

Westmoreland County Industrial Development Corporation WestmorelandCountyIDC.org 724.830.3061

www.developingpittsburgh.com 73 People & Events

Jessica Nikolakopoulos (left) and Lauren Smith from Tandus Centiva NAIOP Pittsburgh President David Weisberg from BNY/Mellon with at the 2016 NAIOP Night at the Fights. Christine Fulton.

Chapman’s Tony Rosenberger (left) and Nate Phillips (right) flank Jim PenTrust’s Tyler Noland and Amy Broadhurst from Hanna Langholz Ambrose from Desmone Architects at NAIOP Pittsburgh’s holiday party. Wilson Ellis.

(From left) HFF’s Mark Popovich, David Rudolph from TriState Capital Allegheny County’s Bob Hurley (left) with PenTrust’s Tad Imbrie and Bank and M & T Bank’s Steve Olsavsky. Anne Imbrie.

74 DEVELOPING PITTSBURGH | Spring 2017 (Left-to-right) Cecilia Cagni from the Allegh- eny Conference, Kernick’s Tom Frank, Autumn Harris from Century Equities, Sarah Stroney from the RIDC, and CBRE’s Kyle Prawdzik.

PWWG is proud to collaborate with Trek Development and Q Development on Adaptive Reuse and New Design at Eighth and Penn. How can we help bring your project to life?

ARCHITECTURE + PLANNING | pwwgarch.com

(From left) Colliers International’s Patrick Sentner, Jeff Dietrick from Oxford Realty Services, and Newmark Grubb’s Lou Oliva at SIOR’s annual Industrialist of the Year banquet.

Building Your Success

Grandbridge provides commercial and Our scope of services includes: multifamily finance solutions through n Insurance Companies a wide range of capital sources n Banks In 2016, Grandbridge’s Pittsburgh Office closed n Pension Funds loans totaling more than $142 million – working n Freddie Mac Multifamily Approved with our clients to meet their financial goals and Seller/Servicer for Conventional and ensure their success. Seniors Housing ® Accepting the Urban Land Institute’s At Grandbridge, we connect you with the right n Fannie Mae DUS Placemaking Award for Excellence, source of funding – creating a personal, n FHA-Insured MAP and LEAN Transformative Places for Tower-Two Sixty successful approach for each transaction. n CMBS Investors on behalf of Millcraft Investments is NAIOP Pittsburgh Past President Brian Walker (second CONTACT US n BB&T Real Estate Funding from right) and Chad Wheatley. Flanking them Dan Puntil, Senior Vice President – Structured Finance are ULI awards vice chair Chic Noll from CDI/ Two Gateway Center – Stabilized Fixed Rate Finance Kimball (left) and Oxford’s Grant Mason (right). 603 Stanwix St., Suite 1899 n Capital Markets Pittsburgh, PA 15222 – Taxable and Tax-Exempt Financing 412.391.3366 – Credit Facilities

Loans are subject to credit approval. Equal Housing Lender. Grandbridge.com

www.developingpittsburgh.com 75 Uber’s David Richter (left) with Megan Guidi and Stephen Spencer from Aavid Thermacore at NAIOP Pittsburgh’s January chapter meeting.

Joel Kreider from Newmark Grubb Knight Frank (left) with Hanna Langholz Wilson Ellis’s Gary Wilson.

From Concept to Completion

(Left-to-right) Avison Young’s Duke Kingsley, Rob Blackmore from CBRE and Bob Cornell ERIE from PA Commercial. 1001 State Street Suite 1400 Erie, PA 16501 T 814.451.1172 Residential Units in the Manchester Neighborhood F 814.451.1150 of Pittsburgh, Pennsylvania

PITTSBURGH 707 Grant Street Suite 1920 From predevelopment support to long-term Pittsburgh, PA 15219 lending, Bridgeway Capital has the financing T 412.201.2450 F 412.201.2451 tools to strengthen real estate development projects with lasting community impact. UNIONTOWN 2 West Main Street Suite 135 For more information contact: Uniontown, PA 15401 Jeni Cooper | Community Development Loan Officer T 724.425.0330 412.201.2450 x 125 | [email protected] (From left) BNY Mellon’s David Weisberg, Lou F 724.425.0332 Oliverio from Dinsmore & Shohl and Pete Li- castro from Point Bridge Realty Advisors. bridgewaycapital.org

76 DEVELOPING PITTSBURGH | Spring 2017 Commercial Loans You need capital. Give your business flexibility. Northwest has Whether your business is a large manufacturing firm looking to Alyssa Kunselman from Mascaro with Jamie what you’re expand, or a sole proprietor in need White of LLI Engineering. looking for. of a line of credit, Northwest offers a full range of commercial loan* products and services to meet your needs and help your business grow.

26 offices to serve you in Greater Pittsburgh

1-877-672-5678 | northwest.com (From left) RIDC’s Adarryl Dreher, Sarah

Stroney and Don Johnson. *Subject to credit approval. See Bank for details. Northwest Bank is Member FDIC.

Avison Young’s Brad Totten and Bob Fessler from.

Creating Value Throughout the Construction Process

Chip Desmone (left) with CBRE’s Matt Clack- son and Kim Clackson.

www.developingpittsburgh.com 77 Kevin McMahon, Pittsburgh Cultural Trust CEO (left) with Meyer Unkovic & Scott’s Andrea Geraghty and Jack Donahue from Donahue Real Estate Services.

When it comes to real estate, we see potential everywhere. CBRE turns scale into strength, expense into performance, and property into prosperity. How can we help you transform your real estate into real advantage?

Build on www.cbre.com/BuildOnAdvantage Advantage Uber’s David Richter with RIDC CEO Don Smith (right).

DLA+ A UNIQUE APPROACH TO ACHIEVE YOUR UNIQUE VISION

Minimize risk. Maximize results.

(From left) Mike Locke, CBRE’s Mateo Villa and Desmone’s Jim Ambrose.

Architecture interior Design PlAnning consulting

www.DLApLus.com (From left) S & T Bank’s John Kline, Ty Arney Pittsburgh 412-921-4300 and Tim Tyger.

connect with us: @DlA_Plus linkeDin.com/comPAny/3017087 DlAPlus.com/blog

78 DEVELOPING PITTSBURGH | Spring 2017

Coming to Lawrenceville 2017 Arsenal Terminal Phase One

Jeff Zacherl from Johnson Controls with CDI/Kimball’s Chic Noll.

243 units / retail / parking ______TRYP Hotel

(From left) Tony Young from The Carnegie Museums, PNC’s Stu Hoff- man and NAIOP Pittsburgh president David Weisberg.

Former Washington Education Center ______

Square View Apartments

12 apartments / retail

Commercial General Contractor

(From Left) PNC’s Greg Fedorko and Joe Pascarella with James Web- www.franjo.com ster from Houston Harbaugh.

www.developingpittsburgh.com 79 Colliers International | Pittsburgh specializes in adding value to our clients to accelerate their success.

Past NAIOP Pittsburgh President Mark Dellana from Genesis Partners with Rusty Hodge of Mongiovi & Sons (right).

Commercial Real Estate Sales and Leasing Services > Real Estate Management > Valuation and Advisory > Corporate Solutions > Investment > Sustainability > Auctions

412 321 4200 | www.colliers.com | @PghCRE Learn how we are living our values of service, expertise, Michael Sharp from Continental Office Envi- community and fun at www.colliersinternationalpittsburgh.com ronments (left) with Scott Rowland from Lan- gan Engineering.

Environmental Management and Site Development Engineering

Seubert’s Brian Hartman and Mark Zywotko from Zywotko Development (right).

Innovative Solutions Outstanding Support

Jessica Jarosz from Century Equities and Meyer Unkovic & Scott’s Grant Scott. 22 S. Linden St. | Duquesne, PA 15110 | 412.469.9331 www.kuresources.com

80 DEVELOPING PITTSBURGH | Spring 2017 Shop. Play. Dine. Stay.

McCandless Crossing is a 1.2 million square foot mixed-use development located in the Northern Suburbs of Pittsburgh, PA. McCandless Crossing is home to a unique mix of national and local retailers, services, office space, and residential homes. To learn more about how you can be a part of this exciting community, please visit www.mccandlesscrossing.com.

www.adventuredev.com 412.682.3810 412.261.8810