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Pittsburgh

CRE FINANCE UPDATE 2013 BUYER’S GUIDE MID-YEAR MARKET UPDATES SOME ADVICE FOR THE NEXT MAYOR

Fall 2013

DEV E LOPING

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CONT E NTS

| Fall 2013

President's Perspective

Development Project

ANSYS/Zenith Ridge at Southpointe II

37 06

Commercial Real Estate Finance Update

As the economy and fundamentals for commercial real estate continue to improve, the big question is: Are lenders ready to finance expansion again?

Developer Profile Imperial Land Corporation

Eye On the Economy

Office Market Update

Grant Street Associates

Industrial Market Update Newmark Grubb Knight Frank

Retail Market Update Langholz Wilson Ellis

Developing Trend

Bus Rapid Transit could be the Oakland-to-Downtown solution.

CBRE

59 Benchmarks

Retiring Greater Pittsburgh Chamber of Commerce president Barbara McNees reflects on a career in economic development and the changes that have taken place in the Pittsburgh region.

National Market Update

Legal / Legislative Outlook Revisions to the Mechanics Lien law would give owners more certainty.

Voices Developing Leaders offer a suggestion to Pittsburgh’s next mayor.

2013 Buyer’s Guide 86

Buyer’s Guide

New from the Counties

People & Events

The 2013 NAIOP Buyer’s Guide puts contacts for designers, engineers, contractors and lenders in one easy-to-use resource. www.developingpittsburgh.com

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President’s Perspective 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

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Carson Publishing, Inc. Port Authority of Allegheny County Pittsburgh Regional Alliance The Greater Cleveland Regional Transit Authority CONTRIBUTING EDITORS

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DEVELOPINGPittsburgh 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

t’s a great time to be in commercial real estate in Pittsburgh. We have one of the best overall real estate markets in the country and, by all accounts, it will only get better. It’s also a great time to be a member of NAIOP Pittsburgh. We too are enjoying success as demonstrated by our membership, which has reached the highest level in chapter history. This additional bench strength allows us to expand our committee membership and further advance our core values of leadership, education and advocacy. Our efforts in advocacy have resulted in many key development initiatives – like the addition of the ramps at I-79 and I-376, as an example. More recent advocacy efforts include changes to amend the Pennsylvania Mechanics Lien laws. Our dedication to education includes our popular and informative chapter meetings which provide timely and relevant monthly informational programs that are second to none. A goal that I have for my presidency is to further our leadership efforts by rolling out a mentoring program for our chapter’s Developing Leaders – our fasted growing membership group in NAIOP. NAIOP has put particular emphasis on our emerging professionals over the past few years. I feel that reaching back to the next generation of professionals in our industry is an obligation and a privilege we have as an organization. Engaging younger people in commercial real estate is another way that we can ensure that the best young talent is attracted to Pittsburgh and grows here. Those goals are the foundation of our Developing Leaders group. The specifics of the program are being finalized and we expect to announce the details in September. However, our goal is to identify mentors from our membership that would allow the Developing Leaders to meet for an informal, interactive discussion with the mentors. We hope to get a strong participation from our chapter members.

Finally, our NAIOP Pittsburgh members enjoy two of the best annual networking events in the city: Night at the Fights and our Annual Awards Dinner. We continually explore other ideas to create additional value for our members. To that end, we will be rolling out a new networking and information event this fall to provide Pittsburgh’s real estate community with the “NAIOP Commercial Real Estate Summit”. We plan to bring the regional leaders in our business – those who are on the front lines every day – to share their observations and predictions about the future of our market here in Pittsburgh. Again, look for more information in a month or so. Enjoy this edition of DevelopingPittsburgh. The focus of the magazine is commercial real estate finance, an industry near and dear to me, but also includes current market data and input from the 10-county region that makes up the Pittsburgh market. It’s one more of NAIOP Pittsburgh’s continued efforts to keep our members informed. Please consider your willingness to participate in the mentoring program. Also, visit the NAIOP website (www.naioppittsburgh.com) and look for notes from us as our new programs draw closer. Regards,

Daniel P. Puntil NAIOP Pittsburgh President www.developingpittsburgh.com

f e a t u r e

FINANCIAL MARKET UPDATE

6 DEVELOPINGPITTSBURGH

| Fall 2013

f e a t u r e

Over the past year there has been a calming of much of the volatility in the reporting of business and economic conditions. That change has corresponded to a calming in the volatility of the actual economy. Since the financial crisis, reporting about business â&#x20AC;&#x201C; which is hardly front page news in most eras â&#x20AC;&#x201C; has continually harped on what may be the next unknown crisis to trip up the economy. After five years, most media outlets are covering business in the manner they did prior to the crash and the global economy itself seems to be offering less to write about as well. Business news has become boring again.

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f e a t u r e

u ro z o n e d e b t c r i s e s h a v e faded. The stock market is c h u g g i n g u p w a rd s t o w a rd s n e w re c o rd s . T h e ‘ f i s c a l c l i ff ’ a n d S o c i a l S e c u r i t y w i t h h o l d i n g i n c re a s e s h a d m o re i m p a c t b e f o re t h a n after t h e e v e n t s t o o k p l a c e . E v e n the th re a t o f t h e F e d e r a l R e s e r v e elimina t i n g i t s b o n d - b u y i n g p ro gram h a s b e e n p ro c e s s e d a n d a b sorbed – p r i c e d i n t o t h e a ff e c t e d securit i e s . M o re i m p o r t a n t l y, t h e actual re p o r t i n g o f e c o n o m i c d a t a contin u e s t o g e t s u n n i e r, e s p e c i a l l y report s t h a t l o o k b a c k o n t h e m o s t recent e s t i m a t e s o f a c t i v i t y. W i t h each n e w re p o r t , t h e p re v i o u s e s t i mates s e e m t o b e re v i s e d u p w a rd .

f o r a c o mmercial real estate trans a c t i o n . What all the lenders have in c o m m o n in today’s market is that t h e i n t e rest rate they can charge f o r t h e funds they provide is lower t h a n a l most any time in history. At t h e s a m e time, the spread between t h e c a p rate for commercial prop e r t y a n d the retur n on the 10-year Tre a s u r y bill is historically high, b e t w e e n 400 and 450 basis points f o r t h e l ast five years. T h e s e a re conditions that should be g re a t f o r commercial real estate fi n a n c i n g but the conditions are also s o m e w h at extraordinary because b o t h r a t es and spreads are essen -

All of t h i s i s g o o d f o r c o m m e rc i a l real es t a t e . H i g h e r t h a n e x p e c t e d GDP g ro w t h , l o w e r t h a n e x p e c t e d unemp l o y m e n t , h i g h e r c o n s u m e r spendi n g t h a n e x p e c t e d a l l a d d u p to bet t e r c o n d i t i o n s f o r t h e b u s inesses t h a t re n t c o m m e rc i a l s p a c e . That, o f c o u r s e i s b e t t e r f o r t h e develo p e r s a n d l a n d l o rd s o f c o m mercia l p ro p e r t y. T h e re m a i n i n g questio n m a r k f o r re a l e s t a t e i s wheth e r f i n a n c i n g i s u p t o t h e t a s k of lend i n g t o m e e t t h e d e m a n d s o f the ma r k e t . It was, a f t e r a l l , t h e o v e re x t e n sion of c re d i t t h a t w a s a t t h e ro o t of the c r i s i s a n d re c e s s i o n . I n respon s e , l e n d e r s a n d re g u l a t o r s went t o g re a t l e n g t h s t o a s s u re that g e t t i n g c re d i t is n o t a n e a s y proces s . I n t h e y e a r s f o l l o w i n g t h e crash, b a n k s a n d o t h e r l e n d e r s swung t h e u n d e r w r i t i n g p e n d u l u m as far a w a y f ro m t h e s t a n d a rd s o f the mi d - 2 0 0 0 ’s a s po s s i b l e . T h a t ’s a natura l h u m a n re a c t i o n . A s t h e f e a r of the m e l t d o w n re c e d e s a n d d e v e l opers r a m p u p p ro j e c t s , t h e q u e s tion is : a re l e n d e r s re a d y t o s u p p o r t expans i o n a g a i n ?

What the Lenders Are Feeling Wheth e r t h e s o u rc e o f t h e c re d i t is a tra d i t i o n a l b a n k , l i f e i n s u r a n c e compa n y, re a l e s t a t e i n v e s t m e n t trust ( R E I T ) o r c o m m e rc i a l m o r t gage b a c k e d s e c u r i t y ( C M B S ) , t h e re will be v a r y i n g d e g re e s o f s u p p o r t

8 DEVELOPINGPITTSBURGH

| Fall 2013

CMBS volume is finally approaching the levels seen in 2004.

What all the lenders have in common in today ’s market is that the interest rate they can charge for the funds they provide is lower than almost any time in histor y. t i a l l y a r tificial, the result of Federal R e s e r v e fiscal policy rather than the m a r k e t action. The supply and de-

mand fundamentals for commercial real estate haven’t been good since before 2008 but the lack of retur n for cash in traditional conservative investments has pushed investors to look at what are normally riskier asset classes for better yields. One of those asset classes that has been in favor is real estate. This counterintuitive love affair with real estate is a bit confusing for lenders. Commercial property values declined by more than 40 percent in 2008 and 2009, yet by 2010 the total retur ns o n commercial real estate in the U. S. averaged 14.5 percent. For the time be ing, low rates are making real estate a hot commodity and lenders are retur ning to the game, especially in areas like Pittsburgh, where com mercial prop erties have held up well. “Commercial real estate is a great loan investment for the bank,” says Northwest Savings Bank regional president Chris Martin. “Most banks are in pretty good shape. They have come through the crisis, cleaned up their balance sheets and bad loans. They have built up capital and there are very few ways to ear n on capital except to lend.” “We feel commercial real estate in our market territory is solid. We like what we see and want to support our customers in commercial real estate,” notes David Antolik, senior executive vice president and chief lending officer for S & T Bank. “In Pittsburgh, for one of the first times we have investors from outside the region just chasing yields. Retirement funds are look ing at Pittsburgh, particularly the

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f e a t u r e CBD, a s re l a t i v e l y c h e a p c o m p a re d to oth e r m a r k e t s . ” These c o m m e n t s a re f a i r l y t y p i cal for b a n k e r s i n We s t e r n PA a n d other re g i o n s , f o r t h a t m a t t e r. T h e progra m s p u t i n p l ac e t o p ro p u p bad ba l a n c e s h e e t s a n d e n c o u r a g e lendin g a f t e r t h e f i n a n c i a l c r i s i s – remem b e r TA R P a n d TA L F – w e re very go o d a t t h e f o r m e r a n d f a i l e d at the l a t t e r. L e n d e r s w e re a b l e to bor ro w m o n e y o v e r n i g h t a t t h e Fed’s w i n d o w f o r o n e - q u a r t e r o f a percen t a n d ‘ s e l l ’ t h e f u n d s b a c k t o the Fe d a t a t w o p e rc e n t m a r g i n . That s p re a d w a s n e a r l y w h a t t h e margin s w e re o n l e n d i n g – e x c l u d ing fee s – a n d t h e re w a s n o r i s k . This ce r t a i n l y h e l p e d b a n k s b u i l d reserve s a g a i n s t w h i c h t h e y c o u l d write d o w n t h e b a d l o a n s o n t h e i r books. T h a t w a s a n e c e s s a r y f i r s t step b u t g i v e n t h e u n c e r t a i n s t a t e of the e c o n o m y, t h e re w a s l i t t l e incenti v e f o r b a n k s t o l e n d m o n e y when t h e e x p e c t a t i o n s w e re t h a t the rat e s t h e y c o u l d g e t f o r l o a n s in a fe w y e a r s w o u l d b e h i g h e r. T h e risks a s s o c i a t e d w i t h l e n d i n g o u t money f o r 1 0 o r 1 5 y e a r s w e re n ’t in line w i t h t h e re t u r n s . Since 2 0 1 1 , h o w e v e r, m a n y l e n d e r s have s e e n t h e e n v i ro n m e n t a s o n e in whi c h t h e y c o u l d g ro w b y t a k i n g share t h a t t h e i r c o m p e t i t o r s w o u l d not. A s t h e g l o b a l e c o n o m y s e e m e d to be re p a i r i n g , t h e p e rc e i v e d r i s k s of the p ro j e c t s d e c l i n e d a n d t h e opport u n i t i e s t o s h if t t h e r i s k b y selling t h e l o a n s i n t h e s e c o n d a r y marke t s i n c re a s e d . E s p e c i a l l y i n a health i e r re g i o n l i k e P i t t s b u r g h , banks b e g a n t o l o o k f o r d e a l s . “We h a v e h a d a b o ut 1 4 s t r a i g h t quarte r s o f g ro w i n g o u r l o a n portfo l i o b u t w e d i d i t b y s t i c k i n g to the b a s i c s , ” s a y s B o b P o w d e r l y, senior v i c e p re s i d e nt f o r i n v e s t m e n t real es t a t e a t F i r s t N a t i o n a l B a n k . “Our u n d e r w r i t i n g e v a l u a t e d t h e cash fl o w, l o o k e d a t d e b t c o v e r a g e and co n s e r v a t i v e re n t i n c re a s e p ro formas . We w e re p re t t y c o n s e r v a tive or a t l e a s t p re t t y v a n i l l a . ” “Our b a n k h a s a g ro w i n g a p p e t i t e for con s t r u c t i o n l e n d i n g . We ’ re lookin g a t m o re d e a l s , ” a g re e s

B B & T B a nk’s senior vice president B r u c e S harp. “There are too many b a n k s c hasing too few loans, howe v e r. B o rrowers are seeing favora b l e t e r ms and conditions." S h a r p ’s point is being echoed by a n u m b er of lenders. Chris Mart i n s e e s interest margins being s q u e e z e d. Dollar Bank’s Jack Shel l e y i s c o ncer ned that competition a m o n g banks has already heated to t h e p o i nt that underwriting stand a rd s a re becoming more forgiv i n g t h a n the market deserves at t h e m o ment. As low interest rates h a v e h u ng around for half-decade a l re a d y, pressure is building from i n v e s t o r s to find better ear nings a n d t h a t creates pressure to close d e a l s f o r bankers. Seasoned lende r s w o r ry that pressure will lead to re l a x e d discipline in underwriting.

“There are gover nment grants, new market tax credits, historic tax credits and other programs that are needed to bring the cost down.” “ C o n v e ntional finance is a thing o f t h e p ast. The capital stacks are m u c h m ore complicated than be f o re , ” o bserves Jim Noland, presi d e n t o f PenTrust Real Estate Advi s o r y S e r vices since 1987. “There a re g o v er nment grants, new market t a x c re d its, historic tax credits and o t h e r p rograms that are needed to b r i n g t h e cost down.” N o l a n d says that the additional enh a n c e m ents are essential in urban d e v e l o p ment, where construction c o s t s a re significantly higher. He f e e l s t h at one big difference with t h e r i s i ng costs from previous mark e t c o n ditions is the uncertainty of t h e p ro j ect’s appreciation. “ P a r t o f it is that inflation has b e e n s o low. Inflation is the friend

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f e a t u r e can’t drive the pro forma to eight percent infla tion when it’s really two or three percent. You have to have other sources to make up the difference.” Whether concer ns are about competition or about the Rates for the bellwether 10-year Treasury and conventional 30higher costs year mortgages remain below the levels of the first quarter of of develop2011 and well below historical norms. Source: Federal Reserve ment, lenders will have to Board, Wells Fargo Securities. figure out how to work with the conditions because the market is looking of com m e rc i a l re a l e s t a t e b u t n o w for more deals rather than it’s hard t o p ro j e c t h o w t h e b u i l d f e w e r. T he economy is improving. ing wi l l a p p re c i a t e , ” h e s a y s . “ Yo u I n P i t t s burgh, we are seeing an in -

flux of new businesses and growth in our strongest businesses. Real estate expansion is coming. More over, investors are looking for more places to put cash and that will drive more deals.

Chasing Yield One of the best examples of money driving a market is in the multifamily sector. At the depth of the recent downtur n, the fu ndamental support for multi-family housing was very strong, even though that wasn’t necessarily a good thing. More people were unable to af ford to own housing and increased the number of renters. The lack of multi-family development meant that fewer units were avail able when the number of renters jumped. Demand quickly outgrew supply and rents went u p. While those were factors that cre ated the need for more apartments, recessionary conditions aren’t

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| Fall 2013

f e a t u r e usually s u p p o r t i v e o f n e w d e v e l o pment. M a n y a p a r t m e n t d e v e l o p e r s also ow n o t h e r c o mm e rc i a l re a l estate a n d w e re n ’t i n a p o s i t i o n t o build. I n t o t h e v o i d c a m e t h e l i f e insuran c e c o m p a n i e s w i t h c a s h a n d favora b l e t e r m s . The in s u r a n c e c o m p a n i e s n e e d e d a way t o o ff s e t t h e l o s s o f y i e l d as inte re s t r a t e s p l u m m e t e d . L i f e insure r s h a v e o b l i g a t i o n s t o d e l i v e r ‘conse r v a t i v e ’ re t u r n s t o t h e i r p o l icy-hol d e r s a n d i n v e s t o r s . T h e d e f inition o f c o n s e r v a t i v e – a n y w h e re from f o u r t o s i x p e rc e n t d e p e n d i n g on wh e n t h e p o l i c y w a s w r i t t e n – was su d d e n l y s e v e r a l h u n d re d b a s i s points a b o v e i n f l a t i o n a n d m u c h higher t h a n t h e Tre a s u r i e s w e re yieldin g . P a r t o f t h e s o l u t i o n w a s for ins u r a n c e c o m p a n i e s t o i n v e s t in apa r t m e n t c o m p l e x e s . B e t w e e n 2009 a n d 2 0 1 1 , re n t s w e re c l i m b ing at o r a b o v e f i v e p e rc e n t a n n u ally, m a k i n g t h e k i nd s o f re t u r n s the lif e c o m p a n i e s n e e d e d . D u r i n g that ti m e , l i f e i n s u r a n c e i n v e s t m e n t

i n m u l t i -family grew each year but s o d i d p rivate investment in multif a m i l y o f all kinds.

and Fannie Mae, Freddie Mac and HUD were additional catalysts with very favorable financing programs.

M o n e y was looking for a place to l a n d a n d there were only so many m u l t i - f a mily deals. The common s e n s e re sult would be for investors t o b e g i n to look elsewhere but in a

As of 2013, construction of multifamily units will reach roughly 325,000 units nationwide – with some 2,500 units starting in Pittsburgh – and inventories will be roughly 40 percent above the 15-year average for apartments. Vacancy rates remain low but the market seems to have caught on that this segment should slow down. That doesn’t mea n the ap petite for yield is diminishing.

The insurance companies needed a way to offset the loss of yield as interest rates plummeted. b o o m , c ommon sense usually takes a b re a k . Developers were sidelined d u r i n g t he recession and multi-fam i l y o ff e red an opportunity to de v e l o p a gain because the funds were c h a s i n g the deals. Anxious invest o r s w e re fueling new construction

There still is an imbalance between the amount of capital chasing commercial real estate and the number of quality deals that exist. Transaction volumes are increasing. CoStar reports that repeat sales have increased 25 percent during the first five months of the year. T ime on the market declined 5.1 percent and the difference between the asking and selling price shrank

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f e a t u r e t o 2 . 2 p ercent. Yet office, retail a n d w a rehouse sales remained 35 p e rc e n t below the levels of the last re c o v e r y period, between 2004 and 2 0 0 7 . T his means there is more c a p i t a l waiting to be deployed.

The Return of CMBS O n e p l a ce that the capital supply is s h o w i n g up is in the CMBS market. O n c e t h e darling of investment p ro d u c t s, CMBS essentially disap p e a re d after the financial crisis. As t h e a p p etite for deals has grown, t h e t o l e rance for the risk inhere n t i n c ommercial mortgages has a l s o i n c reased, allowing investment b a n k s t o buy and package mortg a g e s a gain. C M B S p l ays an important role in t h e f i n a ncial markets, just as all a s s e t b a cked securities do. When f u n c t i o n ing properly, CMBS deals a l l o w i n vestors to allocate capital

“I thin k CMB S lending will continue to retur n as there is a definite need for it in the secondar y market. 14 DEVELOPINGPITTSBURGH

| Fall 2013

across all segments of the risk spectrum. Investment banks assemble commercial mortgages that banks have sold into bonds of multiple loans, with ratings for the various loans according to credit quality. Loans with simil ar credit worthiness are bundled together into tranches that offer higher rates of retur n for lower ratings, since lower credit qualit y merits a higher interest rate on t he loan. Investors can choose to buy the bonds that have a credit quality that matches their comfort level. A transparent, fully-functioning CMBS market allows for projects with higher risk to find financing. “I think CMBS lending will continue to retur n as there is a definite need for it in the secondary market. It provides a source of liquid ity that can’t be filled by any other platform in the permanent debt arena. Not every deal fits the Fan -

nie Mae, Freddie Mac or life insurance company paramete rs.” says Dan Puntil, senior vice president for Grandbridge Capital in Pittsburgh. “Certain deals cater to CMBS, like hospitality for example. There is always a need for CMBS execution to fill the void for other permanent lenders who won’t do certain kinds of deals.”

f e a t u r e At the p e a k o f t h e f i n a n c e b u b b l e in 200 7 , C M B S v o l u m e re a c h e d $225 b i l l i o n i n t h e U n i t e d S t a t e s and m o re t h a n $ 3 5 0 b i l l i o n w o r l d wide. L i k e w h a t h a p p e n e d w i t h residen t i a l m o r t g a g e s , b u y e r s f o r CMBS d i d n ’t s e e m t o c a re w h a t was in t h e b o n d s – a n d t h e r a tings ag e n c i e s h e l p e d m a k e t h a t less tr a n s p a re n t – a s m u c h a s t h e y did tha t t h e re w e re b o n d s t o b u y. That’s t h e d i ff e re n c e b e t w e e n CMBS a n d c o n v e n t i o n a l f o r m s o f finance . I n a c o n v e n t i o n a l l o a n situati o n , t h e l e n d e r n e e d s t o b e comfo r t a b l e w i t h t h e r i s k o f re p a y ment. W i t h C M B S , t h a t d y n a m i c still ex i s t s a t t h e l o a n l e v e l b u t then t h e re m u s t s t i l l b e b u y e r s for the b o n d s t o w h i c h t h e l o a n s are tie d . W h e n t h e c r a s h o c c u r re d no one w a n t e d t o bu y c o m m e rc i a l mortga g e s . The re c o v e r y h a s h e a l e d t h e m a r k e t for the m o s t p a r t . C M B S v o l u m e i s foreca s t t o b e $ 7 0 b i l l i o n o r m o re in 201 3 , ro u g h l y d o u b l e t h a t o f 2011 a n d 2 0 1 2 . M a r k P o p o v i c h , manag i n g d i re c t o r f o r H F F i n P i t t sburgh s e e s t h e re c ov e r y a s n e a r l y comple t e . “CMBS is definitely on the return. I don’t see getting back to the $200 or $300 billion range again but it may get to $90 to $100 billion in the next few years,” he predicts. “CMBS is getting very active. The market had a hiccup after the Bernanke remarks – any time there’s a disruption in the market CMBS gets whipsawed – but things re-priced and settled down in a few weeks. In fact, the last sale went off and prices came in a little better than expected.” Pricing f o r C M B S i s s u a n c e s re f l e c t the ris k t h e m a r k e t i s f e e l i n g . L i k e with a n y b o n d s a l e , b u y e r s m a y a ttach a r i s k p re m i u m t h a t d e c re a s e s the fu n d s r a i s e d i n t h e s a l e . B o n d issuers t r y t o a n t i c i p a t e t h a t r i s k premiu m i n a d v a n c e a n d p r i c e t h e deal a c c o rd i n g l y. W h e n p r i c e s c o m e in bett e r t h a n e x p e c t e d , t h e f u n d s raised i n c re a s e . The at t r a c t i o n o f C M B S t o d e v e l o pers is t h a t t h o s e d e a l s u s u a l l y re s u l t

i n s l i g h t ly higher funding levels f o r t h e developer and no recourse, o r c o l l a teral pledged, because the b u y e r s of the mortgages have – t h e o re t i cally at least – factored t h a t r i s k into the pricing. Underw r i t i n g for CMBS had stiffened d u r i n g t he downtur n too but as d e m a n d for the bonds grows, the s t a n d a rds are relaxing. “ S t a n d a rds are getting more ag g re s s i v e but we aren’t going to s e e 8 0 percent loan-to-value and t e n - y e a r interest only deals again,” s a y s P o povich. “We are seeing 75 p e rc e n t loan-to-value and one year o f i n t e rest only.” “ A s l o ng as there are buyers of c o m m e rcial paper, the CMBS mark e t w i l l push to create the addi t i o n a l v alue that people go to for C M B S , ” predicts Puntil. “We have s e e n i t go from 65 percent loant o - v a l u e to 70 percent, now 75 p e rc e n t . W ill it go back up to 80 p e rc e n t ? I don’t know, but they w i l l t r y. ”

The Interest Rate/Cap Rate Conundrum T h e F e d eral Reserve’s decision to d ro p i n t erest rates to the floor may h a v e p revented the financial crisis f ro m b e coming a full-scale rout but t h e a f t e r effects have created prob l e m s f o r lenders. Even the parties t h a t b e nefitted most from the low

Historically low interest rates have held cap rates at or below the norms for the past two business cycles.

rates – the borrowers – have to look at deals done during this environment as problematic in a few years. Starting from the assumption that the interest rates are go ing to have to rise again, there are three main risks associated with higher rates: investment flight; opera ting income declines and cap rate decompres sion. As the corollary to the phenom enon that lower yields have created higher demand for commercial real estate as an investment and pushed up property prices, higher interest rates could have the opposite effect; that is, investors would opt to have their cash ear ning interest if the rates were four percent or more. While there is some merit to the theory that investors measure real estate risk versus the 10-year Treasury, the evaluation isn’t an either or kind of test. The Treasury bond is a risk-free investment. Commercial real estate i s inherently more risky but the retur ns have typically been two or three times higher than the 10-year yield. “I think the Treasury is about a global event or something that triggers fear. There’s always a flight

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f e a t u r e to safe t y. W h e t h e r t h e Tre a s u r y is yield i n g o n e p e rc e n t o r t w o and-ha l f p e rc e n t , t h a t ' s w h e re money g o e s , ” s a y s P o p o v i c h . “ I f everyth i n g e l s e i s h e a l t h y a n d the T-b i l l i s a t 4 . 5 pe rc e n t , t h e n everyth i n g e l s e i s g o i n g t o b e higher a n y w a y. ” The m o re re a l i s t i c p ro b l e m from h i g h e r r a t e s w i l l b e t h e impact o n a p ro p e r t y ’s o p e r a t ing inc o m e . O p e r a t i n g e x p e n s e s should n ’t i n c re a s e j u s t b e c a u s e of high e r r a t e s b u t t h e c o s t o f financi n g c e r t a i n l y w i l l . S u c h a n increas e w i l l d e g r a d e t h e b u i l d ing’s in t e r n a l r a t e o f re t u r n , a disap p o i n t m e n t f o r c u r re n t

Cap rate doesn’t tell the lender the full stor y but it’s one of many ratios used to analyze the viability of a deal.

Connecting ideas, capital and clients. Grandbridge Real Estate Capital provides the vital link between complex market conditions and capital solutions. As a national full-service leader in commercial and multifamily finance, we combine our wide range of capital sources with a knowledgeable and experienced team to deliver results, deal after deal. our scope of services includes: -

Freddie Mac Program Plus® Seller/Servicer | Seniors Housing Fannie Mae DUS® FHA-insured Loans | MAP and LEAN Nearly 50 Insurance Companies CMBS | Institutional Investors | Pension Funds Proprietary Lending Platform | Structured Finance $29 Billion+ Loan Servicing Portfolio

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perform a n c e w i t h a v a r i a b l e r a t e loan a n d a re a l p ro b l e m a t t h e time o f re f i n a n c i n g . “An in c re a s e i n i n t e re s t r a t e s withou t a c o r re s p o n d i n g i n c o m e growth c o u l d c a u s e p ro b l e m s in som e re g i o n s , a n d P i t t s b u r g h is one o f t h e m , ” e x p l a i n s P a u l Griffit h , m a n a g i n g d i re c t o r for Int e g r a R e a l t y R e s o u rc e s . “That’s p a r t i c u l a r l y t r u e w i t h these c o n s t r u c t i o n l o a n s f o r apartm e n t s w h e n t h e y g o f o r perma n e n t f i n a n c i n g i n t w o years. W i l l t h e p ro f o r m a s t i l l hold u p ? ” “The n e w r i s k I s e e i s r i s i n g rates. W h a t a re r a t e s g o i n g t o do to o u r e x i s t i n g l o a n s ? ” a s k s Powde r l y. “ We ’ re e v a l u a t i n g o u r loans a t e v e r y 1 0 0 b a s i s p o i n t increas e . ” P o w d e r l y s a y s t h a t they a re l o o k i n g a t t h e d i ff e rence b e t w e e n a n y i n c re a s e d

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f e a t u r e costs a n d t h e p ro f o r m a re n t f o re cast. “ We a re l o o k i n g t o f i l l a n y gaps w i t h e q u i t y o r o t h e r p ro p e rties.” Rate-d r i v e n d e c l i n e s i n o p e r a t i n g income p e r f o r m a n c e w i l l h a v e t h e i r bigges t i m p a c t o n ca p r a t e s , w h i c h will ha v e a s i g n i f i c a n t i m p a c t a t refinan c e . Cap ra t e o r c a p i t a l i z a t i o n r a t e i s a quic k m e a s u re o f a p ro p e r t y ’s value b y c o m p a r i n g t h e n e t o p e r a ting inc o m e t o t h e p re s e n t v a l u e o f the pro p e r t y. I t ’s a q u i c k t o o l f o r compa r i n g a b u i l d i n g ’s p e r f o r m a n c e versus t h e re s t o f t h e m a r k e t a n d its com p e t i t o r p ro p e r t i e s . E a c h buildin g h a s i t s o w n s e t o f i n c o m e and ra t e o f re t u r n e x p e c t a t i o n s . Cap ra t e d o e s n ’t t e l l t h e l e n d e r the fu l l s t o r y b u t i t ’s o n e o f m a n y ratios u s e d t o a n a l y z e t h e v i a b i l i t y of a de a l . L e n d e r s l i k e r a t i o s , s o cap ra t e s c o u n t . A q u i c k l o o k a t a n examp l e w i l l t e l l y o u w h y t h a t i s .

A building with a value of $1,000,000 that has a n et operating income of $100,000 has a cap rate of 10 ($1,000,000/$100,000). Decrease that NOI to $50,000 and the cap rate drops to 5. Lower rates artificially increase the income and therefore, the value of the property. The concer n among lenders is that if rates ri se, prop erty values will tumble, lifting cap rates. At the time of refinancing or the conversion of a construction to permanent loan, that can mean a more difficult case for financing the property. There is some histori cal evidence however, that periods of increasing rates don’t necessarily mean higher cap rates. According to the Nation al Council of Real Estate Investment Fiduciaries’ (NCREIF) database, private real estate had an average annual re tur n of 12.2 percent during the six periods of rising rates dating back to March 1978. That ranks high est among the major asset classes,

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f e a t u r e includi n g b o n d s , t h e S t a n d a rd & Poors 5 0 0 I n d e x a n d e q u i t y R E I T ’s . Moreo v e r, t h e i m p a c t o f h i g h e r interes t r a t e s o n c a p r a t e s h a s been m u t e d . D u r i n g t w o o f t h e s i x period s – f ro m M a rc h 1 9 7 8 t o S e p tembe r 1 9 8 1 a n d f ro m J u n e 2 0 0 4 to Sep t e m b e r 2 0 0 6 – a v e r a g e c a p rates a c t u a l l y d e c l i n e d d u e t o r a pidly ris i n g p ro p e r t y v a l u e s . I n t h e interve n i n g f o u r p e r i o d s o f i n t e re s t rate in c re a s e s , c a p r a t e g ro w t h w a s less th a n 5 0 b a s i s po i n t s . I n f a c t , the NC R E I F f o re c a s t f o r t h e n e x t two ye a r s a n t i c i p a t e s t e n - y e a r Tre a sury b o n d y i e l d s t o c l i m b t o w a rd s five pe rc e n t w h i l e ca p r a t e s g o from t h e c u r re n t a v e r a g e o f 6 . 1 t o 6.5 pe rc e n t .

a s i g n i f i cant rotation from investors i n b o n d s to stocks or cash. Bond p r i c e s f ell and yields rose, although t h e T- b i l l rates have held steady bel o w t h e early July levels. For rates t o c o n t i nue higher, the impetus will h a v e t o be from further improve m e n t s i n the overall economy.

More re l e v a n t t o t h e p e r f o r m a n c e of com m e rc i a l re a l e s t a t e a re t h e reason s b e h i n d a n y e x t e n d e d i n t e rest rat e h i k e s . T h e 1 0 0 b a s i s p o i n t spike t h a t o c c u r re d f ro m J u n e t o July re s u l t e d f ro m t h e e x p e c t a t i o n that th e F e d w a s g o i n g t o e n c o u rage ris i n g r a t e s , w h i c h p re c i p i t a t e d

“Construction financing for new p ro j e c t s i s g e n e r a l l y f u n d e d w i t h short-term, floating rates, which have not been impacted yet and the Fed has given us visibility t h ro u g h 2 0 1 4 , ” s a y s S h a r p . “ T h e long-term financing rates tend to become an issue after construction

I f i n t e re s t r a t e s d o r i s e b e c a u s e t h e e c o n o m y i s b e c o m i n g m o re ro b u s t , then all the components of a buildi n g ’s p ro f o r m a – s t ro n g e r a b s o r p tion, lower vacancy and higher re n t s – w i l l a l s o i m p ro v e , l e a d i n g t o higher net operating income. Even i f c a p r a t e s r i s e i n i t i a l l y w i t h i n t e re s t r a t e s , t h e i m p ro v i n g N O I a n d values will hold cap rates in place.

The key to our completed expansion?

a n d s t a b i l i z a t i o n o f t h e p ro j e c t . The permanent financing markets will bear much of that risk. Most b a n k s s t re s s l o n g - t e r m r a t e s d u r i n g underwriting, so a 100 basis point m o v e o ff h i s t o r i c l o w s s h o u l d n o t n e c e s s a r i l y k i l l a p ro j e c t . I f a d e a l i s t h a t t i g h t , i t p ro b a b l y s h o u l d n o t have been done in the first place.” C o n c e r n s a b o u t re - f i n a n c i n g a s i d e , most lenders seem to feel that the time for low rates has passed. I n t e re s t r a t e s t h a t m o v e b a c k t o h i s t o r i c – o r a t l e a s t re c e n t – l e v e l s w o u l d m a k e b a n k s m o re c o m f o r t able. “The benchmark rate went off a cliff in the third and fourth quarter of 2011 and it went as low as 150 basis points last year,” notes Puntil. “The 10-year T-bill should be at four. That’s where it will get to within another year or so. The consumer has become spoiled with these rates. I hear about people looking more cautiously at buying a

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f e a t u r e home at five and quarter percent. Really? These a re still very low rates.”

Building relationships We focus on developing and maintaining strong relationships with our customers. Working with you, project after project, has made us the largest commercial real estate lender in the U.S. Construction loans • Secured lines of credit • Repositioning/rehab lending Mini-perm loans • Interim/bridge loans • Term loans • Acquisition Interest rate swaps

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“We are still in such a low rate environment that even a couple of points upward isn’t going to put us in a bad place,” notes Griffith. “Perhaps it will even be a more realistic place, as long as you’re not dependent on ag gressive rates for tak e out.”

Financing Speculatively Few concepts were less viable for financing since the recession than speculative commercial real estate. Although it was housing and speculative housing that were at the root of the financial crisis, the declining economic fundamentals caused a steep increase in unemployment and a deleveraging of consumer debt that created big vacancies in offices, retail centers and warehouses around the country. In high-growth markets like Las Vegas, Phoenix, Central Florida and Souther n Califor nia, where speculative development exploded in the mid-2000’s, there was pain for a lot of lenders. There were markets where overbuilding didn’t occur and recov ery began sooner than the balance of the country. By this time we know that Pittsburgh was one of those markets that didn’t see steep declines in commercial property values or high vacancy rates, even in retail centers. The problem for markets like Pitts burgh is that finance is a global endeavor, so the pain that lend ers felt about loans in Phoenix created reluctance to take risk in Pittsburgh.

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20 DEVELOPINGPITTSBURGH

| Fall 2013

Since the financial crisis, commercial real estate development has been limited to build-to-suit projects. Even as vacancy rates fell in metro Pittsburgh – leav ing almost no contiguous vacant space in some submarkets – the appetite for spec development remained low until that latter

f e a t u r e half of 2 0 1 2 w h e n some t h a w i n g finally o c c u r re d . For tho s e p ro j e c t s that w e re a b l e t o secure f i n a n c i n g there w e re s o m e commo n d enomin a t o r s : g o o d locatio n s , s t ro n g financi a l s a n d v e r y strong s p o n s o rship. “I don ’t t h i n k spec is t h e f o u rletter w o rd i t w a s five ye a r s a g o , ” says C h r i s M a r t i n . “If you l o o k a t the off i c e m a r k e t right n o w, s p a c e is at a p re m i u m . If you’ re t a l k ing ab o u t a g re a t owner / d e v e l o p e r / operat o r, w e re a l l y want t h a t l o a n . I ’ m not ta l k i n g a b o u t high-ri s e b u t i f y o u are bu i l d i n g a 5 0 , 0 0 0 t o 1 0 0 , 0 0 0 square f o o t o ff i c e b u i l d i n g t h a t ’s a great p ro d u c t . ” Elmhur s t G ro u p h a s d e v e l o p e d three s p e c u l a t i v e p ro j e c t s o v e r t h e past ye a r o r s o , i n c l u d i n g a 9 0 , 0 0 0 square f o o t o ff i c e i n C r a n b e r r y Towns h i p a n d t w o 4 8 , 0 0 0 s q u a re foot fl e x b u i l d i n g s in T h o r n H i l l Indust r i a l P a r k . Elmhur s t i s a l s o workin g o n S c h e nley Pla c e , a 1 1 0 , 0 0 0 square f o o t o f fice bu i l d i n g a n d 170-ca r g a r a g e i n Oaklan d . E l m h u r s t ’s CEO, B i l l H u n t s a y s that g e t t i n g t h e deals d o n e re q u i re d some c h a n g e s i n the ma r k e t c o n d itions a n d i n h i s expect a t i o n s a b o u t the pro j e c t . “You h a v e t o h a v e a proje c t l o c a t i o n that, e v e n w i t h o u t

a t e n a n t has a track record of suc c e s s f u l l easing,” he explains. “The l o a n - t o - value was certainly the big d i ff e re n ce. We put more equity into t h e p ro j ects than we had usually d o n e a n d that was okay with us t o o . We didn’t really want to overl e v e r a g e the building before it was c a s h - f l o wing.” T h e f re eze on financing commercial re a l e s t ate ended several years ago

The spread between cap rates and the 10-year Treasury bond yields is greater than at any time in the last 30 years.

“The loan-to-value was certainly the big difference. We put more equity into the projects than we had usually done and that was okay with us too.

but the thawing out was rather extended, with terms and conditions that made borrowing fairly un desirable. While all indicators were that the Pittsburgh economy was growing very early in the recovery – say as early as third quarter of 2010 – the

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f e a t u r e lendin g e n v i ro n m e n t w a s n ’t s u p portive o f d e v e l o p m e n t , e v e n a s vacanc y r a t e s f e l l a n d re n t s ro s e . Hunt i s o n e o f s e v e r a l P i t t s b u r g h develo p e r s w h o j u d g e d t h a t t h e marke t c o u l d n ’t w a i t a n y l o n g e r for ne w p ro d u c t a n d w a s w i l l i n g t o take w h a t t h e m a r k e t w o u l d g i v e him fo r t h e t i m e b e i n g . “It is i m p o r t a n t t h a t t h e t r a n s a ction be a s f l e x i b l e a s p o s s i b l e s o when y o u d o l e a s e u p y o u c a n re f i nance a t f a v o r a b l e t e r m s , ” h e s a y s . “We u n d e r s t o o d w e w o u l d h a v e a lowe r r a t e o f re t ur n o n e q u i t y for tha t p e r i o d o f t i m e . A n d w e couldn ’t d o a p ro j e c t i n a p i o n e e ring loc a t i o n . B a n k s a re n ’t g o i n g t o be pio n e e r s . ” In Sou t h p o i n t e I I , Q u a t t ro I n v e s t ments i s b u i l d i n g a 1 5 0 , 0 0 0 m u l t i tenant s p e c o ff i c e i n t a n d e m w i t h a new 1 8 6 , 0 0 0 s q u a re f o o t h e a d quarte r s o ff i c e f o r A N Y S Y I n c . B y positio n i n g t h e p ro j e c t a s a s i n g l e projec t t h a t w a s 5 5 p e rc e n t p re leased , Q u a t t ro w a s a b l e t o g e t financi n g b u t n o t w i t h o u t t h e p e rsonal s p o n s o r s h i p of t h e p a r t n e r s .

p re - l e a s ed. It wasn’t long ago t h a t a g ood story meant little for a d e v e l o per’s chances in securing f i n a n c i n g. For now it appears that a t l e a s t one good story, that of the P i t t s b u r gh market fundamentals,

“Our f i n a n c i n g w o r k e d becaus e w e h a v e a good p ro j e c t a n d strong s p o n s o r s h i p , ” notes Q u a t t ro p a r t n e r Jim Sc a l o . “ [ T h e l e n ders] we re l o o k i n g f o r substa n t i a l n e t w o r t h , substa n t i a l t r a c k re c o rd and a p ro j e c t i n a go o d marke t , s u p p o r t e d b y a good s t u d y. ”

g o e s a l ong way, assuming that t h e p ro j ect’s sponsor has staying p o w e r.

Elmhur s t a n d Q u a t t ro a re t w o o f a total o f a t l e a s t e i g h t p ro j e c t s t h a t have g o t t e n u n d e r c o n s t r u c t i o n since l a t e 2 0 1 2 , w hi c h a re s p e c u l a tive or h a v e l e s s t h a n 5 0 p e rc e n t

R o u g h l y three-quarters of a million s q u a re f eet of spec office space has s t a r t e d . Among the larger buildings a re M i l l craft’s Gardens at Mark e t S q u are, DiCicco’s Westpointe

| Fall 2013

Given the dynamics of the office market in the region, especially with the steady growth of users in the Parkway West and I-79 corridors, this new space could well be absorbed by the time the last of the projects is completed. Even if the projects take another year or so to stabilize, it seems likely that the faith shown by the lenders will be rewarded. Assuming that global credit conditions continue to moderate, at least until rates begin to rise in 2015, speculative development should be easier to accomplish in the middle of the decade. Whether the overall economy will encourage more development is an other thing altogether but the current round of spec projects are like bread crumbs pointing the way towards more normal conditions. Of course, ‘no rmal’ is a relative term. For Jim Noland, normal shifts fre quently.

“Great s p o n s o r s h i p is the k e y. S e a s o n e d , well-ca p i t a l i z e d d e v e lopers w h o k n o w t h e subma r k e t s a n d h a v e the ab i l i t y t o e n h a nc e credit a re g e t t i n g d e a l s done,” a g re e s S h a r p . “ B u t t h e d e b t marke t s s t i l l d o n ’t h a v e t h e l i q u i d ity the y d i d . ”

22 DEVELOPINGPITTSBURGH

Corporate Center IV, Co ntinental’s North Shore Place, Cont inental/ Chaska’s Pittsburgh Inter national Business Park and Landmark’s Du tihl Road buildings; In the North Hills, ACRES is building Stonewood Commons IV and Jendoco is developing the smaller Sunset Building.

“Twenty years ago the world was a much simpler place to figure out. You didn’t have September 11 and wars around the world,” he says. “T ime frames for responding are getting shorter. All you can do is make your best guess – and it is a guess – and if you’re right you make money.” DP

Development Project

Rendering by Forum Studio. Source: Burns & Scalo Real Estate Services.

ANSYS/Zenith Ridge at Southpointe II

n business, as in poker, success often comes from knowing when to stand pat and when to be aggressive. Real estate developers generally don’t like standing on the sidelines. W ithout doing more development, their businesses can’t grow. Between uncertain business conditions and a difficult financing environment, the past few years tested the patience of those who develop commercial real estate. So when Jim Scalo, CEO of Burns & Scalo Real Estate Services saw one of his favorite business

parks coming back to life he decided it was time to shift into a higher gear again. B u r n s & Scalo had joined with C h a r l e s Case to form Scalo Case a n d d e v eloped nine buildings – ro u g h l y 700,000 square feet – in t h e f i r s t phase of Southpointe. T h e d e v eloper was selected as o n e o f t he master developers of S o u t h p ointe II, along with Horizon P ro p e r t i es, but had done no new p ro j e c t s in the park by the time the re c e s s i o n chilled development of c o m m e rcial real estate. During that d o w n t u r n, however, Scalo saw the l a n d s c a pe shift at Southpointe. “ I w a s watching the park take off a g a i n w ith the oil and gas industry. C O N S O L was the catalyst but then w e s a w others – like MarkWest and S c h l u m berger – come in,” he re -

calls. “The growth came from other business sectors too. Mylan went from 100,000 to 250,00 0 square feet. Ansys went from 100,000 to 180,000 square feet and Crown Communications just moved into Mylan’s old headquarters.” Scalo found success working in Southpointe in its early years and feels the business model for Southpointe was always very attractive to developers. “It really, truly is the best P3 part nership that exists in a successful model in the region,” he says. “Washington County put in the roads and infrastructure, prepared the park but they don’t compete with the private sector f or deals. You buy land for $125,000 an acre and get a five-year tax abatement. That’s a great investment model.”

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IN SOUTHPOINTE

The only private campus within Southpointe. • Only 2 buildings remain. - Zenith Ridge 2 - 150,000 SF - Zenith Ridge 3 - 150,000 SF • Adjacent to Town Center Retail and 2 Hotels. • Building Signage with I-79 visibility. • Walking Trails and Outdoor Fitness Area. • LEED and Class-G certified LEASE NOW CALL KELLEY HOOVER HECKATHORNE KHoover@BurnsScalo.com | 412.670.4248 BurnsScalo.com/Zenith | 412.250.3000

The exterior walls are laid out completely and cast on site with the brick and other exterior architectural features embedded in the poured concrete before the wall panel is lifted.

As the e c o n o m i c re c o v e r y t o o k hold, B u r n s & S c a l o b e g a n t o l o o k at the o p p o r t u n i t i e s i n S o u t hpointe . I n S e p t e m b e r 2 0 1 1 , t h e compa n y a c q u i re d C h a r l e s C a s e ’s stake i n t h e p a r t n e r s h i p a n d p u rsued d e v e l o p m e n t in t h e p a r k m o re aggres s i v e l y. T h e y d i s c o v e re d t h a t a parcel t h a t w a s h e l d o ff t h e m a r k e t in ant i c i p a t i o n o f b e i n g t h e Wa s hington C o u n t y C o n v e n t i o n C e n t e r site ha d b e c o m e q u i e t l y a v a i l a b l e again. T h e l a n d , s i t u a t e d a t t h e t o p of Hor i z o n Vu e D r i v e , o ff e r s t h e highes t s i g h t l i n e s i n S o u t h p o i n t e II and i s v i s i b l e f ro m I n t e r s t a t e 7 9 . Bur ns & S c a l o a n d p a r t n e r s C h a r l e s Zappa l a a n d J o h n Ve r b a n a c p u t the lan d u n d e r o p t i o n . I n F e b r uary 20 1 2 , t h e p a r t n e r s h i p – l egally k n o w n a s Q u a t t ro I n v e s t m e n t Group L P – a n n o u n c e d p l a n s t o d e velop t h e p ro p e r t y b y b u i l d i n g t w o 100,0 0 0 s q u a re f o o t o ff i c e s . W i t h i n a few m o n t h s , a n o p p o r t u n i t y a ro s e that w o u l d e x p a n d t h e s c o p e o f t h e projec t s i g n i f i c a n t l y. Produc t s i m u l a t i o n s o f t w a re c o m pany A N S Y S I n c . h a d o u t g ro w n its hea d q u a r t e r s a n d w a n t e d t o expan d a n d c o n s o l i d a t e o p e r ations f ro m o t h e r l o c a t i o n s i n t o a new o ff i c e b u i l d i n g. A N S Y S i s s u e d a requ e s t f o r p ro p o s a l s t o d e v e l opers i n J u n e o f 2 0 1 2 . S c a l o / C a s e had de v e l o p e d t h e e x i s t i n g A N S Y S headq u a r t e r s o n Te c h n o l o g y D r i v e in Sou t h p o i n t e a n d Q u a t t ro w a s invited t o s u b m i t a p ro p o s a l f o r t h e new fa c i l i t y, w h i c h w o u l d b e n e a r l y double t h e s i z e o f t h a t f i r s t h e a dquarte r s .

R e s p o n ding to the request, Quattro w a s w o rking a little ahead of the g a m e b ecause they had already put t o g e t h e r a design, albeit for a diff e re n t c oncept, and were market i n g t h e project’s location and site a d v a n t a ges. Given the opportunity t o c h a n ge the program and work w i t h a n anchor office user, Quattro f o c u s e d on a unifying concept for m u l t i p l e buildings along the ridge o f t h e h ill. That created a campus f e e l t h a t made the difference. The R F P w a s in June of 2012 and AN-

The land, situated at the top of Horizon Vue Drive, offers the highest sight lines in Southpointe II and is visible from Interstate 79. S Y S t o o k a couple of months or so t o d e c i de (“It took a while. These b i g d e a l s take time,” Scalo says). In S e p t e m ber 2012, ANSYS agreed to l e a s e t h e building and the project w a s o ff and running. “ We h a d a relationship with ANSYS b u t w h at they really liked about t h e p ro posal was that we were b u i l d i n g a campus,” recalls Scalo. “ T h e i r building will be 186,000 s q u a re feet but they have the op t i o n o f a second building of up to

130,000 square feet ten years after move-in with a notice in eight-andhalf years.” Once Quattro’s proposal was suc cessful, Scalo had the opportunity to execute an approach that he had been kicking around for a while. On a trip to the Midwest, Scalo had seen an approach used that he felt was not being utilized in Wester n PA, one that would solve a couple of the problems he felt were inherent in the traditional co nstruction process when he hired an architect and general contractor. He commit ted to doing the ANSYS project as a design/build delivery. “We knew we were going the general contractor route because of the size of the project and the bonding requirements of the lend ers,” he says. “The problem with the traditional approach is cost overruns. Cost overruns come from two areas: poor drawings and own er changes. We can control owner changes but not poor drawings.” Scalo’s interest in doing what he calls “true design/build” was in having one party responsible for both the design and construction. One weakness of the design-bidbuild process is that it relies on the interpretation of the owner’s intent by two separate entities – archi tect and general contractor – that are not contractually obligated to each other. Unless there is perfect, almost extrasensory communication between owner and architect, there

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“The RFP asked for design, price and schedule. It had a GMP [guaranteed maximum price] essentially,” recalls Clayco’s s enior vice president and partner Kirk Warden. “When we tur ned in the initial design we had a price guaranteed with it. I think we had both the design concept and the right price all along. The fact is that we do this sort of thing all the time.” Throughout the first weeks of 2013, the contractors in the running were asked to supply addi tional iterations of the design with revised pricing. In mid-January, the developer selected Clayco as their design/builder for the ANSYS campus. While their design and price met Quattro’s demands for the project, Jim Scalo says they had an edge in the intangibles as well. “Clayco had good developer experience,” he notes. “Some general contractors don’t work well with developers. We’re not easy to work with. We watch our costs. We work within our pro forma very closely and don’t like when things vary from that. Warden says that Clayco’s model helps them be more sympathetic to developers, possibly because the issues a developer faces aren’t all that unique. “Owners always have constraints, whether it’s budgets, schedules, constructability or whatever and both sides have to keep those constraints and re quirements in mind so everyone can make better decisions all along,” he says. “You make better decisions when all parties are at the table at the same time.”

Rendering by Forum Studio. Source: Burns & Scalo Real Estate Services.

will be o c c a s i o n s f o r d i s a g re e ments a b o u t s c o p e o r i n t e n t . M o s t times, t h o s e d i s a g re e m e n t s l e a d to add i t i o n a l c o s t s t o re s o l v e . I n a design / b u i l d m o d e l , o n l y o n e p a r t y interpre t s w h a t t h e c l i e n t w a n t s . If that p a r t y m i s u n d e r s t a n d s o r mis-co m m u n i c a t e s , t h e o n u s i s o n the de s i g n / b u i l d e r i n s t e a d o f t h e owner. As the h o l i d a y s a p p ro a c h e d , Q u a t tro ass e m b l e d a l i s t o f c o n t r a c tors th a t w e re d e s i g n / b u i l d e x p e rienced . T h e l i s t h a d b o t h l o c a l and na t i o n a l f i r m s , o n e o f w h i c h

26 DEVELOPINGPITTSBURGH

| Fall 2013

w a s C l a yco Construction from St. L o u i s . A Bur ns & Scalo manager h a d p re viously worked with Clayco a n d o n e of the projects Jim Scalo h a d o b s erved in Indianapolis was a C l a y c o job. When the RFP was i s s u e d , t here were nine firms asked t o c o m p ete. T h e re v i ew process was very thoro u g h , w ith an RFP that requested a n u n u s ual level of detail consideri n g t h e shortage of detailed drawi n g s , a process Scalo called “soft d e s i g n , hard bid.”

Getting the design/build firm on board was a significant milestone for the project but there still re mained the tasks of completing a design that met the bud get and working through the financing for the project. The first of those tasks wasn’t go ing to be easy. Both Quattro and Clayco were interested i n doing a building that was architecturally distinctive but the pro forma was built on an average $24/square foot rent for 15 years. Any design

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Rendering by Forum Studio. Source: Burns & Scalo Real Estate Services.

choice s w o u l d u l t i m a t e l y h a v e t o meet t h e t e s t o f t h a t p r a c t i c a l stand a rd . A c c o rd i n g t o Wa rd e n , there w a s n ’t m u c h t i m e w a s t e d gettin g a f t e r t h a t t a s k . “Once w e w e re s e l e c t e d t h e re was a l o t o f re - p r i c i n g w i t h a l o t of alte r n a t e s f o r t h e d e s i g n . We proba b l y p ro v i d e d s e v e n o r e i g h t differe n t v e r s i o n s , ” h e re c a l l s . O n e of Cla y c o ’s d i v i s i o n s i s t h e a rc h i tectur a l f i r m F o r u m S t u d i o s . T h e team h a d i n m i n d a d e s i g n t h a t isn’t c o m m o n l y u s e d i n We s t e r n PA. “We h a d b e e n i n P i t t s b u r g h a lot an d s a w t h e k i n d s o f c o r p o r a t e office b u i l d i n g s t h a t e x i s t e d . [ T h e archit e c t s ] f e l t t h a t t h e P i t t s b u r g h marke t w a s l a g g i n g b e h i n d s o m e of the n e w e r i d e a s t h a t a re b e ing us e d i n o t h e r c i t i e s a ro u n d t h e count r y. ” The fi n a l d e s i g n i s a v e r y g e o m e t r ically- i n f o r m e d b r i c k a n d a l u m i n u m curtai n w a l l e x t e r i o r, f i v e s t o r i e s with s e v e r a l c o l o r s o f b r i c k a n d alumi n u m w i n d o w s w i t h c o l o re d trim. T h e b u i l d i n g ’s e x t e r i o r g e t s texture f ro m t h e c h a n g e i n m a t e r i als an d t h e s h a p e s t h a t t h e m a t erials t a k e . W h a t i s v e r y d i ff e re n t about t h e b u i l d i n g i s t h a t t h i s e x t e-

28 DEVELOPINGPITTSBURGH

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The final design is a ver y geometricallyinfor med brick and aluminum curtain wall exterior, five stories with several colors of brick and aluminum windows with colored trim. r i o r w i l l be architectural structural c o n c re t e cast on site. Site cast con c re t e s t ructures have been built be f o re i n Wester n PA – although not m a n y – but none that casts a fives t o r y e xterior wall with brick inlaid a n d l i f t ed as one entire elevation. T h e s t r ucture has a greater thermal m a s s t h an conventional steel and c a v i t y wall construction and gives u n l i m i t ed flexibility to the interiors b e c a u s e there are no columns. The p ro c e s s also shaves critical time off t h e s c h edule. “ We ’ re able to deliver a core and s h e l l f o r Class A office in eight m o n t h s instead of the 12 to 14

months that it would usually take,” notes Scott Caplan, Clayco’s direc tor of business development in Pittsburgh. “What that means to a developer is four-to-six months less general conditions, four-tosix months less winter c onditions and more importantly, four-to-six months less construction interest.” The structure will be poured and lifted by Concrete Strategies Inc., a concrete subcontracting division of Clayco’s. Proving that everyone in the world is just two degrees separated from Pittsburgh, the president of Concrete Strategies is Joe V itale, father of the Penguins center of the same nam e. Quattro Investment Group took a similar approach to financing the project as it did to cont racting, looking both within the region and across the country for options. “We did a national search for debt, equity and presale and we con cluded our best option was to selfperform,” says Scalo. “We looked at what was our best model, our best gain and that was to selfperform. We put in our own equity of ten percent, which has to go in up front.”

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Rendering by Forum Studio. Source: Burns & Scalo Real Estate Services.

Scalo s a y s h e and hi s p a r t n e r s felt th e re w e re three r i s k s a s s o ciated w i t h t h e projec t a n d t h e y were c o m f o r t able w i t h t h e i r plan fo r m a n a ging the m .

PROJECT TEAM

Quattro Investment Group LP.......................................... Developer Clayco Construction Co................................ Design/build Contractor Forum Studio....................................................................... Architect Burns & Scalo Real Estate Services.........................Leasing Broker Gateway Engineers....................................................... Civil Engineer WesBanco Bank................................................................. Co-Lender First National Bank.......................................................... Co-Lender First Commonwealth Bank................................................ Co-Lender

“There i s t h e develo p m e n t risk. We f e l t w e could c o n t ro l the co n s t r u c t i o n and co s t s . We unders t o o d t h e interes t r a t e r i s k o v e r t h e n e x t t w o years, w h i c h i s i m p o r t a n t b e c a u s e the loa n h a s a f l o a t i n g r a t e . A n d there i s a l e a s i n g r i s k b u t w e f e e l we un d e r s t a n d t h i s m a r k e t w e l l enoug h t o t a k e t h a t r i s k , ” h e e xplains. T h e l a t t e r r i s k a p p l i e s t o t h e second b u i l d i n g u n d e r c o n s t r u ction, a 1 5 0 , 0 0 0 s q ua re f o o t s p e c u lative b u i l d i n g . S c a l o ’s c o m f o r t with th e l e a s i n g s e e m s j u s t i f i e d , as the c o m p a n y i s w o r k i n g t w o reques t s f o r p ro p o s a l s f o r l a r g e portion s o f t h e s e c o n d b u i l d i n g .

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H a v i n g a build-to-suit client on m o re t h an half of the project re d u c e d the speculative aspect of t h e d e v elopment but Quattro was s t i l l l o o king at finding a lender for a 1 5 0 , 0 00 square foot spec, which i s n o t a product that lenders have b e e n l i n ing up for in recent years. “ S p e c f i nancing generally isn’t a v a i l a b l e still. Banks just can’t d o i t b e cause of the regulations. I n s t i t u t i onal lenders – investors, l i f e i n s u rance companies – they a re n ’t i nterested, even if they say t h e y a re ,” observes Scalo. “We

approached it as one project that was more than half pre-leased.” That was how a team of local ba nks approached the project as well.

“Even though there was a spec building, we looked at it as one project,” says WesBanco senior vice presi dent John Fetsko. “W ith the ANSYS deal the project was something like 55 percent pre-leased.” First National Bank’s Bob Pow derly says his bank saw the deal the same way and was willing to look at the project because of the participating lenders. “On larger projects, banks have to team up. On ANSYS, no one was willing to take on the risk of the entire project,” he says. “So we linked up with WesBanco and First Common wealth. They are similar banks with

similar c re d i t a p p ro a c h e s . ” T h e t h re e banks p a r t i c i p a t e d e q u a l l y, t a k i n g a third o f t h e $ 6 0 m i ll i o n - p l u s l o a n . “We g o t a n a m a z i n g d e b t p ro p o s a l . The ba n k s w e re v e r y c o m p e t i t i v e , ” says Sc a l o . “ T h e re i s o n e m o r t g a g e with tw o n o t e s , 1 0 0 p e rc e n t p e r s o n ally gu a r a n t e e d . We g o t a t h re e - y e a r constru c t i o n l o a n a n d t h re e - y e a r mini-p e r m , w h i c h w e a l w a y s l i k e t o do. Th a t g i v e s u s t h e f l e x i b i l i t y t o g o to a pe r m a n e n t l o a n , t e s t t h e c a p i t a l marke t s o r s e l l t h e b u i l d i n g . ” Work s t a r t e d o n t h e p ro j e c t i n l a t e June. C l a y c o i s i n t h e p ro c e s s o f prepar i n g t h e c a s t i n g p a d s f o r p o u ring the e x t e r i o r w a l l s i n l a t e s u m m e r. The m a j o r s u b c o n t r a c t o r s h a v e b e e n lined u p a n d c o n s t r u c t i o n i s o ff t o a smooth s t a r t , a c c o rd i n g t o K i r k Wa rden. “There h a v e n ’t b e e n a n y b i g c h a l lenges , o t h e r t h a n e d u c a t i n g e v e r y o n e about t h e w h o l e d e s i g n / b u i l d p ro c e s s and arc h i t e c t u r a l s i t e c a s t c o n c re t e , ” says Wa rd e n . “ T h e p ro j e c t h a s g o n e pretty w e l l , e v e n t h e s u b c o n t r a c t o r marke t , w h i c h c a n b e d i ff i c u l t , w e n t very w e l l . T h e p ro j e c t i s o v e r 7 5 p e rcent b i d o u t . ”

Manage Facilities & Operations Cost Reduce Energy Costs Improve Operating Performance Lower Maintenance Cost Extend Asset Life Services Include: Energy Audits Maintenance Planning and Budgeting Building Forensics & Engineering Environmental Site Assessments

Project Management Indoor Air Quality Assessments Remediation Support Services Capital Needs Assessments

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Developer Profile

Imperial Land Corporation

atience in the business world is often talked about and seldom applied as diligently as the ow n e r s o f I m p e r i a l L a n d C o rporatio n h a v e . W i t h a b i t o f v i s i o n and ad m i t t e d l y l i m i t e d e x p o s u re t o risk by w a i t i n g , I m p e r i a l L a n d h a s seen t h e m a r k e t c o m e t o t h e m o v e r the co u r s e o f a g e n e r a t i o n . Imperi a l w a s f o u n d e d i n 1 9 7 3 b y W illiam a n d A r t h u r A l o e a s t h e land p u rc h a s i n g a r m o f t h e A l o e Coal C o . T h e l a n d h o l d i n g s u n d e r

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A l o e C o al were shifted to Imperial L a n d , w hich then leased it to Aloe C o a l . T h e coal business then paid a ro y a l t y to Imperial Land, which a l s o p u rchased additional lands for m i n i n g . The properties included ro u g h l y 3,000 acres in wester n A l l e g h e ny County along Potato G a rd e n Run Road and 2,000 acres b y Q u i c ksilver Road in Washington C o u n t y. The properties were both c l o s e t o Route 22 and to Burgetts t o w n R oad.

was relatively flat, workable land that was ready for a new purpose.

I n t h e l a te 1970’s early 1980’s the p ro p e r t i es were heavily mined and t h e c o a l workings were removed. N e w t e c hnologies had been develo p e d t o eliminate all the voids and t h e a c i d mine drainage stopped b e c a u s e the source of the drainage h a d b e e n removed. What remained

Jerry Bunda came on board in 1991 as the first employee of Imperial Land. His job was to hel p do the things necessary to make the prop erty more suitable for development for its next useful life, like improving the access, bringing water, sewers and utilities to the property.

“It’s basically been a reclamation project,” says Gerald Bunda, Impe rial’s president. “The reclamation did well for Potato Garden Run and the tributaries that drain this area so it was an environmental benefit but it was also a long-term economic benefit because the land can be used for another use. That’s called re-mining.”

Gettin g i n f r a s t r u c t u re w o r k e d o u t took m o re t h a n j u s t a f e w y e a r s . Bunda ’s f o r m a l e d u c a t i o n w a s in com m u n i t y d e v e l o p m e n t a n d region a l p l a n n i n g . H e w o r k e d f o r the Al l e g h e n y C o u n t y R e d e v e l o pment A u t h o r i t y f o r f e w y e a r s b a c k in 197 0 ’s a n d t h e n w a s a s s i s t a n t manag e r f o r M o o n To w n s h i p f ro m 1984 t o 1 9 9 1 . D u r i n g t h a t t i m e h e also se r v e d a s d i re c t o r o f t h e M o o n Transp o r t a t i o n A u t h o r i t y, w h i c h promo t e d a n d o v e r s a w t h e n e w interch a n g e s i n t h e m u n i c i p a l i t y. That e x p e r i e n c e l e d t o re l a t i o n s h i p s that w o u l d p ro v e i nv a l u a b l e o v e r the ye a r s , a s I m p e r i a l L a n d s o u g h t to exp e d i t e t h e p ro c e s s e s o f s t a t e and m u n i c i p a l g o v e r n m e n t . “My b a c k g ro u n d w a s m o re g o v e r n menta l b u t I h a d s o m e d e v e l o p m e n t experi e n c e b e c a u s e t h a t e r a w a s a big p e r i o d o f g ro w t h i n M o o n Towns h i p , ” B u n d a sa y s . “ T h a t ’s t h e conne c t i o n b e t w e e n t h e t w o . T h e Aloe’s b e c a m e a w a re o f m e t h ro u g h the de v e l o p m e n t w o r k i n M o o n . ” That p ro c e s s o f g e t t i n g t h e u t i l i ties ex t e n d e d a n d t h e h i g h w a y comple t e d w a s n o s m a l l t a s k a n d took t h e b e t t e r p a r t o f 1 5 y e a r s t o accom p l i s h . T h e re w a s a g a p o f a couple m i l e s b e t w e e n t h e e x i s t i n g water a n d s e w e r s y s t e m , w h i c h r a n along P o t a t o G a rd e n R u n R o a d a n d the Fin d l a y I n d u s t r i a l P a r k p ro p e rties. B u n d a f o u n d hi m s e l f m a k i n g the ca s e f o r t h e p u b l i c i n v e s t m e n t to cata l y z e p r i v a t e d e v e l o p m e n t to man y l e v e l s o f g o v e r n m e n t a n d politic i a n s . I m p e r i a l L a n d d o n a t e d the rig h t - o f - w a y f o r t h e F i n dlay Co n n e c t o r a n d w a s w i l l i n g t o guaran t e e s o m e o f t h e d e b t t a k e n on by t h e m u n i c i p a l a u t h o r i t i e s . H e says th a t t h e e x p e r i e n c e p u t h i m i n front o f s o m e o f t h e m o s t p o w e rful lea d e r s i n P e n n sy l v a n i a a n d a l s o politic a l c h a r a c t e r s l i k e M i k e Ve o n and Bi l l D e We e s e . Ve o n s u c c e s s fully p u s h e d f o r g r a n t s a n d l o a n s that g o t t h e p a r k g o i n g b e c a u s e

“Our job here is to prepare the land for another beneficial use. When I took officials out here and we stood on the hill I would say here’s the new frontier - in Allegheny County – but you can’t get out here and you couldn’t unt il the road was completed,” recalls Bunda. h e k n e w that many of the people e m p l o y ed at Findlay Industrial Park w o u l d l i ve in Beaver County. “ I t ’s b e en quite a challenge. It w a s a n ew frontier for Allegheny C o u n t y and for Washington County t o t h e s outh,” notes Bunda. “For t h i s p ro perty we had to bring ev e r y t h i n g out here. The water, sewer a n d g a s all had to be run out to t h i s a re a and it took a while. We h a d t h e road coming in but it then t o o k a c ouple of years to get pre p a re d f or development.” T h e ro a d Bunda speaks of is the a i r p o r t l eg of the Findlay Connect o r, t h e portion of I-576 that runs b e t w e e n Pittsburgh Inter national A i r p o r t and Route 22 near Starp o i n t e i n Washington County. The h i g h w a y was done in 2006 and f i r s t c o n struction was in 2008. W h e n I mperial Land took their first p ro s p e c ts to the site they only had a “ b r u s h hog road” and had to v i s u a l i z e the property after devel o p m e n t . Imperial Land’s original i d e a w a s to sell bulk land but they

realized that in order to sell the land they had to fully develop the property. Construction began on Findlay Industrial Park in 2008, hardly the best time to start a new project but they were able to sell the first two lots to Appliance Dealer s Cooperative and to Okonite for construction in early 2009. “They were the pioneers. I use that term because they were the first ones out there so the rate per acre was very reasonable to get the mo mentum going,” says Bunda “Then we sold the land to Alro Steel. We’ve had a year lull but that was to get phase two going. Phase two is now done and the sites are pretty good lots. I won’t say all the lots are pad-ready but most are and we’re ready for the next projects.” “Our job here is to prep are the land for another beneficial use. When I took officials out here and we stood on the hill I would say here’s the new frontier - in Al legheny County – but you can’t get out here and you couldn’t until the road was completed,” recalls Bunda. “That goes to th e need for improved transportation. There’s land out there, land close to im portant assets like the airport that doesn’t have access to highways,” he continues. “I will say this, none of the people that have moved here are in the gas business. They chose to be here because of access. They can jump right on a highway. Alro is from Michigan and they can get right on an interstate and connect to there. The Interstate 79 con nection to the Parkway is going to help the whole region because now you can go west without going around. The people that are look ing at us are looking at the trans portation and if we can enhance it with a 22 to 79 link that makes it even better.”

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While the Findlay Industrial Park and its neighboring Westport Woods have been the focus of Imperial Land’s efforts, the ownership of the business still has diverse assets beyond commercial real estate. They also own the property used as a landfill by Allied Waste and operate a sister company, called Landfill Gas that gathers the methane that is emitted at the landfill. The Aloe’s operate a coal company in West Virginia and now have Marcellus shale gas wells on their Quicksilver property. There are 5,000 acres under Imperial Land and another 2,000 acres held separately under Aloe Family Limited Partnership that comprises a total of 7,000 acres on which they are trying to create a new economic benefit. One big advantage is that Imperial Land didn’t go out and buy the land. Because the land had been acquired years ago for coal purposes then the carrying costs of the land weren’t there.

Currently they include Tony Liberati from the DeBartolo Organization, Bob Brand who has experience in family-owned businesses and Bob Stephenson, who was the former head of the RIDC.

Imperial Land Corp. is managed by a board of directors, four family members and three outside members.

Like most businesses based on land or other long-term assets, Imperial Land has had a significantly longer

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Imperial Land’s president Jerry Bunda, who is president-elect of NAIOP Pittsburgh and a member of the chapter’s Executive Committee.

horizon for its decision-making and return expectations. Bunda credits that mind-set for staying the course on a development project that was almost two decades in the making. “The patience came from our board of directors because they knew that it takes a long time for a highway to get built. It takes about 12 years for a highway to get completed,” says Bunda. “We saw that the right-ofway was moving forward and the funding was up and down but what we tried to do was get other things prepared and had other assets to work on. My board kept preaching patience because they believed [the infrastructure] would eventually get here. Now that’s occurred.” Although the Aloe family has been patient and invested with a long range expectation on retur ns, they have maintained a conservative fiscal profile for Imperial Land Co. Until 2006, Bunda had been the only employee. He a nd Brian Temple are the full-time staff of the company, which contracts out or shares administrative and financial

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resourc e s w i t h o t h e r A l o e b u s i nesses .

b e r a t h er than saying here’s where I ’ l l b u i l d you the road.”

In the y e a r o r t w o t h a t f o l l o w e d the su c c e s s e s w i t h A p p l i a n c e D e a lers, Ok o n i t e a n d A l ro S t e e l t h e econom i c re c o v e r y s e e m e d t o t a k e one st e p f o r w a rd a n d t w o s t e p s back. B u n d a s a y s t ha t a n u m b e r o f prospe c t s k i c k e d t h e t i re s b u t n o deals w e re d o n e . B e c a u s e I m p e rial Lan d ’s b u s i n e s s p l a n d o e s n ’t include a n y v e r t i c a l c o n s t r u c t i o n there w a s n o t h o u g h t o f d e v e l o p ing a s p e c b u i l d i n g . I n s t e a d t h e compa n y u s e d t h e t i m e t o c o m p l e t e plannin g o f i t s We s t p o r t Wo o d s project a n d c o n t i n u e d s i t e p re p a r a tion to m a k e t h e F i n d l a y I n d u s t r i a l Park lo t s m o re m a r k e t a b l e .

B u n d a relates that interest from p ro s p e c ts is notably higher. In late J u l y, t h e company saw one of those p ro s p e c ts bear fruit, when Gord o n F o o d Services announced that t h e y w o uld be building a 420,000 s q u a re f oot distribution center at F i n d l a y I ndustrial Park. W ith the 8 3 - a c re Westport Woods in final d e s i g n and construction scheduled t o s t a r t in 2014, Imperial Land C o r p . h as probably moved beyond t h e s t a g e of preparing to develop.

“One t h i n g o u r b o a rd a l w a y s s a i d was th a t w e h a v e t o h a v e i n v e ntory,” B u n d a e x p l a i n s . “ A s o f t h e end of l a s t y e a r w e h a v e i n v e n t o r y and I h o p e t h a t h e l p s . I t ’s a w h o l e lot bet t e r t o h a v e p e o p l e r i d e d o w n a road a n d s a y h e re ’s w h e re y o u ’ l l

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“ O n c e y ou have some success I t h i n k p e ople realize what can be d o n e . We were going to do some t h i n g w i th that land anyway,” n o t e s B unda. “We have 5,000 acres a n d t h e next leg of the highway w i l l r u n through the Quicksilver p ro p e r t y. I’m sure there will be de c i s i o n s t o make about development i n t h e f uture but we have work to d o w i t h the property we’re working

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on right now. We’re moving along smoothly and steadily, b ut that’s the Pittsburgh way isn’t it?”

Imperial L and Corp. is managed by a board of directors, four family members and three outside members. Imperial Land Corporation 1009 Beaver Grade Road, Suite 210 Moon Township, PA 15108 T: 412-446-0670 Jerry Bunda President Imperial Land Corporation www.imperialland.com DP

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sources for mass transit have virtually disappeared and aren’t coming back soon. “The real idea is that Oakland is the center of innovation and entre preneurship in the whole Pittsburgh region. Companies want to be in Oakland to get the energy and innovation but there is little developable land,” says Ken Zapinski, senior vice president, energy and infrastructure for the Allegheny Conference. “How do you do it? Make Oakland bigger by making it seamless to get between there and Downtown.”

Bus Rapid Transit

ne of the evolving economic stories of the past several years i s t h e c o n n e c t i o n b e t w e e n the Ce n t r a l B u s i n e s s D i s t r i c t ( C B D ) and O a k l a n d . U P M C ’s d e c i s i o n t o gradua l l y re l o c a t e n e a r l y o n e m i llion sq u a re f e e t o f a d m i n i s t r a t i v e space f ro m i t s h o s p i t a l c a m p u s e s to 600 G r a n t S t re e t w a s t h e c a t a lyst fo r t h e a c t i v i t y b u t c o m m e rc i a l

a n d re s i dential real estate develop m e n t h a s also grown organically a s p r i v a te developers and property o w n e r s placed bets on the revital i z e d U p t own or Lower Hill District f o l l o w i n g the completion of the C O N S O L Energy Center. A l l o f t his activity has occurred w i t h o u t the support of a dedicated m a s s t r a nsit connection between t h e C B D and Oakland. Creating a l i n k b etween these two main e c o n o m i c centers has thus far b e e n b o th a regional imperative a n d a p r actical impossibility. The t r a d i t i o nal solution is a light rail c o n n e c t ion but executing such an i n f r a s t r ucture project has several s i g n i f i c a nt obstacles, the most s a l i e n t of which is that the funding

While there is an argument to be made that the two economic hubs are growing together wi thout such a transit system – there are barely ten blocks separating the projects at the leading edges of each submarket – Pittsburgh’s regional busi ness and civic leaders are anxious to create a catalyst to accelerate the inevitable. It is looking increasingly more likely that the solution will be a bus rapid transit system. Pittsburgh Regional Alliance and Chamber of Commerce president DeW itt Peart probably speaks for most development advocates when he talks about the creation of a bus rapid transit (BR T) solution. “We have got to do something. What that something will be is a bigger issue but we can’t keep go ing like we are,” Peart asserts. Like most observers, Peart might prefer that a viable alter native existed in light rail. Most urban planning and development studies

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Dedicated BRT buses, like this one in Las Vegas, resemble rail vehicles.

a d v o c a te using light rail for mass t r a n s i t systems. Such systems are w h a t c ommunities and the comm u t i n g public wants. Moreover, as a n c h o r s for private transit-oriente d d e v e lopment, light rail systems a re a t t r active because of their p e r m a n ence. Light rail requires s t a t i o n s and stations become locat i o n s t h rough which thousands of c o n s u m ers pass each day. T h e m a n responsible for support i n g t h e solution to the transit i s s u e a t the Allegheny Conference s a y s t h at light rail isn’t necessari l y t h e right solution for linking O a k l a n d to Downtown. Aside from o b v i o u s cost and topographical i s s u e s , Ken Zapinski points out t h a t t h e Port Authority’s heaviest t r a v e l e d routes for the existing bus s y s t e m are to the easter n neighb o r h o o ds and suburbs, most of w h i c h l ie beyond Oakland. A light r a i l t r a nsit system (LR T) to Oakland w o u l d n ’t serve those commuters o r re l i e ve any burden on the exist i n g s y s tem. Regardless of what f o r m t h e rapid transit connection

between Oakland and Downtown were to take, a large number of East End commuters would need to ride buses and transfer to the new system in Oakland. That means that a Downtown-Oakland LR T connection wouldn’t relieve PAT’s bus ridership beyond Oaklan d and the cost would be difficult to justify. “We have been studying this problem for a long time,” explains Allegheny County executive Rich Fitzgerald. “At first we wanted light rail but it became very evident that it would cost about two billion dollars and we didn’t kn ow where the money would come from. Sec ondly, we realized it would take 15 years to build.” Fitzgerald noted that the full cycle for the North Shore Connector took that long from planning to opening and that during that time the federal gover nment reduced its match from 80 percent of the project to 50 percent, meaning the local authorities would need to find one billion dollars. For a county and

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Port Au t h o r i t y a l re a d y s t r a i n i n g t o regain f i s c a l f o o t i n g , s u c h a c o s t i s practic a l l y u n a t t a i n a b l e . “The o t h e r t h i n g a b o u t r a i l i s t h a t we’ve b e e n s t u d y i n g i t f o r a b o u t 20 yea r s a n d n e v e r h a d a n y c o nsensus a b o u t h o w t o d o i t , ” o bserves We n d y S t e r n , PAT ’s a s s i s t a n t genera l m a n a g e r f o r p l a n n i n g . “The a d v a n t a g e o f b u s – p a r t i c ularly th i s f o r m – i s t h a t i t p ro v i d e s a rail-l i k e e x p e r i e n c e i n t h e m o s t cost-eff e c t i v e m a n n e r and ca n d e v e l o p i n cre mental l y a s re s o u rc e s becom e a v a i l a b l e . I t can als o b e i n t e g r a te d into th e e x i s t i n g t r an s i t system , m a k i n g i t wo r k more e ff i c i e n t l y. ” Ster n e x p l a i n s t h a t t h e Oaklan d - t o - C B D t r i p current l y h a s e i g h t routes r u n n i n g b e t w e e n those t w o l o c a t i o n s a n d anothe r t e n ro u t e s t h a t are rel a t e d . W h e n a functio n a l B R T s y s t e m i s

Stakeholders in a BRT system have begun evaluating the operating alter natives and are marketing the BRT concept.

in place, most or all of those routes could be eliminated, which means that the BR T’s operating costs would not exceed the current costs. Just as important to its advocates is the fact that the BR T could be operational in three or four years from today. And while the cost of a completed BR T system is estimated at $200 million – or one-tenth the cost of rail – the system could develop in phases that would still accomplish some of the project’s goals for transit and development. Stakeholders in a BR T system have begun evaluating the operating alter natives and are marketing the BR T concept. While th e Port Authority is the logical conduit for communication and contracting, there are forty groups involved in the project, including Sustain able Pittsburgh, the city, county, Allegheny Conference, universities, hospitals and business leaders, like

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As far as the first goal is concer ned, a transit solution will have to offer comfortable and clean vehicles but the main problems are associated with travel time and reliability. The PAT bus routes that exist have a frequency of 2.5 minutes but the actual frequency is often eight minutes or more. Be cause of the heavy traff ic in Oak land throughout different times of the day and year, travel times are quite variable.

Photo courtesy Cleveland Regional Transit Authority.

NAIOP P i t t s b u r g h . T h e C o u n t y Execut i v e f o r m a l i z e d t h e e ff o r t b y formin g t h e Tr a n s p o r t a t i o n A c t i o n Partne r s h i p . T h e s t ak e h o l d e r s a re among 3 0 c o m m u n i t y - b a s e d g ro u p s that ha v e s t a r t e d G e t T h e re P G H to exp l o re t h e i m p a c t s o f a B R T system , u s i n g t h e g e t t h e re P G H . o r g websit e t o c o n n e c t w i t h c o m m u t e r s and bu s i n e s s e s . "One o f N A I O P ' s t o p g o a l s i n o u r advoca c y e ff o r t s h a s b e e n t o ' h a v e a seat a t t h e t a b l e ' o n k e y i s s u e s impact i n g o u r i n d u s t r y, ” s a y s Ly n n DeLore n z o , o f Ta rq u i n C o R E a n d past p re s i d e n t o f N A I O P P i t t s burgh. “ A s t h e B R T c o n n e c t i o n betwee n O a k l a n d a n d t h e C B D i s of high i m p o r t a n c e t o o u r o r g a n ization , w e h a v e b e e n f o r t u n a t e t o have a s e a t o n t h e S t a k e h o l d e r s Comm i t t e e . I n t h i s re g a rd , w e h a v e input i n t o t h e f u t u re ro u t e , s t a tions a n d p o t e n t i a l o f s u r ro u n d i n g transit o r i e n t e d d e v e l o p m e n t s i t e s around t h e s t a t i o n s . " In Apr i l , t h e c o l l a b o r a t i v e p l a n n i n g effort re c e i v e d a b oo s t w h e n t h e Rockef e l l e r F o u n d a t i o n a w a rd e d a $1.2 m i l l i o n g r a n t t o s u p p o r t t h e plannin g o f t h e s y s te m . P i t t s b u r g h was on e o f f o u r c i t i e s c h o s e n b y Rockef e l l e r – a l o n g w i t h N a s h v i l l e , Boston a n d C h i c a g o – t o h e l p w i t h the de v e l o p m e n t o f b u s r a p i d t r a n40 DEVELOPINGPITTSBURGH

| Fall 2013

"One of NAIOP's top goals in our advocacy efforts has been to 'have a seat at the table' on key issues impacting our industr y,” says Lynn DeL orenzo, of Tarq uinCoRE and past president of NAIOP Pittsburgh. s i t . E n g i neers Parsons Brinckerhoff a re c u r rently wrapping up a study t o i d e n t ify the alter natives and obj e c t i v e s of the BR T system. A c c o rd i ng to Ster n, there are two m a i n g o als any transit solution m u s t m e et. “ F i r s t i s improving the quality of t r a n s i t e xperience. We already have t h i s h i g hly utilized corridor that m a k e s u p 30 percent of our total r i d e r s h i p. That’s pretty significant,” s h e s a y s . “The second goal is to c a t a l y z e new development. From J a n u a r y 2006 until December 2012 t h e t o t a l investment in Downtown e x c e e d e d $5 billion. That’s a lot of d e v e l o p ment but if you look at how m a n y o pportunities there would b e i n U ptown there is even more p o t e n t i a l.”

Wendy Ster n explains that the operating alter natives have already been whittled down from ten to two that use Fifth an d Forbes Avenues to create dedicated lanes. “One is to operate away from Downtown along Forbes – that lane is already heavily u sed by bus – and to come from Oakland on Fifth Avenue using the curb bus lane,” says Ster n. “The second [alter native] has both lanes operating along Fifth Avenue. It uses the current bus lane going opposite the direction of traffic and a second lane on the other side going with the flow of traffic.” The Parsons Brinckerhoff study will define the alter natives in detail and offer recommendations for stations, infrastructure improvements, traffic light and control systems and cost estimates. It should be available in the fall for the stakeholders to review but Ster n says the release of the study may be delayed until the environmental impact studies are done in the winter of 2014 to satisfy the federal requirements for funding. Should that go smoothly, the Pittsburgh BRT project would need the Federal Transportation Authority’s approval to get in the queue for funding – with no guarantee – to finish the planning and design. Should the project get green lights all along – and assemble the funding – construction of the BRT could begin in 2015, with passengers boarding the first buses in 2017. For an idea of how such a BRT system might work, stakeholders don’t have to merely rely on study and theory; there is a real life system operating for nearly five years in Cleveland. Dubbed the HealthLine because it connects Cleveland’s

downtown to its hospital district, the BRT traverses nine miles along Euclid Avenue. As the city’s ‘Main Street’, Euclid Avenue had seen decline as Cleveland’s fortunes sagged over the past decade. After the BRT commenced operations in 2008, the trip shortened the commute between the end points of the system from 45 to 30 minutes and began to entice private investment along the route. Businesses gained confidence in the permanence of the BRT stations. Crime and drug traffic receded into other areas as ridership on the BRT took off, nearly doubling that of the predecessor bus routes. Euclid Avenue will not be compared to Chicago’s ‘Miracle Mile’ just yet – or even Pittsburgh’s Penn Avenue – but the decline has been reversed and investment is on the rise. County Executive Fitzgerald is one of those leading the charge for a BRT system precisely because he’s seen the ripple effect that the HealthLine has had in Cleveland. He led a delegation of more than 40 people to Cleveland on June 20 to view the system, which had more than 4.6 million riders in 2012. “I saw it three years ago but it really opened up my eyes when we went again in June. When they built their BRT it linked those two communities but it spurred a lot of development in an area that was blighted and dilapidated,” he says. “What impressed me was the tremendous increase in property values along Euclid. I could see that happening along Fifth and Forbes. The other thing is that it took all the other buses off the road [on Euclid]. Think about all the buses currently going through Oakland on Fifth Avenue.” That re l a t e d d e v e l o p m e n t i s w h a t Zapins k i v i e w s a s t h e p a y o ff f o r t h e BR T. “ I t ’s n o t a t r a ns i t p ro j e c t b u t a commu n i t y re v i t a l i z a t i o n , e c o n o m i c and rea l e s t a t e d e v e l o p m e n t p ro j e c t , ” he says . “ We n e e d t o u n d e r s t a n d f ro m the de v e l o p m e n t c o m m u n i t y w h a t level o f t r a n s p o r t a t io n p ro j e c t w o u l d be nee d e d t o s i g n a l c o m m i t m e n t . We need t o h e a r w h a t d e v e l o p e r s w a n t becaus e i f w e g e t t h e B R T a n d i t d o e s not sti m u l a t e e c o n om i c re v i t a l i z a t i o n , it cann o t b e d e e m e d a s u c c e s s . We don’t w a n t p e o p l e c o m i n g b a c k a f t e rwards t e l l i n g u s t h a t w e s h o u l d h a v e though t o f s o m e t h i n g e l s e . ” D P

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Eye on the Economy

he summer of 2013 is the first since 2009 to have no economic shock to short-c i rc u i t a s p r i ng t i m e re c o v ery, al t h o u g h t h a t f a c t s h o u l d n ’t sugges t t h a t a ro b u s t re c o v e r y is und e r w a y o r e v e n o n t h e w a y soon. W h a t h a s b e e n re v e a l e d s i n c e spring i s t h a t t h e U . S . e c o n o m y is doin g b e t t e r t h a n e x p e c t e d i n a numbe r o f k e y m e t r i c s , w h i l e f a l ling be h i n d o n t h e m o s t c o m m o n measu re o f e c o n o m i c g ro w t h . I t has als o b e c o m e c l e a r t h a t A m e r ican ec o n o m i c g ro w t h i s b e i n g h e l d back b y t h e c o n t i n u e d w e a k g l o b a l market p l a c e m o re t h a n b y d o m e s t i c trouble s , a l t h o u g h re d u c e d g o v e r n ment s p e n d i n g i s m u t i n g e x p a nsion. P e r h a p s m o s t i m p o r t a n t o f all mea s u re s , e m p l o y m e n t g ro w t h has co n t i n u e d t o t re n d u p w a rd a t a pace t h a t i s b o t h u n s p e c t a c u l a r a n d better t h a n f o re c a s t e d .

t h e d a t a shows the U. S. economy b a re l y g rowing as rapidly as infla t i o n . D a mpened demand for manuf a c t u re d goods, continued declines i n a l l g over nment spending and a s u r p r i sing slowdown in housing s t a r t s i n June fairly assures that the e c o n o m y grew at one percent or l e s s d u r i ng the first six months.

During t h e p a s t f e w b u s i n e s s c y c l e s U. S. c o m p a n i e s h a v e s t e a d i l y grown t h e i r s h a re o f t h e g l o b a l market p l a c e , w i t h e x p o r t s m a k i n g up a si g n i f i c a n t p o rt i o n o f t h e i r total s a l e s . T h e d e c l i n i n g g ro w t h in Chin a , I n d i a a n d o t h e r e m e r g i n g market s – i n c o m b i n a t i o n w i t h t h e deep re c e s s i o n i n E u ro p e – h a v e re duced t h e s i z e o f t h e p i e f o r w h i c h Americ a n c o m p a n i e s c a n c o m p e t e . This gl o b a l d e c l i n e h a s i m p a c t e d U. S. g ro s s d o m e s t i c p ro d u c t ( G D P ) as wel l .

T h e m o st encouraging trend in the e m p l o y ment picture is the fact that t h e s t e a dy growth has been in tan d e m w i t h a steady decline in public e m p l o y ment. Although the magnit u d e o f gover nment job cuts has n o t b e e n great, the decline means t h a t p r i vate sector employment has b e e n t h at much stronger than the o v e r a l l j ob market.

Estima t i n g G D P h a s b e c o m e a more d i ff i c u l t a s s i g n m e n t i n t h e past ye a r. A f t e r i n i t i a l e s t i m a t e s o f contra c t i o n i n t h e f o u r t h q u a r t e r o f 2012 a n d a l m o s t n o g ro w t h f ro m Januar y t o A p r i l 2 0 1 3 , re a l G D P growth w a s a c t u a l l y 1 . 1 p e rc e n t i n both q u a r t e r s . E c o no m i s t s e x p e c t e d the sec o n d q u a r t e r g ro w t h t o b e barely p o s i t i v e , s o m e w h e re b e tween 0 . 2 a n d 0 . 4 p e rc e n t . W h i l e the ini t i a l re p o r t o f J u l y 3 1 s h o w e d a surp r i s i n g j u m p o f 1 . 7 p e rc e n t ,

42 DEVELOPINGPITTSBURGH

| Fall 2013

E m p l o y ment growth, on the other h a n d , c ontinued the trend upward i n J u n e , with 195,000 jobs added. T h e J u n e research also revealed t h a t p re vious estimates of job g ro w t h for April and May were u n d e r s t ated by 70,000 jobs. Those re v i s i o n s pushed the six-month av e r a g e a bove 200,000 jobs monthly. T h a t ’s a figure that exceeds the e q u i l i b r ium for job creation by o n e - t h i rd, a pace that will support g ro w t h and add to the demand for s p a c e . Also encouraging was the d e c l i n i n g unemployment rate of 7.4 p e rc e n t , which fell even with the i n c re a s e in those looking for jobs.

A c c o rd i ng to the July 23 Price w a t e r h o useCoopers' U.S. Private C o m p a n y Trendsetter Barometer, p r i v a t e sector employers are dis p l a y i n g increasing optimism. The q u a r t e r l y survey tracks the minds e t a n d business practices of 202 C E O ’s a nd CFO’s from privately held U . S . - b a s ed companies. Among the k e y f i n d ings in the second quarter w e re : 8 0 percent of the executives w e re f o recasting growth over the c o m i n g year, with one-third expect i n g d o u ble-digit growth; two-thirds p re d i c t e d higher GDP growth than t h e g o v er nment’s estimates, with a n a v e r age of 2.2 percent; 57 per-

cent said they expected to hire new employees this year. July’s report was the third consecutive quarter of positive outlook and the most positive results since the recession. The key underpinning of the economic foundation – consumer spending – has shown renewed strength after a slump of 0.3 percent in April following the increase in Social Security contributions that accompanied the ‘s equester.’ Personal income has risen 0.3 to 0.4 percent monthly, while the sav ings rate continues to rise. As the impact of the increased taxes fades and the improvement in home val ues expands, consumer confidence and spending should improve. July’s spending increase of 1.8 percent thus far validates that theory. Consumers are also seeing bet ter than expected wage increases. July’s numbers showed a 3.4 percent increase in inflation-adjusted income, while personal savings increased to 4.5 percent of income. Taken as a whole, the improving economic picture has emboldened the Federal Reserve Bank to make plans for scaling back its bond buying program. That’s a prospect that has spooked investors and heartened business people at the same time. Improving conditions and the prospect of an end to quantitative easing have also resulted in the first significant rise in interest rates since the onset of the financial crisis. Rising short-term and long-term interest rates present a potential problem for the recovery in com mercial real estate and for the sud denly robust housing market. Sig nificant increases in rates increase the cost of capital for acquisition and development. At the consumer level, higher rates decrease the af fordability of homes, which could put downward pressure on home prices that have begun a cycle of

apprec i a t i o n o v e r t h e p a s t s i x q u a rters. T h e s e h i g h e r c o s t s o f b o r ro w ing ha v e t h e p o t e n t i a l f o r d a m p e ning va l u e g ro w t h o n a l l c a t e g o r i e s of rea l e s t a t e b u t a l o o k a t t h e perfor m a n c e o f re a l e s t a t e d u r i n g past p e r i o d s o f r i s i n g r a t e s re v e a l s that co n c e r n s a b o u t i n c re a s e s m a y be ove r b l o w n . In all s i x p e r i o d s o f r i s i n g r a t e s g oing ba c k t o M a rc h 1 9 7 8 , u p w a rd pressu re s o n p ro p e r t y p r i c e s m o re than o ff s e t t h e i m pa c t o f h i g h e r interes t , w h i c h c o u l d h a v e p u s h e d cap ra t e s h i g h e r. I t i s e x p e c t e d that a n y w i n d i n g d o w n o f t h e F e d ’s bond b u y i n g w i l l b e a c c o m p a n i e d by imp ro v e d e c o n o m i c f u n d a m e n tals th a t w i l l b o o s t o c c u p a n c y a n d rents, w h i c h w i l l b o o s t t h e i n c o m e from t h e p ro p e r t y a s w e l l . For co m m e rc i a l re a l e s t a t e m a n y of the b i g g e r c o n c e r n s f ro m t h e

p a s t f e w years are receding. While re d u c e d gover nment spending will c o n t i n u e to be a drag on space d e m a n d from those serving the s t a t e a nd federal gover nment, the g ro w i n g employment base should c o n t i n u e to push occupancy levels h i g h e r. New construction additions t o i n v e ntory remain behind the de m a n d f or space from growth, even i n t h e h ot multi-family category. A c ro s s the other commercial prop e r t y t y p es, the extended low levels o f c o n s truction will keep supply b e l o w t he levels of the pent-up demand. C o n s u mer and business confidence re m a i n s somewhat lower than the p re - re c ession levels but there is m u c h e vidence that the damage d o n e b y the financial crisis has h e a l e d . At the root of the financial m e l t d o wn was the overheated U. S. h o u s i n g market. After five years of

re-balancing, that segment of the real estate market is again robust. Beyond the positive employment impact that would attend a boom in home construction, the significant rise in home values will have a salutary effect on the consumer’s mentality. The U. S. eco nomy ap pears to be on firm footing once more. It’s also clear that overseas markets still have much further to go to reach the same level of recovery that the U. S. is experiencing. W ith exports making up more than 14 percent of GDP, expansi on of the magnitude seen during the previ ous growth cycles won’t occur until growth retur ns globally. DP

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Office Market Update PITTSBURGH OFFICE MARKET OVERVIEW – MID-YEAR 2013

t i g u o u s blocks of Class A space in t h e re g i on are located in the CBD, b u t a l l a re marred by challenging c i rc u m s t ances – 146,070 square f e e t a t t he U. S. Steel Tower, not a v a i l a b l e until early 2014; and 1 3 1 , 6 0 0 square feet at the Union Tr u s t B u ilding, which currently is in re c e i v e r ship. At present, there are n o c o n t iguous Class A spaces larger t h a n 9 0 ,000 square feet available i n t h e s uburban markets.

Economic Ove r v i e w

n the first half o f 2 0 1 3 , t h e re w e re m o re p e o p l e w o r k i n g i n P i t t sburgh than ever b ef o re , a c c o rd i n g to the A l l e g h e n y C o n f e re n c e o n Econom i c D e v e l o p m e n t , w h o re ported t h a t 2 6 9 s e p a r a t e e c o n o m i c develo p m e n t p ro j e c t s t h a t c o u l d genera t e a s m a n y a s 8 , 3 0 0 n e w jobs fo r t h e re g i o n w e re i n p ro c e s s as of F e b r u a r y 2 0 1 3 . T h e re g i o n has se e n f i v e c o n s e c u t i v e y e a r s o f contin u o u s e x p a n s i o n a n d a c u r re n t capital i n v e s t m e n t o f $ 3 . 2 b i l l i o n . Despit e d e c l i n e s i n re t a i l t r a d e , admin i s t r a t i v e a n d s u p p o r t s e rvices a n d t h e l e i s u re a n d h o s p i t a l ity ind u s t r i e s , t h e re g i o n m a r k e d a reco rd - h i g h 1 , 1 7 0 , 5 0 0 n o n - f a r m jobs in M a y, a g a i n o f m o re t h a n 1,000 f ro m A p r i l . I n M a y, t h e u n emplo y m e n t r a t e i n t h e re g i o n f e l l to 6.9% , t h e f o u r t h s t r a i g h t m o n t h of dec l i n e s , b e s t i n g t h e P e n n s y l v ania rat e o f 7 . 5 % .

Commercial M a r k e t Over view Class A market tightens throughout region Class A v a c a n c y i n t h e P i t t s b u r g h metro d ro p p e d 3 5 . 2 % i n t h e f i r s t quarte r 2 0 1 3 , p o s t i n g a d i re c t v a cancy o f 5 . 7 % v e r s u s 8 . 8 % i n t h e same p e r i o d 2 0 1 2 . T h e l a r g e s t c o n-

44 DEVELOPINGPITTSBURGH

| Fall 2013

The largest contiguous blocks of Class A space in the region are located in the CBD, but all are mar red by challenging circumstances – 146,070 square feet at the U. S. Steel Tower, not available until early 2014; and 131,600 square feet at the Union Tr ust Building, which cur rently is in receivership. Leasing activity slows, build-to-suit construction accelerates Two of the largest lease transactions year-to-date were for law and financial services groups. Leech T ishman, a full-service legal services firm, expanded its lease at 525 W illiam Penn Place in the CBD to 47,000 square feet assuming two full floors in the building. CPA firm, Schneider

Downs, signed a long-term lease for 46,546 square feet at One PPG Place, also in the CBD. Though leasing activity from the same period in 2012 to 2013 dropped by nearly 52%, numerous new build-to-suit projects for major tenants are in development throughout the market. Mylan Pharmaceuticals and Ansys, Inc. are constructing new headquarters in Southpointe, consisting of 280,000 square feet and 186,000 square feet respectively, while ServiceLink is constructing a new 106,000-sf facility at Pittsburgh Inter national Business Park and PNC continues construction on its 800,000-sf The Tower at PNC Plaza, where it will relocate employees from a number of other locations throughout the CBD. The University of Pittsburgh Medical Center (UPMC) led absorption in early 2013 as it began to fill eight additional floors at the U. S. Steel Tower, adding to the 15 it already occupies there. Additional space will be made available in the Steel Tower when PNC completes renovations on the former Lord & Taylor building and relocates several groups to there later this year.

Airport Corridor emerges as top suburban market Once the darling of the Pittsburgh office market, the Airport Corridor fell from grace in the last decade, suffering from over-development and the decline of the airline industry. However, the energy sector has brought new life – and new development – to the area over the past 36 months. The direct vacancy rate has fallen 53.7 percentage points since 2009, hitting a low of 5.7% in the second quarter 2013, while overall rental rates have edged slowly toward a $20 per square foot (psf) average over the same period. Leasing activity within the submarket jumped 65% between 2009 and

Source: Cushman & Wakefield Research

major tenants move into new spaces and subleases currently on the market are occupied by newcomers. Rental rates for Class A space in the region and all classes of space in the CBD are expected to climb slightly in response to the dropping vacancy rates and the continued reduction of class B inventory due to conversion to residential projects.

2012, peaking at more than 1.0 million square feet (msf) in 2012. The reduction in available Class A space has spawned new speculative development in the area, including Westpointe Corporate Center Four, a 130,000-sf office building situated adjacent to the FedEx Ground and GlaxoSmithKline headquarters. Scheduled to be ready for occupancy in 2014, the building borders the 61-acre tract of land that Chevron recently purchased for its Appalachian regional headquarters. The company plans to construct an office and research campus on the site with an estimated budget of more than $200 million. Additi o n a l l y, D i c k ’s S p o r t i n g G o o d s signed a l o n g - t e r m a g re e m e n t t o lease 7 3 a c re s a t N o r t h f i e l d C o m merce P a r k s o t h a t i t c a n e x p a n d its 66 7 , 0 0 0 - s f c o r po r a t e c a m p u s by an o t h e r 1 8 0 , 0 0 0 s q u a re f e e t . This la t e s t e x p a n s i o n s h o u l d b e comp l e t e d b y 2 0 1 5 a n d i s p a r t o f a maste r p l a n t h a t c o u l d e x t e n d t h e campu s t o m o re t h a n 1 . 0 m s f .

Outside investor interest for CBD grows T ighte n i n g o c c u p a n c y l e v e l s a n d i n creasi n g re n t a l r a t e s i n P i t t s b u r g h ’s CBD h a v e d r a w n n e w i n t e re s t f ro m out-of - t o w n i n v e s t o r s . I n f a c t , o f the la s t 1 3 h i g h - p ro f i l e b u i l d i n g sales i n D o w n t o w n P i t t s b u r g h , 1 0

Continued growth in the technol ogy, energy, education and health care sectors will further escalate rental rates and reduce vacancy rates in the CBD. Speculative development in the fringe markets should surface in response to the rising demands of these tenants. h a v e b e en to out-of-town buyers, i n c l u d i ng prominent buildings such a s t h e U. S. Steel Tower and PPG P l a c e c omplex. The 80,000-sf Bank To w e r recently sold to Rockmere C a p i t a l Partners, LLC, an Erie, PA g ro u p , while two additional prop e r t i e s , i ncluding Liberty Center, are u n d e r a greement to outside inves t o r s . T h e City’s diverse economy a n d a t t ractive business community h a v e p l aced it in the company of s u c h n o table markets as Boston a n d Wa shington, D.C.

Timothy R. Goetz, Principal Grant Street Associates, Inc. A Cushman & Wakefield Alliance Member. DP

Outlook Overall absorption should shift significantly to the positive side throughout 2013 as a number of

Tim Goetz

www.developingpittsburgh.com

Industrial Market Update 2,500,000

t t h e h a l fway point of 2 0 1 3 , t h e I nd u s t r i a l M a rk e t c o n t i nues to send mixed s i g n a l s a s t o b o t h t h e s h o r t term a n d l o n g t e r m d i re c t i o n o f the ma r k e t . W h i l e w e c o n t i n u e t o experie n c e a v e r y h e a l t h y m a r k e t wide o c c u p a n c y r a t e o f 9 2 % a n d high o c c u p a n c y r a t e s a c ro s s a l l proper t y t y p e s , e s p e c i a l l y C l a s s A space a t 9 5 % , t h e m a r k e t a c t i vity is n o t a s ro b u s t a s e x p e c t e d at this p o i n t i n t h e y e a r. Ye a r to date a b s o r p t i o n i s a p o s i t i v e 400,00 0 s q u a re f e e t b u t n o t o n pace f o r t h e h i s t o r i c a l a v e r a g e o f 2,000, 0 0 0 s q u a re f e e t a b s o r p t i o n . In our 2 0 1 3 F o re c a s t , w e p re d i c t e d that th e h i s t o r i c a l l y h i g h o c c upancy l e v e l s w h i c h h a d r i s e n t o t h e pre-rec e s s i o n l e v e l s o f 2 0 0 7 - 2 0 0 8 should re s u l t i n a n u p t i c k i n c o n structi o n a c t i v i t y i n 2 0 1 3 a s C l a s s A space i n v e n t o r y w a s a t d a n g e ro u s l y low lev e l s , e s p e c i a l l y f o r l a r g e r users i n e x c e s s o f 1 5 0 , 0 0 0 s q u a re feet. W h i l e t h e re a re s o m e n o t e worthy b u i l d - t o - s u i t p ro j e c t s o n t h e horizo n , t h e p o s i t i v e n e w s h a s b e e n tempe re d s o m e w h a t b y t h e s u r p r i s ingly l o n g e r s h e l f l i f e o f t h e f e w large v a c a n t C l a s s A b u i l d i n g s i n histori c a l l y s t ro n g s u b m a r k e t s s u c h as the We s t a n d N o r t h w e s t i n t h e 120-13 0 , 0 0 0 s q u a re f e e t s i z e . We stated t h e I n d u s t r i a l M a r k e t t o b e at a ti p p i n g p o i n t w h e re b y a f e w large d e a l s w o u l d p o t e n t i a l l y c re a t e a crisis a s t h e s h o r t a g e o f c o m p e t itive sp a c e f o r l a r g e r u s e r s w o u l d not all o w f o r t h e n o r m a l e x p a nsions, c o n s o l i d a t i o n s a n d b u s i n e s s attract i o n . It appe a r s t h a t t h e P i t t s b u r g h indust r i a l m a r k e t m a y b e i n s y n c

46 DEVELOPINGPITTSBURGH

Industrial Absorption (Sq. ft.)

2,000,000

| Fall 2013

1,500,000

1,000,000

500,000

‐500 500,000 000

‐1,000,000

‐1,500,000

‐2,000,000

‐2,500,000 Total Market

2007

2008

2009

2010

2011

2012

2,088,007

608,875

570,859

‐1,978,524

1,201,492

2,050,837

w i t h t h e national economy, which i s u s u a l l y not the case. Historically, P i t t s b u r gh's Industrial market has l a g g e d t he trends of the national i n d u s t r i al market, both in good t i m e s a nd bad. For instance, 20072 0 0 8 a n d even 2009 were years of p o s i t i v e absorption for Pittsburgh w h i l e t h e national industrial market e x p e r i e nced negative absorption in 2 0 0 8 - 2 0 10. While the Pittsburgh m a r k e t had negative absorption for 2 0 1 0 , i t was a direct result of the c l o s u re of the Sony plant in New S t a n t o n which added over 2 million s q u a re f eet of vacant space to the m a r k e t . In both 2011 and 2012, t h e P i t t s burgh market experienced p o s i t i v e absorption albeit at a slow 1 - 1 . 5 % annual growth rate. C o n s t r u ction activity in the Indust r i a l M a rket has been very limited t h e p a s t several years. While specul a t i v e i n dustrial development has h i s t o r i c ally been limited to a handf u l o f l o cal developers, construct i o n a c t ivity in 2012 was at hist o r i c a l l y low levels and during the f i r s t s i x months of 2013 less than

300,000 square feet was under construction. On the positive side, the Jackson’s Pointe Commerce Park in Butler County came on line in the spring of 2012 and within 15 months has completed transactions for 80% of the planned 335,000 square feet industrial sites. UPS opened its 45,000 square feet facility in April; the initial 70,000 square foot spec building achieved 100% occupancy and a 150,000 square feet warehouse distribu tion center for Highmark is under construction with a fourth quarter 2013 delivery. In the Thor n Hill Industrial Park, Pella W indows & Doors acquired a 7 acre site to construct a new 40,000 square feet office/ware house/showroom with a late Q4/ early Q1 2014 completion date. W ith the completion of the first of two 48,000 square feet R&D/Flex buildings by The Elmhurst Group this summer, there are only two viable development sites left in one of the region’s most successful business parks.

In clos e p ro x i m i t y t o i t s T h o r n Hill Ind u s t r i a l P a r k h e a d q u a r t e r s , Mitsub i s h i E l e c t r i c P o w e r P ro d u c t s contin u e d i t s e x p a ns i o n i n t h e Tr i County C o m m e rc e P a r k . S h o r t l y after l e a s i n g 5 0 , 0 0 0 s q u a re f e e t constru c t i o n i s n o w s t a r t i n g o n the rem a i n i n g 7 0 , 0 0 0 s q u a re f e e t buildin g re s u l t i n g i n t h e c o m p l e tion of t h i s s u c c e s s f u l 1 , 0 0 0 , 0 0 0 square f o o t i n d u s t r ia l p a r k . It was re c e n t l y a n n o u n c e d t h a t Gordon F o o d S e r v i c e i s p l a n n i n g to acq u i re a 6 2 a c re s i t e i n t h e Findlay I n d u s t r i a l P a r k a t We s t p o r t with th e e x p e c t a t i o n o f b e g i n n i n g constru c t i o n o n a 4 2 0 , 0 0 0 s q u a re foot fo o d d i s t r i b u t i o n f a c i l i t y t h a t will pro v i d e o v e r 2 0 0 j o b s . T h i s i s exactly t h e s i z e a n d q u a l i t y u s e r the de v e l o p e r s h o p e d t o a t t r a c t f o r this un i q u e p r i v a t e l y o w n e d d evelopm e n t p ro j e c t . W i t h o v e r 3 0 0 acres p l a c e d i n s e r v i c e a n d o v e r 100 ac re s a b s o r b e d s i n c e t h e p a r k opened i n 2 0 0 9 , t h e F i n d l a y I n d u strial Pa r k a t We s t p o r t i s p o s i t i o n e d to pro v i d e f e e s i m p l e o w n e r s h i p t o occupi e r s a n d m e rc h a n t d e v e l o p ers wit h a n a d d i t i o n a l 2 , 0 0 0 , 0 0 0 square f e e t p l a n n e d f o r P h a s e I I i n

It appears that the Pittsburgh industrial market may be in sync with the national economy, which is usually not the case. Historically, Pittsburgh's industrial market has lagged the trends of the national industrial market, both in good times and bad. For instance, 2007-2008 and even 2009 were years of positive absorption for Pittsburgh while the national industrial market experienced negative absorption in 2008-2010.

addition to the 350,000 square feet already occupied in Phase I. Also in the West Submarket, at the Clinton Commerce Park, the 227,000 square feet Flabeg Solar Panel manufacturing facility announced its closure in the spring of 2013. While it is unfortunate that this highly subsidized project did not achieve the desired results, this quality building should attract interest from other manufacturers in the region to take advantage of its unique size and infrastructure and expected availability in l ate 2013. The much awaited decision by Royal Dutch Shell regarding the proposed ethane cracker plant in Potter Township, Beaver County remains in a holding patter n as the June 30 option period was extended by Horsehead Zinc, which is still in the process of shutting down the 300 acre site. While the proposed ethane cracker plant was never expected to start until mid-2014, this remains the largest and most significant economic development project in Southwester n Pennsylvania and if it proceeds sh ould have a

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Gerard McLaughlin Executive Managing Director gmclaughlin@ngkf.com Louis Oliva Executive Managing Director loliva@ngkf.com 6 PPG Place, Suite 600, Pittsburgh, PA 15222 T 412.281.0100

North America  Europe  Asia-Pacific  Africa  Middle East

www.ngkf.com

Class A Industrial Vacancy

Overall Industrial Vacancy

12.0%

9.0%

10.0%

8.0%

7.0%

8.0% 6.0%

5.0%

6.0%

4.0%

3.0%

2.0%

2.0% 1.0%

0.0% Total Market

2007 8.3%

2008 5.7%

2009 5.0%

2010 5.6%

2011 5.7%

2012 3.9%

0.0% Total Market

2007 7.7%

2008 7.1%

2009 8.3%

2010 10.4%

2011 9.2%

2012 7.4%

Source: Newmark Grubb Knight Frank

signifi c a n t i m p a c t o n b o t h e x i s t i n g and pro p o s e d i n d u st r i a l d e v e l o p ment s i t e s t h ro u g h o u t B e a v e r County a n d t h e We s t S u b m a r k e t s as dem a n d f o r s p a c e b y b o t h midstre a m a n d d o wn s t re a m u s e r s should i n c re a s e s i g n i f i c a n t l y. I n additio n t o t h e $ 4 b i l l i o n c o nstructi o n p ro j e c t , b o t h t h e p e rmanen t j o b s a t t h e p l a n t a n d j o b s created b y o t h e r i n d u s t r i a l u s e r s / occupi e r s s h o u l d b e a d e m a n d driver f o r t h e re g i o n . There w e re a f e w n o t e w o r t h y I n dustria l I n v e s t m e n t t r a n s a c t i o n s i n the fir s t h a l f o f 2 0 1 3 . H i s t o r i c a l l y, the Pit t s b u r g h m a r k e t h a s e x p e r ienced l i m i t e d i n d u s t r i a l i n v e s t m e n t sales a s t h e m a r k e t i s d o m i n a t e d by priv a t e l y h e l d o w n e r o c c u p a n t s and a h a n d f u l o f i n d u s t r i a l d evelope r s w h o p re f e r a ‘ d e v e l o p and ho l d ’ s t r a t e g y r a t h e r t h a n a ‘develo p a n d s e l l ’ s t r a t e g y. A s a result, t h e re a re v e r y f e w n a t i o n a l or inst i t u t i o n a l o w n e r s i n P i t t sburgh. T h e i ro n y i s t h e P i t t s b u r g h marke t i s n o w o n t h e r a d a r o f nation a l a n d i n s t i t u t i o n a l i n v e s t o r s for ad d i t i o n a l a c q u i s i t i o n . H o w e ver, the s e i n v e s t o r s t y p i c a l l y l o o k a t assets i n e x c e s s o f 2 0 0 , 0 0 0 s q u a re feet or $ 1 0 M i n v a l u e a n d re q u i re Class A c o n s t r u c t i o n q u a l i t y. A s only 2 0 - 2 5 % o f o u r t o t a l i n v e ntory fa l l s i n t o t h i s cl a s s i f i c a t i o n , i t is easy t o d e d u c e wh y i n v e s t m e n t activit y h a s b e e n l i m i t e d . In the f i r s t q u a r t e r, t h e 4 1 0 , 0 0 0 square f e e t Tu r n p i k e D i s t r i b u tion C e n t e r, a C l a s s A m u l t i tenant w a re h o u s e d i s t r i b u t i o n

There were a few noteworthy Industrial Investment transactions in the first half of 2013. Hist orically, the Pittsburgh market has experienced limited industrial investment sales as the market is dominated by privately held owner occupants and a handful of industrial developers who prefer a ‘develop and hold’ strategy rather than a ‘develop and sell’ strategy. c e n t e r i n Beaver County was sold t o a n a t ional private investor for $ 2 0 , 0 0 0 ,000. The offering received b i d s f ro m investors throughout the n o r t h e a st, Midwest and Mid-Atlant i c re g i o ns. In the second quarter, t h e 5 3 , 000 square feet R&D/Flex b u i l d i n g at 700 Waterfront Drive w a s a c q uired by a local investor. T h i s w a s an encouraging sign and s h o u l d reassure both local devel -

opers in Pittsburgh and regional/ national developers considering Pittsburgh that there is a viable exit strategy for investing in our market. In closing, if we are able to reach 2,000,000 square feet in absorp tion for the year, it should bode well for 2014 and beyond as the expectation of an improving na tional economy coupled with the local dynamics of the energy industry should increase demand for industrial space in our region. Louis V. Oliva, CCIM, SIOR is the Executive Managing Director for Newmark Grubb Knight Frank and specializes in the Industrial Property Market. He can be reached at loliva@ngkf.com or (412) 4341053. DP

Lou Oliva

www.developingpittsburgh.com

Retail Market Update

ittsburgh is booming! Our m e t ro p o l i t a n m a r k e t a re a experienced a n i n c re a s e i n emplo y m e n t w i t h 1 1 , 8 8 8 n e w j o b s added i n t h e 2 n d Q u a r t e r 2 0 1 3 , placing t h e s e a s o n al l y a d j u s t e d unemp l o y m e n t r a t e a t 6 . 8 % i n J u n e 2013. H o u s i n g w i t hi n t h e re g i o n remain s h i g h l y a ff o rd a b l e e v e n with a v e r a g e s a l e s p r i c e s i n c re a s i n g 2.8% y e a r t o d a t e . Disting u i s h e d re g i o n a l m e d i c a l system s i n c l u d e U P M C a n d H i g hmark. P ro m i n e n t u r b a n u n i v e r s i ties lo c a t e d w i t h i n t h e u r b a n c o re includ e C a r n e g i e M e l l o n U n i v e r s i t y, the Un i v e r s i t y o f P i t t s b u r g h a n d Duque s n e U n i v e r s i t y. T h e P i t t s b u r g h region h a s b e c o m e t h e e p i c e n t e r for an e m e r g i n g n a t u r a l g a s i n d u stry and i s p o i s e d t o s e e t h e n u mber of e n e r g y - re l a t e d c a re e r s g ro w

50 DEVELOPINGPITTSBURGH

| Fall 2013

s i g n i f i c a ntly by the end of this d e c a d e . As a result, Pittsburgh has re c e i v e d much attention nationally a n d t h e accolades include: •

op 10 Great Cities T for starting a business

•

op 10 Cheapest Cities T to Live in

•

op 10 Greatest Places T to Live

•

op 10 Destination City T for Travel and Leisure

R e t a i l e r s seeking a new frontier f o r e x p a nsion have credited the s u c c e s s and repositioning of the C e n t r a l Business District (CBD) a s t h e p rimary ingredient for the re d i s c o v ery of the Pittsburgh region f o r d e v e lopment. Dozens of new re s t a u r a nts, several new hotel an n o u n c e ments, and thousands of

new urban dwellers compliment nearly 168,000 commuters to the CBD. Retailer Scene: Grocery competitors including Whole Foods, Fresh Market, Trader Joe’s, Rare Earth, Bottom Dollar Food and Aldi’s are challenging the regional dominance and market share of Giant Eagle. Restaurateurs Chipotle, Starbucks, DiBella’s and Panera Bread continue to expand within the region. Meanwhile new emerging concepts grabbing a foothold within the full service and QSR concepts include: Noodles & Company, Piada Italian Street Food, Panda Express, Bo nefish Grill, Carrabba’s, Longhor n Steakhouse, Pizza Cuccinova, Burgatory and Jason’s Deli. Convenience store competition is ongoing with Speedway, Sheetz, Get Go and 7-Eleven vying for key cor ner locations throughout the metro area. On the

junior a n c h o r b o x f ro n t L A F i t n e s s , Ross D re s s f o r L e s s , H o m e G o o d s , Petco, H o b b y L o b b y a n d D i c k ’s Sportin g G o o d s a re m o s t a c t i v e . The in a u g u r a l l o c a t i o n o f F i e l d & Stream ( 5 0 , 0 0 0 s q u a re f e e t ) , D i c k ’s Sportin g G o o d s n e w e s t c o n c e p t , opened i n A u g u s t o f t h i s y e a r i n the fo r m e r D i c k ’s l oc a t i o n i n C r a nberry To w n s h i p . Develo p m e n t S c e n e : Vacanc y r a t e s f o r R e g i o n a l S h o pping C e n t e r s h a v e a p p ro a c h e d a l l time lo w r a t e s o f 3 . 8 % . L i k e w i s e , Region a l M a l l s s h a re e q u a l l y l o w vacanc y r a t e s o f 4 % i n t h e p r i m a r y marke t s . W h i l e m o st n a t i o n a l m e tropolit a n re t a i l m a r k e t s a re e x p e riencin g a c ro s s t h e b o a rd l o w e r retail r a t e s , P i t t s b u r g h i s q u i t e the op p o s i t e . H i g h d e m a n d a n d low su p p l y o f p ro d u c t h a v e e i t h e r stabiliz e d o r i n c re a s e d b a s e re n t a l

rates while tenant incen tives have evaporated and operating expenses continue to increase. Nationally, new ground-up retail developments continue in large part to be non-existent. Pittsburgh has several ground up projects underway including Phase 4 of McCandless Crossing (211,916 square feet), Phase 2 of Cranberry Crossroads (125,000 square feet), The Gardens at Market Square in the CBD, and Siena at St. Clair (131,000 square feet). The demand for supply will be in part answered through the redevel opment of several well established and mature regional centers. The Shoppes at Northway (495,000 GLA) in the North Hills on McKnight Road was acquired by LRC Realty and is planned fo r a rede -

IDEAL LOCATION: Park located along I-376 Parkway West near Pittsburgh International Airport AVAILABILITY: 60,000 sf flex building available with loading docks as well as surrounding land parcels that range from 1.7 to 17.6 acres INCENTIVES: Foreign-Trade Zone sites, financing assistance flex building land for sale I-376

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The CBD and the three rivers which define it, embrace the many recreational activities, live theatre per for mances, professional sports teams and t he arts that distinguish our region from so many others.

velopm e n t i n 2 0 1 4 . S e v e r a l n e w retail a n c h o r s w i l l c o m p l i m e n t a new m e rc h a n d i s i n g m i x t h a t w i l l includ e re s t a u r a n t s , a p p a re l a n d grocer y. C e n t u r y I I I M a l l ( 1 , 7 2 0 , 0 0 0 GLA) i n t h e S o u t h H i l l s a t R t . 5 1 was ac q u i re d b y M o o n b e a m C a p i -

t a l I n v e stments earlier this year. P l a n s f o r Century III Mall include a c o n s o lidation of the retail GLA t o 1 , 1 0 0,000 square feet while i n t ro d u cing a focused redevelop m e n t m aster plan that includes e n t e r t a i nment, restaurants, medical a n d h o s pitality. Washington Crown C e n t e r i n Washington, PA will wel c o m e M arshall’s and several new m e rc h a nts to reposition the center a s a n a pparel destination. O u r u n i versities, energy resources, i n n o v a t i ve technology, financial i n s t i t u t i ons, research, and hospi t a l s a re the foundation on which P i t t s b u r gh will continue to grow a n d e x p and into the coming dec a d e s . The CBD and the three rivers w h i c h d efine it, embrace the many re c re a t i onal activities, live theatre p e r f o r m ances, professional sports t e a m s a nd the arts that distinguish o u r re g i on from so many others. A s w e c ontinue to flourish from t h e c o re outward, the goods and s e r v i c e s offered by retail will be in d e m a n d . Topography, infrastructure a n d m a turity of market will con-

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tinue to challenge us to meet these demands with sufficient supply. Kevin Langholz is a principal and retail brokerage leader for Langholz W ilson Ellis Inc. DP

Kevin Langholz

carson publishing, inc. print & electronic publishing, graphic design, website design, print & production

Providing Effective Solutions for Southwestern Pennsylvania’s Commercial Real Estate Needs Office | Industrial | Retail | Investment

606 Liberty Avenue | Suite 300 | Pittsburgh, PA 15222 412.261.2200 | www.LWEre.com

52 DEVELOPINGPITTSBURGH

| Fall 2013

500 McKnight Park Drive • Suite 506A Pittsburgh, Pa 15237 412-548-3823

National Market Update

espite e c onomic h e a dwinds f ro m federa l b u d g e t s e q u e s t r ation, t h e U . S . o ff i c e m a r k e t contin u e d i t s s t e a d y p a c e o f recove r y d u r i n g Q 2 2 0 1 3 . O f fice de m a n d b e n e f i t e d f ro m a slightly l o w e r u n e mp l o y m e n t rate, a t 7 . 6 % a s o f J u n e , a n d growth i n p ro f e s s i o n a l a n d busine s s s e r v i c e j o bs , w i t h the na t i o n a l v a c a n c y r a t e decrea s i n g b y 2 0 b a s i s p o i n t s (bps) d u r i n g t h e q u a r t e r t o 15.2% . T h i s w a s t h e f o u r t h quarte r l y d e c l i n e i n t h e l a s t five qu a r t e r s .

The technology and en ergy sectors continued to fuel demand across the country. Energy companies accounted for the bulk of metro Houston’s 1 .2 million sq. ft. of positive absorption, while technology and healthcare users contributed to the nearly 1.0 million sq. ft. of positive absorption in metro Boston. In Midtown South Manhattan, also known as Silicon Alley, tech demand fueled 700,000 sq. ft. of positive absorption during Q2 2013, the highest level of positive absorption of all U.S. downtown markets.

While e c o n o m i c g ro w t h w a s appare n t a c ro s s t h e c o u n t r y, we saw s o m e re g i o n a l d i v e rgence i n t h e p e r f o r m a n c e o f the off i c e m a r k e t . T h re e o f the fou r U . S . re g i o n s p o s t e d an ove r a l l d e c re a s e i n v a cancy d u r i n g Q 2 2 0 1 3 . T h e lone e x c e p t i o n w a s t h e E a s t , where t h e re g i o n a l v a c a n c y rate he l d s t e a d y a t 1 3 . 2 % — still th e l o w e s t o f a l l U . S . region s . T h e l a c k o f i m p ro v e ment i n t h e E a s t w a s a re s u l t of dim i n i s h e d a c t i v it y b y t h e federa l g o v e r n m e n t a n d t h e financ i a l s e r v i c e s s ec t o r, a s well as r i g h t - s i z i n g b y o c c upiers.

Minimal levels of new office construction continued to keep vacancy levels relatively low. However, although Q2 2013’s 3.9 million sq. ft. of new supply more than doubled Q1 2013’s c ompletion level, delivery levels remained significantly below pre-2008 lev els. Most multi-tenant construction projects still required an an chor tenant, though several major markets had speculative con-

The U.S. office vacancy rate dropped 20 basis points (bps) during Q2 2013 to 15.2%, continuing its slow, steady pace of recovery.

month during Q2 2013, with increases in business and professional service jobs accounting for 31% of the quarter’s employment gains.

U.S. employment gains averaged 188,000 new jobs per

The positive effect of employment gains were dampened

54 DEVELOPINGPITTSBURGH

| Fall 2013

by the implementation of more efficient workplace strategies which has resulted in a reduction in the overall footprint of many financial and professional services firms.

structi o n p ro j e c t s u n d e r w a y a s o f the en d o f t h e q u a r t e r. S p e c u l a t i v e projec t s i n d e s i r a b l e s u b m a r k e t s with s i n g l e - d i g i t v a c a n c y r a t e s i n Housto n , S a n F r a n c i s c o , B o s t o n , Manha t t a n a n d D e nv e r h a v e g e n e rated s i g n i f i c a n t t e n a n t i n t e re s t . U.S. em p l o y m e n t g a i n s c o n t i n u e d their f a i r l y s t e a d y p a c e , a v e r a g i n g an inc re a s e o f 1 8 8 , 0 0 0 n e w j o b s per mo n t h d u r i n g Q 2 2 0 1 3 . B u s iness a n d p ro f e s s i o n a l s e r v i c e s a c -

Sequestration’s negative impact on tenant demand was concentrated in markets reliant on the government and government contractors, particularly aerospace and defense.

counted for 31% of both the quarter-over-quarter and year-to-date gain in private sector employment, outpaced only by leisure and hospi tality, which accounted for 34% of the year-to-date gain. Meanwhile, gover nment posted a 1.3% yearto-date loss in employment due to automatic budget cuts which also negatively impacted aerospace and defense contractors. W ith stronger employment, an improving hous -

Strong investment sales activity in Q2 2013 contributed to a 22% year-over-year increase in total transaction volume for the first half of 2013.

was most prevalent in technology- and energy-heavy markets that have exhibited strong tenant demand.

Speculative construction, while still at historic lows, www.developingpittsburgh.com

ing market and individual investors more bullish on the stock market, the consumer comfort index improved to -28 versus the 12-month average of -35, according to Moody’s Analytics. The pace of office investment sales activity picked up during the Q2 2013, with strong interest from overseas buyers. Federal Reserve Chairman Ber nanke’s comments in June drew attention to the inevi table tapering of the Fed’s quantitative easing program, leading to further interest rate volatility during the latter part of the quarter.

DEVELOPMENT

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While 2013 investment activity remained on track for a strong year—transaction volume for the first half of 2013 paced 22% ahead of the same sixmonth period in 2012, according to Real Capital Analytics—the retur n parameters of leveraged transactions will be affected by recent increases in 10-year treasuries. Any actions taken by the Fed in response to economic growth, however, will be somewhat mitigated by improving market fundamentals. In markets like Manhattan, partial interest transfers and a bifurcation of assets have increased, allowing landlords to capitalize on price gains and investors to obtain a piece of the most desirable, but still limited, product. Secondary and suburban markets recorded an uptick in sales volume as investors were more willing to venture further out on the risk spectrum in light of improving market fundamentals. CBRE U.S. Research Team is part of CBRE Global Research and Consulting – an integrated community of preeminent researchers and consultants who provide real estate market research, econometric forecasting, and corporate and public sector strategies to investors and occupiers around the globe. For more information conta ct: Jeffrey Ackerman CBRE | Managing Director Pittsburgh Market Leader 600 Grant Street, Suite 4800 Pittsburgh, PA 15219 (412) 471-9500 jeffrey.ackerman@cbre.com DP

Jeffrey Ackerman

56 DEVELOPINGPITTSBURGH

| Fall 2013

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Legal/Legislative Outlook Significant Amendments to Pennsylvania’s Mechanics’ Lien Law Appear Imminent By Richard D. Kalson, Esq. and James D. Miller, Esq. I. I n t ro d u c t i o n a n d H i s t o r y The Pe n n s y l v a n i a G e n e r a l A s s e m b l y is serio u s l y c o n s i d e r i n g e n a c t i n g i t s third s e t o f a m e n d m e n t s t o t h e M e chanic s ’ L i e n L a w o f 1 9 6 3 , 4 9 P. S . § 1101 e t s e q . ( t h e “ L i e n L a w ” ) , within a f i v e y e a r s p a n . H o u s e B i l l No. 47 3 ( t h e “ B i l l ” ) w o u l d a d d n e w notice re q u i re m e n t s t o t h e L i e n Law, a s w e l l a s a n u m b e r o f o t h e r revisio n s . After d e c a d e s o f re m a i n i n g u n change d , t h e L i e n La w re c e i v e d m a jor rev i s i o n s i n 2 0 0 7 , f o l l o w e d b y additio n a l a m e n d m e n t s i n 2 0 0 9 . A freque n t c r i t i c i s m o f t h e L i e n L a w, a desc e n d a n t o f a re m e d i a l s t a t u t e first en a c t e d i n P e n n s y l v a n i a d u ring the l a t e 1 7 0 0 s , i s t h a t i t s r i g i d and an t i q u a t e d p ro v i s i o n s a re n o t adequ a t e l y e q u i p p e d t o re s p o n d to man y m o d e r n d a y c o n s t r u c t i o n situati o n s a n d p a y m e n t i s s u e s . The Bi l l i s a n o t h e r a t t e m p t b y t h e Genera l A s s e m b l y t o m o d e r n i z e a n d improv e t h e p ro v i s i o n s o f t h e L i e n Law w h i l e b a l a n c i n g t h e i n t e re s t of own e r s a n d l e n d e r s a g a i n s t t h e interes t s o f c o n s t r u c t o r s a n d s u b contra c t o r s . II. A m e n d m e n ts P ro p o s e d b y the Bill A. N e w N o t i c e R e q u i re m e n t s The ma j o r i t y o f t h e B i l l f o c u s e s o n

t h e c re a tion of a new lien n o t i c e s ystem for project o w n e r s and subcontractors t o f o l l o w. In order to man a g e a n d facilitate the new n o t i c e requirements, the B i l l c a l l s for the creation o f a “ S t ate Construction N o t i c e s Directory” (“Direc t o r y ” ) w ebsite by July 1, 2 0 1 5 * . The Pennsylvania D e p a r t ment of Labor and I n d u s t r y will be respon s i b l e f o r the Directory. T h e D i rectory will serve as t h e d a t abase for owners t o f i l e a “Notice of Comm e n c e m ent” and subcont r a c t o r s to file a “Notice o f F u r n i shing.” These two t y p e s o f notices are criti c a l c re a tions of the Bill. I t i s p o s sible that filing f e e s p a y able by the project o w n e r may be required. T h e s e n ew notice require m e n t s s eek to address t h e l o n gstanding problem i n P e n n sylvania of owne r s a n d contractors not k n o w i n g the identity of s u b c o n t ractors or material s u p p l i e r s fur nishing labor o r m a t e rials for a project. A s a re s ult, an owner or c o n t r a c tor often did not e v e n h a ve knowledge of t h e i d e n tity of a potential l i e n c l a i mant, let alone the f a c t t h a t they possessed a c l a i m , u ntil receiving a no t i c e o f i ntent to file a lien. T h e B i l l provides the owner w i t h t h e right to file a N o t i c e of Commencement w i t h t h e Directory before w o r k o n an improvement b e g i n s i n order to iden t i f y a l l s ubcontractors and m a t e r i a l suppliers that may h a v e l i e n rights through t h e i r s u bsequent required f i l i n g o f a Notice of Furnishing.

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1. Notice of Commencement In orde r f o r a N o t i c e o f C o m m e n c e ment f i l e d b y a n o w n e r t o b e e ff e c tive, th e o w n e r m u s t i n c l u d e , a t a minim u m , t h e f o l l o w i n g i n f o r m ation: (1 ) n a m e , a d d re s s , a n d e - m a i l addres s o f t h e c o n t r a c t o r ; ( 2 ) n a m e and lo c a t i o n o f t h e c o n s t r u c t i o n project ; ( 3 ) l e g a l d es c r i p t i o n o f proper t y u p o n w h i c h t h e i m p ro v e ment i s b e i n g m a d e ; ( 4 ) n a m e , addres s , a n d e - m a i l a d d re s s o f legal o w n e r o f re c o rd o f t h e p ro p erty; (5 ) n a m e , a d d re s s , a n d e - m a i l addres s o f p e r s o n ot h e r t h a n t r u e legal o w n e r a t w h o s e d i re c t i o n the im p ro v e m e n t s a re b e i n g m a d e , if any; a n d , ( 6 ) i f a p p l i c a b l e , t h e name, a d d re s s , a n d e - m a i l a d d re s s of a su re t y p ro v i d i n g p e r f o r m a n c e and pa y m e n t b o n d s . H . B . 1 6 0 2 § 501.2( A ) ( 1 ) . A l t h o u g h t h e B i l l f a i l s to exp re s s l y a d d re s s t h e s i t u a t i o n where a p ro j e c t h a s s e v e r a l c o n tractor s t h a t h a v e c o n t r a c t u a l p r i vity wit h t h e o w n e r, i t c a n re a s o n ably be p re s u m e d t h a t t h e o w n e r i s require d t o i n c l u d e t h e s p e c i f i e d i n format i o n f o r a l l c on t r a c t o r s i n t h e Notice o f C o m m e n c e m e n t . T h e B i l l also do e s n o t a d d re s s w h e t h e r a n owner h a s a d u t y t o a m e n d a f i l e d Notice o f C o m m e n c e m e n t i f t h e identit y o f a c o n t r a c t o r c h a n g e s o r the ow n e r c o n t r a c t s w i t h a n a d d itional c o n t r a c t o r. The ow n e r ’s f i l i n g o f a c o n f o r m i n g Notice o f C o m m e n c e m e n t s h o u l d preven t c e r t a i n d i ff i c u l t s i t u a tions t h a t a r i s e i n m e c h a n i c s ’ l i e n cases. F o r e x a m p l e , t h e N o t i c e of Com m e n c e m e n t s h o u l d e l i m inate in s t a n c e s w h e re a c o n t r a c t o r mistak e n l y b e l i e v e s i t i s c o n t r a c ting wi t h t h e p ro p e r t y o w n e r, b u t later d i s c o v e r s t h a t t h e c o n t r a c t i n g party i s n o t t h e l e g a l o w n e r o r t h a t the wo r k w a s n o t p e r f o r m e d a t t h e directi o n o f t h e l e g a l o w n e r. The Bi l l c r i t i c a l l y re q u i re s t h a t subcon t r a c t o r s h a v e a n a ff i r m a tive du t y t o c h e c k t h e D i re c t o r y to dete r m i n e w h e t h e r a N o t i c e o f Comm e n c e m e n t h a s b e e n f i l e d f o r a proje c t b e f o re p e r f o r m i n g w o r k or fur n i s h i n g m a t e r i a l s . H . B . 1 6 0 2 § 501. 2 ( B ) ( 1 ) . I n a dd i t i o n t o f i l i n g the No t i c e o f C o m m e n c e m e n t w i t h the Dire c t o r y, t h e o w n e r a l s o m u s t conspi c u o u s l y p o s t t h e N o t i c e o f

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The Bill critically requires that sub contractors hav e an affir mative duty to check the Director y to deter mine whether a Notice of Commencement has been filed for a project before per for ming work or fur nishing materials. H.B. 1602 § 501.2(B) (1). In addition to filing the Notice of Commencement with the Director y, the owner also must conspicuously post the Notice of Commencement at the project site before work commences, and take reasonable measures to ensure the Notice of Commencement remains posted throughout the duration of the pro ject. C o m m e ncement at the project site b e f o re work commences, and take re a s o n a ble measures to ensure the N o t i c e of Commencement remains p o s t e d throughout the duration of t h e p ro j ect. “Reasonable measures” i s d e f i n ed in the Bill as the owner

reposting the Notice within 48 hours of being notified in writing or by e-mail that the Notice is not posted at the project sit e. The Bill does not explain the ramifications of failing to use reasonable mea sures to ensure the Notice remains posted at the project sit e, but a subcontractor might possibly be able to take advantage of such a failure to excuse an untimely filing of a notice of fur nishing, at least for the duration that the owner failed to comply with the posting requirement. There also is no indi cation in the Bill of whether substantial compliance with the Notice of Commencement requirements will be considered to be sufficient, or if the failure to strictly comply with the provisions will excuse the subcontractor from having to file the Notice of Fur nishing . 2. Notice of Furnishing If the owner properly and timely files the Notice of Commencement, the Bill provides that a subcon tractor must serve a “Notice of Fur nishing” in order to preserve its right to file a mechanics’ lien. Id. at § 501.2(B). The Notice of Fur nishing must be served on the owner either by personal delivery (with a signed acknowledgment by the owner), certified mail, or filed with the Directory within 20 days of first performing work in connection with the construction of the improvement in order to have the lien cover all work performed for the project. Id. at § 501.2(B)(2)(II). Otherwise, a lien claim will be valid only for the labor and materials fur nished beginning on 20 days before the date on which the Notice was served. The Bill requires that the Notice of Fur nishing must inclu de the following information: (1) general description of the labor, skill, materials or equipment fur nished; (2) name and address of the person supplying the items stated in the work description; (3) name and address of the person with whom the subcontractor contracted with for the work, and, (4) a description of the property being improved. In determining whether the subcontractor has met these requirements,

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the Bil l d e c l a re s t h at a s t a n d a rd o f “subst a n t i a l c o m p l i a n c e ” m u s t b e used. T h e re f o re , a su b c o n t r a c t o r forfeit s i t s r i g h t t o f i l e a m e c h a nics’ lie n i f i t f a i l s t o s u b s t a n t i a l l y comply w i t h t h e N o t i c e o f F u r n i s hing req u i re m e n t s . B. N o L i e n o n R e s i d e n t i a l P ro p erty is P e r m i t t e d f o r A m o u n t s P a i d by Ow n e r t o C o n t r ac t o r The fin a l c h a n g e p ro p o s e d b y the Bil l m o d i f i e s t h e L i e n L a w t o provid e t h a t a s u b c o n t r a c t o r d o e s not ha v e a r i g h t t o f i l e a l i e n o n a residen t i a l i m p ro v e m e n t w h e n t h e owner p a i d t h e c o n t r a c t o r t h e f u l l contra c t p r i c e , a n d t h e p ro p e r t y is or w i l l b e u s e d a s t h e re s i d e n c e of the o w n e r. H . B . 1 6 0 2 § 3 0 1 ( b ) . The Bi l l f u r t h e r p ro v i d e s t h a t a l i e n filed a g a i n s t re s i d e n t i a l p ro p e r t y will be d i s c h a r g e d w h e n t h e f u l l contra c t p r i c e i s p a i d t o t h e c o ntractor o r w i l l b e re d u c e d t o t h e amoun t o f t h e u n p a i d c o n t r a c t price o w e d b y t h e o w n e r o r t e n a n t to the c o n t r a c t o r. T h e a m e n d m e n t s in this i n s t a n c e s e r v e t h e p u b l i c policy o f c o n s u m e r p ro t e c t i o n a n d protec t i n g h o m e o w n e r s w h o m a y not be e q u i p p e d t o d e a l w i t h t h e onerou s re q u i re m e n t s o f t h e L i e n Law. II. A L o o k i n t o t h e F u t u re i n Pennsylvania by Examining the Past in Ohio: O h i o C o u r t s ’ I n t e r p re t a t i o n o f N o t i c e o f C o m m e n c ement and Notice of F u r n i s h i n g R e q u i re m e n t s under the Ohio Lien Law For tho s e w h o h a v e b e e n i n v o l v e d in con s t r u c t i o n p ro j e c t s i n O h i o , the no t i c e re q u i re m e n t s c o n t a i n e d in the B i l l c e r t a i n l y a re f a m i l i a r a s they cl o s e l y re s e m b l e p ro v i s i o n s i n Ohio’s M e c h a n i c s ’ L i e n L a w. O h i o employ s a s i m i l a r n o t i c e m e t h o d involvi n g a N o t i c e o f C o m m e n c ement f i l e d b y t h e o w n e r ( o r i t s design e e ) a n d a N o t i c e o f F u r n i s hing ser v e d b y s u b c o n t r a c t o r s a n d materi a l s u p p l i e r s . S e e O R C § § 1311.0 4 - 1 3 1 1 . 0 5 . U n l i k e t h e D i re c tory w e b s i t e p ro p o s e d b y t h e P e n n sylvani a B i l l , h o w e v e r, O h i o h a s n o centra l d a t a b a s e f o r s u c h n o t i c e s . Instead , n o t i c e s o f c o m m e n c e m e n t must b e f i l e d w i t h t h e o ff i c e o f t h e

62 DEVELOPINGPITTSBURGH

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For those who hav e been involved in constr uction pro jects in Ohio, the notice requirements contained in the Bill certainly are familiar as they closely resemble pro visions in Ohio’s Mechanics’ Lien L aw. Ohio employs a similar not ice method involving a Notice of Commencement filed by the owner (or its designee) and a Notice of Fur nishing ser ved by subcontractors and material suppliers. c o u n t y recorder where the prop e r t y i s l ocated and are subject to a d d i t i o n al provisions to ensure that t h e a p p ropriate parties receive the n o t i c e s . The following Ohio court d e c i s i o n s interpreting Ohio’s notice p ro v i s i o ns may prove to be a useful g u i d e i n predicting how the Bill w i l l b e i nterpreted and enforced by P e n n s y l v ania courts. F o r e x a mple, in Linworth Lumber C o . v. Z . L.H., Ltd., 802 N.E.2d 7 3 6 , 7 4 2 (Ohio C.P. 2003), aff ’d, 2 0 0 3 O hio 4190, P24 (Ohio Ct. A p p . A u g. 4, 2003), an Ohio trial c o u r t h eld that a subcontractor is e x c u s e d from serving a Notice of

Fur nishing by the owner’s failure to include required information in the Notice of Commencement only when the omitted information is necessary to complete service of the Notice of Fur nishing on the owner or its designee. The court found that the inclusion of the name and address of the prop erty owner and original contractor in the Notice of Commencement was all that was necessary for the subcontractor to serve the Notice of Fur nishing. The trial court discounted the significance of the owner’s omission of the date the owner first executed a contract, a complete list of all original contrac tors, and the address of the person preparing the notice form, and misidentification of the original contractor from the Notice of Com mencement. Thus, the subcontractor was not excused from failing to serve the Notice of Fur nishing. On appeal, the Ohio Court of Appeals affirmed the lower court’s deci sion on the basis that the owner’s Notice of Commencement substantially complied with the Ohio Lien Law the Notice, and was sufficient to put subcontractors and material suppliers on notice of the owner’s identity and the location of the construction work. Conversely, in Clinton Elec. & Plumbing Supply v. Airline Profes sionals Assn., Loc. 1224, 2006 Ohio 1274 (Ohio Ct. App. Mar. 20, 2006), the court of appeals excused a subcontractor from filing a Notice of Fur nishing when the owner abbreviated its name in the Notice of Commencement, which failed to comply with the requirement that the Notice of Commencement contain the name of the owner of the real property. The di stinguish ing characteristic of this case is that the mistake was deemed to be a substantial deficiency because it prevented the correct indexing of the Notice of Commencement under the owner’s proper name, and a search of the owner’s name failed to show the existence of the Notice of Commencement. The court also refused to interpret the Ohio Lien Law to place a burden on the lien claimant to prove that it was preju diced by the defect in the Notice of Commencement before the lien

claima n t ’s f a i l u re t o f i l e t h e N o t i c e of Fur n i s h i n g w o u l d b e e x c u s e d . The es t a b l i s h m e n t o f t h e D i re c tory m a y e l i m i n a t e t h i s p o t e n t i a l indexin g m i s t a k e b e c a u s e t h e B i l l provid e s t h a t t h e N o t i c e o f C o m mence m e n t m u s t b e s e a rc h a b l e , at min i m u m , b y t h e o w n e r ’s n a m e , contra c t o r ’s n a m e , a n d t h e p ro p erty ad d re s s . T h u s , a m i s t a k e i n t h e owner ’s n a m e w o u l d n o t a ff e c t a subcon t r a c t o r ’s a b i li t y t o s e a rc h t h e Notice b a s e d o n t h e p ro p e r t y a d dress a n d c o n t r a c t or ’s n a m e . An exc e l l e n t e x a m p l e f ro m O h i o of the c r i p p l i n g e ff e c t o f a s u b contra c t o r ’s u n t i m e l y f i l i n g o f t h e Notice o f F u r n i s h i n g i s J i m M o r g a n Elec. C o . v. S m i t h , 6 8 4 N . E . 2 d 1 1 7 , 120 (O h i o C . P. 1 9 9 6 ) , i n w h i c h t h e court h e l d t h a t a s u b c o n t r a c t o r ’s failure t o f i l e i t s N o t i c e o f F u r n i s hing un t i l f o r t y - e i g h t d a y s a f t e r t h e last da y i t p e r f o r m ed w o r k o n t h e projec t p re c l u d e d t h e f i l i n g o f a lien alt o g e t h e r. T h e O h i o L i e n L a w, like th e p ro p o s e d P e n n s y l v a n i a amend m e n t s , p e r m it s a l i e n c l a i m to rela t e b a c k t o a c e r t a i n d e f i n e d

p e r i o d before the filing or record i n g o f t he Noticing of Fur nishing. I n O h i o , the lien claim relates back t o 2 1 d ays before the Notice of F u r n i s h i ng is served or recorded. B e c a u s e the Notice of Fur nishing a t i s s u e in that case was recorded o u t s i d e the 21-day period, none of t h e w o r k fur nished by the subcont r a c t o r was covered by the lien and t h e l i e n was invalid. The court also h e l d t h a t the owner’s failure to p ro p e r l y post the Notice of Com m e n c e m ent at the project site, and t h e o w n er’s failure to include the d a t e o n which the owner first cont r a c t e d with an original contractor i n t h e N otice of Commencement d i d n o t excuse the subcontractor f ro m t i mely serving its Notice of F u r n i s h i ng. W h i l e t hese Ohio cases may not p ro v e t o be accurate predictions o f h o w Pennsylvania courts will i n t e r p re t and apply the amend m e n t s c ontained in the Bill, they a re t h e best guidance available at t h i s t i m e. Pennsylvania’s statutory l a n g u a g e with respect to Notices

of Commencement and Fur nishing will contain several subtle variances from Ohio’s statutory language, which may lead to different out comes under similar facts. More over, the existence of the Directory, which does not exist in Ohio, may compel Pennsylvania courts to treat certain notice deficiencies in a less lenient manner. Nonetheless, the Ohio decisions serve as a useful war ning to owners, subcontractors and material suppliers of the potential pitfalls involved with the proposed notice requirements, and illustrate important considerations that should be taken int o account when beginning a construction project and fulfilling the notice mandates. Rick Kalson and James Miller are attorneys in the construction and land development practices at Babst Calland. DP

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Benchmarks

Barbara McNees Reflects on Pittsburgh

c a m e d own from leadership that w e n e e d ed to combine the efforts o f a l l t h e organizations to get the m o s t o u t of their efforts and maxi m u m t h e retur n on what they were i n v e s t i n g.

n August 15, Barbara A. McNees re t i re d a s p re s i d e n t of the Greate r P i t t s b u r g h C h a m b e r o f Comm e rc e a f t e r 1 6 y e a r s i n t h a t office. H e r c a re e r i n e c o n o m i c develo p m e n t i n c l u d e d w o r k a t t h e Beaver C o u n t y C h a m b e r o f C o mmerce a n d e i g h t y e a r s w o r k i n g f o r Gover n o r s C a s e y a n d R i d g e . D u r i n g that ti m e s h e w i t n e s s e d t h e re g i o n experie n c e “ c r i s i s , re c o v e r y a n d transfo r m a t i o n ” a n d t a k e s p r i d e in leav i n g a t a t i m e w h e n P i t t sburgh’s f u t u re l o o k s e v e n b r i g h t e r. Develo p i n g P i t t s b u r g h s a t d o w n with M c N e e s a n d a s k e d h e r t o t a k e stock o f w h a t h a s t r a n s p i re d d u r i n g her ten u re .

T h a t w a s right about the time that t h e A l l e gheny Conference had done t h e Wo r king Together Consortium t h a t w a s led by Dr. Mehrabian, who w a s p re sident of Car negie Mell o n . D r. Mehrabian in that report t a l k e d a bout the need to become a re g i o n, that the areas that were d o i n g w ell across the country were a c t i n g a s a region. So as we moved f o r w a rd there was really a strong s u p p o r t from leadership to put t o g e t h e r an organization so that w e c o u l d function as a region. The re s u l t o f all that is what we have n o w, t h e Allegheny Conference and i t s a ff i l i ates so that we could delive r o n t h e organizational structure a n d t h e n work through leadership t h ro u g h out the region to develop w h a t t h e issues are so we can de c i d e w h ere to put our resources.

DP: W h a t a r e t h e a c c o m p l i s h m e n t s of the C h a m b e r t h a t y o u f e e l h a d the big g e s t i m p a c t ?

We d o t hat in three-year chunks, p u t t i n g together a strategic plan e v e r y t h ree years with our leaders h i p . I t hink that’s very important. T h i s i s a leadership-driven effort n o t a s t aff-directed effort. It’s an i m p o r t a nt reason why we’re now s e e n a s a region and really do func t i o n w e l l regionally.

BAM: C o m i n g t o t h e C h a m b e r i n 1997, i t w a s a b o u t t h e t i m e t h a t the lea d e r s h i p b e g a n t o l o o k a t mergin g t h e f o u r o r g a n i z a t i o n s [Great e r P i t t s b u r g h C h a m b e r o f Comm e rc e , P i t t s b u r g h R e g i o n a l Allianc e , A l l e g h e n y C o n f e re n c e On Co m m u n i t y D e v e l o p m e n t a n d Pennsy l v a n i a E c o n o m y L e a g u e ] , a n d a few o f u s t h a t w e re h i re d t h e n were a c t u a l l y b ro u g h t i n t o m a k e that ha p p e n . T h e re w e re a l o t o f organi z a t i o n s d o i n g a l o t o f d i fferent t h i n g s a n d t h e s a m e p e o p l e were l e a d i n g a l l o f t h e m . T h e w o rd

Yo u t a l k about the transformation o f P i t t s burgh the city and that’s the b r a n d b ut a lot of the real develop m e n t h a s been done in the counties o u t s i d e of the city. That truly is a re s u l t o f tur ning us into a region a n d d e v eloping a strategy to enable u s t o w ork together.

DP: What ideas or decisions can you point to that made the difference in how our region was transformed? BAM: A big change was the passing of the Brownfields Act so that we could get the Commonwealth of Pennsylvania to put dollars in and we could begin cleaning up the sites so that development could occur. The first brownfield I was in volved with was the Second Avenue site [the former J & L site] which is now the technology corridor. Pri vate developers and banks wouldn’t touch that site because of the cyanide in the slag. You couldn’t get financing. So the RIDC came in and put up the first buil ding and did some of the first environmental work that needed to be done. It was really one of the first ventures we did on a contaminated site. So to see that tur n around and then move down the river to the next sites felt very good. One of the biggest chall enges we had with the brownfield s was with the people who lived in those communities. When we came in to tear those buildings down th ere was tremendous objection from the communities because ev en though the steel industry had gone away, people in those communities didn’t want to see those buildi ngs come down because they still had hope that the industry would retur n. So even though we were cleaning those sites up and making them ready for the future it was pretty stressful for those communities and their leadership. If you look now at what’s developed on those sites and the economic generators that are there now, it was the right thing to do.

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The Keystone Opportunity Zone that originated in the late 1980’s and early 1990’s was also a big help. We’ve used them very well in Southwestern Pennsylvania and KOZ’s have contributed to the development of many sites. Another thing that helped with the transformation was Jared Cohon and Mark Nordenberg coming together to stop being competitors and start being very collaborative. They both could do what they did very well and of course the medical research piece being brought in from UPMC created growth in the total research dollars coming into the region. They stopped licensing the technology to people from California, Boston and other areas as well. Their commitment to keep the licensing here and grow the companies here and the ability of the private sector to raise venture capital resulted in the whole innovation economy built around research. I think another key when you look at our skyline is our corporate leadership. We’ve been very blessed in terms of commitment to have PNC, BNY/Mellon and all the law firms that make their worldwide headquarters here. They put their money where their mouths are. They could have built offices and operations centers anywhere. They chose to do it in Pittsburgh and in downtown to keep it vital. The revitalization that began with Renaissance I and Gateway Center continues because we’ve been so blessed to have corporations that are very committed, very active and involved in the community. DP: What are the most significant changes that have occurred in the region over the past 25 years? BAM: That's an interesting question. I think the most significant change has been in Pittsburghers themselves. When I first moved back here and we had lost the steel industry, we looked at the strategic opportunities and would bring site location experts in and the first thing a Pittsburgher would say to them would be ‘why do you want to be here, why do you want to be in Pittsburgh’? After Bill Flanagan came in, we went through a whole communica-

66 DEVELOPINGPITTSBURGH

| Fall 2013

tions program aimed at marketing Pittsburgh to Pittsburghers. Other regions were marketing themselves to people outside but we discovered after very painstaking survey and research that what we needed to do was change the perception of the people in this region about what this region is. I think we have come full circle on that. We now have people who are so proud to be Pittsburghers and proud of the transformation that has occurred because of all the hard work that has been done. I don’t think we have the cab driver saying, ‘why did you come here’ anymore. That is one of the biggest changes I have seen. We are no longer derogatory about Pittsburgh but are very proud of where we are. DP: What would you want to accomplish if you were presiding over the Chamber for another 10 years? BAM: I think over the next ten years the challenge is going to be the talent attraction. We’re edging our demographics a little younger but not necessarily gaining more people. No region is growing by having more babies; they are growing through immigration, talent attraction. And as you look at people like me, the Baby Boomers, we’re going to be retiring over the next ten years and the next generation has to be ready to step in. They have to have the right skills, the right education to take the jobs that are going to be available.

do that well but again it’s at the federal level where we need a solid energy policy that’s not all over the place. Coal is still a big part of the energy sector here and we need to do more research around clean coal. And what’s happening in the nuclear industry is sad. We should be able to do nuclear energy here and not have to only export it. I think Pennsylvania is going to be a huge player in the energy industry just like we were back when they first discovered oil in T itusville. And the other issue that is important is the whole air service area. It’s not just for Pittsburgh but for Cincinnati, Columbus, St. Louis and smaller cities. How do you push air service back to the cities that aren’t New York or Atlanta or Chicago? I think that’s an issue again, that is critical to the attraction and retention of jobs. DP: What will you do all day now? BAM: (Laughs) I don’t know! It will be interesting to see. I told my husband that I woke up in the middle of the night with a nightmare that I’m going to have to cook him lunch every day. That is not a goal! He may have to learn to cook. We have some travel plans, some things to do that we haven’t had time to do over 30 years. We’re not the kind of people to just take it easy so I’m sure we’ll find things to do to stimulate us intellectually. DP

The whole diversity and immigration problem I think is going to be our next great challenge. We have the companies but they won’t stay if they don’t have the people with the skills they need to do the work. We have a great history with immigration in this city; that’s who we are. But there has to be a federal immigration policy that works so that the people with the skills that are needed can come to Pittsburgh and be part of the economy. The other thing that would be on my ‘to do’ list would be the whole energy industry. That’s either going to be a big boom or not but we’ve done a good job in Pennsylvania of regulating the industry so that it’s environmentally friendly. I think states

Barbara McNees

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For more information on how you can develop connections with commercial real estate through NAIOP, visit us online at www.naiop.org or call (800) 456-4144.

Voices Developing Leaders Offer a Suggestion to Pittsburgh’s Next Mayor Mary M a r g a re t M c C a r t y Sales E x e c u t i v e Herbe r t , R o w l a n d & G r u b i c , I n c .

A d a m V iccaro A s s o c i a te C B R E I n c.

Kyle Prawdzik Director HFF

Having been born and raised less than 10 miles f ro m d o w n t o w n P i t t sburgh (Mt. Lebanon) I’ve been fortunate enough to g ro w u p e x p e r i e n cing eve r y t h i n g t h e c i t y h a s t o o ff e r. Now, a s a y o u n g p ro f e s s i o n a l , I a m especi a l l y i n t e re s t e d i n f o l l o w i n g the de v e l o p m e n t s i n P i t t s b u r g h ’s revital i z a t i o n . To t h e n e w m a y o r o f Pittsbu r g h , I w o u l d l i k e t o s e e y o u re-cap t u re y o u n g e r s u b u r b a n i t e s . I see m a n y y o u n g a d u l t s c h o o s i n g to mov e o u t i n t o e v o l v i n g s u burbs su c h a s R o b i n so n , C r a n b e r r y, and Wa s h i n g t o n , PA . P i t t s b u r g h is und e r g o i n g a n e x c i t i n g re s u rgence i n c o m m e rc i a l a n d re s i d e n tial de v e l o p m e n t a n d I b e l i e v e t h e mayor s h o u l d p l a y a n a c t i v e ro l e i n attract i n g p e o p l e a n d b u s i n e s s e s back t o t h e c i t y. T h e re a re s e v e r a l new a n d p l a n n e d p ro j e c t s c o n t r i b uting t o o u r re v i t a l i z a t i o n , s u c h as the l o f t a p a r t m e n t s i n t h e S t r i p Distric t , re s t a u r a n t s a n d n i g h t l i f e in Mar k e t S q u a re , an d t h e r i v e rfront d e v e l o p m e n t s o n t h e N o r t h Shore. I t i s m y h o p e t h a t t h e n e w mayor o f P i t t s b u r g h w i l l b e c o mmitted t o p ro m o t i n g t h e c i t y a s a premie r s p o t f o r p ro f e s s i o n a l s t o live, w o r k , a n d e n j o y. I ’ m e x c i t e d for Pit t s b u r g h ’s re v i v e d g ro w t h a n d I’m loo k i n g f o r w a rd t o i t s b r i g h t future.

The first thing I w o u l d l i ke t o s e e t he n e w m a yor o f P i t t sb u r g h d o is t o l i f t t he n a t u r a l gas d r i l l i n g ban i n t h e C ity o f P i t t sb u r g h . It’s w e l l k n own t h a t m a ny of the oil and gas comp a n i e s who are opening offices in t h e re g i on are avoiding the City of P i t t s b u r gh because of the natural g a s d r i l l ing ban. I don’t believe t h a t a n y of these companies will a c t u a l l y drill in the city limits but k n o w i n g that the City of Pittsburgh s u p p o r t s drilling just may attract a l a r g e c o rporate user to construct a h i g h r i s e Class A office tower for i t s e l f o r to lease a large block of v a c a n t s pace in the CBD.

The first thing that I would like to see the new mayor do is to take a more ac tive role in marketing the city to outsiders. The city of Pittsburgh is going through a major renais sance, and as locals we are all aware of the positive press about our city. Outsiders are also starting to notice that our city has changed. We have had face-to-face meetings with over 60 institutional commercial real estate investors in the last year that all want to invest capital in our region. The problem is that for every one person who has heard about the new Pittsburgh there are still ten people who think of Pittsburgh as a smoky post-industrial city. We need the new mayor to jump on the positive press train and take a keen interest in orga nizations like V isit Pittsburgh, the Allegheny Conference, t he PDP and the PRA. If we continue to heavily market the city on a global scale we will continue to see outsiders want to live, work and invest in our city.

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Stacey Wa t s o n V ice P re s i d e n t Huntin g t o n N a t i o n a l B a n k

P e t e r A r noldt C o n s u l t ant R C x B u i lding Diagnostics

Billy Hinton Director of Business Development Nello Construction Co.

The fir s t thing I would like to see Pit t sburgh’s next m a y o r accomplish is t o meet w i t h US Ste e l and en sure th e y remain downto w n . F ro m a m i c ro l e v e l , i f US Ste e l l e f t t h e C BD , i t w o u l d c e rtainly h u r t t h e o ff i c e m a r k e t b y i njecting s i g n i f i c a n t o ff i c e s p a c e i n t o the ma r k e t j u s t a s w e a re s t a r t i n g to see re n t a l r a t e s i n c re a s e a n d signific a n t n e w p ro d u c t i s a b o u t t o come o n - l i n e . M a y b e m o re i m p o rtantly, f ro m a m a c ro l e v e l , i f U S Steel l e f t t h e C B D i t w o u l d b e a blow t o t h e i d e n t i t y o f o u r C i t y. A signific a n t m o v e o u t o f t h e C B D by a co r n e r s t o n e o f t h e P i t t s b u r g h econom y c o u l d p o t e n t i a l l y c re a t e doubt i n t h e re v i t a l i z a t i o n o f d o w n town. Accom p l i s h m e n t # 1 B w o u l d b e t o relocat e t h e b u s t r a n s f e r s o u t o f the CB D t o re d u c e p e d e s t r i a n c o n gestion a n d t r a ff i c . T h i s w o u l d a l low pe o p l e t h a t a re e i t h e r w o r k i n g or visit i n g d o w n t o w n c o n d u c t t h e i r busine s s e a s i e r a n d a t t r a c t m o re visitor s t o t h e a re a .

P i t t sb u r g h ’s a p ro u d c i ty w i t h g o od re a s o n . R e g a rd l ess, w e c a n ’t re s t o n our l a u re l s . Publict r a n s p o rtat i o n b y far is the #1 o p p o r t un i t y f o r improvement in the region. F ro m t h e inactivity at the airport t o t h e P ort Authority debacle, our t r a n s p o rtation issues are abundant. F o r a c i t y that often excels and l e a d s t h e way, this is an area where w e ’ v e f a llen behind. T h e f o c us of the incoming mayor’s o ff i c e s hould address this dilemma w h i c h w ould improve far more in o u r c i t y than just the transportat i o n h e a dache. The answer won’t b e s i m p l e or cheap, but as the ada g e g o e s, 'it takes money to make m o n e y ' . Imagine the economic imp a c t p o s sibilities. W ith reliable and re a d i l y available transportation op t i o n s , t h e regular 'burb-to-'burgh c o m m u t er's transportation costs d ro p s i g nificantly. The idea of elim i n a t i n g parking fees and reducing m a i n t e n ance and fuel expenses for p e r s o n a l vehicles increases the likel i h o o d t hat consumers will spend t h a t m o ney elsewhere (especially if t h e y h a ve a safe, cheap way to get t h e re ) . And, on top of the "green" b e i n g s p ent at area businesses, an i n c re a s e d use of public transporta t i o n f a l l s in line with the sustaina b l e e n deavors we've pioneered s u c h a s the Pittsburgh 2030 District mission. We a re proud of our many accom p l i s h m e nts that have improved our w o r l d a nd the world around us. Let u s c o n t i nue to raise the bar. Let us c o n t i n u e to be a city of champions.

We need a strong advocate in the mayor’s office to expedite the approv al of large commercial projects. The notion of online permitting was recommended in 2008 when an audit of Pittsburgh BBI took place, however, was never fully imple mented. Around that time, permit applications became available online but were still accompanied by the age-old requirement of a walk-in submission process. Bring ing the permit submission process online as well as payments (the city should devise a tran saction fee to cover their costs) will minimize paperwork and help stre amline the overall tur naround for approval. Simplifying the permit application bank of the DCP’s major depart ments and tracking permit applications online would be a huge plus.

70 DEVELOPINGPITTSBURGH

| Fall 2013

To their credit, the DCP has done a fantastic job with fast-tracking the approval of small commercial proj ects (SCPR) and accepting walkthrough permitting weekly. Less tur naround time an d process inefficiencies means more time for building our city. To that I think we could all say, amen.

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News from the Counties

Armstrong County In dustrial De velopment Council (ACIDC) sold several lots within their industrial parks, leased space within their new multi-tenant facility, provided financing assistance and borrowed state funds to make pad-ready sites.

Armstrong County Armstrong County Armstrong County Department of Economic Development Northpointe Technology Center Center II 187 Northpointe Boulevard Freeport, PA 16229 724-548-1500 (T) 724-545-6055Â (F) Michael Coonley, Executive Director mpcoonley@co.armstrong.pa.us www.armstrongidc.or T h e first half of 2013 was succ e s sful for Armstrong County. The

Metal Solutions, Inc. received a Small Business First loan to construct a new 12,350 square foot building. The business will be located in souther n Armstrong County in the Parks Bend Farms Industrial Park. Projectile Tube Cleaning, Inc. purchased a lot in the Manor Township Business Park to construct a 9,000 square foot building, and several properties ha ve been optioned and are expected to close in the coming months. Earlier this year, the ACIDC ini tiated the first of two major site improvement projects at North pointe. The first site improve ment project, which consists of the development of 42 padready acres, began earlier this year and will be completed in September 2013. The sites are designated for office and light www.developingpittsburgh.com

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Armstrong County (continued) industrial development with finished grades at approximately 1%. The pad-ready lots, ranging from 2 acres to 20 acres, will also be included in a Keystone Opportunity Expansion Zone application. The second site improvement proj ect will commence in early 2014 and will include more pad ready de velopment at Northpointe. The proj ect scope will include the extension of infrastructure and gra ding of the unoccupied retail acreage at North pointe. The ACIDC will solicit proposals from retail developers during the fourth quarter of 2013 with the intent of partnering to complete the project. This property will also be included in the Keystone Opportunity Expansion Zone application. For additional information about the ACIDC, please view our listing in the Buyer’s Guide.

Pittsburgh

south side Works

Wexford

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Beaver County

Elmhurst 4.75 x 4.75_Final NAIOP ad 2/20/13 2:53 PM Page 1

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

The Elmhurst Group. Woven into the fabric of Pittsburgh. Whether it’s locating space in one of our existing commercial buildings, or developing an entire turnkey office community from a clean sheet of paper— as we did with Airside Business Park— Elmhurst Group can accommodate virtually any commercial real estate need. We manage every building we own. We maintain close personal contact with our clients. We operate with the understanding that we are in the service business— not the space business. We recognize that our legacy is inextricably linked to the quality of our people and the service we provide, so we conduct our business with integrity, and honor our commitments. For more than 30 years, Elmhurst Group has been a part of the Greater Pittsburgh region. And in order to remain, we know that our deeds always need to back our words.

w w w. e l m h u r s t g r p . c o m

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412.281.8731

In May 2013, the Beaver County Corporation for Economic Development (CED) began an $800,000+ earthmoving project as part of its contin ued expansion of the Hopewell Business and Industrial Park, located at Exit 48 of Interstate-376. The project involves moving more than 200,000 cubic yards of earth as part of creat ing an additional 15 acres at the site. To date, the Hopewell project has become home to ten projects employ ing over 1,500. Currently all improved property at the site is either sold or under agreement. Loan activity was brisk during the first half of 2013. CED approved: equipment loans for four manufacturing projects; $700,000 in direct loans from its Business Development Fund; and more than $500,000 in its

capaci t y a s a c o n d u i t l e n d e r t h ro u g h the Co m m o n w e a l t h o f P e n n s y l v ania’s S m a l l B u s i n e s s F i r s t P ro g r a m , for the p ro j e c t s . I t is e s t i m a t e d t h a t the pro j e c t s w i l l c re a t e 5 0 + j o b s and re t a i n a n a d d i t io n a l 9 0 j o b s w i t h total c a p i t a l i n v e s t m e n t o f m o re t h a n $3,000 , 0 0 0 . Finally, i t w a s a n n o u n c e d t h a t V E K A , Inc., a m a n u f a c t u re r o f v i n y l d o o r s and w i n d o w s , w i l l i n v e s t $ 6 m i l l i o n in cap i t a l i m p ro v e me n t s a n d e m p l o y an add i t i o n a l 3 8 p e o p l e a t i t s M a r i o n Towns h i p p l a n t . C E D w a s i n v o l v e d i n obtain i n g f i n a n c i n g a n d c o n s t r u c t i n g a portion o f t h e i n f r a s t r u c t u re n e c e s s a r y for the c o m p a n y t o b u i l d i t s i n i t i a l facility i n M a r i o n To w n s h i p , B e a v e r County. T h e p ro j e c t w i l l h e l p re t a i n the 35 0 j o b s t h a t c u r re n t l y e x i s t a t t h e site.

Butler County Community Development Corporation of Butler County 112 Woody Drive Butler, PA 16001 724-283-1961 (T) 724-283 3599 (F) Ken Raybuck, Executive Director kraybuck@butlercountycdc.com www.butlercountycdc.com The pu rc h a s e b y Ye l t r a h , L L C o f t h e Trinity B u i l d i n g l o c a t e d a t 1 4 0 H o l lywood D r i v e i n t h e P u l l m a n C e n t e r Busine s s P a r k E x p a n s i o n h a s t a k e n place. T h e C o m m u n i t y D e v e l o p m e n t Corpor a t i o n o f B u t l e r C o u n t y ( C D C ) i s curren t l y w o r k i n g w i t h J o h n s t o n e S u p ply, th e n e w o w n e r o f t h e b u i l d i n g , t o comple t e t h e b u i l d o u t . I t i s a n t i c i p a ted tha t J o h n s t o n e S u p p l y w i l l h a v e a grand o p e n i n g a t t h e f a c i l i t y t h i s f a l l . A loca l f r a t e r n a l o r g a n i z a t i o n i s i n t h e proces s o f p u rc h a s i n g a t w o - a c re p a rcel tha t w i l l h o u s e t h e i r n e w b u i l d i n g at the P u l l m a n C e n t e r B u s i n e s s P a r k Expans i o n . A d d i t i o n a l d e t a i l s w i l l b e annou n c e d o n c e t h e s a l e i s f i n a l i z e d .

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Desmone & Associates Architects Architecture • Planning • Interior Design 3400 Butler Street • Pittsburgh, PA 15201 412.683.3230 • www.desmone.com

The CD C i s a l s o w o r k i n g w i t h a m a n ufacture r t o f i n a l i z e a s a l e a t t h e V i ctory Ro a d B u s i n e s s P a r k . T h e b u s i n e s s manuf a c t u re s a c t u at o r s f o r u s e o n t h e locks a n d d a m s t h a t a re f o u n d o n t h e many r i v e r s i n We s t e r n PA .

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Butler County (continued) Availab l e n o w, t h e C D C h a s : 3 , 6 0 0 square f e e t o f f i r s t f l o o r o ff i c e space a v a i l a b l e f o r l e a s e a t t h e Pullma n C o m m e rc e C e n t e r ; 3 , 4 0 0 square f e e t f o r s a l e o r l e a s e a t the Ba n t a m C o m m o n s ; 4 0 a c re s o f land a t t h e V i c t o r y R o a d B u s i n e s s

Fayette County Fay-Penn Economic Development Council 1040 Eberly Way, Suite 200 Lemont Furnace, PA 15456 724-437-7913 (T) 724-437-7315 (F) Michael A. Jordan, Jr., Executive Director michaelj@faypenn.org www.faypenn.org During t h e f i r s t h a l f o f 2 0 1 3 , Fay-Pe n n E c o n o m i c D e v e l o p m e n t Counc i l ( F a y - P e n n ) c o n t i n u e d to see a t re m e n d o u s a m o u n t o f growth f ro m F a y e t t e C o u n t y b u s i nesses a s w e l l a s a n i n c re a s e i n i n terest f ro m b u s i n e s s e s p o t e n t i a l l y relocat i n g t o t h e a re a . The U. S . A r m y R e s e r v e s ( U S A R ) purcha s e d a p p ro x i m a t e l y 2 0 a c re s in the F a y e t t e B u s i n e s s P a r k , Smithf i e l d , G e o r g e s To w n s h i p f o r a new R e s e r v e s c e n t e r i n F a y e t t e County. T h e c o n s t r u c t i o n o f t h e estima t e d $ 1 1 . 8 m i l l i o n p ro j e c t is antic i p a t e d t o s e r v e 1 5 0 - m e mber res e r v i s t s f ro m P e n n s y l v a n i a , Maryla n d a n d We s t V i r g i n i a . T h i s state-o f - t h e - a r t c e n t e r i s e x p e c t e d

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 County I n d u s t r i a l D e v e l o p m e n t s , Inc., d b a G re e n e A l l i a n c e f o r

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P a r k w h ich has a KOZ designation t h ro u g h December 31, 2017; 30 a c re s o f land at the Pullman Center B u s i n e s s Park Expansion. The Pullm a n s i t e includes rail access and i s l o c a t ed in the City of Butler and B u t l e r Township.

t o h o u s e the Army Reserve 401 M e d i u m Truck Company under the U S A R ’s Grow the Army initiative. T h e n e w unit would be part of the A r m y ’s C ombat Service Support R e s e t I n i tiative to support new b r i g a d e combat teams. P l a n s f o r the new center include a 3 0 , 0 0 0 s quare foot training facil i t y, a 4 , 800 square foot mainte n a n c e b uilding and a storage site t h a t w i l l provide administrative, e d u c a t i o nal, assembly, library, l e a r n i n g center, vault, weapons s i m u l a t o r and physical fitness are a s f o r t he unit. The USAR would e m p l o y one full-time employee d u r i n g t he week and support traini n g o f a pproximately 150 reservists o n t r a i n i ng weekends. G e ro m e Manufacturing held a g ro u n d b reaking for their new $9 m i l l i o n , 150,000 square foot facil i t y i n t h e Fayette Business Park in J u n e . G e rome Manufacturing Com p a n y h a s become a well-known p ro d u c e r of custom precision sheet m e t a l p roducts serving both East a n d We s t Coast clients as well as f o re i g n markets. The decision was

D e v e l o p ment, celebrated its 56th y e a r o f s ervice to Greene County t h i s p a s t February in business park d e v e l o p ment and business financi n g . T h e organization owns and m a n a g e s the 248 acre EverGreene Te c h n o l o gy Park in Waynesburg a n d t h e 72 acre Paisley Industrial P a r k i n Carmichaels. R e c e n t l y Paisley Park has seen Stall i o n O i l f i eld Services construct a n e w b u i l ding on the 10 acre parcel t h e y a c q uired in 2012 and this s p r i n g R G Johnson Co., Inc. began c o n s t r u c tion of a new 37,000

Contact the CDC at 1 (800) 2830021 if you have are looking for office or flex space or shovel-ready land in Butler County.

made to consolidate operations of their two existing buildings, comprising a total of 121,000 square feet, in the Uniontown area into one facility. The new facility will hous e almost $2 million worth of new produc tion equipment that will allow the business to grow and plans for future purchases of new, cuttingedge equipment have already begun. Fay-Penn Economic Development Council, along with Washington Financial Corporation and the Department of Community & Economic Development provided the financing for Gerome’s new build ing and new manufacturing equipment. Gerome currently employs approxi mately 100 people and anticipates eventually adding an additional 20 to 25 employees. The plant in the Fayette Business Park will be operational by early Spring 2014.

square foot building in EverGreene Technology Park. Like RG Johnson, a second coal mine related com pany, Irwin Car & Equipm ent will soon call EverGreene home with their purchase of a 2 acre parcel. Additionally several land sales have been approved for both parks with closings scheduled for the coming months. EverGreene has 30 acres of padready acreage available for imme diate development while Paisley Park has 15 acres readily available.

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 Two ne w b u s i n e s s pa r k s a re u n d e r develo p m e n t i n I n d i a n a C o u n t y. T h e y will ad d m o re t h a n 2 0 n e w b u s i n e s s sites, t o t a l i n g a b o u t 1 5 5 a c re s o f n e w shovel - re a d y p a d s . The W i n d y R i d g e B u s i n e s s & Te c h n o logy Pa r k i s u n d e r w a y, w i t h c o n s t r u c tion of a 9 5 , 0 0 0 s q u a re f o o t b u i l d i n g for Cre p s U n i t e d P ub l i c a t i o n s . P re liminar y w o r k i s a l s o u n d e r w a y o n t h e second p h a s e o f t h e n e w p a r k , w h i c h is loca t e d a t t h e i n t e r s e c t i o n o f U S 4 2 2 and SR 2 8 6 i n W h i t e To w n s h i p . W i n d y Ridge w i l l b e a p re m i e r p a r k f e a t u r i n g a mix o f c o m m e rc i a l a n d l i g h t i n d u strial si t e s w i t h a b ro a d a r r a y o f a m e n ities. The 11 9 B u s i n e s s P a r k i s l o c a t e d a l o n g US 119 i n C e n t e r To w n s h i p a n d w i l l feature 3 t o 5 p a d - re a d y s i t e s r a n g ing fro m 3 . 5 t o 8 a c re s . C o n s t r u c t i o n of road a n d u t i l i t y i n f r a s t r u c t u re w i l l begin i n A u g u s t a n d f i n a l p a v i n g a n d landsc a p i n g w i l l b e c o m p l e t e d i n 2 0 1 4 .

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Three h o t e l p ro j e c t s a re a l s o m o v ing for w a rd . A n e w 8 2 - ro o m “ s e l e c t service ” h o t e l w i l l b e c o n s t r u c t e d n e a r the int e r s e c t i o n o f U S 4 2 2 a n d S R 2 8 6 . A bou t i q u e h o t e l i s a l s o b e i n g p l a n n e d in dow n t o w n I n d i a n a , f e a t u r i n g 4 7 u pscale g u e s t ro o m s an d m e e t i n g ro o m s with in t i m a t e c h a r a c t e r. A 1 2 0 + ro o m hotel a d j a c e n t t o t h e K o v a l c h i c k C o nvention & A t h l e t i c C o m p l e x a t I n d i a n a Univer s i t y o f P e n n s y l a v a n i a i s a l s o i n final p l a n n i n g s t a g e s . Two ne w re s t a u r a n ts a re a l s o o p e n i n g in dow n t o w n I n d i a n a . T h e B l a c k h o r s e Steakh o u s e , a f a r m - t o - t a b l e s t y l e re s tauran t i s o p e n i n g in t h e n e w l y re n o vated B ro w n H o t e l , a n d Ta z é , a M e d i terran e a n R i s t o r a n t e , i s o p e n i n g i n t h e histori c t r a i n s t a t i o n .

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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 Lawrence County Economic Development Corporation is now ready to lease its 50,000 square foot single tenant or multi-tenant building. W ith construction expected to be completed in September 2013 this facility offers 45,000 square feet of total manufacturing/warehousing space with 5,000 square feet of office space sitting on five acres. The ceiling height to eave is 25' and to the center of the roof is 31'. The building is located in a Pennsylvania Keystone Opportunity Tax Free Zone I Millennium Park adjacent to

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Interstate 376 with direct access to Pittsburgh, Youngstown and Hermitage. These four projects represent $13 million of new investment and create 132 new jobs in the community: Upstate Shredding – Upstate Shredding/Weitsman Recycling of Owego, NY purchased the former Ferrotech recycling facility on Moravia Street in New Castle. This is a $6 million project which includes demolition of the existing structures, construction of 33,000 square feet of warehouse and office space. Additionally a state-of-the-art shredder will be installed. The project is completing the permitting process and is expected to create 30 new positions. RW Elliott expansion – RWE Holding is constructing a 30,000 square foot processing facility at their site located in Taylor Township with total project cost estimated at $1.2 million. The company processes carbon, graphite and coke for the steel in-

dustry and is enclosing its activities. There are currently 10 jobs at the site and 7 additional jobs are being projected. The LCEDC working with the PA Dept of Community and Economic Development obtained a Pennsylvania Industrial Development Authority Loan to assist with the financing of the project. Magnetic Lifting Technologies is relocating from Ohio to Neshannock Business Park. The project consists of the purchase of 4 acres of land with the construction of a 40,000 square foot facility. Fifteen new jobs are being created with an additional five proposed. The LCEDC provided assistance by working with the Gover nor’s Action Team to provide Pennsylvania Industrial Development Authority financing for this $2.3 million project. The company expects to break ground in September. Portersville Valve is relocating from Portersville, Butler County, PA to Shenango Township. The company

has purchased 23 acres along Route 422 east including the former Shenango Bowl-away. This a $4.3

Washington County Washington County Economic Development Partnership 20 East Beau Street Washington, PA 15301 724-225-3010 (T) 724-228-7337 (F) Jeff Kotula, President jeff@washcochamber.com www.washingtoncountyworks.com Gallaway Safety & Supply (GSS) held groundbreaking ceremonies recently for a 27,000-square-foot office and warehouse building in Eighty Four, which will serve as the company’s new corporate headquarters. GSS has been in business since 2000 and offers a vast inventory of safety and supply items. Its inventory includes safety, industrial and janitorial supplies. GSS also offers a custom im-

million project that should be completed in 2014. New jobs to Lawrence County will be 50 with anoth-

printing service so company names, logos or slogans can be printed or embroidered on a variety of products. The new building is being constructed by General Industries of Charleroi and is expected to be completed in October. Also, the Washington County Commissioners approved the sale of property in the Starpointe Business Park, Hanover Township, to Lifting Gear Hire, an Illinois-based firm that is the largest company in the country devoted exclusively to the rental, sale and service of lifting, winching and material handling equipment. The sale price is $188,500 for the 3.1 acres with usable acreage expected to 2.9 acres. The company will be opening within 10 to 12 months in Lot 11 in the first phase of Starpointe. It will initially have a 25,000-square-foot

er 25 proposed. The LCEDC again provided project assistance working the Gover nor’s Action Team.

building with the ability to add another 15,000 square feet. The company expects to begin construction as soon as it receives permits. Fletcher Industries, which specializes in wiring control panels for manufacturers in the United States and overseas, moved into a new 20,000-square-foot site at 200 Woodcliff Drive in Southpointe II. The company was assisted by the Washington County Chamber of Commerce and the Washington County Authority with the site selection.was successful in securing a Redevelopment Assistance Capital Program grant of $1.5 million to aid the development of the park’s next phase. Fourth River Development is currently in the planning stages of Flex Building 3, a 60,000 sq. ft. spec building to be built later in 2013.

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

Property Valuation

The new 73,500-square-foot Advanced Technology Center will be distinctly located within the county’s 2.8 million square-foot RIDC Westmoreland (former Sony facility) in East Huntingdon Township, one of the largest multi-tenant facilities in easter n United States. WCCC anticipates the center will be completed and open for classes beginning Fall of 2014. In addition to Aquion Energy gearing up for produc tion of its first full-scale manufacturing facility at the RIDC Westmoreland complex by year’s end, DNP (Dai Nippon Printing) recently added 26,000-square-feet to support a new product line increasing its space to almost 161,000-square-feet. DNP produces spools of thermo-transfer ribbon strips used on the back of credit cards and operates three shifts per day. “The location of the new Advanced Technology Center is significant in that it will thrive amongst industry,” said Jason Rigone, Executive Director of the Westmoreland County Industrial Deve lopment Corporation. “Not only will it will be an incentive for new employers who have a need for specialized pro grams to relocate here, but it will also be an asset to the existing businesses in this regional employment center.” Some other major developments in the county include:

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Integra Realty Resources - Pittsburgh Over 135 years of experience providing commercial real estate appraisals, market and feasibility studies, impact studies, litigation support and consulting throughout Western Pennsylvania and West Virginia. In addition, with 65 offices across the United States, we provide a national platform to solve your valuation challenges. Paul D. Griffith, MAI, CRE, FRICS Managing Director T: 724.742.3324 F: 724.742.3390 pgriffith@irr.com www.irr.com/pittsburgh 80 DEVELOPINGPITTSBURGH

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• A 75,000-square-foot flex-warehouse un der construction at Westmoreland Airpark by EFR Limited Partnership in Latrobe. Phase II construction underway at the Westmoreland Airpark opening up an additional 52 acres of developed property crucial for new and expand ing businesses in the region. • A r nold Palmer Regional Airport in Unity constructing an additional 250 parking spaces. • W CCC breaking ground on an $8.4 mil lion 30,000-square-foot education center in Latrobe. • S eton Hill University breaking groun d on an $11 million 46,000-square-foot dance and visual arts center in Greensburg.

NE In add i t i o n t o t h e a b o v e c o n s t r u c t i o n a c t i v i t i e s, Westm o re l a n d C o u n t y ’s b ro w n f i e l d re d e v e l o p e d sites h a v e s h o w n s o m e p ro m i s i n g m o v e m e n t i ncluding t h e 2 6 , 0 0 0 - s q u a re - f o o t l e a s e e x t e n s i o n for Gla s s a u t o m a t i c , a 1 , 2 0 0 - s q u a re - f o o t re l o c a tion of t h e M o u n t P l e a s a n t G l a s s M u s e u m a t t he Mount P l e a s a n t G l a s s C e n t re i n M o u n t P l e a s a n t, 17,182 - s q u a re - f e e t o f s h o r t - t e r m l e a s e a re a f o r Forest H i l l s Tr a n s f e r a n d 2 0 , 0 0 0 - s q u a re - f e e t o f space f o r S t e l l a r P re c i s i o n C o m p o n e n t s , b o t h a t the Jea n n e t t e I n d u s t r i a l P a r k i n t h e C i t y o f J e a nnette.

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People & Events

(Left-to-right) Moderator Randy Cornelius from First Niagara with panelists Mike Thomas of PNC, HFF’s Claudia Steeb and Jack Shelly from Dollar Bank at the May 16, NAIOP Pittsburgh meeting.

(left-to-right) Allen & Shariff's Paul Messineo Jr. with Sean Walters of W Group Holdings and Jim Droney from Mt. Lebanon Office Equipment at the May 21 NAIOP Pittsburgh/ MBA ‘One Project – One Team’ seminar on collaboration.

(From left) Continental Building’s Carl Belli with Todd Anderson and Joe Scalise of EMCOR/Scalise Industries.

Sharon Landau and Anderson Interiors’ Bob Dezort at the CREW golf outing.

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(From left) Pentrust’s Tyler Noland, Amy Brocato from Langholz Wilson Ellis, Clayco’s Scott Caplan, Matt Smith from Red Swing and Babst Calland’s Matt Jameson at the NAIOP Pittsburgh golf outing at Laurel Valley.

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Panelists at NAIOP Pittsburgh's July 18 program on downtown were Michael Sriprasert from Landmarks Community Capital Corporation, Arthur Ziegler from Pittsburgh History & Landmarks Foundation, Strada’s Ed Shriver, Izzy Rudolph of McKnight Realty Partners and moderator Pierce Richardson of K & L Gates.

Representing Grandridge Real Estate Capital at the clay shoot are NAIOP Pittsburgh president Dan Puntil and Megan Zillweger Jones.

Action Housingâ&#x20AC;&#x2122;s Jennifer DiNardo takes aim at the CREW clay shoot.

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BUILDING A BETTER FUTURE 412-462-4371 WWW.FRANJOCONSTRUCTION.COM

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2013 Buyer’s Guide!

LOOKING FOR AN ARCHITECT, ENGINEER, CONTRACTOR OR LENDER? THE 2013 NAIOP BUYER’S GUIDE LISTS DOZENS OF FIRMS FROM AROUND THE REGION THAT CAN FIT THE BILL.

Coming to Southpointe in Spring 2014

contact gilbane area manager allison stawarz to learn more

86 DEVELOPINGPITTSBURGH

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Architect............................................87 Civil Engineer....................................87 Construction Consultant...................88 Consultant.........................................88 Contractor.........................................88 Developer..........................................89 Document Handling . .......................89 Economic Development....................90 Engineer............................................90 Environmental...................................90 Finance..............................................91 Geotechnical Engineer......................91 Green Building/Energy Consultant...91 Industry/Trade Association................91 Interior Designer...............................91 Land Surveyor...................................91 Landscape Architect..........................92 Maintenance/Service Contractor......92 Professional Services.........................92 Real Estate Broker.............................92

Architect Astorino

227 Fort Pitt Boulevard Pittsburgh, PA 15222 T: 412-765-1700 www.astorino.com John D. Francona, RA, LEED AP jfrancona@astorino.com

At Astorino, we believe that great design meets the deepest needs of the people who live, learn, heal, work and play in the environments we create. It’s that simple. For over 40 years, Astorino has been at the forefront of where people and design intersect. A full-service company, Astorino combines architectural, engineering, construction and interior design solutions with unprecedented human-centered research to provide one seamless delivery process. We leverage our creative foundation, interdisciplinary expertise and strong collaborative approach to impact the greater good...to design for the future...and to reimagine landscapes.

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.

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 more than 50 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.

Front Studio Architects 357 N. Craig Street Pittsburgh PA 15213 T: 412-682-2121 www.frontstudio.com Art Lubetz Art@frontstudio.com

Front Studio’s architecture is experientially powerful and environmentally responsive. For 45 years, we have taken a creative approach to architecture, working closely with our clients to meet their occupancy, environmental and budgetary needs. Our work uses provocative yet economical materials to produce fresh and unique solutions. With an emphasis on collaboration and flexibility, and our ability to innovate and adapt, Front Studio has a distinct reputation for excellence.

Gerard Associates Architects, L.L.C. 1601 Arrott Building 401 Wood Street Pittsburgh, PA 15222-1838 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.

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 F: 724-981-4515 www.hhsdr.com Frank Gargiulo fgargiulo@hhsdr.com

HHSDR has been building relationships with our clients since 1953. Specializing in the adaptive reuse of facilities for education and training, commerce, and government, we have designed for sustainability since the 1980s. HHSDR has completed LEED-certified projects in Allegheny and Mercer counties. For several years, we have been ranked by the Pittsburgh Builders Exchange as the most active firm in the tri-state region. We’ve earned that ranking by providing high-quality and responsive service to our clients. Our project portfolio includes projects sized from a few hundred to 400,000 square feet.

RSH Architects

IDC Architects

Five Penn Center West Suite 300 Pittsburgh, PA 15276 T: 412-848-2275 x44576 Gary Homonai Business Development Director, NE Region Gary.homonai@ch2m.com www.idcarchitects.com

IDC Architects is a multidisciplinary planning and design firm with over 20 years of experience in advanced technology and mission critical design. Ranked by Architectural Record as one of the world’s leading design firms, we are a team of architects, engineers and construction managers who believe that value begins with a harmonious relationship between client and design team. From iconic exteriors to optimized building systems, value pays dividends over time. We combine 3D visualization tools, airflow modeling, and sustainable solutions to generate innovative design and engineering solutions for facilities of the future.

363 Vanadium Road #200 Pittsburgh PA 15243 T: 412.429.1555 x 19 F: 412.279.7285 www.rsharc.com Joel C. Cluskey, AIA, CCS jcluskey@rsharc.com

RSH Architects celebrates its fourth decade of professional practice with renewed ownership, enthusiasm, and a commitment to quality architecture that endures - aesthetically, functionally and environmentally. RSH Architects serves diverse clientele within a variety of markets which include colleges and universities, financial institutions, housing, municipal governments, and high technology manufacturing.

VEBH Architects

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

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.

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.

Civil Engineer

GAI Consultants, Inc.

Renaissance 3 Architects, P.C. 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 facilitate positive human interactions and behaviors, while employing technologies that help improve the performance of our daily lives. R3A is a 17-person firm with three 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.

385 E. Waterfront Drive Homestead, PA 15120 T: 412-476-2000 www.gaiconsultants.com Patrick M. Gallagher 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.

www.developingpittsburgh.com

Contractor The Gateway Engineers

400 Holiday Drive, Suite 300 Pittsburgh PA 15220 T: 412-921-4030 F: 412-9219960 www.gatewayengineers.com Ryan L. Hayes, Director of Business Development rhayes@gatewayengineers.com

The Gateway Engineers, Inc. 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’s 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 www.gatewayengineers.com

Red Swing Group

4154 Old William Penn Hwy Suite 300 Murrysville, PA 15668 T: 724.325.1215 F: 866.295.5226 www.RedSwingGroup.com Matthew Smith Matthew.Smith@RedSwingGroup.com

Red Swing Consulting Services views its clients as partners focusing first and foremost on building and maintaining strong relationships. Mutual trust from these relationships is the foundation of solid business partnerships. Red Swing offers complete land development consulting services to take a project from concept through construction. Red Swing possesses experience in land development, infrastructure, utility, environmental and communication 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.

Construction Consultant

RCx Building Diagnostics 210 Fifth Street Charleroi, PA 15022 T: 866-382-8628 Web: www.RCxBD.com Contact: Peter Arnoldt, LEED GA Email: PArnoldt@RCxBD.com

RCx Building Diagnostics' certified engineers and consultants are dedicated advocates of environmentally and fiscally smart buildings. Setting out to improve the existing building stock isn't just a side project: it's what we do. Our mission is to provide commercial building owners and operators with independent, 3rd-party services empowering them with the tools, knowledge and expertise necessary to maximize the level of efficiency and performance possible within their current design and resource constraints. Our services include: Energy Audits, Retrocommissioning, Sustainability Consulting, Building Certification Assistance (i.e. LEED®, EnergyStar®, etc.), and Retrofit Project Management.

Pennoni Associates is a multi-disciplined consulting engineering and design firm employing 900 professional, technical, and administrative personnel with 28 offices throughout the eastern United States. Pennoni, an ESOP company, offers services in Site Design, Landscape Architecture, Environmental, Health and Safety, Indoor Air Quality, Surveying, Transportation, Land Development, Construction Inspection and Testing, MEP, Geotechnical, Underwater Inspection, and Structural Engineering. Locally, Pennoni has offices located in State College, Monroeville and Uniontown that service the developer, building owner, industrial, transportation, education, government, and Marcellus Shale industries in western Pennsylvania, West Virginia, and Ohio.

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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.

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.

Burchick Construction Company Inc.

RRC Consulting Group, Inc. Campayno Consulting Services, LLC

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

Consultant

Pennoni Associates Inc. 700 Seco Road Monroeville PA 15146 T: (412) 229-2778 www.pennoni.com John Skorupan jskorupan@pennoni.com

A. Martini & Company

100 W Station Square Drive, #1910 Pittsburgh PA 15219 T: 412-364-3035 www.rrcconsulting.com Angela Alfonso 412-651-9333 Angela.Alfonso@rrcconsulting.com

RRC Consulting Group (RRC) provides Facilities Support Services, Environmental Consulting, and Environmental Health Services for Commercial, Public, Industrial, and Residential properties coast-to-coast. Services include: • Maintenance Operations Management • Asset Management • Energy Audits • Facility Condition Assessments • Building Forensics/Thermography • Life-Cycle Analysis • Operational Readiness • Infrastructure • Phase I & Phase II Assessments • Environmental Engineering • Project Management • Construction Inspections • Building Commissioning • Electrical Contractors • Site Preparation/Demolition • Environmental Site Assessments • Regulatory Compliance • Environmental Health Management Solutions • Indoor Air Quality Assessments • Mold Assessments and Remediation Plans • Environmental Training Services • Asbestos Inspections/Lead Assessments

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.

EMCOR/Scalise Industries 108 Commerce Blvd. Suite A Lawrence, PA 15055 T: 724-746-5400 F: 724-746-5410 Joe Scalise jscalise@scaliseindustries.com www.scaliseindustries.com

EMCOR Services Scalise Industries is a single source provider of Mechanical, Electrical and Fire Protection Construction Services to commercial and institutional clients. From service and maintenance solutions to complex construction projects, the Scalise Industries team utilizes our extensive resources to enable integrated workflow solutions. We deliver superior service through our 65+ years of facilities expertise and trade knowledge, and continuously implement new technologies to construct quality products and enhance value for customers. A part of EMCOR Group, our local expertise is backed by the resources of a Fortune 500 organization. What can we do for you?

Document Handling

Nello Construction Company Restoring the Past Building the Future

Jendoco Construction Corporation 2000 Lincoln Road Pittsburgh PA 15235 T: 412-361-4500 F: 412-361-4790 www.jendoco.com Domenic Dozzi ddozzi@jendoco.com

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.

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

Since our inception nearly 120 years ago, Landau Building Company has evolved into a premier commercial construction firm. For over five generations we have insisted on exceeding our clients’ expectations for quality and service – and that insistence built the reputation we reinforce every day. Focusing on client satisfaction is our philosophy and our business strategy. Demonstrating our integrity, value, and quality on every project is our plan to ensure continued success. Our clients know that Landau will represent their best interests and deliver the best product money can buy.

McKamish, Inc.

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

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!

100 Houston Square #200 Canonsburg, PA 15317 T: 724-746-1900 F: 724-746-7032 www.nellloconstruction.com Billy Hinton hinton@nelloconstruction.com

We bring enthusiasm as well as sophistication to both small and large-scale projects. Our team has designed, managed, built, and collaborated on new builds, renovations, historic restorations, build-outs, and tenant improvements. We’re passionate about working alongside schools, ministries & non-profits, real estate developers, municipalities, restaurants, banks, auto dealerships, hotels, and industrial clients.

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.

Rycon Construction Inc. 2525 Liberty Avenue 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 expertise in new construction, renovations and design-build projects for owners of commercial, industrial, institutional 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. Rycon has executed more than $1.7 billion of work and currently averages in excess of $140 million annually.

Volpatt Construction 100 Castleview Road Pittsburgh PA 15234 T: 412-942-0200 F: 412-942-0280 www.volpatt.com Ray Volpatt Jr. RayJr@volpatt.com

Volpatt Construction, a General Contractor/Construction Manager who specializes in new construction, renovation, and restoration has successfully positioned itself as one of the most respected building contractors in the Western Pennsylvania Tri-State area. From one small laboratory renovation at the University of Pittsburgh to more than 500 commercial, institutional and industrial projects, Volpatt Construction has developed a focus on high quality, hands-on service, competitive pricing, and timely project completion which has helped them build a long list of repeat clients. For more information please contact Ray Volpatt, Jr. We are Building.

Developer

Horizon Properties Group, Inc. 375 Southpointe Blvd. Suite 410 Canonsburg, PA 15317 T: 724-743-7722 ext 2502 Michael Swisher mswisher@horizonprop.net

Horizon Properties Group, Inc. is a full service real estate development company with extensive experience in the development of new communities, office buildings, corporate headquarters facilities, retail, hospitality and residential projects. The company is headed by Rod L. Piatt and Michael Swisher who were the key individuals responsible for the successful development of Southpointe including the master planning. Horizon Properties Group is comprised of an in-house staff of architects, planners, engineers, landscape architects, interior designers and financial professionals that enable Horizon to excel in all facets of real estate development.

Multiscope Document Solutions 135 Technology Drive Canonsburg, PA 15317 T: 724-743-1083 F: 888-515-7120 www.multiscope1.com Douglas Beck, Managing Partner dougb@multiscope1.com

At Multiscope Document Solutions, we deliver state-of-the-art document, paperless and hardware technology solutions to organizations nationwide. We are dedicated to helping our customers create efficiency, improve productivity and add to their bottom lines with document solutions tailored to their needs. Our award-winning services are custom-designed independent of any particular manufacturer. Working with industry leaders from across the spectrum to deliver the right solutions, every time. We build an array of services by consistently staying on top—and ahead—of the latest technologies and the changing needs of the business world.

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.

www.developingpittsburgh.com

Economic Development

Ambridge Regional

2301 Duss Avenue Suite 1 Ambridge PA 15003 T: 724-266-4661 www.ambridgeregional.com Gene Pash, President Gpash@ambridgeregional.com

Value Ambridge Properties at the Ambridge Regional Distribution & Manufacturing Center is located in Beaver County and is convenient to all major local roadways, and only 11 miles from the proposed ethane cracker plant. Entirely zoned for industry, its 85 acres house 22 buildings that contain over one million square feet of leasable business, warehouse, office, wet lab, distribution, and manufacturing space. Its tenants also enjoy direct access to Norfolk Southern Rail Co. service as well as on-site maintenance and logistics services. For more information, call 724-266-4661, or visit www.ambridgeregional.com.

Fay-Penn Economic Development Council 1040 Eberly Way Suite 200 Lemont Furnace, PA 15456 T: 724-437-7913 www.faypenn.org Dana Kendrick danak@faypenn.org

For 20 years, Fay-Penn has been the lead agency for economic development in Fayette County. As evidenced by its experience and successes, Fay-Penn has a high quality staff in place with a number of years of experience in planning, managing and marketing buildings; construction, rehabilitation, and maintenance of buildings; business park development; tenant lease development and management; state and federal grant writing, management, and administration; workforce development; low-interest business financing solutions; and real estate managing and marketing.

KU Resources, Inc.

Firsching, Marstiller, Rusbarsky & Wolf Engineering, Inc. 1500 Ardmore Boulevard, Suite 200 Pittsburgh, PA 15221 T: 412-271-5090 F: 412-271-5193 www.fmrwengineering.com Joseph Loizzo, P.E. loizzo@fmrwengineering.com

Firsching, Marstiller, Rusbarsky & Wolf Engineering, Inc. provides Mechanical, Electrical, Plumbing and Fire Protection consulting engineering services for commercial buildings. We design M.E.P. systems for hospitals, surgery centers, office buildings, universities, laboratories, churches, theaters, and airports. We also perform engineering studies and site evaluations for existing buildings. We work with building owners for evaluating and designing equipment replacement projects such as water heaters, boilers, air handling units, chillers, generators, and electrical service upgrades. We use both Revit and AutoCAD to develop our construction documents.

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.

Environmental

Washington County Chamber of Commerce 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.

Community Development Corporation of Butler County 111 Woody Drive Butler, PA 16001 T: 724-283-1961 F: 724-283-3599 www.butlercountycdc.com Ken Raybuck, Executive Director kraybuck@butlercountycdc.com

The Community Development Corporation of Butler County (CDC) is the lead economic development organization in the 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 40 acres, with a KOZ designation, at Victory Road Business Park and 30 acres at the Pullman Center Business Park Expansion; all utilities are available at both sites. Office space is also available for sale/lease at Pullman Commerce Center and Bantam Commons.

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20 East Beau Street Washington, PA 15301 T: 724-225-3010 F: 724-228-7337 Mary Stollar Director of Business Investment www.WashingtonCountyWorks.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.

Engineer

Fisher Associates

Southpointe 135 Technology Drive, Suite 100 Canonsburg, PA 15317 T: 724-916-4250 Brian L. Fischbach, P.E., LEED BFischbach@fisherassoc.com www.fisherassoc.com

GAI Consultants, Inc.

Providing comprehensive, professional engineering consulting solutions since 1984, Fisher Associates, P.E., L.S., P.C. specializes in Civil Infrastructure & Land Development services. Quality site development demands a practiced understanding of design issues inherent with specific land uses, development types, and site constraints. In addition, we offer services such as Transportation (bridge, highway, traffic, construction representation), Environmental, Regulatory Compliance, Survey, Landscape Architecture, Geographic Information Systems (GIS), Geotechnical Engineering, Construction Scheduling, Non-Destructive Testing, and 4D Visualization. Contact our office to find more out about how we can help you realize your project goals:

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.

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

KU Resources, Inc.

Herbert, Rowland & Grubic, Inc. 200 West Kensinger Drive, Suite 400 Cranberry Township, PA 16066 T: 724-779-4777 www.hrg-inc.com James M. Lopresti, P.E., Vice President jlopresti@hrg-inc.com

HRG is a full-service consulting engineering firm celebrating over 50 years of service. Our company has been nationally ranked Top 500 engineering design firm in the United States by Engineering News-Record (ENR) magazine 12 consecutive years. HRG has eight office locations throughout Pennsylvania, West Virginia, and Ohio, and a staff of 215 engineers, surveyors, geologists, landscape architects, environmental specialists and related personnel to deliver a full-service approach to every project. Our accomplished team provides services related to land development, water resources, water/wastewater & energy, transportation, survey, GIS, environmental, mechanical/electrical/ plumbing, and financial consulting.

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

Northwest Savings Bank Pennoni Associates Inc. 700 Seco Road Monroeville PA 15146 T: (412) 229-2778 www.pennoni.com John Skorupan jskorupan@pennoni.com

Finance 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.

Southwest Region Headquarters 125 Emeryville Drive, Suite 100 Cranberry Township, PA 16066 T: (724) 778-0200 www.northwestsavingsbank.com Northwest Direct: 1-877-672-5678 Christopher Martin, Regional President cmartin@nwbcorp.com

Founded in 1896, Northwest Savings Bank is a fullservice financial institution offering a complete line of business and personal banking products, employee benefits and wealth management services, as well as the fulfillment of business and personal insurance needs. Northwest operates 166 community banking offices in Pennsylvania, New York, Ohio and Maryland – including 28 offices in the Greater Pittsburgh area. For 117 years, we have served our communities with an ever-expanding array of banking and investment products that meet the needs of both business and personal customers. Member FDIC, Equal Housing Lender.

PNC Real Estate

249 Fifth Avenue Pittsburgh PA 15222 www.pnc.com/realestate Joe Pascarella, VP T: 412-762-2672 joseph.pascarella@pnc.com Autumn Harris, AVP T: 412-762-4702 autumn.harris@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.

Geotechnical Engineer ACA Engineering, Inc.

First National Bank

12 Federal Street Pittsburgh, PA 15212 Robert B. Powderly, SVP, Managing Director Investment Real Estate Group T: 412-359-2663 powderly@fnb-corp.com www.fnb-corp.com

First National Bank offers diversified financial solutions to our commercial clients, including corporate banking, small business banking, investment real estate financing, asset based lending, capital markets and lease financing. You can rely on the experience and expertise of local professionals who understand the industries, economy and business climate of this region. Whether you need capital for facility expansion, an acquisition, construction or other long-term financing plans, we have the solutions to help you achieve your business goals. Call us today to learn more. First National Bank, Member FDIC, Equal Housing Lender.

Green Building/ Energy Consultant

Trane

400 Business Center Drive Pittsburgh, PA 15205 T: 412-747-3000 www.Trane.com Tim White, Sales Manager Complex Solutions twhite2@Trane.com

Trane, a wholly owned subsidiary of Ingersoll Rand (NYSE: IR), is a world leader in creating and sustaining safe, comfortable and efficient environments in commercial, residential and industrial markets. Trane offers a broad range of energy-efficient heating, ventilation and air conditioning solutions services, systems and solutions, including aftermarket service and parts; advanced building controls; and building solutions that allow energy-efficient systems to pay for themselves through energy savings. Over nearly 100 years, Trane’s built their reputation for reliability, high quality, product innovation, and a powerful distribution network. Visit www.trane.com.

Industry/Trade Association

631 Iron City Drive Pittsburgh PA 15205 T: 412-922-3912 www.mbawpa.org Jon O’Brien jobrien@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 for construction.

Interior Designer

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

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.

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.

Master Builders’ Association of Western Pennsylvania, Inc.

Land Surveyor

Pennoni Associates Inc.

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.

700 Seco Road Monroeville PA 15146 T: (412) 229-2778 www.pennoni.com John Skorupan jskorupan@pennoni.com

Landscape Architect Maintenance/ Service Contractor

Professional Services

services and market intelligence that encompass accounting, research, marketing and administration, as well as access to cutting-edge technology.

Grant Street Associates, Inc. Babst Calland

GAI Consultants, Inc.

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

Multiscope Document Solutions 135 Technology Drive Canonsburg, PA 15317 T: 724-743-1083 F: 888-515-7120 www.multiscope1.com Douglas Beck, Managing Partner dougb@multiscope1.com

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

Babst Calland’s lawyers have well-rounded skills in real estate, corporate, finance, energy, environmental, and zoning and� land use law, as well as diverse, practical experience. We provide pragmatic and creative advice to developers, landlords, tenants, buyers, brokers and managers of commercial real estate in all aspects of their business. From acquisition to disposition, our unique approach to the practice of law gives our real estate clients an edge.

Trane

400 Business Center Drive Pittsburgh, PA 15205 T: 412-747-3000 www.Trane.com Tim White, Sales Manager Complex Solutions twhite2@Trane.com

700 Seco Road Monroeville PA 15146 T: (412) 229-2778 www.pennoni.com John Skorupan jskorupan@pennoni.com

1133 Penn Avenue Pittsburgh, PA 15222 T: 412-261-3644 www.schneiderdowns.com Gennaro DiBello gdibello@schneiderdowns.com

Since 1956, Schneider Downs has provided an array of financial and consulting services to the real estate industry, including accounting, tax, business advisory, wealth management, corporate finance and technology consulting services. We have a team of professionals dedicated to serving our real estate clients, providing strategic services to meet the specific needs of this unique industry. By integrating our years of experience serving real estate clients, our professionals help our clients improve cash flows, save on taxes and increase profitability.

Real Estate Broker

U. S. Steel Tower, Suite 4800 600 Grant Street Pittsburgh, PA 15219 412-471-9500 www.cbre.com/pittsburgh Jeffrey Ackerman jeffrey.ackerman@cbre.com

The Pittsburgh, Erie and State College Offices of CBRE is the local leader in providing comprehensive commercial real estate services to property owners, investors and tenants. Recognized as the largest commercial real estate service provider in the western, Northwestern and Central Pennsylvania areas, CBRE Pittsburgh has set the standard for excellence in the marketplace for over 50 years. We offer extensive corporate real estate solutions, knowledge and experience in Asset Services, Brokerage Services, Corporate Services Investment Sales, Facilities Management, Management Services and Retail Services. The CBRE Pittsburgh, Erie and State College offices are committed to providing clients with quality support | Fall 2013

Six PPG place, Suite 600 Pittsburgh PA 15222 T: 412-281-0100 www.ngkf.com Gerard McLaughlin gmclaughlin@ngkf.com Louis Oliva loliva@ngkf.com

With roots dating back to 1929, Newmark Grubb Knight Frank’s strong foundation and broad experience make it one of the most trusted names in commercial real estate worldwide. Its integrated services platform includes leasing advisory, global corporate services, investment sales and capital markets, consulting, program and project management, property and facilities management, and valuation services. A major force in the real estate marketplace, Newmark Grubb Knight Frank serves the local and global property requirements of tenants, landlords, investors and developers worldwide with more than 340 offices on five continents. Newmark Grubb Knight Frank is a part of BGC Partners, Inc. (NASDAQ: BGCP), a leading global brokerage company primarily servicing the wholesale financial and real estate markets. For further information, visit www.bgcpartners.com.

TARQUINCoRE, LLC CBRE

92 DEVELOPINGPITTSBURGH

At Grant Street Associates, Inc., we aim to be your commercial real estate provider of choice - the standard for industry knowledge, service and execution in the Pittsburgh region. As a full-service commercial real estate firm and member of the Cushman & Wakefield Alliance, Grant Street Associates has been providing unsurpassed client-oriented tenant, landlord, buyer and seller representation services since 1993. We have built one of the most dedicated, recognized and respected commercial real estate firms in the Greater Pittsburgh region.

Newmark Grubb Knight Frank

Schneider Downs

Pennoni Associates Inc.

The Grant Building 310 Grant Street Suite 1550 Pittsburgh, PA 15219 T: 412-391-2600 www.gsa-cw.com

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 representation to property management to tenant representation to brokerage services – whatever your real estate needs might be – TARQUINCoRE can help you maximize options, seize opportunities, avoid potential pitfalls and expedite transaction times.

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WWW.DOLLARBANK.COM

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