DevelopingPittsburgh Fall Issue 2016 by Jaimee Greenawalt

Pittsburgh

MOBILITY

The Future of Development The Affordable Housing Question Mid-Year Market Reports 2016 Buyerâ&#x20AC;&#x2122;s Guide

Fall 2016

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President's Message

Feature 06 Mobility: The Future of Development

| Fall 2016

Profile 31 Developer Burns & Scalo Real Estate Services Trend 37 Developing The natural gas industry in recovery

Eye On the Economy

Market Update 43 Office Colliers International Pittsburgh Market Update 49 Industrial Hanna Langholz Wilson Ellis

53 Capital Markets Update / Legislative 59 Legal Outlook Pittsburgh’s affordable housing initiative

65 Benchmarks The Denver Transit blueprint 69 Voices Legislators weigh in on the role of government in aiding development

Project Profile 23 Development East Side Bond Apartments

2016 Buyer’s Guide

News from the Counties

People / Events

Guide 88 Buyer’s The 2016 NAIOP Buyer’s Guide puts contacts for designers, engineers, contractors and lenders in one easy-to-use resource.

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President’s Message PUBLISHER Tall Timber Group www.talltimbergroup.com EDITOR Jeff Burd 412-366-1857 jburd@talltimbergroup.com PRODUCTION Carson Publishing, Inc. Kevin J. Gordon kgordon@carsonpublishing.com ART DIRECTOR/GRAPHIC DESIGN Carson Publishing, Inc. Jaimee D. Greenawalt CONTRIBUTING PHOTOGRAPHY Port Authority of Allegheny County Massery Photography Mark Grasso The Mosites Company Regional Transportation District Tall Timber Group CONTRIBUTING EDITORS Karen Kukish ADVERTISING SALES Karen Kukish 412-837-6971 kkukish@talltimbergroup.com MORE INFORMATION: DevelopingPittsburghTM is published by Tall Timber Group for NAIOP Pittsburgh 412-928-8303 www.naioppittsburgh.com No part of this magazine may be reproduced without written permission by the Publisher. All rights reserved. This information is carefully gathered and compiled in such a manner as to ensure maximum accuracy. We cannot, and do not, guarantee either the correctness of all information furnished nor the complete absence of errors and omissions. Hence, responsibility for same neither can be, nor is, assumed. Keep up with regional construction and real estate events at www.buildingpittsburgh.com

Time has been on my mind lately. While we measure time in very precise increments... seconds, minutes, hours, days, weeks, years…it remains an enigma in many ways. As I think about time, two sayings come to mind. “Time flies.” and “There is no time like the present.” The first is particularly impactful to me as write these comments for two specific reasons. I recently dropped my first-born off for her freshman year at the University of Alabama and my time as president of NAIOP Pittsburgh is quickly coming to an end. It is hard for me to believe either of these things. While I will keep my thoughts on the passage of time vis a vis my family private I would like to share with you my thoughts about the last two years steering Western Pennsylvania’s premiere commercial real estate organization. First, I will say that it has been my sincere privilege to work with NAIOP Pittsburgh’s leadership. My collaboration with them has been among the best of my professional career and I am certain that the organization is in good hands as I move out of my role as president. The past two year’s have seen many NAIOP Pittsburgh successes. We continue to offer the best networking and educational opportunities in the industry. Attendance at our monthly education programs continues to grow and registration for our annual banquet in 2016 was the second highest in the history of the event. Night at the Fights is on an upswing allowing us to to support the great work of Habitat for Humanity of Greater Pittsburgh. This fall we will work with the Pittsburgh Regional Alliance to offer timely and important programming during a visit from national site selectors in November. Advocacy has also been an important part of my tenure. Our goal, as always, has been to work on a national, statewide and local basis to ensure that conditions for commercial real estate development are positive and fair. We have visited our representatives in both Harrisburg and Washington, D.C. to voice our opinions and concerns and we work with NAIOP corporate to keep abreast of issues that could impact the industry. Currently we are working on matters such as permitting and affordable housing locally; DEP and DCED issues statewide; and tax reforming and energy policy nationally.

The second saying “There is no time like the present.” comes to mind for two reasons. The first is because I am not sure that there has ever been a better time in the last 40 years to be in commercial real estate in Western Pennsylvania. We are enjoying growth in industry sectors such as information technology and energy that is reflected in all aspects of commercial real estate including industrial, office, mixed-use, hospitality and multi-family. The national attention that we have been receiving is a welldeserved testament to what is happening here. “There is no time like the present.” also comes to mind when I think of those of you reading these comments who are not NAIOP Pittsburgh members. I have always marveled that while our membership is 300 + we attract 700 real estate professionals to our annual banquet. Why? Do you not know or understand the benefits of belonging to both NAIOP Pittsburgh and NAIOP corporate? Have you not seen your peers in the industry benefit from their membership? I can tell you that NAIOP Pittsburgh has been important in my career development……. professionally and personally. So...since there is no time like the present I suggest that you visit naioppittsburgh.com or naiop.org and learn more about how you can join forces with us to better your career and the Western Pennsylvania’s commercial real estate industry. Thank you,

Brian Walker NAIOP Pittsburgh President

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FEATURE

Photo by Port Authority of Allegheny County.

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FEATURE

t’s about mobility. That’s the message that is being communicated at virtually every presentation or conference focused on the future of transportation. Advances in technology and unexpected shifts in societal expectations have changed a conversation about highways and transit from systems to individual mobility almost overnight. As that conversation has evolved, so has the future of commercial real estate development. Pittsburgh has changed. It may seem like the last five years have been something of a civic victory lap, celebrating a remarkable revitalization of a regional economy. That renewed regional vitality was a rising tide that lifted the fortunes of commercial real estate. You could make an effective argument that the turning point in this transformation occurred when the attitude of Pittsburgh’s people changed. Coincidence or not, real economic progress began after the “Imagine Pittsburgh” campaign kicked off in 2008. That progress gave leaders the room to dream and plan about what Pittsburgh should be like in 2030. One of the key components of a future plan is transportation.

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FEATURE New Technology

aving played an enormous role in convincing Pennsylvania’s legislature that the citizens of the commonwealth would tolerate higher gas prices to fix its roads, Pittsburgh’s civic leaders have undertaken another seemingly impossible task: imagining the future of the region’s transportation infrastructure.

Stan Caldwell calls what is going on in transportation and mobility “disruptive technology.” Caldwell is an adjunct professor of transportation and public policy at Carnegie Mellon’s H. John Heinz III College. He’s also the executive director of the Traffic 21 Institute and deputy executive director of the Technologies for Safe and Efficient Transportation University Transportation Center. Seated at the junction of technology and public policy, Caldwell believes that the changes going on in mobility will go beyond simply making transportation more efficient and convenient. He looks at the rapid growth of Uber for how it is disrupting an

Planning for the future of mobility allows for the correction of bad decisions of the past or the adjustment for good decisions that no longer work. Getting this opportunity right is critical for a region like Pittsburgh, where a new economy is struggling to work with old infrastructure. Better mobility can also help with another critical Pittsburgh problem: workforce. It’s estimated that only 30 percent of the people living in cities in America can access jobs they are qualified to do. That number Image courtesy Uber Technologies Inc. may be light in a region with poor access to all parts of the city. entire industry. He believes that Attracting new businesses and within five years new technology workers is extremely hard work. will disrupt most institutions that Making jobs accessible to all of touch transit and transportation, the talent within the region could including the built environment. significantly ease that burden. “What has happened has been Pittsburgh’s mayor and its leaddriven by the public,” Caldwell ers are trying to think big about notes. “For years people tried to the solutions to the problems of get more taxi service in Pittsburgh getting around. But it may just be without success and concluded it that the future of mobility won’t wasn’t a taxi town. W ithin a year require big solutions, just smart or two, Uber has 25 percent of all ones. rides.”

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He points out that Uber’s share of the ridership market is still muted by the company’s relative newness to the market. In the west, where San Francisco-based Uber began, the company’s model is the dominant mode of transportation. In Las Vegas, the city is considering eliminating the authority that regulates taxi cabs because so few people use taxis that there aren’t many issues to regulate. In a city that exists almost exclusively for tourism, that’s a disruption that would have been unthinkable five years ago. Uber is generally near the center of most conversations about the future of mobility, and for good reason. The company’s rise has been meteoric. Just over two years ago the Pennsylvania Utility Commission (PUC), with the full support of Gov. Corbett, took steps to try to eliminate Uber and its competitor Lyft when the companies wouldn’t alter their modus operandi. Mayor Peduto defended the businesses. The PUC fined Uber, then allowed them to operate (while not rescinding the fine). Less than a year later, Uber began its rise as one of Pittsburgh’s fastest-growing employers. Pennsylvania finds itself in the position of defending an $11.4 million fine (after recommending a fine of $50 million), while at the same time welcoming Uber Technologies and celebrating the fact that the company is doing groundbreaking research for the future. What a difference two years makes. What we’ve learned in those two years is that Uber’s ride service is but a first step in the com-

FEATURE pany’s technological advances, one that allows the company to gather enormous amounts of data about whom we are and where we go. For now, Uber’s next play is in getting an automated vehicle to the market first. Already a tenant in multiple facilities in Lawrenceville, Uber has agreed to be the first tenant in the Almono development. They will convert the former roundhouse building into research facilities and invest millions in building a test track at the site. The race to get the automated vehicle to the marketplace has been joined. You only needed to look at the partners involved in Pittsburgh’s unsuccessful application for the $50 million Smart Cities Grant to understand that almost all major players in transportation view this technology as game-changing for their business. In the short term, the impact of the new technology on the built environment has been primarily in leases. Part of Google’s growth in Pittsburgh has been because of its quest to make the first automated car and to use its existing lead position in mapping to provide the information needed to operate the vehicles without drivers. Caterpillar recently signed as the first tenant in RIDC’s Lawrenceville Technology Center, taking 10,000 square feet for its robotics research. Expect these and other companies involved in the chase to expand their presence here as the research advances. A lot of the other new technology associated with better mobility is in the arena of software, specifically smart phone apps. New apps are growing that will track the most efficient public transportation options for the rider based

The Imagine Transportation Crowd Sourcing Initiative produced responses that showed that Southwestern PA residents shared many concerns about the future of transit.

The race to get the automated vehicle to the marketplace has been joined. You only needed to look at the partners involved in Pittsburgh’s unsuccessful application for the $50 million Smart Cities Grant to understand that almost all major players in transportation view this technology as game-changing for their business.

on his or her location. Apps exist to evaluate the cost, schedule and convenience of the multiple mobility options available at a given location – including ride sharing and walking – and making recommendations depending upon whether the user is seeking to find the fastest, cheapest or most direct mode of transit. This mobile information usage will be one of the most significant technology influences of the next five years. The use of real time information is what enables Uber and its like to operate. Due to the Internet of things, there will be more access to real-time information that should significantly increase the penetration of ridesharing and private taxi services. The growth of such services will accelerate more dramatically after the adoption of 5G communication, which should occur in 2020. The use of 5G will make communication between things – sensors and devices – faster and cheaper. 5G will also allow more information from the field to be communicated to the people. Letting the imagination wander, it’s possible to visualize a time

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FEATURE when vehicles are communicating with each other to judge speed and braking distances or traffic signals are sensing congestion and adjusting light changes to optimize traffic flow. General Motors is introducing vehicles in 2017 that will have radios that can communicate with the infrastructure and other vehicles, allowing information to be “seen” from vehicles that are around corners. The advancements in technology are both a blessing and a curse to those trying to plan the transportation of the future. Uber has enhanced public transportation in that it supplements the existing system. W ith a smartphone app, getting an Uber ride is a matter of a few minutes or less. Workers in Downtown can use that service to make a meeting out in Green Tree or South Side without having to rely on their car. One less parking space is needed. One more rider uses the light rail system or a bus to commute. What will happen when Uber expands its services to what Uber ultimately wants to offer? Would a system of automated on-demand vehicles supplant the need for a bus rapid transit system or expanded LRT? Think of how decisions about highways might have gone in 2006 versus 2016 with the knowledge of how the natural gas industry would develop. The Southern Beltway, which was intended to connect the deep South Hills to the airport and stimulate development in an undeveloped portion of the region, will now make

PAT has created guidelines for transit-oriented development to encourage more private investment along public transit assets.

a critical connection between the regional home of the gas industry – Southpointe – and the future of the gas industry – Monaca – with the airport in between. It’s not hard to imagine a string of industrial parks like Findlay Industrial Park or Chapman Westport located all the length of that new highway when the gas industry matures. Development is drawn to jobs and commuting corridors. New corridors

connect jobs to where people live but also create additional development corridors. Emerging technology could change these corridors and the developments that are drawn to them.

Old Technology One of the beauties of the new technology is that most advances are being developed to make using the old technology – buses and rail – more

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FEATURE enjoyable. These existing transportation modes can certainly be improved but for now there isn’t a technology that is aiming to eliminate mass transit as a key component of modern mobility. In Pittsburgh, the Port Authority was one of the big beneficiaries of Act 89 of 2013. A main provision of the Act was the inclusion of transit systems in the funding mechanism, which gave PAT a stable income stream for the first time in decades. Act 89 didn’t provide for funding that would allow PAT to expand or restore many routes. To increase ridership and connect more people to the transit system, PAT is taking another approach: transit-oriented development. “We’re looking at our six fixed guideways – east, west and south busways and our rail - where we own additional land along them,” explains Ellen McLean, CEO of the

Port Authority of Allegheny County. “We know that development built along transit usually does very well. For us, it brings riders. It’s smart development. It allows us the ability to promote sustainable land use. It has a host of positives.” To that end, PAT wrote what are in Pennsylvania the first transitoriented development guidelines. The guidelines are best practices that were adopted by the PAT board of directors and vetted by the Congress of Neighboring Communities, a Pitt program that promotes cooperation among the City of Pittsburgh and 39 communities. PAT is stepping into the world of development to promote ridership of its public assets. In May, PAT held a developer’s forum to begin the conversation about transit-oriented project. PAT is mapping its land inventories and working with communities to see if their stops are ap-

propriate and conducive to economic development. “We’re looking at how to take land we own and maybe in joint development or on our own, make sure that the development around there is the appropriate use, whether it’s walk, bike or other modes,” McLean continues. “In terms of looking at development and participating in development, we’re taking a new role in it. We see it as a revenue source going forward, with the Port Authority participating with a developer or the community and adding the value that our stop brings to the project.” Two major suburban developments that are transit-oriented are nearing construction, although by coincidence both predated PAT’s initiative. SunCap Property Group is in the final stages of pre-construction, working with R ycon Construction to firm up the budget on a 300-unit apartment

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FEATURE

project across Village Drive from the Port Authorityâ&#x20AC;&#x2122;s South Hill Village parking garage. The garage serves hundreds of commuters who use the Light Rail Transit system from Upper St. Clair, Bethel Park and northern Washington County. I n Cast le S ha nnon, J R A De ve l o p ment i s in t he f ina l s ta g e s o f secu ri ng f ina nc ing f o r i ts Ca s tl e Sh an non S t a t ion pro j e ct, a m i x e d use d e v e lopm e nt t h a t i n cl u d e s 1 5 2 uni ts of m a r k e t - r a t e a p a rtme n ts , 14,000 squa re f e e t o f s e rvi ce retai l a nd a pa r k ing g a ra g e . JR A 's fo unde r, J im A ie llo S r. s a ys th e si te co nst r a int s t ha t u s u a l l y c o me wi th tra nsit - or ie nt e d d e ve l o p me n ts pl ague d t he pla nnin g o f th e p ro j e ct fo r s eve n y e a r s. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s been a career,â&#x20AC;? Aiello jokes. â&#x20AC;&#x153;The first seven or eight years were spent working on something that was totally unrealistic. In Castle Shannon weâ&#x20AC;&#x2122;re working with a site

thatâ&#x20AC;&#x2122;s like a bowling alley and that is totally undermined. After that much time we abandoned that for something more practical. Weâ&#x20AC;&#x2122;ve been very lucky to have state grants that have hung in there with us throughout. The state and local politicians have been very supportive.â&#x20AC;? JRA is working with Mascaro Construction on the project, which Aiello estimates had a 70/30 chance of going ahead. â&#x20AC;&#x153;It should all be decided within 60 days,â&#x20AC;? he says. Structured parking garages are a part of the old solution to building in densely populated areas. As Americans became more dependent upon cars for daily transportation, the demand for parking soared. In the suburbs the solution was fairly simple: allocate some of the land to parking lots. W ithin dense urban areas, where ground is more precious, vertical structures were the solution.

Building structured parking in residential properties is especially expensive. A parking space in a surface lot is $1,500 to $2,000 to construct but a space in a parking garage may be as much as $20,000. That adds a lot to the cost of the project. Developers build that into the pro forma but the rents they can charge are determined by the market, not the construction cost. Parking counts are determined by code. In a city like Pittsburgh, with historically scarce parking space in and around the central business district, there isnâ&#x20AC;&#x2122;t a lot of flexibility for zoning variances. One byproduct of the rapid advancement of ride sharing and the imminent technology of automated vehicles is that parking counts are becoming obsolete. The younger generation that is moving into cities is proving to be more likely to use public transit or bikes instead of owning a car. Thatâ&#x20AC;&#x2122;s the advantage of urban living after all. These trends

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aren’t necessarily glimpses of the future. The changes in behavior are already showing up more in 2016. “The research being done on driverless cars is fine but if they developed one right now it wouldn’t be legal on our roads,” says Steve Guy, CEO of Oxford Development. “What could be done right now is change the way we do parking. We’re forced to build parking to a code count but the trend is going the other way with the users, especially in the fringe CBD or fringe urban areas. We should be figuring out how to accommodate better communica-

except for what we had to build and put them somehow towards building a better transportation system,” Guy asserts. “Every developer can participate like that. Rather than building parking that isn’t going to support what tomorrow’s generation wants, we should figure out a better way to move from one transportation portal to another.” Ray Gastil, the city’s planning director, agrees with the vision Steve Guys espouses. As the person ultimately responsible for Pittsburgh’s zoning regulations, Gastil can’t get the cart before the horse.

was primarily a residential trend, with people making the decision to move back into cities to be where they could live, work and play without having to drive from one to the other. That phase of moving back was characterized by a different set of dynamics than today. More often than not, those moving back to the city were professionals who had lived in the suburbs for a while, often re-urbanizing after raising children. New Urbanists came from all walks of life but the prototype was an empty-nester looking to be where the action was. Over the past five years, the move to the city has had similar motives but has been subtly – and not so subtly – different. The emphasis is on density rather than urbanization. That may seem a semantic difference but there is more substance to one than the other. New Urbanism was about lifestyle, but the attraction of density has more layers. Density is also about a more sustainable way of living. Density brings more opportunity, more economic activity. And density also lends itself better to a multi-modal transit environment. Not surprisingly, density has been very attractive to younger adults and that’s where the real importance of higher density lies.

Photo by Port Authority of Allegheny County.

tion access tools with Uber; better ride-sharing services like Zipcar or other services like that; other forms of transportation to make it safer to use in all seasons. People will bundle up and ride their bike if they have a safe thoroughfare. I think the mayor is on the right track.” Guy reports that when the Hot Metal Flats opened in 2015, demand per bedroom for leased parking spaces was about 90 percent. One year later The Yards is seeing less than half that level of demand. “I would have rather taken those excess dollars that had no value

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“There are reductions today that can get us below a one-to-one [ratio] but looking at parking requirements is absolutely something we have to do,” Gastil acknowledges. “The only way to look seriously at reducing parking is to increase other options. There is ride sharing, more bike service and more robust and nimble transit service. But Pittsburgh is not where other cities are with that. It’s just a little too early.”

Density and Urbanization What started a decade ago as New Urbanism has morphed into a measurable societal shift. New Urbanism

Much of the hoopla surrounding the new mobility technology is credited to the demand from those between the age of 25 and 35, the so-called Millennials. This generation is larger than any that came before it and is therefore quite powerful; however, there are also a number of myths about Millennials that are proving to be unfounded. Research is showing that Millennial-aged workers have an equal interest in collaborating and private space as previous generations. They expect life to be different from their parents’ life, just like any previous generation. Where the Millennials are truly different – and this is relevant to the topic of mobility and density – is in their expectations for how technology will enhance their lives.

FEATURE

Young adults expect information to be at their fingertips, in part because it always has been for them. The technology they own defines them in the way that a car defined the Baby Boomers in the 1960s and 1970s. So it’s no surprise that young adults would more readily adopt technology in the form of ride sharing or multimodal transit commuting to replace the reliance on cars. As a practical matter, cities are where these forms

“Particularly among young people there is a push for better mass transit, for getting around in a more sustainable way,” says Rich Fitzgerald, Allegheny County executive. “Young people want to see transit without cars.”

of transit developed first. Moreover, the adoption of this kind of technology and the other conveniences of high-density living also allow for a more sustainable lifestyle. And that’s appealing to Millennials in a way that it wasn’t to older generations. Because of their education, young adults see sustainability as an important virtue.

less energy and resources. It preserves open space to be enjoyed in a natural state,” asserts T im Inglis, CEO of the Colcom foundation. “Greater density is certainly possible and desirable in a stable, no-growth or slow-growth region. Think of it as reverse sprawl.”

“Increased population density is good for us and our environment. We have more leisure time, more socialization, a shorter commute, use

You only need to look as far as Baltimore to see the impact that “reverse

sprawl” can have on real estate. Baltimore is home to numerous major corporate campuses because of its beltway connections to Washington, DC and the suburbs, but campuses that aren’t located near Baltimore’s Metro rail system are now being hollowed out. It is becoming increasingly clear that the draw of city living is attractive to young talent in all walks of life and

that’s having an interesting effect on employers. In growing numbers, companies are moving back to cities from the suburbs because the talent they want to attract wants to live there. What Millennials have shown to be different from other generations is that they are willing to live where they want until they find a job there, rather than the other way around.

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If you consider that the U.S. economy has shifted from a manufacturing base, which was built upon huge fixed real estate assets, to a service or information base, that attitude shift makes sense too. Manufacturing plants and big headquarters were magnets for hiring. Workers went to where the jobs were. Today, jobs are going where the workers are. As Boomers retire and Millennials become the worker being pursued, it follows that companies will chase the talent. There isn’t much data to support this movement yet, but there are plenty of anecdotes. In June, McDonalds moved its corporate headquarters from the suburbs into downtown Chicago. In late August, General Electric moved into center city Boston from a 70acre campus in Fairfield, CT. Wells Fargo recently reported on conditions in North Carolina and noted that almost 500,000 square feet of new construction in downtown Charlotte was being built to suit for two technology companies located outside of the city. In Raleigh, three companies from suburban locations – two from the vaunted Research Triangle Park – were moving to its downtown, absorbing more than 600,000 square feet of office space. Perhaps the most compelling anecdote comes from Motorola Solutions, which moved its headquarters from Schaumburg, IL into downtown Chicago on August 15. Motorola’s CEO, Greg Brown said it was clear that his employees – and Motorola’s customers – weren’t interested in coming to an office an hour outside the energy and vibrancy of Chicago. Here in Pittsburgh, one of the driving motives behind Kennametal’s plans for a Pittsburgh headquarters was the difficulty of attracting talent to Latrobe, PA. “Talent doesn’t want to sit in traffic for an hour on the Parkway or in a tunnel,” Fitzgerald notes.

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“Today’s talented workforce wants to get where they want, how they want.” “Fifteen years ago talent attraction would have been one of the factors we’d consider in locating. Now it’s the top factor,” says Dan Adamski, managing director of JLL’s tenant representative group in Pittsburgh. “I’m working right now with a couple of suburban clients who are locating in Downtown or extended Downtown.”

What Could Happen in Pittsburgh Every three years, the Allegheny Conference conducts an extensive year-long outreach to identify the problems that should be addressed in its next three-year strategic plan. In 2014, those sessions yielded three major concerns that are the cornerstones of the work the Conference will do from 2015 to 2017. Workforce development was the overwhelming issue raised by businesses. Infrastructure was one of the other two. In many ways these two issues are related. Among the conclusions that most workforce studies consistently make is that there is a mismatch of the inventory of skills that workers have with the skills employers need. Whatever the degree to which that mismatch exists in Pittsburgh, it is exacerbated by the limitations of our regional transportation system. And having limitations on the ability of employees to get to work does impose limitations on where employers will locate. “Pittsburgh is a ‘quadrant-ized’ market because of the lack of a beltline or connecting interstate highways,” says Jim Scalo, CEO of Burns & Scalo Real Estate Services. “People in the south don’t look west. People in the east wouldn’t dream of looking to the west. Because of that, we see the north, south and west as the growth markets.”

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FEATURE

Photo by Port Authority of Allegheny County.

W ith a society that is looking increasingly towards cities, perhaps driven by the younger generation, employers in those suburban quadrants can become more isolated from the workforce. That’s an issue that leaders want to see addressed, so that all parts of the region can benefit from the improvements in the regional economy. “Historically, Pittsburgh has been able to get around having good transit because people drive,” notes Gerald McLaughlin, managing executive director at Newmark Grubb Knight Frank. “Because of how limited our transit system is, we have more people driving than we should. In the suburbs, public transit virtually doesn’t exist.”

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McLaughlin points out that the limited transit options also limit the options of companies located Downtown. Employers with a significant number of workers who use public transportation face the real possibility of losing many of those workers if the company relocates out of the CBD. At the same time, a Downtown location may be the only one that allows an employer to recruit from all corners of the metropolitan area. “If you do an analysis of employees working Downtown you find that they live 360 degrees from the center of town,” McLaughlin reports. “If you look at the suburbs, employees live near their workplace or at least on that side of the tunnel or river.” It’s something of a happy coinci-

dence that the employment patterns in Pittsburgh are changing at the same time as transportation is evolving. If moving back into the CBD becomes a permanent shift, so too seems to be the shift in where people will work in the East End of town. The research being done at Carnegie Mellon and Pitt are spinning out new businesses and opportunities at a rate that has far exceeded the capacity of Oakland’s real estate. Walnut Capital proved at Bakery Square that East Liberty could be a relief valve for Oakland. More recently, the RIDC in Lawrenceville and Oxford Development at 3 Crossings in the Strip District showed that high-tech companies can connect with Oakland while not locating there. But for an optimal future

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solution, mobility planners would do well to look at making those connections easier. “Companies want to be on those campuses to be close to the people who are doing the research. Extending the Martin Luther King Busway and connecting to Lawrenceville and down to Almono will be huge for our region,” says Fitzgerald. “The value we have in this region is in our universities. Carnegie Mellon has turned out about 40 companies a year.” Fitzgerald also still advocates for the Bus Rapid Transit system to connect Oakland and Downtown. He likes the funding environment of 2016 better than in past,

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FEATURE noting that politicians aren’t signing pledges to not raise taxes. “I believe we’re going to see wealth created, a lot of value added to properties, particularly along Fifth and Forbes Avenue,” he continues. “We’ve seen that happen in other cities and there’s a way to make that happen in Pittsburgh.” Solving the question of what a regional transportation system of the future will look like is an overwhelming prospect. In addition to the workforce mobility issue, there are issues of economic equity, technology, regional inclusion, multi-modal mix, funding and a myriad of variables. Hoping to take the right first steps, the Allegheny Conference is following Pittsburgh’s playbook for past successes by creating a broad-based group that is reaching out to the widest possible audience of residents. That group is the Regional Transportation Alliance (RTA), which is led at the Conference by Ken Zapinski senior vice president energy and infrastructure, and Carly Dobbins-Bucklad senior policy analyst. Kicked off in the fall of 2015, the RTA is loosely based on the Southwestern PA Growth Alliance, which had been successful in Harrisburg at raising issues facing economic development in the ten counties. Like the Growth Alliance, the RTA has one private-sector and one public-sector representative from all ten counties and the City of Pittsburgh. To start the information-gathering process the RTA created the Imagine Transportation Crowd Sourcing Initiative, a survey of 23 stakeholders groups and 800 organizations. The key was to elicit answers that would be representative and comparable. Crowd sourcing took six months to ensure that there were adequate responses to represent everyone. “The only way this would be successful long-term is if you start by asking broadly what people think are the biggest problems and what they want to see done in transporta-

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tion,” says Dobbins-Bucklad. “If you can start there and add in more and more specific insights and expert information and work that’s been done before, you get to a picture of what we want it to look like if we move past the status quo.” In its survey RTA asked organizations, rather than individuals, to report on what the issues facing their constituents were. Hoping to avoid complaints about bus tardiness or suggestions of hovercraft on the rivers, RTA expected the organizations to understand their local needs and to communicate a more collective set of concerns. “Everybody is a transportation expert because everybody deals with transportation. What we asked was what was the biggest transportation problem that their group or constituency faced,” says Zapinski. The survey also asked why that was the problem raised. “People tend to think about transportation as a project, the thing you build, the thing you change,” says Dobbins-Bucklad. “What we wanted out of this was ‘why?’ What is the underlying problem?” Responses came in that could be categorized into four main areas of concern. Among the thousands of comments there was a focus on 17 priorities to address in those four main categories. Six of those priorities stood out as being concerns that were more urgent than the others. It was interesting the half of the six top priorities dealt with making Pittsburgh better for the future. Only one dealt with basic needs. Creating additional public transportation was the suggested solution that was mentioned most often. The six top priorities are: • W ant multiple mobility options • G uide future development • A ttractiveness/ competitiveness • R eliability and ease of use

• Reducing congestion • C onnecting to jobs and education

“It was really interesting just how much alignment in patterns did emerge. We were hoping that patterns would emerge because that would be a basis for shared conversations but we didn’t know,” observes Dobbins-Bucklad. The RTA will present a summary of priorities – based on the input that RTA received - to the public by the end of 2016. Calling it version 1.0 because they know it will change, the RTA intends to feed back to the same audience the priorities it provided and ask what do you think? “What we do know is that things won’t change unless there’s a community interest and excitement and a will to change things,” emphasizes Zapinski. “What that change looks like and how it will play out I have no idea. That’s around the next corner but no change takes place unless you have an engaged community that’s motivated to action.” Technology, density and connectivity are driving new realities in mobility. While what’s around the next corner isn’t known, it’s possible to consider what a more-connected future Pittsburgh would look like. Architect Chip Desmone is one who thinks the uncertainty of the future liberates the planning process. “Cities with big ideas get rewarded. In other cities where they have thought holistically about transit and connections, it’s been critical to new development,” Desmone says. He wants to see planners think beyond the immediately practical. “If what we have is better marketed, that will be helpful but what we have is completely average. We can do better.” DP

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Development Project

As part of the $15 million TIGER grant, new pedestrian structures were built that connect East Busway riders directly to Shadyside or East Liberty by access through Eastside Bond.

Eastside Bond Apartments

he Eastside Bond apartments are the final piece of a fifteen-year odyssey of construction that began with the landmark inking of a deal to bring Whole Foods to Pittsburgh and ended with a transformed community. Eastside’s origins go back further than the Whole Foods deal in 2001, of course. Even today, those involved with the project recall that it was as much about a vision for the rebirth of East Liberty as it was about commercial real estate. Eastside was going to be a multi-phased patient development and developer Steve Mosites saw the project repairing

a seam between East Liberty and Shadyside that existed since the public housing high-rises and the East Busway were built. It’s why the project was always referred to as a “zipper” development. In fact, the apartments were named Bond because the developer saw the project re-bonding the two communities. A check of the Mosites Company’s website reveals that the Eastside Bond project was originally slated to be Eastside Phase III. After construction was completed on Whole Foods in 2002 and the adjacent retail in 2007 – Phases I and II – the third phase was envisioned as office space. But several factors intervened. One factor was a global economic downturn but another was that the success of the first two phases had created some credibility for Mosites Company. The developer had adopted an unorthodox strategy of building two-story retail that was

designed to be at ground level for two different streets in Phase II. The retail on the upper level at Penn Avenue was ground level on Highland Avenue and faced intentionally towards the Shadyside neighborhood that had been cut off before. That the vision succeeded as it did opened the eyes of public agencies, making Mosites successful in attracting more grants as it proposed grander ideas for the neighborhood. “If you posed the question of 'vision' to The Mosites Company after each phase of our Eastside development you may have gotten a different response,” says Mosites. “Looking back, each phase of Eastside was approached as a collaborative design driven process of discovery, with an overarching search for ‘spatial magic’ and better neighborhood connections.”

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“Our story had gotten bigger. We had more gravity,” is how Mark Minnerly, director of real estate for Mosites Company, puts it. Mosites would need all the gravity it could muster over the next few years. Part of Phase III was a plan to incorporate the former bus station and Port Authority transit stops along the East Busway in the project. But melding transit into the master plan was not making sense, either economically or to the vision of the development. The cost of a transitoriented component to the project was out of line but the project was attracting public subsidy to help with development. Minnerly says those funds probably made the difference in the project. “Those state funding partners were critical. The DCED (Department of Economic and Community Development) funding was extremely influential because it allowed us not to take the first deal that came along. That gave us the time to think

and got us through to the Target store,” he recalls. “We got Business in Our Sites funding, which was a combination of grants and loans that were patient and had no interest. It gave us the ability to leverage our funds with lenders to do land accumulation at a time when commercial real estate was crashing and no one wanted to do deals.” It was in the midst of that commercial real estate collapse that Target announced it had chosen Eastside as the location for a new two-story store, to be located at the corner of Penn and Highland. That parcel was initially planned to be the final phase of Eastside but developing the Target store was a long-awaited opportunity that came at the right time. Roughly two years later, when Target opened in 2011, Mosites Company was in the process of trying to make the remaining phase of Eastside work by pursuing an ambitious program of residential and transit development. And as Target’s sales soared, performing as well as

the top stores in the country, the notion that East Liberty was a fringe area was dispelled. Mosites had skipped Phase 3 because it could not rationalize the transit piece of the project in an office development. Working with the City of Pittsburgh and the Port Authority of Allegheny County (PAT), Mosites decided to pursue a Transportation Investment Generating Economic Recovery (TIGER) grant to build a new multi-modal transit station. It was a very complex project that was going to involve city, county, state and federal agencies in a private, mostly residential development. The concept resonated well with PAT, which was trying to be creative in increasing its ridership. “Eastside was a trade of land for the rebuilding of the station and the construction of the pedestrian walkway and site amenities,” explains Ellen McLean, CEO of the Port Authority. “The Mosites people are extraordinary in their progressive

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thinking this way. Not everybody thinks this way in terms of transit.”

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Beginning with the TIGER II round of funding, Mosites submitted an unsuccessful application in 2010 and then suffered the same fate in 2011 with TIGER III. In 2012, the company prepared to submit another application for TIGER IV. “We decided we were going to try one more time,” recalls Minnerly. “Time is your friend if you can afford to buy it.” This time the effort hit pay dirt, as Pittsburgh’s application was accepted for a $15 million TIGER grant in June of 2012. With matching funds from the city and PennDOT, the TIGER grant would kick start the project and cover $34 million in costs for the East Busway Transit Center.

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In addition to landing the TIGER grant, Eastside’s partners were able to have the area surrounding the development declared a Transit Revitalization Investment District (TRID). The TRID designation qualified the project to receive a portion of the state taxes collected for the district to reinvest in infrastructure. The enabling legislation passed the PA legislature in 2004 but the regulations surrounding the TRID process were daunting enough that Eastside was the first functioning TRID. Mosites Company had been exceptionally creative in assembling public redevelopment assistance that would help fund the project but the complexity that accompanied those grants was unprecedented for the developer. The mingling of federal money into the project meant that Mosites would have to procure at least part of the project through public bidding, a process the principals didn’t favor. The nature of the TIGER grant also meant that a transit center that would serve multiple users would be delivered in multiple steps. Beyond the overlapping of public and private funding, the project also overlapped physically and that was a source of some of the complication. The TIGER grant covered the construction of the East Liberty Transit Center, a multi-modal station that replaced the PAT East Busway station and connected the busway to East Liberty proper. Part of that center construction was a 520-car parking garage that was above the grade of the busway but would be sub grade for the street level of the apartments. The garage is not intended for multimodal transit use, however. It is designed to support the apartments and the needs of the community. Mosites Company’s private investment is the vertical portion of the project but it begins with the responsibility for the top of the garage. Confused? Wait until you hear about the paperwork. “We worked with the Port Authority and the URA (Urban Redevelopment Authority) to construct the station on behalf of the Port Authority,” explains Chris Minnerly, project manager at Mosites Company. “The URA held

26 DEVELOPINGPITTSBURGH

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the construction contracts for the station. Portions of the garage were conceived as public infrastructure. The garage was built as part of the Mosites Company project scope and the public infrastructure was layered on that construction and became part of the TIGER grant. “What we really built with that infrastructure was the lid of the garage, a public right-of-way that acts as a public street on top of the garage, and the sidewalks and plazas that help make the connection to the communities of Shadyside and East Liberty,” he continues. It was fortunate that the URA was able to package the transit center and the garage together when it put the project out to bid, awarding a $34 million contract to PJ Dick Inc. in October 2013. As the construction of the East Liberty Transit Center proceeded, the Mosites Company began to work with PJ Dick on the development of the private apartments that would follow.

Mark Minnerly says that the contractor and URA played key roles in keeping the project in compliance with the federal and state regulations for the various grants that were involved.

few blocks east and Oakland was less than 15 blocks to the west. Apartments seemed to be a better fit than the office over retail of the original plan.

“PJ Dick was extremely valuable to us because they had knowledge of government procurement and procedures,” he says. “The URA was a make or break factor. There were a few individuals at the URA who made it their business to learn the requirements so that we could nail it down.’

“If you looked at the market, at least in the East End, there was still enough demand [for apartments], even with the other projects our colleagues were developing. In a way we were all developing different things,” explains Mark Minnerly.

The use of the vertical construction that followed the completion of the transit center in 2015 changed after the recession. By the time that the TIGER grant was won and construction on the infrastructure started, other developers had undertaken projects in the neighborhood. Walnut Capital’s Walnut on Highland opened in 2013, shortly after East Liberty Place. Dozens of restaurants had opened. Two boutique hotels were under construction. Bakery Square’s booming employer base was just a

“The big leap was looking at the site as four acres of urban fabric instead of four acres of retail,” he continues. “We could look at the property to ask what value-adding product the upper floors should be. At the time the market was screaming market rate housing and Wall Street wanted nothing to do with spec office.” By the time that the financing for the apartments was being finalized, Mosites Company had assembled an equally complex capital stack. Two different tranches of New Market Tax www.developingpittsburgh.com

The new street created above the parking garage completes the urban connection between Eastside’s retail west of Highland Avenue and the Centre Avenue intersection at the Target store.

Credits added to the equity in the project. There was plenty of appetite for the tax credits on the first $23 million tranche and a second tranche of $14 million was raised. Private debt of $72 million came from Huntington Bank as the lead lender, with participation from PNC, First Commonwealth Bank and First National Bank. Mark Minnerly marvels at the difference 15 years made. “When we did Whole Foods, it was a five million dollar deal. The bank only had two million and they were nervous about that,” he chuckles. The path Mosites Company took to deliver the final phase gave the market a head start on the apartment “boom” in Pittsburgh. Bank underwriters had begun to get a little cautious about apartment projects by late 2014 but there seems to have been faith in the Eastside brand. “We had a pretty good feeling about the demand for that product, and Steve Mosites had such a great vision, such great details,” recalls David Tetrick, senior vice president

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of commercial real estate for Huntington Bank. “It’s a real monument to the development of East Liberty.”

reconnecting one of Pennsylvania’s most vibrant communities with the rest of a revitalized economy.

Mosites Company partnered with Morgan Communities on the apartments. The Rochester, NY-based developer and apartment operator entered the Pittsburgh market a few years earlier and had assembled an impressive portfolio of properties. The Design Collective from Baltimore designed the 360-unit property, which includes amenities like a saltwater pool, outdoor grilling areas, theater, a dog-washing station, health and wellness center and a yoga studio.

“A good developer never works alone. We have been lucky to work in partnership with many design and development luminaries over the years, including Rob Stephany, Ernie Hogan, Skip Schwab, Maelene Myers, Bill Kolano, Hank Beukema, Dave Gibson, Tom Murphy, Bill Peduto, Kevin Acklin, Dan Gilman, Rich Fitzgerald, the URA and many others leading the East Liberty revitalization,” observes Steve Mosites. “Soon we will complete the final elements of Eastside Bond - The Mews and the East Plaza - a true public space connecting and bonding Shadyside, transit and East Liberty. We hope tt will be a gathering place for many years to come.” DP

The final phases of the Eastside Bond apartments are being completed and lease up of the available apartments is ahead of pro forma. More than 60 percent of the apartments are leased at rents that range from $2.40 per square foot to $2.65 per square foot. Eastside Bond wraps up almost two decades of planning and building that played a significant role in

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Developer Profile The Bentley, located at the top of Greentree Hill, will serve as the new headquarters for Burns & Scalo Real Estate Services. Image by LDA+ Architecture & Interior Design.

Burns & Scalo Real Estate Services

hen asked about his company’s history, Jim Scalo initially demurs. The CEO of Burns & Scalo Real Estate Services (BSRES), Scalo prefers to look at what his company has yet to accomplish. “I’m more of a future guy,” Scalo says. “I never like to talk about the past because it’s immaterial.” Burns & Scalo Real Estate Services is in the middle of a hot streak. After a strong run of developing a

handful of buildings in Southpointe during the 1990s, BSRES kept its powder dry ahead of the financial crisis. The company took on projects that were out of its sweet spot – like the Brix 26 apartments in South Side – during the downturn because multi-family was one of the few products that could be developed in the early 2010s. But over the past three years, BSRES has returned to its core business and prospered. The marquee development of this streak was its Zenith Ridge project, a three-building office complex perched on the southern-most ridge in the Southpointe II development.

That project included 486,000 square feet of office space, kicked off by construction of a build-to-suit new headquarters for Ansys Inc. A second spec office was built concurrent to the Ansys headquarters, along with a third spec building started a year later. That project became a de facto build-tosuit almost immediately when Rice Energy signed a deal to take the entire building. Zenith Ridge is essentially full in mid-2016. During the Zenith Ridge project, the company also built a spec 60,000 square foot office building in the RIDC Park West. That building, called the Concord, is now home to global architectural/engineering firm CH2M. The company also bought two troubled business parks, Abele Business Park in South Fayette Township and Cedar Ridge in Robinson Township.

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W ith news of a final investment decision by Shell Chemicals to build its cracker plant in Monaca and dozens of big users in the market, BSRES has stepped up its activity to another level. Putting Jim Scalo’s motto to work – “new beats old” – BSRES has nearly one million square feet of office projects in the works. The company has moved the dial quite a bit over the past 20 years. Burns & Scalo Real Estate started as an investment business for residential roofer Duke Burns and Jack Scalo, Sr. The two men began their roofing business in 1956 and saw real estate as the means to their long-term plans. “As they became profitable in their trade they looked to real estate for two things, retirement and tax shelter,” recalls Jim Scalo. “In the 1960s and 1970s they started investing in small real estate, duplexes and some small apartments. When I got out of college in the early 1980s I went straight into that full time to get my arms around what they had. We built it up to a couple thousand units and then sold it in 1994. And that sent them into retirement.” That positioned Scalo to get into the business in the way he envisioned it. Scalo and his twin brother, Jack, spent lots of time at Burns & Scalo growing up and each ended up gravitating towards separate arms of the business. Over the more than 30 years in business, each has grown the respective operations into formidable enterprises. While Jim owns the real estate business wholly separate from the legacy roofing business that his brother Jack owns, the two still work together. Jack invests in many of the real estate deals and Jim is an investor in Scalo Solar. At the start of their careers, neither Jim nor Jack came into a business that they would recognize today. Jim Scalo remembers that while the real estate business was not sophisticated in any way, the opportunity he was provided set the foundation for his career. “I had worked at the roofing company since we were little kids. I had

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an affinity for real estate and started working there during the summers in college,” recounts Jim Scalo. “Duke Burns had a brother that handled the business and I guess you could say I replaced him when I graduated.” “What my dad and Duke did was brilliant. They gave Jack and me our own thing and they gave us a lot of rope to hang ourselves,” he continues with a laugh. “We made a lot of mistakes at their expense but at the same time we each grew our business exponentially. I give them all the credit in the world because what we were given was a lot of

“I’m a long-term investor. It takes two or three years to really get something stabilized,” Scalo concludes. “It’s probably three to four years if it’s a new development. If you sit in a market for that long with the right product, in the right location and it’s new, you’re going to score.” opportunity. We weren’t given a lot of money. That’s probably a good lesson as we now have legacy businesses and our children are getting involved.” Scalo also expresses gratitude for that lack of sophistication because he realizes it made him develop his own philosophy about running a real estate services company. “What we weren’t given was a lot of guidance. My dad and Burns weren’t real estate pros. They never spent a day in the life of a real estate man,” he says. “They weren’t working off of budgets. They were working off of ten percent appreciation every year. That solved everything back then.

“We’re a highly-disciplined firm now with strong financial management. I would put our financial management team up against anybody’s. And I say that because I get to see a lot of other company’s when we do acquisitions.” Over the years, Scalo has grown into a manager who believes that the strength of his business and the desired return for his investors – of which he is one – depends on his people. He has learned that keeping them focused on what is important to the company’s success, rather than a litany of duties, is the difference between operating smoothly and pinching pennies. That means creating processes and a culture where the success of the company translates into the financial success of the employees. “We do one day a month where we just review the financials on every one of our entities. It’s a tough day,” Scalo explains. “We skip a month during budget season and January, so it’s just ten times a year. What we’re looking for in those meeting is variance reporting. We’re looking at month-to-date and year-to-date and if there’s a reason to look at more detail we do. “That’s also a day when the world stops for the company. The facilities guys come in. The leasing people are in. The marketing people come in and we just go from one to the next. It’s a day when we talk about all the properties. We talk about the business in addition to the financials. So it’s not just the financials. The leasing agents all have commitments and we talk about where they are on those commitments.” Scalo explains that the budgets for his properties are built upon those leasing commitments. The success in forecasting those budgets means the difference between running according to plan and cutting expenses to make plan. Scalo is committed to planning and making plan for his investors every year. Part of the discipline that has been imposed at Burns & Scalo is that rigorous commitment to plan at all levels and Scalo has communicated well that

the key to making plan is leasing. His staff understands that leasing is the life blood of their business and their activities need to support that objective. “The facility manager knows there are three fundamental priorities every day: Front door policy, which is what does the property look like? The condition of the vacancies; and service calls,” Scalo explains. “If you ever go through one of our vacant spaces they look really good because that manager knows that he needs to remove the negatives and help that leasing agent lease that space because that’s going to affect plan. And they are all incentivized.” BSRES employees are included in the metrics of success for the company. Success for a real estate services company is multi-faceted. There are investors whose expectations must be met and agreements met. The operations of the company need to be profitable. Burns & Scalo’s management has worked diligently at creating ways for the staff to be part of the striving and the success. “Every year we’re looking for ways to change the plan. One of the things I’m always looking at is compensation,” Scalo admits. “If I think every day my employees are coming to work thinking about how to make me more money I’m foolish. But if I can put plans in place so that people can think about how they can make more money for themselves and it aligns with corporate goals, we both win.” Burns & Scalo created what it calls a performance result description in addition to a job description. Instead of a list of tasks, BSRES employees are given a list of priorities that are set to reach key result areas. In the effort to move the company forward a little every day, Scalo sees the accomplishment of the high priority tasks as critical to success and all employees have financial incentives tied to those key result areas. It’s a way for all BSRES staff to make an important contribution to the company’s success and be recognized for those contributions. There’s also a corporate financial goal that, once

achieved, triggers another financial incentive for the employee. All of this detail management is aimed at getting all the employees working together towards the same goals. Scalo says his team is rigid in judging the results but the payoff for the individual can be thousands of dollars.

“Ever y year we’re looking for ways to change the plan. One of the things I’m always looking at is compensation,” Scalo admits. “If I think ever y day my employees are coming to work thinking about how to make me more money I’m foolish. But if I can put plans in place so that people can think about how they can make more money for themselves and it aligns with corporate goals, we both win.” “The point is, we want to pay this money out but we’re strict about it because if you’re not, it doesn’t mean anything,” Scalo asserts. “It never really works until people start getting the money either. We’ve been doing this about four or five years and it’s working really well.” Scalo explains that the management team also looks for special projects for its employees to earn additional incentives for value-adding opportunities like buying out the subcon-

tracts on one of BSRES’s construction projects or managing the project. Burns & Scalo now acts as the general contractor on its own developments. At various times since Jim Scalo took over the real estate business, the company has both acted as contractor and worked with a third-party general contractor. Scalo says that both methods led to successful projects but he feels more comfortable in the joint role of both owner and contractor. The size of the BSRES portfolio means that the company regularly works with specialty contractors for maintenance and repair work, as well as tenant improvements. Having that Rolodex of subs and adding staff with construction project management experience, Scalo likes the control it gives BSRES over schedule and performance. In the past couple of years, BSRES added an annual prequalification process, for which it charges vendors, to its best practices for construction management. Scalo says that some subs balked at the idea but that the environment which it creates works better for both BSRES and the contractors. “I remind them that the process keeps the unqualified competitors from bidding. They are not going to lose work to a sub that isn’t managing its business like they are,” he explains. BSRES has grown its operating business as its portfolio has grown. That business includes brokerage, property management and development. In 2016, BSRES acquired a marketing company to help drive the front end of the business. Although its operations primarily support its own real estate activities, BSRES will do occasional third-party projects. The company was recently hired to do office development services at the George Westinghouse Research Center for an outside investor. BSRES will help with the development plan and brokerage for a fee but will have no ownership stake in the project. Its portfolio is dominated by Pittsburgh properties but it also includes

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properties in Ohio, Indiana and North Carolina. Scalo is bullish on the corporate office market, especially the Columbus area right now. “I would say that who we are today is narrowly focused. We are an office, primarily suburban, investment developer. We’re not interested in other product types - multi-family, retail, or hotel,” he notes. “We have smidgens of that in our portfolio. Today the portfolio is a little over five million square feet. We generally develop to hold. We’re not the kind of people who are IRR driven. We’re driven by cash on cash. I believe wealth is income not liquidity. When I get a lot of liquidity I put it to work.” BSRES is poised to put that liquidity to work again on projects later this year and into 2017. Work has started on the first of two 80,000 square foot buildings, called Beacon One and Two, at the Abele Business Park in South Fayette

Township. BSRES is working through the development process on more new construction in the RIDC Park West, planning two 106,000 square foot buildings it has branded the Boardwalk. Across the Parkway, BSRES signed an agreement to buy the 192,000 square foot former GlaxoSmithKline headquarters in Moon Township. And in the city’s Fairywood section, near Crafton, BSRES is partnering with Franklin Interiors to build a new 150,000 square foot office and shop; and will be developing a second 150,000 square foot building for W. J. Beitler Co. across from the Franklin Interiors project.

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Developing Trend The Gas Industry is Looking Like a Comeback Kid

s the country was mired in a deep recession in 2009, energy companies were descending upon Southwestern PA in a frenetic build up of natural gas exploration of the Marcellus Shale formation. The drilling built over the next few years, transforming the economies of Greene and Washington Counties. Economic benefits spilled over into many sectors of the region’s economy, providing construction opportunities, full hotels and a booming market for pickup trucks and tires. Commercial real estate benefitted from those early years of the Marcellus play. Hotels and motels quickly popped up to meet the demand from roustabouts and engineers from out of state. Southpointe II, which was originally set as a retail mixed-use center, was redesigned and became home to a handful of new office buildings leased by gas companies. Gas well service companies took hundreds of small and large industrial leases and sites. Fallow industrial parks in Washington, Greene and Westmoreland Counties filled with build-to-suit tenants. Towns like Canonsburg and Waynesburg saw empty storefronts fill up and merchants prosper. Then came a steep decline in the price of oil and gas. Five years of increasing production of gas and oil from shale exploration – both in the Appalachian and western regions of the U.S. – coupled with falling demand from China and the rest of the globe led to a steep decline in prices beginning in

the summer of 2014. Energy production is a boom-and-bust business. As has happened through many cycles, excess supply had to be absorbed before prices could stabilize at profitable levels. A failing global economy kept demand low and steep cutbacks in drilling, even in the newly-explored Marcellus and Utica formation, were the only remedy. The rig count in Pennsylvania has fallen to 16 from more than 100. Thousands of jobs have been cut in the industry, which was just in the beginning stages of its multidecade build. As could be expected, revenues for businesses serving the industry have fallen as well. Trumbull Energy Services President T im O’Brien estimates that its revenues have declined by 80 percent from the high point. Trumbull is involved in construction of well and midstream sites. The Ellwood Group, a manufacturer of steel castings for the oil and gas industry, reported that its revenues fell from $1.1 billion in 2014 to a forecast of $650 million for 2016.

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Supply and demand remain out of balance but events are working to bring demand higher, while oversupply is absorbed. Summer 2016 has been hotter than expected. That has boosted demand for electricity, including power generated by natural gas. Coal use is down by one third year-over-year and gas generation is up ten percent. Gas consumption is at record high levels, according to the Energy Information Administration (EIA). Moreover, construction is underway on new gas-fired power plants in Moundsville, WV, South Huntingdon Township, Lordstown, OH and Johnstown. Several others are on the way. And then there are the ethane crackers. “The growth of manufacturing here, with those industries all using gas, that’s a huge opportunity to create new demand,” predicts Dave Spigelmyer, president of the Marcellus Shale coalition. “The cracker and the power generation loads are all pretty critical to demand and we have seen some appreciation in price. It’s pretty logical that we’d see some additional capital spending. [Spending] is certainly not where it was and I don’t see it going to where it was any time soon. But I do think we’ll see some reinvestment of capital back in PA and that’s a good thing.” Spot prices for Marcellus gas have risen from around $1.30 per million cubic feet (Mcf) to $1.90. The prospect of this future demand is giving producers a reason to invest capital in measures that will also help boost the current low prices. Over the past few months, activity in the midstream has surprisingly rebounded. In an environment that has been rife with retrenchment and capital budget cuts, capital expenditures on midstream facilities are a sign that the industry sees a corner turned, if not a recovery on the horizon. The largest of these investments is the $1.5 billion being spent on the Revolution cryogenic processing plant and gathering pipelines by Energy Transfer Partners (ETP). The project includes 100 miles of pipelines, originating in Butler County and terminating at the Revolution 38 DEVELOPINGPITTSBURGH

| Fall 2016

cryo plant in Smith Township in western Washington County. The processing plant is planned to have a 400 million cubic feet per day capacity. ETP also plans a fractionation plant in Marcus Hook, south of Philadelphia. Based on similar investments, the cryogenic processing plant should cost more than $550 million to construct. A contract for the earthwork for the plant has been let. Washington County is seeing other investments that will boost the capacity to process and move gas to market. It is the inability of producers to get the enormous volume of gas extracted from Southwestern PA wells that is the root of the steep discounts on the spot price that Marcellus producers are seeing. EQM Gathering, part of EQT, has plans for the Mako Compressor Station in Amwell Township. Mark West is moving forward with the Imperial Land Compressor Station in Robinson Township and expansions of the Redd and Dryer stations in Robinson and Amwell respectively. Mark West is also expanding a Sunoco facility in Independence Township. These projects represent investments of between $10 million and $30 million

Washington County is seeing other investments that will boost the capacity to process and move gas to market. It is the inability of producers to get the enor mous volume of gas extracted from Southwester n PA wells that is the root of the steep discounts on the spot price that Marcellus producers are seeing.

each. Sunoco Logistics has also been taking bids on packages of its proposed Mariner West pipeline, a second distribution network that is key to moving liquids from the Marcellus and Utica to eastern markets in larger quantities. “Pipelines are absolutely critical. We’ve got to make sure we have opportunity to use gas here,” says Spigelmyer. “It’s a multifaceted effort, making sure we’re building manufacturing and using product here in PA but also having the avenues to get it to critical consuming regions across the country. That means moving liquid supplies of natural gas to Sabine Pass and over to the east coast to export.” Another encouraging sign for the gas industry has been the trend in drilling activity. In recent earnings announcements, most of the publicly-traded producers have been guiding expectations for drilling higher. In his comments to analysts on July 28, for example, EQT’s CEO David Porgas noted that, “We are getting in front of a broader industry ramp-up.” Rig counts have stabilized throughout the Marcellus and Utica footprints, albeit at diminished numbers from even earlier this year. Baker Hughes reported that 36 rigs were working in Ohio, West Virginia and Western PA during the last week of July. That’s down from 81 in July of 2015 but the rig count has been stable for the past month or so and looks to have reached the end of a decline. Even with reduced rig count, gas production in Pennsylvania has remained fairly strong. Producers have become significantly more efficient since the early drilling six or seven years ago and wells are showing flatter decline curves than were originally expected. Four wells now produce what ten wells did in 2009. As a result, PA producers are on pace for five trillion cubic feet in 2016. That’s more than one-quarter of all U.S. gas production. Reduced drilling tends to be reflected in reduced industries as much as a year later. Current stocks

are more than 15 percent above those a year ago and almost 19 percent higher than the five-year average. The Energy Information Agency forecasts that natural gas inventory will be 4.2 trillion in October, an all-time high. But Rice Energy’s CEO, Daniel Rice, believes that the industry has overcorrected. In his presentation to analysts in July Rice explained, “[O]ur analysis of historical state data tells us that the basin needs 50 to 55 rigs to maintain flat production. We think this lack of growth from the basin sets the stage for an improving gas market in 2017 and 2018.” Th e s i z e of t he re se r ve s i n th e U.S . s h a l e fo rmati ons is t he root of th e p ro b l e m. S h i fti n g co n sump t ion de m a nd f ro m o i l a n d c o a l to n a tu ra l gas tak e s t im e . T he g a i n s i n d e ma n d h a v e b e e n smal l c om pa re d t o t h e e n o rm o u s p o te n ti a l o f th e g a s re se r v e s. D e ma n d fro m th e cra ck e rs th emse lv e s w on’t m a k e a b i g d e n t. T h a t’s wh y th e b uild of m a nuf a c tu ri n g a n d p o we r g e n e ra ti on ca pa c it y is v ie we d a s s o i mp o rta n t to a l o ng-te r m he a lt hy p l a y. Sh el l ’s e st im a t e d pro d u cti o n o f 1 .6 m i l l i o n to n s of p ol y e t hy le ne w ill re q u i re 1 0 5 ,0 0 0 b a rre l s o f ethan e da ily a s a f ee d s to ck . P T T ’s cra ck e r, wh e n fu l l y ope r a t iona l, wi l l p ro d u c e o n e mi l l i o n to n s an nua lly, m e a ning t h a t th e o u tp u t fro m th e cracke r s in t he e a r ly 2 0 2 0 s wi l l b e fe d b y a b o u t 170,000 ba r re ls of e th a n e e a c h d a y. T h a t’s ab out 6. 4 Mc f of na tu ra l g a s d a i l y, a fra cti o n o f th e am ount of ga s n e e d e d to fi re th e m a n u fa ctu ri ng proc e sse s of th e i n d u s try th a t i s e xp e cted to fo l l ow S he ll, P T T a n d a n y o th e r cra ck e rs . A t th i s point , how e v e r, fe w s e e m ce rta i n a b o u t th e speci fi c s of w ha t ’s to c o me . “It’s pretty early for that. When you take a look at the multiplier effect behind that kind of investment decision, I think we’ll see it,” notes Spigelmyer. “The fact that it’s going to take four or five years to build, I’m sure folks have those kinds of opportunities on the drawing board but I don’t think we’ve really seen what’s going to come yet by any stretch of the imagination.” The good news is that the prospect of improvement in the gas industry from the construction of the ethane crackers is already driving activity. When asked if they had seen an uptick in business since the June 7 announcement, the reaction of professionals ranging from architects and engineers to brokers to developers is nearly unanimous in the affirmative. Even though the first polyethylene pellet won’t roll off the line until 2021, those who hope to benefit from the production don’t want to be the last in place. That sense of urgency and optimism looks to be energizing the moribund gas industry now. DP

www.developingpittsburgh.com

Eye on the Economy Markets don’t like uncertainty. This truism seems to be irrelevant to the U.S. economy thus far in 2016.

ritain’s voters chose to leave the European Union. Acts of terrorism have taken terrible tolls on a number of cities in the U.S., Europe and Asia. Racial strife has sparked protests and deaths in the U.S. And the American presidential campaigns promise (threaten?) to produce the most infuriating, divisive and entertaining few months in generations of politics. Yet the reaction to all of this disruption has been a collective yawn from the U.S. consumer. Spending on durable goods, vacations and consumer items remains on an upward path, helping to push the U.S. economy forward, even as the economies of much of the world struggle. You could certainly make a good argument that the U.S. consumer is displaying the same hubris that he or she did in 2007, just before the roof caved in, but there are few – if any – parallels between today and the run-up to the financial crisis. For the most part, the relative calm and optimism of the American worker is owed to the strength of the employment situation. Whether the measure is car-buying or leasing office space, the underlying strength of the U.S. jobs market is supporting steady – if unspectacular – growth. The June and July jobs reports were – not surprisingly – almost a mirror image of the “surprise” report on May’s hiring. Employers

40 DEVELOPINGPITTSBURGH

| Fall 2016

added 292,000 new hires in June and 255,000 in July, according to the Bureau of Labor Statistics, which was well above the 175,000 consensus estimate. W ithin the report were two noteworthy items. First, the categories of employment that grew the most were higher-paying sectors like IT, education and health services and professional services. Second was the continued growth in wages. Average hourly wages were 2.6 percent higher year-over-year through July. That represents healthy growth over price inflation and a steady – if unspectacular – trend upward over the past year. Unspectacular – perhaps disappointing is more accurate – is a generous description of gross domestic product (GDP) growth. The first estimate of GDP growth for the second quarter was reported at 1.2 percent on July 29, less than half the rate forecasted by economists surveyed by Bloomberg. Moreover, the rate of growth in the first quarter was adjusted downward to 0.8 percent. Economists had been expecting more of a bounce back from the slow first quarter but the pattern of economic activity makes it seem more likely that growth for the rest of 2016 will remain below two percent. A look at the components of GDP growth reveals that the drag on the economy was business investment, rather than consumer. Investment by businesses fell by 3.2 percent from April through June. That’s a reflection of weak global demand, a persistently strong dollar and more aggressive reduction of inventories. By comparison, consumers were buoyed by continued job growth, low inflation, slightly higher wages, low interest rates and low energy prices. In fact, several of the key drags on business are catalysts for consumer investment. Corporate earnings have been pressured by weaker sales and

growing overhead associated with higher healthcare costs and rising wages. U.S enjoys near full employment status – at least technically – but that also means that worker productivity has peaked, which also pressures employer costs. Although hiring continues and layoffs are still declining, corporations will curtail adding to staff if flat or declining profits begin to erode the value of the company. It’s the growth in jobs that ultimately drives commercial real estate. W ithin the commercial real estate category there are certainly signs that the business cycle is getting long in the tooth, or at least is reaching a point where growth will be flatter in the coming quarters. JLL illustrates its office market report with the use of its “Skyline Clock” and categorizes major city markets as rising, peaking, falling or bottoming. At midyear, JLL placed some of the cities with high concentrations of technology business – San Francisco, Austin, Denver and Seattle - as in the peaking category. Not surprising, energy-dependent Houston was in the falling group. While New York, Chicago and Washington, DC were the largest cities in the rising category, Pittsburgh was also classified as a rising market. More markets were in the rising category than not but if the pace of hiring begins to slow further (and hiring has already slowed by about one-third since 2015), many of those markets will see demand peak ahead of JLL’s expectations. Slower job growth has also begun to impact the multi-family sector, although it’s worth noting that the market dynamics in the multi-family market are still trending upward. The July reports on apartment rents showed that growth had slowed again, falling to two percent since July of 2015. In two of the major

cities in the U.S., San Francisco and New York, rents were actually off by between one and two percent. Multi-family construction reached cyclical highs in 2015 for starts, completions and permits. That level of activity suggests that the first stages of oversupply will be seen later this year. Construction starts have only fallen by about 16,000 units or 4.2 percent year-over-year through June. As the oversupplied conditions become better recognized, especially if rent growth slows or reverses, development of new multi-family projects will slow further. In addition to the supply and demand conditions, two other factors helping with apartment development are beginning to become drags on expansion. Overhanging single-family inventories created by the wave of foreclosures from 2008 to 2010 have abated. In fact, the fallout from the mortgage crisis prevented new developments, either because developers weren’t willing or financing wasn’t available. The result is a shortage of buildable lots for at least the last 12 to 18 months. As might be expected, that shortage was an incentive for developers to step up activity and more new construction will be possible later in 2016. At the same time, lenders continue to have excess liquidity and a desire to lend. Demand for single-family home ownership is pent up and with rents exceeding mortgage payments in many markets, mortgage demand should grow. Banks are still saddled with regulations that hinder their ability to make deals but there are an increasing number of programs – particularly from Fannie and Freddie – that are making first-time ownership more accessible. Most notable are loans with low or no down payment required. That comes at a time when home ownership is growing

A strong dollar, weak global economy and lower earnings are holding U.S. GDP growth down. Year-end GDP growth data from Bureau of Economic Analysis.

among the youngest – and largest – demographic group in America. These two trends shouldn’t materially impact the multi-family market in 2016 but the cyclical shift towards ownership and away from renting should be noticeable in 2017. Strong consumer health is the driving factor behind strength in two other real estate categories. Consumer spending growth is lifting retail enterprise overall but within the retail category, the explosive growth of online sellers like Amazon, Zappos and Wayfair have driven strong growth in industrial construction. Large fulfillment centers, like the one proposed for Amazon by Hillwood at Chapman Westport, have driven more development and positive absorption. The hospitality industry is likewise seeing continued strength from individual and group travel. Revenue per available room (RevPar) and average daily rate (ADR) are both on a pace to experience growth in excess of five percent in 2016. The positive metrics are pushing development of additional supply of roughly two percent more capacity in 2016.

The first half of summer has brought little to indicate that consumers are losing confidence in their personal economic conditions, even though as many as 70 percent of the people in some surveys have expressed dissatisfaction with the condition of the national economy or leadership. Spending for travel and dining are up. Home values continue to appreciate faster than the rate of inflation. A surprising six percent drop in gasoline prices has made filling up the tank roughly 50 cents per gallon cheaper than last summer. Household and mortgage debt ratios are lower than at any time since the Carter Administration. America in the third quarter of 2016 is a safe haven for investment and a stronger economy than most of the rest of the world. In spite of unsettling headlines and political rhetoric designed to inflame voters, the American worker and consumer are behaving as though he or she is comfortable with his or her household’s conditions. That’s good news for the U.S. economy for now. DP

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Office Market Update

ollowing a strong performance in the first quarter of 2016, Pittsburgh’s office market ended the second quarter with similar strength, boasting a vacancy rate of just 7.7 percent. The average rental rate, over all classes, finished at a solid $20.40 per square foot. Overall, Pittsburgh’s Central Business District (CBD) posted a declining vacancy rate of 8.3 percent, down over 0.5 percent from this time last quarter. The average asking rental rate per square foot for all classes in the CBD remained steady from previous quarters reaching $23.66 per square foot. The average asking rental rate for Class “A” buildings in the CBD was just over $26.65 per square foot with Class ”B” reaching an average of $20.60 per square foot. We can expect overall rental rates in the CBD to increase due to the two large renovations underway to include: the 529,000 square foot Liberty Center and the 1,011,000 square foot One Oxford Centre. The buildings are currently quoting $33.00 and $34.00, respectively. Similarly, Pittsburgh’s suburban office market remained strong. The end of the second quarter showed a 7.4 percent vacancy rate compared to the first quarter’s vacancy rate of 7.9 percent. The average rental rate for Class “A” buildings in the suburban office markets reached $23.43 per square foot with Class “B” attaining rates of $19.36 per square foot. Both classes demonstrated an increase from the previous quarter. Suburban submarkets, such as the Parkway West, have retained large amounts of Class “A” inventory providing sizeable users with options in the market.

As we pass the midpoint of 2016, Pittsburgh continues to see positive activity in the market. One of the largest transactions this quarter was the purchase of the 307,000 square foot Centre City Tower in the CBD by the New York-based King Penguin Opportunity Fund III. Another major transaction involved the 18-story Arrott Building downtown, which transferred to Columbusbased Batra Realty Group for $3.0

million. Local investors continue to demonstrate their commitment to the region with ventures such as McKnight Realty Partners’ recent acquisition and planned repositioning of River Walk Corporate Centre located in the CBD Fringe submarket (800,000+ square feet). As evidenced by this quarter’s positive absorption of 677,809 square feet, the office market continues to

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Source: CoStar Office Report, Q2 Pittsburgh Office Market, Colliers International

strengthen. Thanks to local and national investors as well as companies like Oculus (Facebook) and Uber, the

This has created a fertile bus iness environment for startups. Not just limited to the tech industr y, Fo rbes Magazine declares that there is an increasingly diverse cross-section of individuals leaving larger organizations to venture out on their own and create businesses. 44 DEVELOPINGPITTSBURGH

| Fall 2016

Pittsburgh region maintains movement and national interest that has long been absent since our days of earning the title of Steel City. We can expect this high level of interest and activity to carry forward into the next quarter. All information in this report is provided on an “as reported” basis from data reported by CoStar in its 2Q Office Report as of July 11, 2016. Colliers International | Pittsburgh has used reasonable care in preparing the information included in this report, but makes no representation regarding the completeness, accuracy, or timeliness of any information or that such information and data will be error-free. Alexis Wilkerson, Associate *CoStar characterizes the CBD (Central Business District) as a high density, well organized core within the largest city of a given MSA, this case being the City of Pittsburgh.

**CoStar defines the Suburban market as including all office inventory not located in the CBD. ***Office statistics include office condominiums, office loft, office medical, all classes and all sizes, and both multi-tenant and single-tenant buildings, including owner-occupied buildings. ****All rental rates have been converted to a full service equivalent.

Co-Working Space: The Nest Before The Flight Pittsburgh, a city historically known for its blue-collar mentality and rich industrial history, is going through a renaissance. This time, it is emerging as a city rich in intellectual capital and technological advancement. The drivers of Pittsburgh’s economy have consistently been “meds, techs, eds and finance.” As of late, the Technology Sector has taken a noticeable lead. This lead is attributed to the innovation emanating from

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stated, “co-working space allows for collaboration and free thinking. It provides an exciting atmosphere to stay motivated and focused on growing young companies. The benefit of being in spaces like Alloy 26 is that companies can feed off each other.”

(From left) Maria Hanson, Mamadou Balde, David Thor and Patrick Sentner.

the two largest universities in the city; Carnegie Mellon University and The University of Pittsburgh. W ith innovation comes ideas and with ideas comes enterprise. This has created a fertile business environment for startups. Not just limited to the tech industry, Forbes Magazine declares that there is an increasingly diverse cross-section of individuals leaving larger organizations to venture out on their own and create businesses. One thing every business needs is space for work. This space can be a home office, coffee shop or conventional office building. The newcomer to this list of preferences is “co-working space.” The idea of co-working space, in Pittsburgh specifically, began before the term was coined. Dale McNutt’s StartUptown has been in existence since 2006 and is still going strong. Since then, other spaces have popped up, including Beauty Shoppe, Innovation Works, Revv Oakland

46 DEVELOPINGPITTSBURGH

| Fall 2016

and Alloy 26. These co-working spaces usually provide a large open layout with some designated offices and breakaway, conference and quiet rooms. Essentially, anything a startup needs is contained within the space. The benefits of co-working space are many; the most apparent being cost savings. Unlike traditional office spaces, lease rates are determined by the number of desks or offices and frequency of visits, instead of the square footage. Rent at these spaces can cost you less than a cup of coffee a day and provide you with the necessary space and resources. In addition, the tenants in the coworking spaces are not obligated or held to the traditional long-term office leases. Furthermore, the culture is one that epitomizes the millennial generation; laid back and care-free. This means no shirt and tie; rather flip-flops and t-shirts. As Alloy 26 tenant and Digital Dream Labs CEO Jacob Hanchar

Due to the emergence of startups in the City of Pittsburgh, large co-working space corporations like WeWork and Industrious are rumored to currently be searching in the Central Business District for office space in the 20,000 to 30,000 square foot range. This presence could serve as a benefit to the city in other ways as well. Naturally, if companies such as WeWork or Industrious leased space in the CBD, that would bring more startups to the CBD as well. That, in turn, would entice the employees of these startups to potentially look Downtown and in the Fringe for residence. As our CBD continues to evolve through resurgence and create a new identity for itself (mainly that it’s livable), this would definitely create a bigger buzz and bring even more life to our CBD after work hours. This is an exciting time in our city as technology continues to advance and new companies are formed. Co-working space nurtures these new and developing companies until they are established and ready to stand alone. The fact that such notable co-working developers such as WeWork and Industrious are seeking to establish offices in Pittsburgh further substantiates the city’s growing national reputation as a hub for technology and innovation. Mamadou Baldé Esq. Vice President & In-House Counsel Colliers International Two Gateway Center 603 Stanwix Street, Suite 125 Pittsburgh PA 15222 412-321-4200 Patrick Sentner Founder Patrick.Sentner@colliers.com DP

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Industrial Market Update

n a n a ti o n a l l e ve l , th e wa re h o u s e a n d ma n u fa c tu ri n g m a rk e ts are cre a t ing a lot of p o s i ti ve p re s s . Ab sorp t ion num be r s a re s e tti n g record le v e ls c om pa re d to o th e r recove r y a nd e x pa ns i o n p h a s e s . Overal l v a c a nc y is t h e l o we s t i t h a s been sinc e t he Gre a t R e c e s s i o n , an d i n som e inst a nc e s s ta ti s ti c i a n s are s aying t ha t it is th e l o we s t i t has be e n in 30 y e a rs . E -co mme rc e has pl a y e d a big pa rt i n th i s s h i ft because of t he inc re a s e i n o n l i n e sal es v e r sus t ha t of re ta i l s to re s . Th i s so c a lle d “A m a z o n e ffe ct” has i mpa c t e d t he w a y e a c h o n e o f us shops a nd de m a n d s g o o d s . We l i ve i n a soc ie t y w he re mo s t o f u s cri nge a t t he t hough t o f wa i ti n g l o nger t ha n t w o da y s fo r a p a c k a g e – l et a lone le a v ing t h e h o u s e to wai t i n a pot e nt ia l tra ffi c j a m th a t wi l l l e a d us t o a n un p re d i cta b l e l i ne at a st ore . T his n e w tre n d h a s

p a i re d wel l wi th an ec onomy that h a s co n ti nued to add j obs , whi c h i s c re a ti n g c ons umer c onfi denc e and i n tu r n , has i nc reas ed c ons umer s p e n d i n g. Thi s wi l l c onti nue to s ta ck u p the demand for warehous e a n d m a nufac turi ng s pac e i n quarte rs to come. O n a l o cal l ev el , Pi tts burgh’s mes s a g e i s very s i mi l ar. A bs orpti on and v a ca n cy remai n s tabl e for wareh o u s e s p ac e and were i mpac ted o n l y s l i g htl y when A meri c an Eagl e v a ca te d the 440,000 s quare foot d i s tri b u ti on c enter i n Warrendal e. H o we v e r, i t s eems that when the b u i l d i n g was ac qui red i n January b y M c K ni ght Real ty, l eas i ng i ntere s t h a s been c onti nuous wi th the b e l i e f that a few 100,000 s quare fo o t – 1 5 0,000 s quare foot deal s wi l l b e s i gned i n the near future. A s th e ro ughl y 700,000 s quare fe e t o f s pec ul ati v e dev el opment c o n ti n u e s goi ng v erti c al i n the P a rk wa y Wes t/A i rport c orri dor, v a ca n cy l ev el s mi ght i nc reas e, but

wi l l hopeful l y ev en out wit h t he pent up demand that ex ist s out in the market. Thi s was ref lect ed in a rec ent trans ac ti on that w as f inali z ed between Berl i n Pac kaging and N ey er i n Jul y pri or to the development of C l i nton C ommerce Cent er bei ng c ompl eted. A fter scour ing the market for a c oupl e of year s, Berl i n fi nal l y ex ec uted a deal f or 150,000 s quare feet of the 252, 000 s quare foot s pec ul ati v e w arehouse bui l di ng wi th a pl an to expand by an addi ti onal 150,000 s quare f oot wi thi n a y ear of oc c upan cy. The s o-c al l ed A maz on eff ect has pl ay ed a bi g rol e i n dri v ing new demand for warehous e space in Southwes ter n Penns y l v ania and the market i s s eei ng much lar ger requi rements bec aus e of it . At t he end of Jul y, the Pi tts burg h Business T i mes announc ed that Hillw ood i s obtai ni ng approv al s to build a mi l l i on s quare foot warehouse out by the Pi tts burgh I nter nat ional A i rport. The onl y reas on a m illion

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Over time, and closer to constr uction commencement in 2018, the market will see an increased demand for industrial space, especially for properties that are ser viced by barge and rail. If the tri-state area is fortunate enough to obtain multiple cracker plants, it is likely that the market will see manufacturers of the plastics and compounds move closer to the region as well. try i ng to fi gure out how t o accom modate new del i v ery dem ands. This trend has ev en i mpac ted com panies that di s tri bute s pec i fi c ally t o Southwes ter n Penns y l v an ia in t hat they need to be as c l os e t o t he cit y as pos s i bl e i n order to e ff icient ly di s tri bute around the reg ion w it h the anti quated “hub and spoke” s tate road network. W i th a lack of l and av ai l abl e for warehouse dev el opment, pai red wi t h new z oni ng regul ati ons that could m ake warehous e dev el opment around the c i ty more di ffi c ul t (River f ront I nteri m Pl anni ng O v erl ay Dist r ict ) , s ome of thes e c ompani e s are also l ooki ng for s mal l er hubs in areas that do not hav e c onv en ient access. (M onroev i l l e i s a good e xam ple. )

square f oot w a re hou s e b u i l d i n g woul d loc a t e in S ou th we s te r n Pennsy lv a nia is due to a s h i ft i n shi p pi n g pa t t e r ns. P re l i m i n a ry

50 DEVELOPINGPITTSBURGH

| Fall 2016

s e a rc h e s for requi rements rangi ng fro m 3 0 0,000 to 500,000 s quare fe e t o r m ore hav e taken pl ac e and i t i s b e l i ev ed thes e us ers are al s o

Thi s demand for s pac e a lso exist s i n Southwes ter n Penns y lvania’s indus tri al and manufac turing sect or. Ex ampl es are s een wi th the recent ac qui s i ti ons c ompl eted by West inghous e Pl as ma and Retal Indust r ies. Wes ti nghous e Pl as ma acquired 221 Wes tec D ri v e i n N ew Stant on in or-

der to suppor t t he g ro wi n g d e m a n d of the ir t e c hnology th a t i s u s e d to convert w a st e int o e n e rg y. R e ta l I n dust r ie s e x pa nde d i n to th e Un i te d States t hrough a n a c q u i s i ti o n o f a 150,000 squa re f oot m a n u fa ctu ri n g bui l di n g in D onor a w h e re th e y p l a n on ma nuf a c t ur ing po l y e th yl e n e fo r th e p a c k a ging indus try. Th e o il a nd ga s indu s try h a s b e e n around S out hw e st e r n P e n n s y l va n i a fo r ma ny y e a r s. H ow e v e r, S h e l l â&#x20AC;&#x2122;s an nounc e m e nt t o pro c e e d wi th th e d e v e lopm e nt of a cra ck e r p l a n t on th e f or m e r H or se h e a d s i te i n Monac a ha s c re a t e d a n e n ti re n e w i n dust r y of it s ow n. I t h a s a l re a d y spurre d a f lur r y of i n ve s tm e n t acti vi t y in t he im m e d i a te ma rk e t. Over t im e , a nd c lose r to c o n s tru c ti on com m e nc e m e nt i n 2 0 1 8 , th e ma r k e t w ill se e a n i n c re a s e d deman d f or indust r i a l s p a c e , es peci a lly f or prope rti e s th a t a re servi ce d by ba r ge a n d ra i l . I f th e tri -stat e a re a is f or t u n a te e n o u g h

to o b ta i n mul ti pl e c rac ker pl ants , i t i s l i k e ly that the market wi l l s ee m a n u fa cturers of the pl as ti c s and co mp o u nds mov e c l os er to the re g i o n as wel l . W i th th e ongoi ng ex pans i on of G o o g l e , U ber and other rel ated te c h n o l o gy fi rms , the regi on wi l l co n ti n u e to s ee an i nfl ux of co mp a n i es that feed off the s ame ta l e n t p ool . The Stri p D i s tri c t, La wre n cev i l l e and O akl and are the d e ma n d e d l oc ati on for thes e fi rms , a n d a re ex peri enc i ng a trans formati o n b e caus e of i t. O nl y ti me wi l l te l l h o w thi s trend wi l l mature and co me to i mpac t the market.

Amy Broadhurst

Amy B ro adhurs t (Broc ato), CCI M Vi ce P re si dent Ha n n a L anghol z W i l s on El l i s O n e P P G Pl ac e | Sui te 1640 P i tts b u rg h, PA 15222 4 1 2 -2 6 1 -7115 a b ro a d h u rs t@ H annaLW E.c om www.HannaLW E.c om DP

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Capital Markets Update

coRpoRate banking · business banking · tReasuRy management · commeRciaL ReaL estate · pRivate banking

- S po n s o red by -

ome eight years removed from the fall of 2008, when lending came BUS037_12.indd 1 to a complete standstill, the capital markets in 2016 are marked by excess liquidity, strong commercial real estate fundamentals, few signs of overbuilding or economic recession and a consumer balance sheet that is as strong as it has been in more than 40 years. The markets are also marked by ultra-low interest rates, a burdensome regulatory environment (which accounts for some of the liquidity) and an extraordinarily weak global economy. For all the background noise in the markets, the outlook for lending and borrowing in the U.S. is surprisingly stable.

U.S. even more attractive for parking cash. Several Eurozone central banks are currently offering negative interest rates and the uncertainty of how and when Great Britain will exit makes the low-yielding U.S. Treasury bonds seem quite healthy in comparison. Demand for Treasuries has pushed prices up and yields down since the Brexit vote, driving rates for medium- and long-term debt lower still.

that a rebound from the winter BUS037_12 slowdown had been completed. Pointing to continued improvements in the labor markets, steady gross domestic product (GDP) growth and 2/14/12 low inflation, the FOMC hinted that it would look to September for the next upward signal in rates. The FOMC also left the door open to take action in response to what it called “readings on financial and international developments.”

“Events like the Brexit have actually helped our market because the U.S. is that much more attractive to investors,” says Mark Popovich, senior managing director for HFF in Pittsburgh.

Most observers saw this provision as a safety valve, leaving the Fed to keep rates lower should U.S. GDP growth slow or global markets face further disruption. Given that any change in rates by the Fed should be no more than 25 basis points (bps), the upshot of the FOMC action this summer is that interest rates will not be a disruption to capital flows. The same cannot be said about the regulatory environment.

During the second quarter, the most disruptive event was likely the June 23 vote by the British to exit the European Union. The exit will take many months – perhaps even years – to execute but there was an immediate negative response by investors throughout the world. That response ranged from cuts in the credit rating for Great Britain to flights of capital from Britain and Eurozone countries. While the vote seemed to be a negative for England, Scotland, Wales and Northern Ireland, it will take the full implementation of the divorce to understand the economic impact. For borrowers, the Brexit was definitely good news. As was seen in the early primal response by investors, a divided European Union makes the

This heightened demand should put talk of negative rates in the U.S. on hold and make it easier for the Federal Reserve Bank to contemplate normalization; however, the unspectacular rate of economic growth in the U.S. doesn’t inspire higher rates. And against the backdrop of the global economy, there seems to be less and less of an argument for normalization of interest rates within the three-year horizon. In fact, you could argue that the current environment has become normal. At its June meeting, the Federal Open Markets Committee (FOMC) seemed not to embrace the rate environment as a new normal, yet the FOMC chose not to raise its key overnight lending rates again. In the minutes of the meeting, which were released July 27, the FOMC members expressed satisfaction

11:08 AM

As predicted, the creeping impact of Dodd-Frank regulations is having a material impact on commercial real estate financing in 2016 and will be a significant negative factor on the market in 2017 and beyond. Regulations have steadily tightened their grip on lenders, making it harder and progressively more expensive to borrow money for commercial real estate, even without an onerous increase in interest rates. For a couple of years, regulators have looked at individual banks with heightened scrutiny and a more formulaic approach to routine reviews of portfolio. Risk rating was

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tougher and there were requirements for reserves that were unreasonable, especially since the regulations were passed – but not implemented – during a downturn in real estate that has now passed. “In the majority of cases with development and construction projects, banks are looking for the permanent loan to be consumed by the institutional market – insurance companies or CMBS – but regulations are starting to impact those institutions,” notes Jack Shelley, senior vice president for real estate lending and services for Dollar Bank. “If we took on the permanent loan, it’s not that it wouldn’t perform but, with the regulations on portfolio size and diversification, that might make it more difficult to participate in further developments with our long-term customers.” The regulations Shelley references force banks to reserve higher levels of capital to recognize the risks,

EXPERIENCE

| Fall 2016

Each of these regulatory burdens impacted the banks by imposing higher reserve values on projects or deals that did not meet the HVCRE guidelines. That, in turn, impacts all borrowers doing business with banks.

Beginning in 2015, banks also faced the implementation of High Velocity Commercial Real Estate (HVCRE) regulations. HVCRE placed arbitrary – and often higher – rules for equity in deals. More problematic were regulations that forced banks to use cost rather than current market value for assets – like land – that were part of the deal’s equity. That regulation is particularly onerous in a market where developers have long-standing land positions. At the same time, HVCRE required that applicable ratios use the fully-stabilized value of the property as the denominator, rather than the cost of the project or

“The impact of HVCRE is in the higher cost of capital to the banks,” explains John Fetsko, senior vice president and senior commercial banker at Wesbanco. “Banks then have to increase their prices or raise the rate being charged.” Although warnings about HVCRE regulations have been sounding since mid-2015, the gestation cycle of a development deal is long enough that the impact of HVCRE wasn’t experienced much until 2016. Similarly, regulatory oversight of certain types of deals, primarily multi-family, has

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54 DEVELOPINGPITTSBURGH

improvements. The artificially high value increased the amount of equity needed for new construction.

whether those are higher or just regulated higher. Higher capital reserves limit a bank’s ability to pursue other loan opportunities. These regulations come at a time when there is increased competition within the bank for capital, as lenders find they must invest more heavily in technology, reinventing branch banking and cyber security.

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tightened in 2016. Lenders in that space are finding that deals that drew no comment a year ago are now requiring remedies or higher reserves. “The [HVCRE] regulations have worked their way into the system but they have not been fully digested yet. If a bank is blessed to be well-capitalized, it can sit back and plan for the changes and still serve its customers in the way they are accustomed,” observes Shelley. “HVCRE is definitely an issue and it’s having an effect, but we don’t see a pattern yet of how that is affecting the market. I do see a handful of banks in the region that are doing less because of HVCRE.” At the opposite end of the spectrum, conditions for residential mortgages continue to be more aggressive. Regulatory burdens on residential mortgages remain high but several major banks have begun to offer mortgages with no down payment

At the opposite end of the spectr um, conditions for residential mortgages continue to be more aggressive. Regulator y burdens on residential mortgages remain high but several major banks have begun to offer mortgages with no down payment required.

required. Fifth Third Bank and BankCorp South have kicked off zero down payment mortgages, although unlike during the housing bubble, these kinds of loans are available only to borrowers with aboveaverage credit and payment coverage. Lending to those with poor or average credit remains challenging. Dodd-Frank regulations on commercial mortgage backed securities (CMBS) have begun to kick in. The regulations that will have the biggest impact will be those that impose risk retention by the buyers of the bonds. In particular, buyers of B-rated bonds will be required to retain five percent interest in the unrated transactions. W ith the disruption in the CMBS markets that occurred in the first quarter, buyers of B-piece bonds were already chafing at the spreads or last-minute rate hikes for those deals. The increased regulation will make it more difficult to finance projects with higher risks.

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The first CMBS deal with a risk retention structure included was put forward by Wells Fargo on August 1. It was not a surprise that spreads drifted higher in the early response; however, the risk retention proved an attraction and the majority of the investment-grade bonds in the $871 million issue were oversubscribed. Spreads fell to 94 basis points, below the 97 bps that was the forecast and well below the 108 bps spread of the offering a week earlier. While it may seem that such regulation is logical, Dodd-Frank addresses CMBS in a way that belies an understanding of how the market works and could be seen as redundant. CMBS deals include multiple tranches of loans with varying degrees of quality. The variances are rated and the risk premiums associated with the lower quality – meaning higher risk of default – loans are priced into the deals. As risk perception rises, so does the price or the spread of the lower-rated pieces of the CMBS issuances. At the heart of CMBS is the opportunity for borrowers of riskier projects to get financing, while at the same time offering buyers of the loans a higher return. Improving transparency or rating accuracy could be beneficial

During the first quarter of 2016, fears about the Chinese economy and a potential real estate bubble implosion drove spreads on B -piece bonds much higher. Many CMB S issuance this past winter saw erosion of B -piece tranches, as individual loans were rejected by buyers. The result of the risk aversion was a steep decline in CMB S volume.

Rates from the Eurozone and several European nations remain negative. Source Wells Fargo Economics.

56 DEVELOPINGPITTSBURGH

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to the CMBS bond buyers but risk retention adds another layer of risk and cost that will impede volume. In market conditions where volume is already being diminished by risk perception, such an additional burden is unwelcome. During the first quarter of 2016, fears about the Chinese economy and a potential real estate bubble implosion drove spreads on B-piece bonds much higher. Many CMBS issuance this past winter saw erosion of B-piece tranches, as individual loans were rejected by buyers. The result of the risk aversion was a steep decline in CMBS volume. Global CMBS volume was $19.4 billion, down almost one-third from the $28 billion of the first quarter of 2015. Since then, however, calm has returned to the CMBS market. “CMBS has definitely seen recovery from the first quarter,” notes Popovich. “Everyone is quoting now. Spreads have come in 50 to 75 basis points. Everyone is eager to get to the market because the paper is in demand and the fundamentals of commercial real estate are very good right now.” The disruption from the first quarter greeted a year in which CMBS volume was forecasted to reach as high as $125 billion. Forecasts of volume for the full year have been moderated accordingly, with expectations falling to $65 to $70 billion by year’s end. There may be better news for CMBS on the regulatory front too. A bill that passed through the House Financial Services Committee in March, known as The Preserving Access to CRE Capital Act of 2016 (H.R. 4620), is going through Congress with the intention of removing some of Dodd-Frank’s impact on low-risk CMBS. The increased regulation of unrated pieces would still remain with its passage, however. Thus far, market conditions have stabilized and second quarter volume bounced back to billion; however, the CMBS market remains cautious about higher defaults and the Dodd-Frank regulation won’t help deal generation.

I n many w a y s, how e v e r, d i s ru p ti o n i n gl o ba l m a r k e t s a n d i n cre a s e d regul a t ion a re just d i s tra c ti o n s from wha t is pr im a r i l y a s ta b l e borro w ing e nv ironm e n t, e s p e c i a l l y i n com pa r ison t o t he u p h e a va l th a t marke d t he y e a r s f o l l o wi n g th e fi nan cia l c r isis of 20 0 8 . Events in China and Europe were largely irrelevant to the life insurance companies that lend into commercial real estate. All of the life insurance lenders increased allocations for commercial real estate again in 2016 and, absent the concerns that marked CMBS and bank regulations, life companies have been able to remain aggressive and choosy lenders. One factor plaguing life insurance companies is low interest rates. Given the fact that real estate is meant to be part of a portfolio that produces income to hedge against hiccups in actuarial assumptions that lead to losses, low rates make the hedge less effective. To combat the falling rates, life companies have begun to establish floors for rates, generally in the 3.25 to 3.5 percent range. Li fe co m pa nie s ha v e b e e n e s p e ci a l l y i n tegra l t o t he f ina n ci n g o f th e ap artme nt boom a c ro s s th e n a ti o n . So me six y e a r s int o a g ro wth cy c l e fo r mult i- f a m ily, t he a mo u n t o f new co nst r uc t ion is c a u s i n g h i g h e r

l e ve l s o f c auti on among l enders i n th a t s p a ce. “In some markets life companies are backing off of multi-family but in general they are not,” observes Dan Puntil, senior vice president for Grandbridge Real Estate Capital. “There is a sense that some markets are getting overbuilt. There are a few markets that are getting soft, like Houston, with a lot of transient workers.” “If you’re looking for a construction loan to get a multi-family project started in Pittsburgh that could be a tough sell,” predicts Nick Matt, senior managing director at HFF. “There has been a lot of inventory added and there is a lot in the pipeline. Banks want to see how things play out. On the permanent financing side, the product has been holding up. Occupancy has hung in there. Rents have hung in there. We’re financing a number of multifamily deals right now.” Matt reports that Fannie Mae and Freddie Mac have been particularly aggressive on stabilized multi-family deals, many of which represent projects that started construction within the past few years. In addition to the liquidity, borrowers are seeing very favorable conditions on the deals, with rates as low as four

percent, two years of interest only, 80 percent loan-to-value and tenyear amortizations. Terms like those offered by Fannie and Freddie on multi-family call to mind the kinds of aggressive deals that marked the mid-decade bubble in the 2000s. But lending conditions like that are far from the norm. After a decade which saw money lent without regard to repayment, followed by a complete freezing of liquidity and then slow, painful deleveraging, capital markets are behaving rationally and predictably. There remains an excess of cash looking for a place to work but that’s not a bad place for borrowers in commercial real estate. “There is a lot of money looking for less product than buyers would like, particularly when everyone is in the game,” says Puntil. “The capital markets seem to be clicking very well right now,” notes Popovich. “There is more capital chasing than there are deals. That has pushed capital to look at secondary markets like Pittsburgh for opportunities.” DP

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Legal/Legislative Outlook Pittsburgh’s Affordable Housing Initiative

ittsburgh’s recent revitalization is partly the result of what was a broadbased, persistent effort to bring prosperity back to the region after a generation of struggle. Pittsburgh has become a model for such efforts elsewhere but there is an unintended downside to that broad-based effort: the fruits of the recovery have not been equal. During the past 30 years the broad-based approach also meant that initiatives to foster recovery were diffused, often marked by similar groups competing for the same resources. The results have also been diffuse, however. The rising tide of Pittsburgh’s economy has not lifted all boats. One group that has been left behind is the residents of affordable housing. In this decade the renaissance has been especially beneficial to the City of Pittsburgh, which has seen an influx of population – especially of younger people – and a boom in new residential construction. Housing starts within the city limits over the last half dozen years have exceeded the activity levels of Cranberry Township in its heyday. The neighborhood that has seen the most dramatic revival is East Liberty, which has changed from blighted to hip in less than a decade. As the success in East Liberty begins to spread north to Garfield and east to Larimer and Homewood, concerns about affordable housing options for the existing residents is growing and the City of Pittsburgh is responding.

In May, the City Council received the report of the 27-member Pittsburgh Affordable Housing Task Force (PAHTF), which included members of Mayor Peduto’s staff, elected officials and private sector developers like Trek Development’s Bill Gatti. The PAHTF looked at the problem of inadequate affordable housing and came up with three major goals:

• R espect and stabilize existing communities; • C reate quality affordable housing opportunities; and • M aximize the impact of resources by ensuring lasting affordability The desire to ensure affordable housing for all Pittsburgh residents has its roots in basic fairness. Advocates for

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lower-income and working class citizens, as well as the region’s leaders, see Pittsburgh’s turnaround as a hollow victory if there isn’t equity in the fruits of that turnaround. Pittsburgh is a bluecollar town, with a history of upward mobility and opportunity for its working people. But like other cities, Pittsburgh also has an ugly side to its history. The “urban renewal” of the Lower Hill District to prepare for the Civic Arena is but the best-known of missteps in the treatment of poorer residents. There seems to be a genuine desire to learn from past mistakes. There is also a practical side to the initiative to ensure affordable housing for all. “I’ve been to Pittsburgh many times and in many respects it’s a good news story, but there are many people in Pittsburgh paying an unsustainable amount of their income to rent or own their home,” reports Stockton Williams, executive director of the Terwilliger Center for Housing at the Urban Land Institute (ULI). “There is abundant research that shows when people pay an unsustainable share of their income for housing, they sacrifice in other areas. That’s not good for them or the economy.” Williams noted that the most recent survey of metropolitan Pittsburgh working families – defined by earning up to 120 percent of the median household income and working at least 20 hours per week – showed that 52,266 households were paying more than 50 percent of their income for housing. In its report the PAHTF found that while more than ten percent of the housing stock in Pittsburgh was affordable income-restricted, “there remains an affordability gap of 17, 241 units for households earning up to 50 percent of the city’s median household income.” One big difference in policy that is part of the reason that the Peduto Administration feels compelled to act is the diminished role of the federal government. Beginning with the formation of the Department of Housing and Urban Development as a cabinet position in 1965, the federal government has taken the lead in housing equality as an outgrowth of civil rights advocacy. Since 2010, however, two of the primary funding sources for housing subsidy - the HOME Investment Partnerships Program and the Community Development Block Grant program – have decreased by 52 percent and 28 percent respectively. Moreover, the lack of affordable housing stock in the city has left 41 percent of the holders of Housing Choice Vouchers could not find homes that qualified for use, leaving one-fourth of the $42 million available unused. “The mayor is really determined to get something done and formed the task force. The city reached

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out to the Urban Land Institute (ULI) to connect market-rate developers to the discussion,” recalls Lynn DeLorenzo, executive associate at TarquinCoRE LLC, past president of NAIOP Pittsburgh and executive committee member of ULI. “What I like is that the city came out to developers to ask what challenges might be created for future projects. Developers want to do more affordable housing but are challenged by the lack of the tax credits.” The lack of tax credits has been a disincentive for development of the affordable product across the U.S. In cities with historically high home prices, this shortage of development has created a crisis. It is the Peduto administration’s goal to avert such a crisis in Pittsburgh. East Liberty is ground zero of sorts for this problem. Once home to a high percentage of public housing projects, East Liberty has seen the most new market rate multi-family development, with rents that are $2.25 per square foot and higher. Three high-rise projects were demolished in 2009, along with 174 townhouses and smaller dilapidated apartments. Roughly 650 units of subsidized affordable housing were replaced with about 75 low-income restricted units. The remaining residents struggled to find affordable housing in East Liberty. Many were forced to leave the community and the problem persists today. A recent opportunity for residents to rent 19 affordable homes in Bloomfield/Garfield brought 300 applications. While the demolition of the high rises was a key to reconnecting East Liberty to its neighboring communities and to shoppers, the loss of affordable units is regrettable. With two of the city’s biggest proposed redevelopment projects located in the Hill District and Hazelwood, the timing for instituting workable programs is ripe. The environment in which the reforms will take place is less so. DeLorenzo points out that the cost of development in the City of Pittsburgh is proportionally higher than in other cities, making development of affordable housing more difficult to pencil out. Using tax credits to make up the gap caused by the lower rents of affordable apartments made the pro forma work in past but without them, projects become unfeasible. Moreover, many of the region’s most successful multi-family projects – The Yards, East Side Bond, Bakery Square and Village Green – are located in neighborhoods where higher rents can be commanded, making developers less than anxious to reduce the possible return on investment. On the other hand, all of those successful projects received some significant public subsidy to account for the higher costs associated with urban development and requirements that wouldn’t have been

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made on suburban developments. With the acceptance of public funds, reasons the city, comes the responsibility to include affordable housing in the development. “We are looking at incentives. There are no mandatory requirements but it’s also not mandatory [that a developer] get public subsidies,” notes Raymond Gastil, AICP, director of city planning. “If a developer is getting low-income tax credits, affordable housing units are part of the requirements but there are other forms of public assistance. The administration wants to take a hard look at developments that are getting public subsidy to see if there are opportunities for affordable housing. There is no absolute baseline in the recommendations the task force made but we need to incentivize the inclusion of affordable units in new developments.” There are direct financial incentives that come from state or federal agencies but Gastil cited the use of zoning adjustments as examples of incentives for developers. The city’s zoning ordinances could be altered to allow for increases in density or building height in recognition of inclusion of affordable units in a housing or mixed-use development. These would help offset the loss of rental revenue for lower-income units compared to market-rate rents. Adding more units to a project would obviously add more top line and could make a pro forma work. The PAHTF made five specific recommendations in its May report. Those are:

• T he Pittsburgh Housing Trust Fund. • Increased Utilization of the 4% Low Income Housing Tax Credit. • Inclusionary Housing. • P reservation of Existing Affordable Housing. • P rotection of Existing Homeowners and Tenants.

During work sessions with the city, developers applauded the effort to build more affordable housing but expressed concerns that the funding

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mechanism was borne by the commercial real estate industry alone. Developers pointed out that the real estate transfer tax was already high and that raising millage would dampen the desire to have property in the city. Several attendees at the meetings suggested broadening the base of the revenue sources and being more creative in funding ideas. It was noted that several of Pittsburgh’s philanthropic foundations have affordable housing as a key mission. Brian Walker, NAIOP Pittsburgh’s president, cited examples of similar initiatives in other cities that floundered when commercial real estate bore the full weight of funding. “When this was happening in San Diego, the development of the Gas Light District sat idle for four years,” he reported. “It wasn't until the impact fees being assessed solely on the developers was decreased, until density bonuses and expedited permitting plans were arranged, and the burden of funding the affordable housing trust fund was spread across the whole community, not just real estate developers, that redevelopment of the District took off.” The trust fund is recommended to be $10 million to be used annually to low-income families to assist them in affording their homes. It is the inclusionary housing category where the actions Ray Gastil describes would come into play, with the recommendation that any development of 25 or more units that receives any public assistance be considered for inclusion of affordable units. Affordable Housing Opportunity Overlay zones are proposed for the best locations for new market-rate apartments to include affordable units as well. PAHTF exhorts City Council to take action by preparing for implementation of the recommendations in 2017. During the balance of 2016, PAHTF suggests that governance be established, along with finding sources of funding the Trust Fund and tax credits. In 2017 and 2018, it is recommended that the specific implementation of the five strategies be codified into ordinance. This implementation process implies that

additional work is needed with developers, property owners and financiers to find workable rules. “We are not the same kind of market as other cities. We recognize that,” acknowledges Gastil. “Pittsburgh is in many ways an emerging market for affordable housing.” Indeed, the first attempts at funding the Pittsburgh Housing Trust Fund have met some resistance. PAHTF recommends using expiring Tax Increment Financing and tax abatements (like LERTA), along with a one dollar increase in the hotel room tax. It also recommends a one-half mill increase to the real estate tax and a one percent increase in the real estate transfer tax, a tax that is already viewed as onerous by the real estate community. Pittsburgh’s leaders seem intent upon the affordable housing initiative working and it’s likelier than not that a funding mechanism that is acceptable to all stakeholders will be found. As with most incentive-based development programs, ways can be found to do good projects while making desirable returns. There appears to be sufficient development will to create good projects for good reasons. If executed properly, affordable housing can be blended into the fabric of the communities in Pittsburgh in a way that raises the standard of living. For the Pittsburgh revitalization to be complete, the standard of living must increase throughout the population. “Any growing economy needs service workers and blue collar workers to fill out critical positions in the economy,” notes Williams. “Those kinds of workers tend to live in affordable housing.” “I have never been to one good mixed housing project around the country where you can tell the difference between the affordable and market-rate units,” asserts DeLorenzo. “You don’t want to create the tenements of the future. If you build affordable housing that is separate from other neighborhoods that’s what you’ll get.” DP

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Benchmarks

The Den ver Tr ans it So lu tio n

n June 2014, the Allegheny Conference on Community Development led a group of more than 90 Pittsburgh leaders on a benchmarking trip to Denver. The visit was a reciprocal trip that included corporate CEO’s, elected officials, small business owners, philanthropic foundations and public employees. Denver was one of the few cities to create more jobs than Pittsburgh after the Great Recession and Pittsburgh’s civic leaders wanted to see what could be learned. In many ways, Denver had succeeded following a playbook similar to Pittsburgh’s. There was an energy economy entrenched in Denver that benefitted from the fossil fuel market of 2008-2013. Linkage to universities that were fostering entrepreneurship helped boost the technology and healthcare sectors of the economy and was a jobgenerator. But two major factors were different: population growth and public transportation. People had been attracted to Denver’s climate, outdoors and economy since the 1980s. Population growth averaged 50,000 people annually since the mid-1990s. These were dynamics that were 180 degrees from Pittsburgh’s experience. In practice, of course, attracting new population is difficult for older, colder cities. Drawing on Denver’s experience in that area wasn’t instructional.

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Denver’s light rail extension connected the city’s central business district with its airport, creating a corridor for new business and technology innovation.

What was instructional – and eye opening – was the massive expansion project that the Regional Transit District (RTD) was nearing completion after a decade. The project is called FasTracks and it involves 122 miles of new light rail and commuter lines, 18 miles of bus rapid transit and 57 new transit stations. The project also includes technology and connections that enhance bus service from suburb-to-suburb and makes using the transit system safer and more efficient than in the past. Most of the expanded system will be completed by the end of 2016 with a price tag of almost $6 billion. FasTracks restored Denver’s historic Union Station in its center city and connected it to Denver International Airport, the booming suburbs north, west and south of the city and to the University of Colorado in Boulder, some 30 miles to the northwest. The ambitious project nearly quadrupled the size of the transit system. The Pittsburgh delegation found the scope of the project impressive, especially since construction will

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take slightly less than a decade to complete. They saw significant private real estate investment occurring around Union Station and along several corridors where connections were being made between business and technology, or consumers and employment. What made the biggest impression, however, seemed to be the way Denver’s civic leaders accomplished the project and especially how it was funded. L oc ated at the foot of the Rocky M ountai ns , D env er i s a major cit y i n a s pars el y -popul ated West er n s tate. There i s ampl e l and t o ac c ommodate growth i n all directi ons . A fter dec ades of g row t h, D env er was a s prawl i ng m et ropolitan area that l ac ked c on nect ivit y. I ts l eaders were c onv i nc e d t hat t he key to c onti nued pros per it y and di v ers i fi c ati on of i ts ec o nom y lie in c reati ng a regi onal transpor t at ion s y s tem that woul d attract business and j obs . Pl ans were ma de. A soluti on was pres ented to th e vot er s for fundi ng the program and it w as s oundl y defeated.

What happened next resonated with the Pittsburgh leaders in 2014. Denver’s leaders returned to the voters again in 2004 with a better story. Voters were given a clear vision of how an expanded light rail and bus system would make Denver a more unified economic region and be better prepared to compete in the 21st Century. A funding mechanism was proposed that was a sales tax increase that was small enough – 4 cents on every $10 purchased – that it was neither punitive nor a disincentive to shopping. Put on the ballot in an environment of no new taxes, the measure passed in large part because Denver’s citizens saw an infrastructure improvement that they believed would pay off for them. Colorado is not a tax and spend state. The Tax Foundation ranked the state 18th most business-friendly for corporate taxes. A powerful coalition of politicians, contractors and labor have been trying to get a similar one percent sales tax passed since 2013 to raise $600 million annually to increase the funds spent on highways and bridges. In June, that coalition announced that the proposal was again being pulled from the ballot in 2016. Voters went for the Regional Transportation District’s increase in 2004 because there was a vision they could share. “People embraced the vision. They embraced the strategy. They understood it,” notes Morgan O’Brien, CEO of Peoples Gas and chairman of the Allegheny Conference at the time of the trip. “There was a broad group behind it. There wasn’t one political person leading it.” O’Brien recalls that the leaders of the effort in Denver explained to the Pittsburgh delegation that the biggest challenges in the process were things that weren’t surprising to the Pittsburghers. “One of the ingredients they said caused them to be successful in moving that strategy forward was that they had broad community support. The formula was that you need a bunch of community leaders from all walks of life who were willing to

work together towards a common goal and common vision,” O’Brien chuckles. “We’re sitting there thinking we just organized this trip with exactly those kinds of people. We’re sort of halfway there. For Denver, that was what they described as one of the biggest challenges.” Civic leaders in Pittsburgh have a history of assembling teams of like-minded individuals from very different industries to tackle problems. The genesis of the Allegheny Conference, for example, was a result of an effort led by Jack Heinz and David Lawrence to clean up Pittsburgh’s awful pollution problem. Since that time, groups of corporate CEO’s, politicians, labor and non-profit leaders have leaned into the major problems confronting the region. Some of those, like the loss of heavy manufacturing, have been awesome problems and many of the problems haven’t been solved. But the challenge of articulating the recommended solutions to the public shouldn’t be beyond the leadership in Pittsburgh. Denver has also been successful at executing the vision in a very compressed timeframe. Legislation that enabled a construction manager/ general contractor to be hired early in the project helped RTD go from no design to construction on the first packages in about two years. The bulk of the construction didn’t begin until 2009, yet RTD was able to begin opening commuter lines as early as 2013 and the Union Station in 2014. Executing the financing of the expansion, which is made up of roughly a dozen major projects to create nine transit corridors, was also difficult. The sales tax increase was critical to the expansion but the funding that the tax raised wasn’t enough for the entire FasTracks program. Significant portions of FasTracks proceeded with private/ public partnerships as developer. Bonds were issued that rely on fares and tax receipts to repay the bondholders. The Federal Transportation Administration contributed more than a billion dollars to the effort.

To accomplish a similar expansion of Pittsburgh’s transit system will require some legislative heavy lifting, a bit of persuasion with the federal government and a Herculean effort to figure out what solutions need to be included. One of the immediate responses to the Denver trip was the formation of the Regional Transportation Alliance (RTA), a task force that includes the kind of coalition that the RTD used to accomplish its mission. That kind of broad-based effort may be second nature to Pittsburgh’s leaders but working out what kind of system will serve the region best won’t be an easy task. The RTA conducted a large crowd sourced survey throughout the past winter and spring and an initial report is expected to be presented by year’s end for further action. It’s unlikely that the solutions ultimately presented will be any less ambitious or expensive than Denver’s were. Morgan O’Brien is one regional leader who isn’t daunted by that prospect. “The other thing that they talked about during that trip was that it was a regional strategy. It wasn’t just the City of Denver or a particular area. It was the whole community, leaders all at the table coming up with a single strategy,” he says. “We had a number of county commissioners around Pittsburgh sitting in the room with us on that trip. It’s been the DNA of successful efforts in this region to have a broad cross-section of people. We all felt really excited. We thought we can do this. We don’t have the specifics as to how it might look but I think we all came back and said we’ve done things like this before. “We’re competitive people. We said if Denver can do it we can do it. It gave a little more energy to the idea that we have to work together as a broader community and have a regional strategy. That was reinforced out there in Denver.” DP

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Voices

What is your position on the role of state/federal government in maintaining infrastructure and supporting transit? Congressman Bill Shuster U.S. House of Representatives "I believe i n l i mi te d g o ve r n m e n t. A d a m S mi th , th e fa th e r o f modern e c o n o mi c s wh o developed th e u n d e rl y i n g p ri n ci p l e s o f a capi ta list ic m a r k e t e c o n o my, a l s o b el i eve d in lim it e d g o ve r n me n t. He rec ogniz e d t ha t th e re a re th re e p ri mar y role s t he go v e r n me n t m u s t ful fi l l f or it s c it iz e ns : to p re s e rve j usti ce , t o prov ide fo r d e fe n s e , and to e re c t a nd m a i n ta i n p u b l i c wo rks t o f a c ilit a t e co mme rc e . O u r Fo unding F a t he r s a l s o u n d e rs to o d the i m por t a nt role o f th e n a ti o n a l g over nm e nt in he lpi n g c o n n e ct o u r co untry t hrough it s i n fra s tru ctu re . I n ad dit ion, it ha s lo n g b e e n a R ep ublic a n t r a dit ion to ta k e th i s o bl i ga t ion se r iously — fro m P re s i d en t A br a ha m L inc o l n ’s s u p p o rt for the t r a nsc ont ine n ta l ra i l ro a d to Preside nt T he odo re R o o s e v e l t’s co nstruc t ion of t he P a n a ma Ca n a l to Preside nt E ise nho we r’s e s ta b l i s h men t o f t he Int e r st a te Hi g h wa y System . Thes e be lie f s hold tru e to d a y a s i nfras t r uc t ure in t he U n i te d S ta te s i s som e t hing t ha t t o u c h e s th e l i ves of pe ople of a l l b a ck g ro u n d s . Paren t s ne e d t he a b i l i ty to s a fe l y transpor t t he ir c hild re n to s c h o o l ;

b u s i n e s s es depend on dri v abl e ro a d s , a n effi c i ent av i ati on s y s tem, a n d fu n cti onal ports to trav el and mo v e p roduc ts ; and i ndus tri es l i ke c o a l a n d natural gas requi re pi pel i n e s , ra i l roads , and hi ghway s to e n a b l e qui c k and rel i abl e ac c es s to ma rk e ts . A s C hai rman of the H ous e Tra n s p o r tati on and I nfras truc ture C o m m i ttee, I hav e worked to a d d re s s our i nfras truc ture needs th ro u g h l egi s l ati on l i ke the FA ST A ct. T h i s meas ure was the fi rs t l o n g -te rm hi ghway bi l l i n ov er a d e c a d e , and i t di d not rai s e a p e n n y i n tax es . The opti mal s i tua ti o n fo r gov er nment s upporti ng tra n s p o r tati on i s when federal , s ta te , a n d l oc al gov er nments are wo rk i n g together, al ong wi th the p ri va te s ec tor, to meet thos e needs , l i k e we a re worki ng to ac c ompl i s h th ro u g h l egi s l ati on i n the Trans porta ti o n C o mmi ttee." Congressman Michael F. Doyle U.S. House of Representatives "Trans portati on i nfras truc ture pl ay s a c ri ti c al rol e i n our nati on’s ec onomy. Poorl y mai ntai ned, i nadequate i nfras tru c tu re s l ows ec onomi c growth, re d u c e s A meri c ans ’ qual i ty of l i fe, a n d re s u l ts i n more trav el -rel ated i n j u ri e s and deaths .

U nfortunatel y, the s tate and federal gov er nments have of t en s hortc hanged the mai ntenance and moder ni z ati on of our hi g hw ays, mas s trans i t s y s tems , and ot her i nfras truc ture. That’s c ost ing each U S hous ehol d, on av erage, $3, 400 a y ear. I ’v e c ons i s tentl y s upported i nc reas ed federal gov er nm ent i nv es tment i n trans porta t ion – in the 2009 A meri c an Rec o ver y and Rei nv es tment A c t, for exam ple, and i n 2015’s F i x i ng A meri c a ’s Sur f ace Trans portati on A c t, whi ch aut hori z ed $305 bi l l i on ov er five year s for i mprov ements to U S highw ays and mas s trans i t – and I believe that more mus t be done t o f ix our c rumbl i ng i nfras truc ture. I w ould s upport a number of options t o i nc reas e fundi ng for i nfr ast r uct ure c ons truc ti on and mai nte nance – i nc l udi ng l egi s l ati on to est ablish a N ati onal I nfras truc ture Development Bank, whi c h woul d lever age bi l l i ons of dol l ars i n pri vat e invest ments i nto i nfras truc ture im provements . I woul d al s o s uppor t r aising the federal gas tax , or ta xing each barrel of oi l . A modes t f uel t ax i nc reas e woul d c os t most Am er ic ans l es s than the c os ts t hey w ould otherwi s e i nc ur from our increasi ngl y outdated, poorl y -m aint ained, and ov er-c apac i ty trans p or t at ion i nfras truc ture. I n addi ti on, it w ould c reate new j obs and pro m ot e ec onomi c growth."

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Despite the economic successes of the past decade Pittsburgh still experiences very slow growth in job creation and population. What are your ideas for supporting job and population growth in Western PA? Representative Mike Turzai Speaker of the House Pennsylvania House of Representatives "Any vision for familysustaining job creation and population growth for Pittsburgh should begin by ensuring Pennsylvania’s energy independence. For a 21st century Pittsburgh energy policy to work, we must pass into law the Keystone Energy Enhancement Act (KEEA), a bill that will utilize the region’s vast resources by incentivizing job creation and infrastructure development within Pennsylvania’s natural gas, manufacturing and petrochemical industries. In 2012, the American Chemical Council studied the potential impact natural gas could have on employment and found a staggering 1.1 million family-sustaining downstream jobs were available around the industry in construction, 980,000 potential jobs revolved around the supply chain and 200,000 manufacturing jobs were waiting to be filled. It’s commonsense that even a portion of 2.2 million jobs downstream that could turn Pittsburgh into a great global energy hub cannot be created if the supply is killed upstream by onerous taxes and overregulation. By creating Keystone Energy Enhancement Zones throughout Pennsylvania, modeled after the successful Keystone Opportunity Zones program, industrial locations and brownfield sites once left for dead can be filled with companies and jobs for decades to come. Participation in the KEEZ program is contingent upon job creation, private

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capital investment and development. By allowing this nascent industry to grow, Pittsburgh can lead the nation in creating family-sustaining jobs that will retain our best and brightest young minds and attract many others to the region." Congressman Mike Kelly U.S. House of Representatives "We’ve been blessed by God in Pennsylvania, but particularly Southwest Pennsylvania, with all the resources we need to be successful. Population growth comes with economic opportunity. With our resources of coal and natural gas in particular, we have the opportunity to be the epicenter of an energy revolution if government could get out of the way. Additionally, we’ve been blessed with some of the most highly trained workforces in the country which means we can continue to aggressively manufacture things and build wealth. Combine those two items, energy resources and a strong manufacturing workforce, with a top-notch education system and our opportunities for economic growth are bright." Congressman Keith Rothfus U.S. House of Representatives "It was the people of Western Pennsylvania that built this country in the 19th and early 20th centuries. Given the

unique combination of world-class players in different industry sectors, from financial services to health care to education to manufacturing to technology to energy to construction, the people of Western Pennsylvania can lead the rebuilding in the 21st. One of the missing ingredients for healthier growth in Western PA is a hostile Federal regulatory and tax environment. Fed Chair Janet Yellen repeatedly blames slow economic growth on "headwinds" hitting our economy. I recently suggested to her that the headwinds are actually man-made. In other words, there is a considerable drag on growth due the many pages of regulations coming from agencies like the Environmental Protection Agency, the Department of Labor, and the financial regulators that are limiting capital and financial services. Rather than overregulation, we need smart regulation. We need to slow the Washington regulatory onslaught. That's why I introduced and passed in the House the SENSE Act, which will save 5,200 middle class Pennsylvania jobs and allow the coal-refuse to energy industry to continue to supply power to the grid while cleaning up the environment. It's why I am working for increased flexibility for community financial institutions so they can get more capital flowing to small businesses. And it's also why I've pushed for accountability for Federal regulators, insisting that they accept responsibility for the negative impact of regulations on wages and job growth. We also need to ensure the stability of our infrastructure, and I have been a strong advocate for investing in our locks and dams that allow significant shipping to occur within our region." DP

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News from the Counties

The c ons truc ti on wi l l st ar t in approx i matel y 18 mo nt hs, w it h c ommerc i al produc ti on expect ed to begi n earl y i n the next dec ade. The proj ec t wi ll have up to 6,000 c ons truc ti on w or ker s i nv ol v ed i n bui l di ng the f acilit y, and an ex pec ted 600 per m anent empl oy ees when c omplet ed.

Allegheny County

Allegheny County Economic Development Chatham One, Suite 900 112 Washington Place Pittsburgh, PA 15219 412-350-1000 (T) 412-642-2217 (F) Robert Hurley, Director Director.ed@alleghenycounty.us www.alleghenycounty.us/economic I n June, our regi on fi nal l y re cei v ed the news that we had b e e n hopi ng for and ex pec ti ng: S h e ll C hemi c al announc ed i ts fi n al i nv es tment dec i s i on to b u i l d a maj or petroc hemi c al co mpl ex i n Beav er C ounty.

A l l egheny C ounty Ec onom ic D ev el opment (A C ED ) and our ec onomi c dev el opment par t ner s are prepared for the grow t h, as wel l as the opportunit ies, that wi l l c ome as a result of the proj ec t. I n addi tion t o t he i mmedi ate workforc e and suppl y needs , the proj ect w ill also bri ng s ubs tanti al downst ream ac ti v i ti es to the enti re region. The petroc hemi c al c o m plex i s i n c l os e prox i mi ty t o gas feeds toc k prov i di ng shor t er and more dependabl e suppl y c hai ns to Shel l . Far m ore i mportant to the reg ion is t he fac t that more than 7 0 percent of N orth A meri c an po lyet hylene c us tomers are wi thi n a 700- m ile radi us of Pi tts burgh. The f acilit y wi l l s erv e as a magnet f or t he pl as ti c s i ndus try, but also f or

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o th er c om pa nie s w h i c h wi l l b e c o me p art o f t he indust r ia l s u p p l y c h a i n that w ill se r v e t he p l a n t. T h e co mp l eted f a c ilit y w ill n e e d s u p p l i e rs o f the indust r ia l ga s e s a n d o th e r ch emi c a ls re quire d f o r th e cra ck i n g p ro ces s. T he re w ill a l s o b e a d e man d f or c om pa nie s wh o wi l l wo rk to serv ic e , re pa ir, a n d re fu rb i s h th e p l ant’s e quipm e nt an d te ch n o l o g y. B usi n e sse s t ha t supp l y h o s p i ta l i ty and ot he r se r v ic e s o r co n s u ma b l e s to th e pla nt a re a lso p l a n n i n g to make s ignif ic a nt inv e s tm e n ts i n th e area and pla nning f o r s i g n i fi c a n t i ncrease s in busine ss . M an uf a c t ure r s, c om p a n i e s a n d d e vel o pe r s a re c ont a c ti n g A CE D wi th b oth sm a ll a nd la r ge re q u i re me n ts for s i te s, a nd e x pre s s i n g i n te re s t i n the I -3 76 a nd I- 79 c o rri d o r. We a re wo rki n g c lose ly w it h fe d e ra l , s ta te , and l o c a l de v e lopm e n t p a rtn e rs o n b usi n e ss a t t r a c t ion e ffo rts to s u p -

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 mpcoonley@co.armstrong.pa.us www.armstrongidc.org In Ju ne 2016, A D E X M e d i ca l Staffi n g L L C le a se d 1 ,0 0 0 s q u a re feet i n N or t hpoint e Te ch n o l o g y Center II. Ow ne d a n d o p e ra te d b y th e Ar m st rong C oun ty I n d u s tri a l Devel opm e nt C ounc i l , Te c h n o l o g y Center II is a 32, 000 s q u a re fo o t mu l ti -t e na nt buildin g l o ca te d a l o n g SR 28 a t E x it 18. A DE X M e d i ca l Staffi n g is he a dqua r te re d n e a r Tampa , F lor ida a nd p ro v i d e s re cru i tment a nd pla c e m e nt s e rv i ce s fo r medi ca l prof e ssiona l s , s p e c i fi c a l l y travel i ng nur se s. T he i r o th e r o ffi c e s are l oc a t e d in A t la n ta , L o s A n g e l e s , New Yor k C it y, a lon g wi th a n i n te rnati o na l off ic e in A mma n , Jo rd a n .

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p o rt ma n ufac turers and bus i nes s es a s th e y work to bec ome a part of th e cra cker s uppl y c hai n. A C ED offe rs a menu of res ourc es for thes e d e ve l o p ers and bus i nes s es , i nc l udi n g ta x and fi nanc i ng i nc enti v es . A CE D i s al s o prov i di ng i nv es tment a n d s u p p ort to partners hi ps and p ro g ra ms that wi l l prepare a workfo rce th at wi l l be i n demand for the c o n s tru c ti on and operati on of new fa ci l i ti e s. A C ED awarded a grant to th e I ro n Workers Joi nt A pprenti c es h i p a n d Jour ney man Trai ni ng F und to s u p p ort the ex pans i on of i ts tra i n i n g fac i l i ty that wi l l res ul t i n th e tra i n i ng of an addi ti onal 300 a p p re n ti c es and j our ney men to h e l p me e t the anti c i pated demands o f th e cons truc ti on i ndus try. A C ED a l s o p a rt i c i pated i n the l aunc h of C M U’s n ew A ddi ti v e M anufac turi n g La b t hi s s ummer– The N ex t M a n u fa c turi ng C enter. The C enter

T h e n e w offi c e i n the Pi tts burgh re g i o n p os i ti ons A D EX M edi c al S ta ffi n g to s erv e the growi ng h e a l th c are i ndus try i n s outhwes ter n P e n n s yl vani a and the tri -s tate area. I n M a rc h 2016, the A C I D C s ol d a n 8 5 ,0 00 s quare foot i ndus tri al b u i l d i n g i n Ki ttanni ng Borough to l o n g -ti m e tenant, D i el ec tri c Sol uti o n s L L C . The A C I D C purc has ed th e u n o c c upi ed bui l di ng i n 2005 a n d ma d e ex tens i v e renov ati ons a n d te n a nt i mprov ements . Shortl y th e re a fte r, the A C I D C entered i nto a l e a s e to purc has e agreement wi th Di e l e c tri c Sol uti ons . The c ompany h a s d e vel oped a rev ol uti onary p ro c e s s f or produc i ng l i ght-wei ght g l a s s fi b er fabri c , a key c omponent u ti l i z e d in many adv anc ed el ec tro n i cs produc ts . Thei r patented p ro c e s s res ul ts i n a s uperi or perfo rm i n g produc t that i s ty pi c al l y m u ch th i nner and s tronger, wi th i mp ro ve d el ec tri c al and thermal p ro p e rti es c ompared to other co mme rc i al l y av ai l abl e produc ts . I n a d d i ti o n al to el ec troni c s , D i el ec tri c S o l u ti o n s ' produc ts are us ed i n

i s des i gned to prov i de an ot her ec onomi c dev el opment tool f or t he regi on by engagi ng c om panies f rom Pi tts burgh and ac ros s the globe in l eadi ng res earc h. The regi on has bec ome a m odel in repos i ti oni ng i ts el f from a place of dec l i ne to a hub of i n novat ion, res earc h, energy, i nv es tm ent , and c ol l aborati on. A l l egheny Count y Ec onomi c D ev el opment looks forward to c onti nui ng to w or k w it h i ts partners i n s upporti n g new busines s and i ndus try, and i s excit ed about what thi s proj ec t and it s anc i l l ary res ul ts wi l l mean f or t he regi on’s ov eral l growth.

a v ari ety of hi gh-tec h c om posit e appl i c ati ons i n many demanding i ndus tri es . The A C I D C c onti nues to prom ot e the remai ni ng offi c e and light i ndus tri al l eas e s pac e i n Technology C enter I I and pad-re ady sit es i n N orthpoi nte. N orthpo int e has c onti nued to generate i n t erest w it h four l ots c urrentl y under agreement. The A C I D C al s o op er at es the Wes t H i l l s I ndus tri al Par k and mai ntai ns a databas e of proper t ies av ai l abl e throughout the count y. F or i nformati on about the ser vices offered by the A C I D C , o r t o search av ai l abl e l and and bui l dings in A rms trong C ounty, v i s i t ht t p: / / www.arms trongi dc .org.

Beaver County

Beaver County Corporation for Economic Development 250 Insurance Street, Suite 300 Beaver, PA 15009 724-728-8610 (T) 724-728-3666 (F) James Palmer, President jpalmer@beavercountyced.org www.beavercountyced.org Sh el l C he m ic a l A ppa l a ch i a L L C made a f ina l inv e st m e n t d e ci s i o n to bui l d a n e t hy le ne cra ck e r wi th a pol yet hy le ne de r iv a ti v e s u n i t i n P o tter To w nship. T he c o mp l e x wi l l u s e ethan e f rom sha le g a s to p ro d u c e 1.6 mi llion t ons of p o l ye th yl e n e per ye a r. W it h t he s i te ’s p ro xi m i ty to gas f e e dst oc k , t h e c o mp l e x , a n d i ts cust om e r s, S he ll wi l l b e n e fi t from s hor t e r a nd m o re d e p e n d a b l e suppl y c ha ins c om pa re d to s u p p l y from the Gulf C oa st. Up to 6 ,0 0 0 worke r s w ill be e m p l o ye d d u ri n g

co n s tru c ti on and an ex pec ted 600 p e rma n e nt empl oy ees wi l l work at th e c o mpl ex when i t i s c ompl eted. Co l u m b i a G as of Penns y l v ani a o p e n e d a new c entral i z ed trai ni ng fa c i l i ty i n C enter Towns hi p for emp l o y e e s who operate and mai ntai n i ts n a tu r al gas di s tri buti on s y s tem. T h e $ 1 0 mi l l i on, 22,000 s quare fo o t fa c i l i ty features i nnov ati v e te a ch i n g env i ronments , i nc l udi ng a n o u td oor “Emergenc y Res pons e S a fe ty Town,” a moc k nei ghborh o o d o f mi ni -homes and bus i nes s es co mp l e te wi th underground uti l i ti es a n d me te rs where i ns truc tors c an cre a te a n d c ontrol v ari ous emerg e n c y trai ni ng s c enari os . T h e B e a ver C ounty C orporati on fo r E c o n omi c D ev el opment (C ED ) a p p ro ve d fi nanc i ng for C reeks i de S p ri n g s , L L C , who wi l l i nv es t ov er $ 1 m i l l i o n i n N ew Bri ghton. C ED a p p ro ve d a $250,000 l oan and rec -

ommended the Penns y l v a nia Industri al D ev el opment A utho r it y ( PIDA) approv e an addi ti onal $400, 000 l oan to s upport the ex pa nsion. C reeks i de i s a pri v ate l abel and c ontrac t pac kager of wa t er- based bev erages . The fi nanc i ng w ill f und a new s i ngl e s erv e product ion line, al l owi ng the c ompany to ret ain 30 empl oy ees and c reate 12 new jobs. C ED al s o approv ed a $12 3, 000 l oan and rec ommended P IDA approv e an addi ti onal $123, 000 to Standard H ors e N ai l , Co. , LLC i n N ew Bri ghton, a manuf act urer of mac hi ne “Woodruff” keys, t aper pi ns , and other prec i s i on f ast eners . Thi s $290,000 proj e ct w ill c onv ert unus ed warehou se areas i nto manufac turi ng s pace f or a new tec hnol ogy to be used in t he c ompany ’s produc ti on process, retai ni ng 22 j obs and the creat ing 10 new pos i ti ons .

www.developingpittsburgh.com

Butler County

Community Development Corporation of Butler County 112 Hollywood Drive #102 Butler, PA 16001 724-283-1961 (T) 724-283 3599 (F) Ken Raybuck, Executive Director kraybuck@butlercountycdc.com www.butlercountycdc.com Butler County construction growth is occurring in all areas, including the completion of the $4.2 million Freeport School sports stadium in the south and Slippery Rock University in the north, where they expect this summer’s work will top $10 million. The most concentrated area of development is in the southwestern part of the County near the turnpike and route I-79. Cranberry Township is continuing to see hotel growth including a Best Western Plus (101 rooms), to be built at Cranberry Springs Drive; a Marriott Town Place currently under construction at Cranberry Springs (96 rooms); and construction is underway on the 122 room Wood Springs Hotel on Wisconsin Ave. In addition to hotels, Cranberry Township continues to grow in residential, commercial and retail space. A 300room apartment building, to include parking garage and pool is planned for the village of Cranberry Woods. Numerous new construction projects are

Fayette County

Fay-Penn Economic Development Council 1040 Eberly Way, Suite 200 Lemont Furnace, PA 15456 724-437-7913 (T) 724-437-7315 (F) Bob Shark, Executive Director, bobs@ faypenn.org Lori Scott, Business Support Coordinator, loris@faypenn.org www.faypenn.org Fay-Penn Economic Development Council is midway in its 25th anniversary year celebration. The organization is continuing its legacy of growing the economy of Fayette County, Pennsylvania, and has been announcing the results and prospects of various projects. 76 DEVELOPINGPITTSBURGH

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in the works in Cranberry Township in the 25,000 square foot range including a Cochran Collision Center, Planet Fitness, Urban Air, and a Goodwill store. Sterling Properties is proposing an 81,000-square-foot warehouse and distribution center for Marshall Road. If built, the warehouse and distribution center would be leased to one or more businesses.

VA facility that would create a zone to allow for professional offices, data processing, educational institutions and other specific enterprises. Future POS, a technology company that produces point-of-sale software for the restaurants, is in the planning stage for a 40,000 square foot headquarters to be built along Route 8 in Center Township.

Jackson Township along route I-79 continues to see growth with plans for a 14 duplex homes on 4 acres on Old Little Creek Road in Harmony Place. Jackson Crossing will have 107 homes built in three phases. The 350,000 square foot Fed Ex off Route 528 in Jackson Township is nearing completion and nearby an additional 42-acre development was recently recommended by the township planning commission for a hotel, restaurant, convenience store and office space. The Buncher Company continues to plan for growth at its Jackson’s Pointe development, and recently submitted plans for phases three and four, which will include retail development. Jackson Township is just east of Beaver County where the new Shell Cracker plant is being built.

The CDC is managing construction of a 230-space parking garage that will serve the Springhill Suites Hotel and other businesses. The new 76-room Marriott Springhill Suites in downtown Butler is well underway. CDC is also working with Butler County Tourism on the planned Kaufman House renovation in Zelienople, planned for opening in 2017. CDC is working with Butler County Commissioners on plans to renovate the existing government center and build-out space on the second floor of the new government center annex.

One of this year’s top 10 construction projects in the region includes Center Township’s new 168,000 square foot VA Butler Healthcare facility. Earlier this spring the township supervisors approved the creation of an economic resource overlay district nearby the Most recently, Fay-Penn completed Phase I of the Dunbar Township Business Park and held a ribbon cutting ceremony in July. Phase I provides 12 pad-ready parcels on 92 acres. The Park is geared toward light to heavy industrial use, and provides highway frontage along Route 119, one of the main North-South corridors through the county. It also features rail access. Fay-Penn estimates that the Park can ultimately house 1,100 new jobs. Fay-Penn’s University Business Park, which is home to Fay-Penn headquarters and caters primarily to technologyoriented firms, is undergoing major road upgrades this August. Within this Park, Fay-Penn is collaborating with Penn State Fayette – The Eberly Campus (adjacent to the Park) to launch the county’s first business accelerator.

CDC is currently working with two manufacturers who are considering new buildings at its Pullman Center Business Park Expansion in Butler. For information on land available at Pullman and the Victory Road Business Park in Clinton Township, contact Ken Raybuck at Community Development of Butler County for information: 724 283 1961. CDC also has a link for all known available sites and buildings in Butler County at www.butlercountycdc.com Fay-Penn is also constructing an upscale business event center here to host up to 70 attendees for workshops, conferences, and meetings. Fay-Penn is nearly complete with renovations to a 24,000 square foot VFW Building at the western gateway to downtown Uniontown. Fay-Penn invested $2.4 million to revitalize the historic building, including construction of a second floor. PTC, a software development company, has signed a 5-year lease to become the first occupant on September 1 in what is now the Fay-Penn Business Center, keeping 50 high-tech jobs in the central business district. Additional companies have expressed interest in becoming tenants once the Center is open.

During the first half of the year FayPenn closed three business loans in the amount of $523,000, impacting 51 jobs either being created or retained. Additional loan projects closing soon total $362,000, and several others are in various stages of development. In business support activity, Fay-Penn continues to meet with local companies to better understand and address their needs. Eleven businesses have been visited to date in 2016. As an offshoot to this effort, Fay-Penn is supporting Pittsburgh’s Catalyst Connection to identify Fayette County manufacturers

Greene County

Greene County Industrial Developments, Inc. 300 EverGreene Drive Waynesburg, PA 15370 724-852-2965 (T) 724-852-4132 (F) Don Chappel, Executive Director donchappel@gcidc.org www.gcidc.org Greene County has seen some slowdowns in natural gas drilling and the coal mining industry. However, that has not overshadowed projects that saw advances in energy storage, gas compression facilities and a power generation project.

impacted by the decline of the coal industry, and to assist them in entering new markets for their products. Catalyst’s project is part of its overall Partnerships for Opportunity and Workforce and Economic Revitalization (POWER) strategy, with $400,000 in funding to date coming from the Appalachian Regional Commission. Fay-Penn’s workforce development efforts were highlighted by $50,000 in recent contributions to its scholarship fund. The Eberly Foundation and the Community Foundation of Fayette County gave $25,000 each to the newly Sheetz announced plans for a second operation in Waynesburg along SR 21. A local township announced plans to construct a new municipal building. Two local companies had construction plans approved for building expansions. Vantage Energy bid and received the gas rights to Alpha Natural Resources gas rights through a bankruptcy proceeding. Emerald Mine and Cumberland Mine UMWA employees both approved a new five-year contract. Greene County Memorial Hospital Foundation held a ground breaking for their new $60,000 square foot recreation center in EverGreene Technology Park.

Other plans that began or moved forward in the first half of 2016 include:

Indiana County

Indiana County Center for Economic Operations 801 Water Street Indiana, PA 15701 724-465-2662 (T) 724-465-3150 (F) Byron G. Stauffer, Jr., Executive Director byronjr@ceo.co.indiana.pa.us www.indianacountyceo.com On July 14th, the Indiana County Center for Economic Operations hosted David Ruppersberger, President of the Pittsburgh Regional Alliance (PRA), and an affiliate of the Allegheny Conference on Community Development. Mr. Ruppersberger was joined by his team of economic development marketing professionals for a familiarization (FAM) tour of Indiana County arranged by Byron G. Stauffer, Jr. and his staff at the Indiana County Office of Planning & Development.

The daylong tour began at the National Center for Defense Manufacturing and Machining (NCDMM) headquarters in the Corporate Campus business park in Burrell Township and concluded at the Windy Ridge Business & Technology Park in White Township. The tour also visited the Interchange Center, 119 Business Park, 280 Indian Springs Road, Indiana Regional Medical Center (IRMC), Kovalchick Convention & Athletic Complex, 3-Ring Realty (former Fisher Scientific Co.), TROIKA (former Gorell Window & Doors), Indiana University of Pennsylvania (IUP) Campus, downtown Indiana and the Indiana County Jimmy Stewart Airport/Air Park. “Businesses considering investment in our region – location or expansion – have a large menu of options here because of the region’s large footprint and its diversity. We’re 10 counties, but one region of opportunity,” said Ruppersberger.

renamed Orville and Ruth Eberly Workforce Development Scholarship Fund. Fay-Penn opened this fund in 2014 and plans to grow it until its proceeds can provide approximately $10,000 in annual scholarships to Fayette County residents pursuing technical or trade career education. Although Fay-Penn's efforts are broad in scope, we focus on bringing the highest economic benefit return to our community. Since its inception in 1991, Fay-Penn has helped to create and retain over 9,000 jobs and generate $1.5 billion in business investment. Greene County Industrial Developments, Inc. and Greene County Office of Economic Development started a new out-reach program to meet with all manufacturing businesses within the county to promote growth and diversification of the economy. Both Greene County economic development agencies partnered with Catalyst Connection, University of Pittsburgh Institute for Entrepreneurial Excellence and several others and received a $400,000 POWER Grant through the U.S. Economic Development Administration to enable and begin a long-awaited partnership to boost manufacturing and provide job development opportunities for struggling communities whose livelihood once was based on coal mining.

Ruppersberger went on to say, “In order for Indiana County to be successful in attracting business investment that will create and retain jobs, a robust inventory of business parks and pad-ready sites, as well as other incentives, such as Keystone Opportunity Zone (KOZ)-related programs must be on the docket. These create a level playing field in terms of being competitive in the Pittsburgh region, as well as globally. The Indiana County Center for Economic Operations team has done an excellent job of acquiring strategic sites and preparing them for investment.” Complete details about economic development efforts in Indiana County are available at www.indianacountyceo.com.

www.developingpittsburgh.com

Lawrence County Lawrence County Economic Development Corporation 100 East Reynolds Street Plaza South, Suite 100 New Castle, PA 16101 724-658-1488 (T) 724-658-0313 (F) Linda Nitch, Executive Director nitch@lawrencecounty.com www.lawrencecounty.com

The second annual Lawrence County Impact Awards, celebrating businesses in our county that have made a significant impact in our community, is scheduled for Thursday, August 29, 2016. This year’s event will be held at the New Castle Country Club and will honor Nick’s Auto Body, First Energy, Posies by Patti, New Castle Tool and Die and Dairy Farmers of America. The Lawrence County Economic Development Corporation (LCEDC) and the Borough of Ellwood City recently teamed up to complete a financing package for Ellwood City based flower retailer, Posies by Patti. Both entities utilized Enterprise

Zone dollars to help fund the $100,000+ project involving the acquisition of a new facility, renovation and equipment purchases. Owners Patti and Keith Kuhn hope to be up and running at the new location in October of this year. The LCEDC was recently awarded a $200,000 matching grant from the Appalachian Regional Commission (ARC) that will complete the Corporation’s 50,000 square foot, multi-tenant facility at the Millennium Technology Park. The monies will help build out the second bay including office space and the installation of HVAC. Steelite International, a warehouse distribution facility for the tableware firm, now occupies both halves of the building. Ben Weitsman of New Castle recently opened doors at its downtown location on May 7, 2016. The company constructed all new buildings, equipped the facility with new equipment and fully paved and landscaped the entire yard to operate their brand new shredder serving a full, nonferrous downstream and retail scrap metal recycling facility. The LCEDC assisted the company in obtaining $500,000

in Enterprise Zone tax credits and a MultiModal Grant from the Commonwealth of PA in the amount of $204,615 to assist with rail line construction. Steve Caldararo, owner of Nick’s Autobody, in New Castle, has recently completed construction of a new paint facility located near his headquarters on Mill Street. The company is a full service collision, painting, and mechanical repair facility, recognized as an I-CAR (Platinum) facility. The $400,000 project is partially funded by the Lawrence County Enterprise Zone Revolving Loan program. Earlier this year, Penn Power embarked on a large-scale project here in New Castle to build a transmission line from their Grant Street substation to the Hillcrest Avenue substation. This project has been at least three years in the works that involved completion of an engineering plan, establishing a right of way and, finally, construction. Once completed, the line will give extra reliability to many customers in western Pennsylvania, including (UPMC) Jameson Hospital.

DEVELOPED SITES QUALIFIED WORKFORCE STRATEGIC LOCATION

Westmoreland County WestmorelandCountyIDC.org 724-830-3061

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Washington County Washington County Chamber of Commerce 375 Southpointe Boulevard #240 Canonsburg, PA 15317 724-225-3010 (T) 724-228-7337 (F) Jeff Kotula, President jeff@washcochamber.com www.washcochamber.com

Washington County continues to develop and expand its economy and business community with several significant projects. Retal Group proudly announced that they are opening their first manufacturing facility in the United States in the Donora Industrial Park. Retal PA, LLC acquired a 143,225 square foot facility where they will manufacture plastic preforms, high density lids and closures for the food and beverage industry. Mylan announced expansion plans for the company. They are adding a parking garage to their headquarters in Southpointe to expand their campus with 1,035 more parking spaces. In addition to the parking garage, they plan to add a five story, 180,000 square foot office building and a pedestrian bridge to connect to their existing administrative building. The building project should be completed by 2018. Improvements in the City of Washington include Trek Development’s $11 million project to

Westmoreland County Westmoreland County Industrial Development Corporation 40 North Pennsylvania Avenue #520 Greensburg, PA 15601 724-830-3061 (T) 724-830-3611 (F) Jason W. Rigone, Executive Director wcidc@wpa.net www.co.westmoreland.pa.us

Westmoreland County has seen strong economic development growth in terms of expansions and attraction projects in 2016. As part of the ongoing revitalization efforts in the City of Jeannette, demolition of the former Monsour Medical Center, located at the County gateway fronting US Rt. 30, has been completed. Site work continues and Phase II is expected to begin in early fall. By the end of the fourth quarter, the Westmoreland County Industrial Development Corporation (WCIDC) will invite developers to submit RFP’s for commercial development possibilities at the 3.7-acre developed site. Please visit our website, www.westmorelandcountyIDC.org for project

redevelop the Washington Trust Building. This project involves construction of a two story, 74-car parking garage as well as renovation of floors two through ten in the annex tower to accommodate 24 one-bedroom residential units. Commercial use in the original six-story building and on the ground floor of the annex will be retained. A $467, 675 infrastructure project is also underway to improve numerous storm water management systems throughout the City of Washington.

full-depth reconstruction project for five miles of Interstate 70 between the East Beau Street (Route 136) and Eighty Four Interchanges.

First Energy’s subsidiary, Allegheny Line Co. will invest tens of millions of dollars to build a static Var compensator substation in Smith Township to meet the anticipated demand from midstream natural gas production facilities and to reinforce the grid for existing customers.

Southpointe Town Center announced two recreational facilities, Faster Fitness and Athlete Performance Training Facility and Barre3 that features a mix of ballet movements, yoga and Pilates classes.

Additionally, DreBo America is planning a $2.1 million project to double the size of its packaging and distribution center, which will lead to 20 new jobs in California Technology Park. Four major transportation projects are in progress on Interstate 70. The westbound side of the $51 million project to build a diverging diamond interchange at the Murtland Avenue and Route 19 interchange, the reconstruction of the Centerville/Monongahela interchange and the reconstruction of the Ginger Hill/ Bentleyville interchange are all underway. Preliminary work has begun on the $100 million

updates and more information. In May, the WCIDC reached a settlement agreement with Zion Bullitt Avenue LP concerning the former Jeannette Glass Plant property. As part of the agreement, Zion will turn over the deed to the blighted 13-acre property purchased by the WCIDC at a tax sale in 2012. Before redevelopment can begin, the property will be accurately assessed for environmental and safety issues.

The newly launched American Petroleum Partners, LLC located in Southpointe, has recently entered into a business partnership with Apollo Global Management LLC, which will be able to provide up to $800 million in private equity investment for exploration and production in the Marcellus and Utica Shales.

The Pittsburgh Veterinary Specialty & Emergency Center broke ground for a 13,000 square foot, $5 million facility in North Strabane Township. The facility will employ about 60 people and offer emergency services, internal medicine services and surgery to animals. Housing is up and coming within the community with nearly 700 units in various stages of construction at three mixed-use projects. In addition, NVR is proposing a 126-acre housing development in Cecil Township, consisting of 125 single family dwellings, 124 single family attached townhomes and 42 single family attached duplexes.

Exel Inc. - The developer began construction on Philips Respironics’ new 260,000 square foot distribution center on a 44-acre parcel in Westmoreland Distribution Park North, East Huntingdon Township. Construction is expected to be completed within the second half of the year. 200 jobs are projected.

Also noteworthy developments: Alcoa Inc. – The company opened a 3-D printing metal powder production facility at its Alcoa Technology Center in Upper Burrell. The facility is part of a $60 million expansion project announced last September. 100 jobs are projected.

JD Oliver, LLC – The real estate company purchased a 6.55-acre parcel in Westmoreland Airpark, Unity Township. A 25,000 square foot truck service and parts facility is planned for the site, and will be leased to Freightliner upon completion. 30 jobs are projected. This is Freightliner’s second expansion in the County’s industrial park system in the last two years.

Donegal Real Estate Development, LLC ¬– Approximately 8.13 acres in Westmoreland Technology Park II, Hempfield Township, was optioned by the company. They represent Donegal Construction Corporation, which will utilize the property for a newly constructed administrative headquarters along with a repair facility and associated yard area for their milling operations. 30 jobs are projected.

Tenaska – The energy developer began site work at their 134-acre parcel in South Huntingdon Township. The site will be the future home of Tenaska Westmoreland Generating Station, a state-of-the-art electric generating facility. Estimated construction cost is more than $500 million. More than 300 jobs are projected during construction and 25 permanent jobs during operation.

www.developingpittsburgh.com

People & Events

JLL’s Jackie Bezek and Adam Viccaro from CBRE cut two-by-fours for NAIOP Developing Leaders’ volunteer day with Habitat for Humanity on June 11.

(From left) HFF’s Mark Popovich, Wesbanco’s John Fetsko and Jim Scalo from Burns & Scalo Real Estate Services were presenters at NAIOP Pittsburgh’s annual finance update.

www.developingpittsburgh.com

(Left-to-right) Guardian’s Christina Bucciero, Christi Neroni from Agency Assist Outsource Solutions, Julie Kline from Strassburger McKenna Gutnick & Gefsky PC and Terri Sokoloff from Specialty Bar & Restaurant at the CREW/ NAIOP Pittsburgh Clay Shoot.

(From left) Tony Pitassi from PWWG Architects, Scott Rowland from Langan Engineering, Nate Phillips from Chapman Properties and Langan’s Ben Hunter.

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St. Clair Hospital Outpatient Center, IKM Architects AIA Design Pittsburgh 2013 Peopleâ&#x20AC;&#x2122;s Choice Awards Photo by Massery Photography

We Are Building 412-942-0200 rayjr@volpatt.com www.volpatt.com

Delivering quality construction since 1991 in the institutional, industrial and commercial market.

Your Site. Our Team.

3D Laser Scanning Land Surveying Due Diligence

Site Development

Civil Engineering Structural Engineering

Pittsburgh | Chicago | LA | Milwaukee rasmithnational.com (412) 828-7604

www.developingpittsburgh.com

B&G Breaking Ground Ad:Layout 1

7/2/14

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Real Estate I Construction I Manufacturing P. 412-227-2500 • F. 412-227-2050 www.BlumlingGusky.com

Chuck Chiatto from BB&T, with Megan Zillweger-Jones and Dan Puntil from Granbridge and Charles Krushansky from Newmark Grubb Knight Frank (right).

Project success. It’s what our clients do. It’s what we do.

(From left) LLI Engineering’s John Shaginaw, Michael Haberman from Gateway Engineer, Jamie White and Regis Etzel from Etzel Engineer Builder.

DLA+ A UNIQUE APPROACH TO ACHIEVE YOUR UNIQUE VISION Minimize risk. Maximize results.

Jim Scalo(left), RIDC’s Don Smith and Newmark Grubb’s Lou Oliva (right) at NAIOP Pittsburgh’s annual golf outing.

Architecture interior Design PlAnning consulting

www.DLApLus.com

Pittsburgh 412-921-4300

connect with us:

84 DEVELOPINGPITTSBURGH

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linkeDin.com/comPAny/3017087

DlAPlus.com/blog

Chapman’s Nate Phillips (left) and Martin Taube with Menard USA at NAIOP’s golf outing.

Environmental Management and Site Development Engineering

Speaker Doug Herold from Integra Realty Resources (left) with NAIOP President Brian Walker, from Millcraft Industries.

Innovative Solutions

Outstanding Support

22 S. Linden St. | Duquesne, PA 15110 | 412.469.9331 www.kuresources.com Joe Chaffin from Michael Baker International with Turner’s Drew Kerr (right).

Building Your Success (From left) Jessica Jarosz from Century Realty, Attorney Holly Forsberg, Robin Alexander from Bank of America, Robin Zoufalik from Pieper O’Brien Herr and Kimly Vu Gianoutsos from McGuire Woods.

Grandbridge provides commercial and multifamily finance solutions through a wide range of capital sources In 2015, Grandbridge’s Pittsburgh Office closed loans totaling more $91.4 million – working with our clients to meet their financial goals and ensure their success. At Grandbridge, we connect you with the right source of funding – creating a personal, successful approach for each transaction.

Rachel Pagone from Babb, Copasec’s Julia Poepping, Andrea Geraghty from Meyer Unkovic & Scott David Forrestall from SecurIT360 and CardConnect’s Brett Fishe.

CONTACT US Dan Puntil, Senior Vice President Two Gateway Center 603 Stanwix St., Suite 1899 Pittsburgh, PA 15222 412.391.3366 Loans are subject to credit approval.

Our scope of services includes: n Insurance Companies n Banks n Pension Funds n Freddie Mac Program Plus® n Fannie Mae DUS® n FHA-Insured MAP and LEAN n CMBS Investors n BB&T Real Estate Funding – Structured Finance – Stabilized Fixed-Rate Finance n Capital Markets – Taxable and Tax-Exempt Financing – Credit Facilities Grandbridge.com

Equal Housing Lender. www.developingpittsburgh.com

Coming to Lawrenceville 2017 Arsenal Terminal Phase One

Rebecca Williams from Kimball Office, with LGA Partners’ Paulette Burns, Jonathon Glance and Mary Rose Hopkins, Cindy Nielsen and Autumn Harris from Century Equities (seated).

243 units / retail / parking __________________________________________ TRYP Hotel

First Commonwealth’s John Clingan (left) and Brian Pukylo at NAIOP Pittsburgh’s golf outing.

Former Washington Education Center __________________________________________ Square View Apartments 12 apartments / retail

Commercial General Contractor www.franjo.com 86 DEVELOPINGPITTSBURGH

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Joshua Fye from Farmers National Bank of Emlenton and Ed Lantz from Appraisal Nation (right).

Allegheny County Economic Development (ACED) is the county’s lead economic and residential development agency. Our six authorities assist manufacturers, businesses, municipalities, health care facilities, nonprofits, and homeowners with funding for land development, improvements, acquisitions, expansions, and renovations: Redevelopment Authority of Allegheny County (RAAC)

Authority for Improvements in Municipalities (AIM)

•Assists new and expanding businesses with grants and lowinterest loan programs. •Tax incentives and tax exempt financing. •Vacant Property Recovery Program.

•Assits local municipalities with capital needs and improvement projects. •Low interest funding source for projects such as sewer systems, bridges, roads.

Hospital Development Authority (HDA) •Assists hospitals, health care centers, personal care facilities, nursing homes, and others. •Tax Increment Financing (TIF). •Tax exemptions.

Higher Education Building Authority (HEBA) •Tax-exempt financing for colleges, universities, and other higher learning institutions. •Reduced interest rates on loans for developers.

Industrial Development Authority (IDA) •Assists manufacturers, nonprofits, and developers. •Provides financing for land aquisition, construction, renovation and equipment purchases.

Residential Finance Authority (RFA) •Financing or refinancing of costs for the acquisition, renovation or improvements of projects. •Assistance with lowinterest, fixed-rate mortgages and closing costs. •First-Time Homebuyer Program.

To learn more about how ACED can support you and your project, visit www.alleghenycounty.us, or contact us at 412-350-1000. We look forward to partnering with you.

LANDAU BUILDING COMPANY

RELATIONSHIPS I REPUTATION I RESULTS

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

Robert Hurley, Director Allegheny County Economic Development One Chatham Center • Suite 900 • 112 Washington Place • Pittsburgh, PA 15219 Phone (412) 350-1000 • www.alleghenycounty.us/economic/

www.developingpittsburgh.com

DEVELOPING

Pittsburgh

2016 Buyer’s Guide! ARCHITECTURE | INTERIORS | PLANNING

lga-partners.com

LOOKING FOR AN ARCHITECT, ENGINEER, CONTRACTOR OR LENDER? THE 2016 NAIOP BUYER’S GUIDE LISTS DOZENS OF FIRMS FROM AROUND THE REGION THAT CAN FIT THE BILL. Architect............................................89 ASA Specialty Contractors ...............90 Civil Engineer....................................90

From Concept to Completion

Contractor.........................................91 Developer..........................................91 Document Handling .........................92 Economic Development....................92 Engineer............................................92 Environmental...................................93

ERIE 1001 State Street Suite 1400 Erie, PA 16501 T 814.451.1172 F 814.451.1150 PITTSBURGH 707 Grant Street Suite 1920 Pittsburgh, PA 15219 T 412.201.2450 F 412.201.2451 UNIONTOWN 2 West Main Street Suite 135 Uniontown, PA 15401 T 724.425.0330 F 724.425.0332

Finance..............................................93 Alphabet City® Center

From predevelopment support to long-term lending, Bridgeway Capital has the financing tools to strengthen real estate development projects with lasting community impact.

Industry/Trade Association................93 Insurance...........................................93 Interior Designer...............................94 Land Surveyor...................................94 Landscape Architect..........................94

For more information contact: Dwayne Rankin | Team Leader – Loan Officers & Community Development Loan Officer 412.201.2450 x 128 | drankin@bridgewaycapital.org

bridgewaycapital.org 88 DEVELOPINGPITTSBURGH

Geotechnical Engineer......................93

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Legal Services....................................94 Owner Representative......................94 Professional Services.........................95 Real Estate Broker.............................95

Architect DLA+ Architecture & Interior Design

CH2M

400 Industry Drive, Suite 100 Pittsburgh, PA 15275 T: 412-249-6495 F: 412-269-5425 www.idcarchitects.com Jeff Murray, FAIA, LEED AP Jeff.Murray@ch2m.com Mark Witouski, CPSM Mark.Witouski@ch2m.com

CH2M (formerly IDC Architects) is a world leader in high-performance building design committed to imaginative sustainable workplace, research and industrial facilities. We have developed a portfolio of design excellence and technical quality in buildings and spaces that inspire human innovation and enhance performance. CH2M’s Pittsburgh office has a global reach providing a full range of services including planning, architecture, engineering, and interior design for demanding projects requiring innovative design solutions. Our multidisciplinary design teams integrate art, technology and human imagination to create architecture embodying the spirit of those it serves.

Design 3 Architecture PC 300 Oxford Dr. Ste. 120 Monroeville, PA 15146 T: 412-373-2220 www.d3a.com William Snyder was@d3a.com

Design 3 Architecture has been offering architecture, planning, and interior design services to the Pittsburgh region since 1982. We view inherent project constraints as potential opportunities for innovative design solutions. With a philosophy grounded in team collaboration, providing both personal attention and project leadership, Design 3 Architecture does more than solve problems. We provide solutions that are unique, exciting and affordable.

Folster Plaza, Suite 200 750 Holiday Drive Pittsburgh, PA 15220 www.DLAplus.com Kari Miller KAMiller@DLAplus.com

DLA+ is a full service architecture and interior design firm dedicated to providing Strategic ArchitectureSM solutions through a collaborative and integrated approach to delivering projects for our clients in Corporate/Commercial, Higher Education, Sports, Government, Healthcare, and Retail/Hospitality. We are committed to delivering not only a technically successful project, but also one that includes sound principles of sustainable design intended to serve the client and the community well into the future. Fueled by a creative and talented team, our once two person firm has grown to 30 people in a matter of six years earning us a spot as one of the “100 Fastest Growing Companies in Pittsburgh” two years in a row and the INC 5000 Fastest Growing Companies in the United States three years in a row.

HHSDR Architects/Engineers 40 Shenango Avenue Sharon, PA 16146-1502 130 7th Street, 201 Century Bldg. Pittsburgh PA 15222-3413 T: 800-447-3799 T: 412-281-2280 www.hhsdr.com Andreas Dometakis adometakis@hhsdr.com Frank Gargiulo fgargiulo@hhsdr.com

HHSDR has been Building Relationships with our clients since 1953. We are regional leaders in design and construction contract administration, with a portfolio of projects sized from a few hundred to 400,000 square feet. We deliver design solutions through traditional design-bid-build techniques as well as design-build. Ranked annually by the Pennsylvania Builders Exchange as the most active firm in the tristate region, we earn our clients’ trust by providing high-quality and responsive service.

Perfido Weiskopf Wagstaff + Goettel 408 Boulevard of the Allies Pittsburgh, PA 15219 T: 412.391.2884 F: 412.391.1657 www.pwwgarch.com Alan Weiskopf, Managing Principal aweiskopf@pwwgarch.com

PWWG offers architecture, planning, and urban design for projects in multi-family housing; education and technical training; and the rehab, preservation, and adaptive reuse of historic structures. Our awardwinning design work also includes hotels, parking structures, theaters, and commercial operations. For 39 years, from our studios in downtown Pittsburgh, we have assisted owners with detail-oriented service, from early explorations, to coordinating multi-disciplinary teams of engineers, to construction management and LEED commissioning. PWWG is also expert in code and zoning compliance, feasibility and space programming, historic tax credit applications, community outreach, and 3D visualizations.

DRS Architects, Inc.

One Gateway Center, Seventeenth Floor Pittsburgh, PA 15222 T: 412-391-4850 F: 412-391-4815 www.drsarchitects.com Kathryn A. Jolley, MBA, ASID, LEED AP kathryn_jolley@drsarchitects.com

Designing for the future, DRS Architects continues to provide innovative and creative architectural solutions as we have for nearly 60 years. We listen carefully to our clients’ needs and develop customized responses to each design challenge. We provide architecture, interior design and master planning services through the varied markets of higher education, laboratories, health and wellness, government, hospitality, and corporate offices. Our talented design teams work to develop exemplary projects which enrich daily life, improve communities, advance a sustainable future and promote design excellence.

Renaissance 3 Architects, P.C. IKM Incorporated

One PPG Place Pittsburgh, PA 15222 T: 412-281-1337 F: 412-281-4639 www.ikminc.com Joel R. Bernard, AIA, NCARB, LEED AP Principal jbernard@ikminc.com

IKM Incorporated has been providing architecture, planning and interior design services to corporate and institutional clients for 100-years. IKM’s mission is to provide innovative and informed architecture that positively impacts the world through leadership in understanding, exploration and decision making. IKM is a member of the American Institute of Architects and the US Green Building Council.

48 South 14th Street Pittsburgh, PA 15203 T: 412-431-2480 www.r3a.com Deepak Wadhwani dw@r3a.com

At R3A we believe that successful design shapes environments that actively engage the senses and facilitates positive human interactions and behaviors, while employing technologies that help improve the performance of our daily lives. R3A is a 23-person firm with two principals, supported by an experienced and creative team of architects, interior designers and project managers. R3A provides a full range of architectural, interior design, planning services. We pride ourselves in being uniquely qualified to respond to the increasingly diverse and complex facilities needs of our clients and their organizations.

Gerard Associates Architects

410 Fort Pitt Commons 445 Fort Pitt Boulevard Pittsburgh PA 15219 T: 412-566-1531 www.gerardassociatesarchitects.com Dawn Danyo DiMedio, AIA, LEED AP BD+C dddimedio@gerardassociatesarchitects.com

A Woman Owned Business providing architecture, planning, interior and environmentally responsible design services to a full range of commercial clients since 1959. The firm commits itself to understanding projects completely, developing working relationships with clients and delivering projects that are technically and aesthetically complete. Every project is given principal attention. We believe this commitment to service yields superior design.

Stantec

650 Smithfield Street # 2500 Pittsburgh, PA 15222 T: 412-394-7000 www.stantec.com George Halkias, AIA, LEED, AP george.halkias@stantec.com Alicia Wolfe, NCIDQ Cert., LEED AP alicia.wolfe@stantec.com

Stantec unites approximately 22,000 employees in over 400 locations. We collaborate across disciplines and industries to bring buildings, energy and resource, environmental, and infrastructure projects to life. Our work— architecture, engineering, interior design, landscape architecture, surveying, project management, and project economics, from initial project concept and planning through design, construction, and commissioning—begins at the intersection of community, creativity, and client relationships. Since 1954, local strength, knowledge, and relationships, coupled with our world-class expertise, have allowed us to go anywhere to meet our clients' needs in more creative ways. www.developingpittsburgh.com

Overhead Door Company of Greater Pittsburgh 400 Poplar Street Pittsburgh, PA 15223 T: 412-781-4000 Ext. 216 F: 412-781-2446 www.overheaddoorpittsburgh.com Jason Henze jhenze@ohdpgh.com

VEBH Architects

470 Washington Road Pittsburgh, PA 15228 T: 412-561-7117 www.vebh.com Contact: Daniel Skrabski info@vebh.com

VEBH Architects has been serving the communities of Southwestern Pennsylvania and beyond for more than 65 years. We are passionate about creating quality environments for our clients. Our designs for workplaces enhance client identity, offer increased productivity, and deliver long-term value to a business, as well as the customers and the community it serves. We are committed to creating great places that inspire, motivate, and ultimately enrich our region and the communities in and around the places we call home.

From the time we invented the garage door in 1921 Overhead Door has always produced and installed the highest quality products. Our superior product craftsmanship and dedicated excellence in customer care has made us the leader in door systems for diverse markets and customers around the globe. We offer the most complete line of quality residential, commercial and industrial upward-acting door systems. Our Red Ribbon trademark is your guarantee of receiving unequaled personalized service and expertise – from assistance with product selection through the timely completion of product installation.

ASA Specialty Contractors

The Gateway Engineers

400 Holiday Drive #300 Pittsburgh, PA 15220 T: 412-921-4030 F: 412-921-9960 www.GatewayEngineers.com Ryan L. Hayes, Director of Business Development rhayes@GatewayEngineers.com

Gateway Engineers and its predecessors have played an active role in the development of the Ohio Valley since 1882. Our incessant pursuit of project management excellence has created strengths in municipal engineering, consulting work, and all facets of private development including the burgeoning energy industries. The tradition of providing value-added engineering solutions carries on as the company continues to grow. Gateway Engineers staff of registered professional engineers, surveyors, construction inspectors, and landscape architects, along with qualified technicians, is ready to provide the expertise and personalized service which every project deserves. For more information, please visit the new GatewayEngineers.com.

R.A. Smith National, Inc.

333 Allegheny Avenue, Suite 202 Oakmont, PA 15139-2072 T: 412-828-7604 F: 412-828-7608 www.rasmithnational.com John Frydrych, M.S., P.E. john.frydrych@rasmithnational.com

R.A. Smith National is a multi-disciplinary consulting engineering firm that is a leader in civil engineering and site development, structural engineering and land surveying. R.A. Smith National works with clients to deliver excellence, vision and responsive service. Developers and governmental agencies take advantage of the diverse expertise and team collaboration that is incorporated in every project. The firm provides comprehensive services that include civil engineering, structural engineering, site development engineering, site planning, surveying, water resources engineering and 3D laser scanning. Offices are located in Oakmont (Pittsburgh), PA; Brookfield (Milwaukee), Madison and Appleton, WI; Naperville (Chicago), IL; and Irvine, CA.

Civil Engineer Pennoni Associates Inc. Allegheny Mineral Corporation One Glade Park East Kittanning, PA 16201 T: 724-548-8101 www.alleghenymineral.com Dennis C. Snyder, President Mike Odasso, Vice President of Sales maodasso@snydercos.com

Allegheny Mineral Corp. provides crushed stone, industrial rock dust and agricultural lime to Pennsylvania, Ohio, and West Virginia. In 2014, the company was listed as one of the 40th largest aggregate producers in the nation. Our limestone product has provided a solid foundation for schools, churches, hospitals and family homes in and around our community. Allegheny Mineral has been recognized for its efforts in areas of safety, sustainability, community relations and industry contributions in the form of awards from state and federal agencies.

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GAI Consultants, Inc.

385 E. Waterfront Drive Homestead, PA 15120 T: 412-476-2000 www.gaiconsultants.com Patrick M. Gallagher, Assistant Vice President / Senior Director p.gallagher@gaiconsultants.com

Transforming ideas into reality for over 50 years, GAI’s teams of real estate and economic counselors, urban planners, engineers, environmental specialists, surveyors, and landscape architects provide innovative, practical, and cost-effective solutions for all stages of land development. Our award-winning land development portfolio includes large multi-use complexes, retail centers, healthcare and educational campuses, residential communities, urban streetscapes, parks and trails, marinas, and resorts. Distinguished in our commitment to urban-infill, Greenfield, and brownfield development, we help clients achieve their project goals. GAI brings projects from ideas to reality. Learn more at www.gaiconsultants.com.

9 Foster Plaza, Suite 700 750 Holiday Drive Pittsburgh, PA 15220 T: 412-521-3000 x2778 www.pennoni.com John Skorupan jskorupan@pennoni.com

Pennoni is proud to be celebrating our 50th anniversary as a multi-disciplined consulting engineering and design firm. An ESOP company, Pennoni employs over 1,000 professional and technical personnel with 30 offices throughout the Mid-Atlantic States, Ohio, North Carolina and Florida. Pennoni is a full-service provider of Land Development, Landscape Architecture, Structural Engineering, Surveying, Environmental, Transportation, Geotechnical, MEP Design and Energy & Sustainability. Locally, Pennoni has offices in Pittsburgh, State College and Uniontown that service the developer, industrial, transportation, education and the Marcellus Shale industry in Western Pennsylvania, Ohio and West Virginia. We promise to put all of our passion, our knowledge and our skill into doing whatever it takes, every day, every time, for every project.

Red Swing Group

Corporate Office: 4154 Old William Penn Hwy, Suite 300 Murrysville, PA 15668 T: 724.325.1215 F: 866.295.5226 Surveying & Telecommunications Office: 3001 Jacks Run Rd, Suite 107 White Oak, PA 15301 T: 412.678.4403 F: 866.295.5226 www.RedSwingGroup.com Matthew E. Smith, P.E. Matthew.Smith@RedSwingGroup.com

Red Swing Consulting Services views its Clients as Partners; focusing first and foremost on building and maintaining strong relationships and trust. This mutual trust is the foundation of a solid business partnership. Red Swing offers Land Development Consulting Services to take a project from concept through construction. Red Swing has experience in Surveying, Civil Engineering, Infrastructure, Utility, and Telecommunications Projects. Red Swing effectively maximizes the return on investment through a collaborative design approach, utilizing a low impact design philosophy that reduces project capital costs and produces the competitive edge that we and our partners demand.

Rycon Construction Inc. Burchick Construction Company Inc. 2 East Crafton Avenue Pittsburgh, PA 15205-2804 341 Science Park Drive, Suite 205 State College, PA 16803 T: 412-921-3303 C: 412-491-6132 www.dewooster.com Chuck Wooster, President chuckwooster@dewooster.com

Since 1971, our firm has been a highly regarded and respected leader in the traffic engineering industry. We are most proud of our uncompromising integrity. Our goal is to guide our clients through the rigorous process of real estate development and assist them by correctly identifying on-site and off-site traffic impacts, develop cost effective and efficient mitigation strategies, and seek and receive municipal and State DOT approvals and/or permits. Our skills include: Traffic Engineering Studies, Highway Occupancy Permits, Traffic Signal System Design, Roadway Design, Intersection Design, and Parking Studies. Wooster also provides site design services.

500 Lowries Run Road Pittsburgh, PA 15237 T: 412-369-9700 www.burchick.com Joseph E. Burchick joeburchick@burchick.com

Burchick Construction is a full-service general contractor founded on the commitment to excellence that Joe Burchick brings to each project the company undertakes. Burchick’s management approach is designed to ensure optimum results for our clients, setting the performance standard for construction services. Our executives and managers have broad-based experience delivering construction to the highest standards, regardless of the client’s preference for delivery method. Burchick’s project team and professional engineers on staff are equally comfortable with a completed design or with providing pre-construction assistance at the earliest stages of design. Burchick has managed commercial, industrial and institutional projects from $100,000 to $73 million with equal attention. Burchick Construction, setting the performance standard.

LANDAU BUILDING COMPANY 9855 Rinaman Road Wexford, Pennsylvania 15090 T: 724-935-8800 www.landau-bldg.com Jeffrey Landau, President jlandau@landau-bldg.com

Established over 100 years ago, Landau Building Company (LBC) has become one of the premier family-owned and operated general contracting firms in Western Pennsylvania. In 2006, Landau Building Company expanded its construction services to include the northern West Virginia region when it created the subsidiary Marks-Landau Construction. Now in its 5th generation, LBC continues to build strong RELATIONSHIPS with its clients by focusing on their need to build a safe, high-quality project on time and within budget. Our commitment to integrity, honesty, and excellent client service has built the solid REPUTATION we exhibit every day and on every project. We deliver exceptional RESULTS that exceed our client’s expectations for quality and service and make Landau Building Company their builder of choice. We welcome the opportunity to be your builder of choice.

2501 Smallman Street, Suite 100 Pittsburgh, PA 15222 T: 412-392-2525 F: 412-392-2526 www.ryconinc.com Todd Dominick todd@ryconinc.com

Rycon Construction, Inc. is a premier preconstruction, general contracting and construction management firm with offices in Pittsburgh, Atlanta, Cleveland, and Ft. Lauderdale. An ENR Top 400 Contractor, Rycon specializes in new construction, renovations and designbuild projects for owners of commercial, industrial, institutional, multi-unit residential and governmental buildings. Rycon’s stellar reputation for quality service is built on a solid history of successful projects completed on time and on budget and an unwavering business philosophy that puts customer satisfaction first. The results are return customers and impressive company growth. The company has executed more than $2.5 billion of work and currently Rycon’s revenues exceed $300 million.

Developer

Contractor Restoring the Past Building the Future

Jendoco Construction Corporation A. Martini & Company

320 Grant Street Verona, PA 15137 T: 412-828-5500 www.amartinigc.com Emily Landerman Emily.Landerman@amartinigc.com

Established in 1951, A. Martini & Co. is not just a general contracting and construction management firm – it is a family business that embodies the dedication, work ethic and talent of three generations of the Martini family. A. Martini & Co.’s size, history and work philosophy are specifically geared to offering experience, commitment and a partnering approach. A. Martini & Co. provides construction management and general construction services for multimillion dollar and smaller projects for industry, retail, medical, entertainment, corporate, residential, education and non-profit clients. “We at A. Martini & Company believe that a true collaborative approach from preconstruction through final closeout is in the best interest of the owner. Our competitive stature and cost consciousness is apparent in both hard bid and negotiated contacts."

McKamish, Inc.

2000 Lincoln Road Pittsburgh, PA 15235 T: 412-361-4500 F: 412-361-4790 www.jendoco.com Domenic Dozzi dpdozzi@jendoco.com

55th & AVRR Pittsburgh, PA 15201 T: 412-781-6262 F: 412-781-2007 www.mckamish.com Dave Casciani davec@mckamish.com

AdVenture Development, LLC

Located in Pittsburgh for over 50 years, Jendoco has built a reputation for being a premier quality general contractor and construction manager with expertise in many facets of building construction. From renovations, to restorations, to new construction, our team of seasoned professionals has the experience and commitment to meet the challenges of your projects. We have experience with new construction, renovation, historical restoration and preservation, research facilities, hospitals and medical facilities, schools and universities, religious facilities, water treatment facilities, multi-tenant residential, commercial, industrial, institutional, retail and sustainable construction.

When it comes to specialty mechanical contracting, McKamish sets the bar. The Commercial Construction Group at McKamish serves customers big and small in virtually all market segments, meeting their Mechanical Contracting, Plumbing and HVAC needs. We excel at Pre-Construction and Design Assist/Build services. The McKamish Service Group thrives to optimize customer investment in new and existing building systems. A dedicated team of professional technicians, operating a fleet of vehicles, provide McKamish Service customers with around-the-clock support. Please visit our website – www.mckamish.com – to learn more about us!

Kevin Dougherty formed AdVenture Development, LLC in 2005. AdVenture Development focuses on commercial real estate development projects and is actively involved in the acquisition, development, leasing and management and has also retained real estate consulting assignments in Pennsylvania, Virginia, West Virginia and North Carolina. Currently being developed in Pittsburgh, PA is McCandless Crossing, a 1.2 million sf mixed-use development. In the Raleigh, North Carolina area a similar development , EASTFIELD, is planned. Kevin and his team are dedicated to exceeding their clients’ expectations. Please visit our website at: www.adventuredev.com to learn more.

111 E. Oak Street Selma, NC 27576 T: 919-965-5661 www.adventuredev.com Kevin M. Dougherty kmd@adventuredev.com

PJ Dick Inc.

225 North Shore Drive Pittsburgh PA 15212 T: 412-807-2000 www.pjdick.com Bernard J. Kobosky Bernie.kobosky@pjdick.com

PJ Dick – Trumbull – Lindy Paving is a Pittsburgh, PA based contracting entity providing building construction, highway, site, and civil construction and asphalt paving services. Since 1979, the companies have served a number of different owner groups including commercial, institutional, government and private equity developers. Consistently ranked among the nation’s top firms, the family owned group of companies is widely considered the region’s largest construction firm offering a variety of delivery systems utilizing superior expertise, equipment and innovation.

www.developingpittsburgh.com

Economic Development

Engineer

Chapman Properties

100 Leetsdale Industrial Drive Leetsdale, PA 15056 T: 724-266-4499 www.chapmanprop.com Steve Thomas sthomas@chapmanprop.com

Ambridge Regional

Chapman Properties is a leading provider of quality business facilities in Southwestern Pennsylvania. An award winning commercial property development and management company based in Pittsburgh, Chapman designs, builds, and operates state-of-the-art business parks with a concentration on regional distribution and industrial projects. They are best known for their redevelopment of the 2+ million square foot Leetsdale Industrial Park, and are currently developing Chapman Westport, a 2.6 million square foot master-planned mixed use business park located 3 miles from Pittsburgh International Airport on the Westport Road Interchange of PA Turnpike 576, and Chapman Southport, a 153-acre mixed use office park located on Racetrack Road in Washington County next to the Meadows Racetrack and Casino and Tanger Outlet Mall.

Document Handling T R I ST T E Tri-State Reprographics, Inc. 2934 Smallman Street Pittsburgh, PA 15201 T: 412-281-3538 F: 412-281-3344 www.tsrepro.com DJ McClary, Director of Operations DJMcClary@tsrepro.com

For 70 years, Tri-State has provided printing and document management to Architects, Engineers and Contractors. Today we utilize the latest in Online Planroom Services, Scanning / Printing in both Black &White and Color. Level 3 Graphics, a division of Tri-State specializing in large format color, services the Sign, Advertising, and Display Markets. Our unique approach combined with our product research and years of knowledge enables us to continually present new possibilities to our clients.

2301 Duss Avenue #1 Ambridge, PA 15003 T: 724-266-4661 www.AmbridgeRegional.com Erica Loftus, Marketing & Public Relations Manager info@AmbridgeRegional.com

The Ambridge Regional Center is "Rail Served. Crane Served. Customer Served.” Our 85 Acre, 22 Buildings and Over 1 million square foot Industrial Park offers: Warehouse, Distribution, Manufacturing, Lab & Yard Space. Convenient to all major roadways, and only 11 miles from the future Shell cracker plant, our tenants enjoy direct access to Norfolk Southern Rail Co. service as well as on-site maintenance and logistics services, through our Con-Am Warehouse. Designations: Foreign Trade Zone, HUB Zone, Enterprise Zone, PA Act 2 Clearance.

Fay-Penn Economic Development Council

1040 Eberly Way Suite 200 Lemont Furnace, PA 15456 T: 724-437-7913 www.faypenn.org Bob Stark, Executive Director Bobs@faypenn.org

Fay-Penn Economic Development Council is on point to grow and diversify the economy in Fayette County, Pennsylvania. We’re the pre-eminent "1st stop shop" economic development organization in the county, providing comprehensive, second-to-none business development services through our staff and partners to make clients more competitive in a global marketplace. We do “traditional” economic development – rental space, pad-ready business park acreage, and financing – but also provide innovative programming to support entrepreneurs, develop leaders, and promote the business amenities of Fayette County. In our 25-year history, we’ve helped countless businesses to succeed. Yours could be next!

Armstrong County Industrial Development Council

Northpointe Technology Center II 187 Northpointe Boulevard Freeport, PA 16229 T: 724-548-1500 www.armstrongidc.org Michael P. Coonley, AICP Executive Director economicdevelopment@co.armstrong.pa.us

The Armstrong County Industrial Development Council (ACIDC), established in 1968 is a private 501(c)(3) industrial development corporation. Identified as the lead economic development group within the County, the ACIDC, along with its sister organization the Armstrong County Industrial Development Authority, provides single-point-of-contact service for emerging or expanding business and industry. Owners and operators of four industrial parks, single use and multitenant facilities, the ACIDC works closely with existing or prospective businesses to identify the right location. They also provide financing assistance to companies through government loan/grant programs and private sector financial institutions.

Civil & Environmental Consultants, Inc. 333 Baldwin Road Pittsburgh, PA 15216 T: 800-365-2324 www.cecinc.com Gregory P. Quatchak, P.E. gquatchak@cecinc.com

Civil & Environmental Consultants, Inc. (CEC) is a company of professionals who provide integrated design and consulting services at all points in a property’s life cycle. CEC’s industry experts offer a full complement of evaluation, technical and regulatory insight. Our value lies in the practical knowledge senior leaders contribute along with our broad skill-sets and desire to advance our clients’ strategic objectives. We’re building trust and our reputation on a local level through personal business relationships while continually assessing our environmental and economic sustainability in the communities where we practice.

KU Resources, Inc. Washington County Chamber of Commerce 375 Southpointe Boulevard #240 Canonsburg, PA 15317 T: 724-225-3010 F: 724-228-7337 www.washcochamber.com Mary Stollar Senior Vice President Economic Development marys@washcochamber.com

The Washington County Chamber of Commerce is the largest business organization in Washington County and the second largest chamber of commerce in Southwestern Pennsylvania. The Chamber focuses on economic and business development initiatives to expand the economy of Washington County and was one of the first organizations to publically support the economic benefits and job creation potential of the natural gas industry. Learn more at www.washcochamber.com.

22 South Linden Street Duquesne, PA 15110 T: 412-469-9331 F: 412-469-9336 www.kuresources.com Mark Urbassik murbassik@kuresources.com

KU Resources, Inc. provides a full range of environmental management and site development engineering services to industrial, commercial, and communitybased clients. The firm specializes in brownfield redevelopment, environmental site assessment, economic revitalization assistance, regulatory permitting and compliance, remediation design and implementation, and environmental risk management strategies. The firm’s engineering and environmental consulting capabilities also include the areas of civil and geotechnical engineering, site development engineering, water resources engineering, mining and quarry services, water quality monitoring, and air quality compliance and permitting.

LLI ENGINEERING

Community Development Corporation of Butler County 112 Hollywood Drive #102 Butler, PA 16001 T: 800-283-0021 F: 724-283-3599 www.butlercountycdc.com Ken Raybuck, Executive Director KRAYBUCK@butlercountycdc.com

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The Community Development Corporation of Butler County (CDC) is the lead economic development organization in Butler County. The CDC is your first contact for economic development in Butler County. The CDC works closely with you to identify the right location for your business. Available land includes 60 acres at the Victory Road Business Park, with a KOZ designation, and 30 acres at the Pullman Center Business Park Expansion. Initial lots at the Pullman site are priced as low as $50,000 per acre. All utilities are at both sites. The CDC also has financing available for real estate, equipment, working capital and lines of credit.

Westmoreland County Industrial Development Corporation Fifth Floor, Suite 520 40 North Pennsylvania Avenue Greensburg, PA 15601 T: 724-830-3061 F: 724-830-3611 www.westmorelandcountyidc.org Jason W. Rigone Executive Director wcidc@wpa.net

Founded in 1983 by the Westmoreland County Board of Commissioners, the Westmoreland County Industrial Development Corporation (WCIDC) implements a comprehensive economic development strategy to promote growth in terms of job creation, economic output and a stable tax base for Westmoreland County. Through the development of a county-wide industrial park system, a responsive Business Calling Program and involvement in public/private partnerships, WCIDC strives to foster business growth, resulting in job opportunities for the citizens of Westmoreland County.

1501 Preble Ave, Suite 300 Pittsburgh, PA 15233 T: (412) 904-4310 www.LLIEngineering.com James D. White, PE, LEED AP jwhite@lliengineering.com

LLI Engineering provides mechanical, electrical, architectural, commissioning, and structural engineering services. Since 1910, LLI Engineering has been consistently recognized for providing top-quality engineering design services. We specialize in commercial, critical facilities, education, healthcare, industrial, infrastructure upgrades, green building design, energy conservation modifications, project engineering, and engineering estimates. Located in Pittsburgh, Pennsylvania, LLI Engineering has completed projects in over 20 different states.

Finance 2 East Crafton Avenue Pittsburgh, PA 15205-2804 341 Science Park Drive, Suite 205 State College, PA 16803 T: 412-921-3303 C: 412-491-6132 www.dewooster.com Chuck Wooster, President chuckwooster@dewooster.com

Environmental KU Resources, Inc.

22 South Linden Street Duquesne, PA 15110 T: 412-469-9331 F: 412-469-9336 www.kuresources.com Mark Urbassik murbassik@kuresources.com

Dollar Bank

Three Gateway Center 401 Liberty Avenue Pittsburgh, PA 15222 T: 412-261-7515 www.dollarbank.com David Weber dweber578@dollarbank.com

As your business changes, you'll need the flexibility to respond to market opportunities by purchasing equipment, expanding your facilities or increasing working capital. Your credit needs will change as your business grows, so your overall credit plan should address short-term demands as well as long-term growth. Dollar Bank’s Business Banking Experts will work to understand your business and assist you in achieving your goals with the right financing for your needs. For more information, contact David Weber, Vice President Business Lending.

Geotechnical Engineer ACA Engineering, Inc.

410 North Balph Avenue Pittsburgh, PA 15202 T: 412-761-1990 www.acaengineering.com Thomas R. Beatty, P.G. tbeatty@acaengineering.com

ACA Engineering, Inc. is an independently owned and operated geotechnical and environmental engineering, materials testing and inspection firm with offices in Pittsburgh, Mechanicsburg, and Laporte PA, and Youngstown, OH. Our engineers, geologist, draftspersons, inspectors, and technicians provide quality designs, engineering studies, surveys, and project management. Our senior staff has a combined experience of over 100 years in engineering, construction inspection, and laboratory testing. ACA maintains an in-house laboratory that has been inspected and accredited by AASHTO Materials Reference Laboratory, Cement and Concrete Reference Laboratory, and the U.S. Corps of Engineers.

Industry/Trade Association First Niagara Bank, N.A. Commercial Real Estate 11 Stanwix Street, 16th Floor Pittsburgh, PA 15222 T: 412-807-2834 www.fnfg.com Greg Boyd, VP Gregory.boyd@fnfg.com Kris Volpatti, FVP Kris.volpatti@fnfg.com

With First Niagara you’ll find a perfect balance, a community oriented bank offering personal attention, delivering customized solutions, and keeping current with products and services required for any project. We aim to improve the quality of life of our neighbors in terms of where they live, work and play. Today, over 70,000 neighbors live in apartments, over 60,000 people work in facilities, over $3,500,000,000 in commerce flows through retail and hospitality projects all financed by First Niagara. Work with one of our teammates – benefit from the consistent quality they deliver.

PNC Real Estate

249 Fifth Avenue Pittsburgh, PA 15222 www.pnc.com/realestate Joe Pascarella, VP T: 412-762-2672 joseph.pascarella@pnc.com

PNC Real Estate is a leading provider of banking, financing and servicing solutions for commercial real estate clients. Our capabilities include acquisition, construction and permanent financing for developers and investors; agency financing for multifamily properties; and debt and equity capital for the affordable housing industry. And, through Midland Loan Services, we provide third-party loan servicing, asset management and technology solutions.

American Subcontractors Association of WPA

565 Callery Road Cranberry Twp., PA 16066 T: 724-538-8227 F: 724-538-8227 www.asawpa.org Angie Wentz, Executive Director asawpa@zoominternet.net

ASA Western PA, the American Subcontractors Association of Western PA, is a non-profit organization dedicated to the representation and advocacy for the subcontractor, specialty trade contractor, supplier and service provider business community; promoting an equitable business environment through providing professional education, networking opportunities, government advocacy and influence throughout the construction industry. ASA was founded in 1966, our chapter was established in 1989. ASA of Western PA has been around for 26 years. Learn more about what ASA Western PA can do for your company by visiting our website or contacting the office.

Builders Guild of Western PA, Inc. 650 Ridge Road, Suite 301 Pittsburgh, PA, 15205 T: 412-921-9000 www.buildersguild.org

Building trade unions and contractors working together to provide the best value in construction. Our 40,000 member workforce is professionally trained in the finest apprenticeship centers in the country. We understand the demands of the industry, are committed to customer satisfaction and are drug free. Today’s building trade unions are setting a new standard of excellence. Get to know us.

IRONWORKER EMPLOYERS ASSOCIATION Of Western Pennsylvania Foster Plaza 9 750 Holiday Drive, Suite 615 Pittsburgh, PA 15220 T: 412-922-6855 www.iwea.org William C. Ligetti, Jr. wligetti@iwea.org

The IWEA is a Trade Association of Union Contractors who work in all aspects of the Ironworking Trade within the Construction Industry. We are a resource for all owners, developers and contractors who are looking for a qualified contractor with a well-trained workforce. Visit our website or call our office for additional information.

Master Builders’ Association of Western Pennsylvania, Inc. 631 Iron City Drive Pittsburgh, PA 15205 T: 412-922-3912 www.mbawpa.org

Leading the Industry, Building the Region! The Master Builders’ Association represents the preferred commercial contractor in our region. Collectively, the membership accounts for over 80% of the commercial construction in our area and the MBA contractors have built over 90% of the square-footage of LEED certified buildings in the Pittsburgh region. With skilled labor, superior safety services and the latest technology, the MBA contractor is the best value.

Insurance

Simpson & McCrady LLC

310-330 Grant Street | Suite 1320 Pittsburgh, PA 15219 T: 412.261.2222 info@simpson-mccrady.com

Simpson | McCrady is a boutique risk management firm with a tailored approach to client management services. Our firm prides itself on providing our client base with access to specialists in all areas of the insurance industry including Commercial Insurance, Private Client Services, Employee Benefits and captive risk alternatives. We strive to go above and beyond taking care of your insurance needs by providing risk management tools and solutions through our trusted vendors. As one of the largest personal and commercial insurance advisors in Pennsylvania, we have the expertise to handle any account size anywhere in the world.

www.developingpittsburgh.com

Interior Designer

Landscape Architect Meyer Unkovic & Scott Lennon, Smith, Souleret Engineering, Inc.

846 Fourth Avenue Coraopolis, PA 15108 T: 412-264-4400 www.lsse.com Larry W. Souleret, P.E., P.L.S., M.ASCE lsouleret@lsse.com

Design 3 Architecture PC 300 Oxford Dr. Ste. 120 Monroeville, PA 15146 T: 412-373-2220 www.d3a.com William Snyder was@d3a.com

Established in 1985, Lennon, Smith, Souleret Engineering (LSSE) is a civil engineering and surveying firm with offices located in Coraopolis (Allegheny County) and Greensburg (Westmoreland County), PA. LSSE provides surveying services for sites throughout Pennsylvania and Ohio. Our recent experience includes an 833-acre industrial park site in Findlay Township, 40+ miles of new waterlines for a regional utility, approximately 300 miles of new sanitary and storm sewers, property surveys for sites ranging from 0.5 to 833 acres, and over 3,000 rights-of-way.

Land Surveyor Red Swing Group

GAI Consultants, Inc.

385 E. Waterfront Drive Homestead, PA 15120 T: 412-476-2000 www.gaiconsultants.com Patrick M. Gallagher, Assistant Vice President / Senior Director p.gallagher@gaiconsultants.com

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GAI Consultants, Inc.

385 E. Waterfront Drive Homestead, PA 15120 T: 412-476-2000 www.gaiconsultants.com Patrick M. Gallagher, Assistant Vice President / Senior Director p.gallagher@gaiconsultants.com

1300 Oliver Building Pittsburgh, PA 15222 T: 412-456-2800 www.muslaw.com W. Grant Scott T: 412-456-2893 wgs@muslaw.com Patricia E. Farrell T: 412-456-2831 pef@muslaw.com

The Real Estate & Lending Group recognizes the importance of understanding our clients’ business objectives and providing timely, creative, and cost-effective solutions. We work with financial institutions, manufacturers, shopping center and mixed-use property owners, brokers, developers, buyers, sellers, landlords, and tenants. Our team handles a broad range of matters such as contract negotiation, site acquisition and development, evaluation of potential environmental issues, site planning, commercial loan closings, and zoning variances. Our team also handles land use, title insurance, residential transactions, oil and gas leasing issues, and tax assessment appeals.

Owner Representative

Legal Services Campayno Consulting Services, LLC

Babst Calland

Two Gateway Center 603 Stanwix Street, 6th Floor Pittsburgh, PA 15222 T: (412) 394-5400 www.babstcalland.com Justin D. Ackerman, Esquire jackerman@babstcalland.com Marcia L. Grimes, Esquire mgrimes@babstcalland.com Peter H. Schnore, Esquire pschnore@babstcalland.com

Babst Calland’s real estate lawyers have well-rounded skills and experience in real estate development, finance, construction, energy, environmental risk assessment, zoning and land use, tax assessment appeals, eminent domain, and other corporate and litigation services. We provide creative, pragmatic advice to developers, landlords, tenants, investors, brokers and managers of commercial real estate to help them reach their goals, through attentive service that keeps the client’s bottom line in mind. From acquisition to disposition, our approach to the practice of law gives our real estate clients an edge.

P.O. Box 554 Oakmont, PA 15139 T: (412) 794-8129 F: (412) 794-8130 www.campaynoconsulting.com Jesse C. Campayno T: 412-302-0035 ccserv@comcast.net

Campayno Consulting provides construction consulting services for owners and developers who need assistance managing the complex contractual relationships between their contractor and architect. Jesse Campayno has more than 37 years of experience in field and executive positions, giving him insight into the best practices of project management. Campayno focuses on five core services: Owner representation and construction management; estimating and conceptual budgeting; project executive services; dispute resolution and business consulting. Our clients rely on our expertise to add value to their projects by providing clear direction, maintaining open lines of communication and placing the project owner’s goals as the top priority.

Professional Services

AmeriServ Trust And Financial Services Company – Trustee PenTrust Real Estate Advisory Services, Inc. – Investment Advisor 2 East Crafton Avenue Pittsburgh, PA 15205-2804 341 Science Park Drive, Suite 205 State College, PA 16803 T: 412-921-3303 C: 412-491-6132 www.dewooster.com Chuck Wooster, President chuckwooster@dewooster.com

Real Estate Broker

Oxford Development Company’s Riverfront East Office Building: Built with ERECT Funds Opening May 2017

Photo by Mark Grasso

Building Solid Investment Returns For Tomorrow, And Creating Union Jobs Today For more information call 412-279-4100.

Avison Young

4 PPG Place, Suite 300 Pittsburgh, PA 15222 T: 412.944.2137 F: 412.944.2124 www.avisonyoung.com Brad Totten Principal and Managing Director brad.totten@avisonyoung.com

Avison Young is the world’s fastest-growing commercial real estate services firm. Headquartered in Toronto, Canada, Avison Young is a collaborative, global firm owned and operated by its principals. Founded in 1978, the company comprises 2,400 real estate professionals in 78 offices, providing value-added, client-centric investment sales, leasing, advisory, management, financing and mortgage placement services to owners and occupiers of office, retail, industrial and multi-family properties.

TARQUINCoRE, LLC

2403 Sidney Street, Suite 200 Pittsburgh, PA 15203 T: 412-381-7433 F: 412-381-6793 www.Tarquincore.com Ronald J. Tarquinio, Principal ron@tarquincore.com

Whether you’re an investor, developer, landlord or tenant, you need a partner who can provide you with comprehensive real estate knowledge… and help you put that knowledge to work for your benefit. Someone who can analyze all of the relevant aspects of a potential transaction, develop creative strategies based on an insightful understanding of the market, then help you effectively implement your plans. TARQUINCoRE meets these needs with a unique, client-focused approach across a complete range of commercial real estate services. From landlord and tenant representation to property management to land acquisitions and brokerage services – whatever your real estate needs might be – TARQUINCoRE can help you maximize options, seize opportunities, avoid potential pitfalls and expedite transaction times.

Creating Value Throughout the Construction Process

www.developingpittsburgh.com

The Partnership Behind the Project. 412-683-3810

412-261-8810