PITTSBURGH | Development Rundown III

[themaguffin]

That is a surprising and nice project.

They openly note in the article that without an anchor tenant for the commercial section of the tower it will probably not be built.

Do you think that is necessary for 200,000 total square feet? I guess it is, but that's only a portion of the building and if they could get some of that office space rented, that would do it, no?

[pj3000]

Originally Posted by eschaton

The awful thing is it was done by an architect. A coworker of my wife lives across the street, and asked her why they were doing it and she literally said "It's not in the historic district, so we can."

Yikes

Originally Posted by eschaton

My wife works for Rothschild Doyno (though she hasn't been on this project in particular) so I knew this was in the works.

If it gets built, I think it might be worth sacrificing the Market Street buildings. But that's a big if. They openly note in the article that without an anchor tenant for the commercial section of the tower it will probably not be built. So the Troiani family are basically offering a speculative project as a reason to be allowed to demolish historic buildings. It could be an empty lot for a decade plus if they never get the tenant. It's possible this is all a bad-faith effort to look like they're serious about a big project in order to get the planning commission to okay knocking the buildings down - potentially allowing a more modest project or even expansion of their parking in the future.

Yeah, I think it's a really big if. The majority of these types of real estate "developers" can't get projects like this done. This is a parking lot family. Easy money. I give them credit for thinking big, but where is the capital coming from? And unfortunately, the pragmatist in me just looks at the reality of the situation... and the facts are that small, family-owned operations like this don't succeed in building skyscrapers as their first major project. And the cynic in me realizes that the Froggy's building and other small buildings on this tract are liabilities for Troiani, while parking lots would be assets.

[pj3000]

Selected renderings of what the Troiani family is claiming will sit on their big downtown parking lot someday...

[Austinlee]

^That street level view looks pretty awesome TBH. If something like this were built there it was be pretty good.
I agree with pj3000 and others though that anchor tenants seem hard to secure nowadays in downtown. There have been many stalled developments when they don't find one leaving a big empty lot to look at. And when a Pittsburgh company does decide to anchor a building it seems like they build their own like FNB Bank is planning.

[pj3000]

Originally Posted by Austinlee

^That street level view looks pretty awesome TBH. If something like this were built there it was be pretty good.
I agree with pj3000 and others though that anchor tenants seem hard to secure nowadays in downtown. There have been many stalled developments when they don't find one leaving a big empty lot to look at. And when a Pittsburgh company does decide to anchor a building it seems like they build their own like FNB Bank is planning.

Yeah, and with the market for office space in a high rise, especially given the current global pandemic/work-from-home culture becoming more and more solidified... it seems like complete financial suicide for a small, family company that owns parking lots and a bit of square footage around town to attempt to build a "signature" tower at this time.

[eschaton]

So, I crawled through the Troiani website, and they really have six different projects they're attempting roughly simultaniously.

1. The project listed above.

2. A standalone residential building on the corner of First/Wood downtown.



3. The project on Penn and 23rd involving two new midrises, retail, apartments, and a parking garage. This actually cleared zoning awhile ago. That there's no shovels in the ground is troubling.



4. Redevelopment of the Papa J's parking lot in Carnegie as a new, 40-unit residential building.



5. A 17-unit townhouse project in South Fayette.

6. Development of an entire 175-acre parcel outside of Peters Township as a new subdivision.

This seems to be very aggressive for a company which has essentially, up until this point, managed two existing small commercial buildings (one in Carnegie, one in the Strip), owns three units in Gateway Towers, and operates four surface parking lots.

[pj3000]

And I don't imagine that any construction or acquisition/demo has occurred at that proposed former Papa J's site in Carnegie either, which was destroyed by fire over 2 years ago and demolished...

[eschaton]

Apparently there's a new (and quite expensive) 14-unit townhouse development going into West Oakland?



I have to say this surprises me. That block of West Oakland might as well be the Hill District, given it's just outside of Oak Hill. I could see market-rate homes there - South Oakland has had a steady drip of market-rate infill. But starting $550,000, and going up from there? A bit shocking.

[themaguffin]

eschaton, is it possible that they have funding or a partner that wouldn't be known?

This is a lot of detail to just be nothing.

[pj3000]

Detailed proposals with multiple renderings are a dime a dozen. The vast majority of them never get built, or are never built in the proposed form. But they are what is needed to present to municipal governing boards, potential investors, the public, etc.

First and foremost, they want to demolish those historic buildings so they can make a profit. Old buildings in need of significant renovations don't offer the profit timeline they want. A large downtown parking lot does. Very low overhead, very high margins, basically right away. And now the site is cleared for a major development should there be interest from an actual developer/company, who they then sell/lease the land to for big $. My basic rule of thumb on major office/mixed-use proposals is: no anchor tenant commitment = no go.

[photoLith]

Yeah that tower ain’t never going to happen. They just want to be shit birds and make it a parking lot forever while tearing down some of downtowns oldest remaining buildings. Screw them.

[eschaton]

Originally Posted by pj3000

Detailed proposals with multiple renderings are a dime a dozen. The vast majority of them never get built, or are never built in the proposed form. But they are what is needed to present to municipal governing boards, potential investors, the public, etc.

First and foremost, they want to demolish those historic buildings so they can make a profit. Old buildings in need of significant renovations don't offer the profit timeline they want. A large downtown parking lot does. Very low overhead, very high margins, basically right away. And now the site is cleared for a major development should there be interest from an actual developer/company, who they then sell/lease the land to for big $. My basic rule of thumb on major office/mixed-use proposals is: no anchor tenant commitment = no go.

I basically agree with this, but it's impossible to actually expand the number of parking spaces on that parcel without going through zoning, because there's an overlay over the Golden Triangle stopping the expansion of surface spaces. So they could leave the space totally vacant, but they couldn't actually expand the number of spaces without a variance - which I am guessing that the city would be averse to doing after a bad-faith demolition.

Most likely outcome is the buildings are lost, the site remains vacant for a decade, then eventually they sell and something way less impressive gets built there.

[JDescutner]

Originally Posted by photoLith

Yeah that tower ain’t never going to happen. They just want to be shit birds and make it a parking lot forever while tearing down some of downtowns oldest remaining buildings. Screw them.

I wrote an email to planningcommission@pittsburghpa.gov and I strongly urge everyone to do so if you oppose the demolition of these historic buildings.

"Dear Commissioners,

I am writing to strongly oppose the demolition of the buildings at 100-106 Market St. and 209 First Ave.

Pittsburgh has already endured so many significant losses of historic buildings and neighborhoods that reflect the beauty and character of this great city, and we cannot afford to lose more to uninspired and piecemeal modern developments. If we continue to bulldoze our past, we will lose what makes this city unique and will have less of what sets us apart from other cities.

I also want to add the extreme doubt that I have that the developers will actually secure a tenant for the proposed new building, especially during this health crisis and its aftermath, and with work-from-home culture becoming more widely practiced. There are already so many vacant office buildings throughout the city and region and I fear that these beautiful historic structures will be torn down, no tenant will be secured for the new development, and the lots will simply remain empty for the foreseeable future. This city is already pockmarked with vacant lots in virtually every neighborhood.

I hope that you find it in yourselves to preserve our past so that we can have a more colorful future."

[pj3000]

Originally Posted by eschaton

I basically agree with this, but it's impossible to actually expand the number of parking spaces on that parcel without going through zoning, because there's an overlay over the Golden Triangle stopping the expansion of surface spaces. So they could leave the space totally vacant, but they couldn't actually expand the number of spaces without a variance - which I am guessing that the city would be averse to doing after a bad-faith demolition.

Most likely outcome is the buildings are lost, the site remains vacant for a decade, then eventually they sell and something way less impressive gets built there.

True, though I don't doubt that is part of the reason for such a seemingly detailed and professionally-produced proposal... to demonstrate their supposed commitment to the development and request a variance for the parking while they "get the finances in order". I hope I'm wrong, and I probably am... because I think what you note at the end is the most likely scenario. I have a feeling they would much rather sell the site for big bucks, and cleared lot is much more attractive to a would-be buyer, with the demo of historic structures out of the way.

[photoLith]

Originally Posted by JDescutner

I wrote an email to planningcommission@pittsburghpa.gov and I strongly urge everyone to do so if you oppose the demolition of these historic buildings.

"Dear Commissioners,

I am writing to strongly oppose the demolition of the buildings at 100-106 Market St. and 209 First Ave.

Pittsburgh has already endured so many significant losses of historic buildings and neighborhoods that reflect the beauty and character of this great city, and we cannot afford to lose more to uninspired and piecemeal modern developments. If we continue to bulldoze our past, we will lose what makes this city unique and will have less of what sets us apart from other cities.

I also want to add the extreme doubt that I have that the developers will actually secure a tenant for the proposed new building, especially during this health crisis and its aftermath, and with work-from-home culture becoming more widely practiced. There are already so many vacant office buildings throughout the city and region and I fear that these beautiful historic structures will be torn down, no tenant will be secured for the new development, and the lots will simply remain empty for the foreseeable future. This city is already pockmarked with vacant lots in virtually every neighborhood.

I hope that you find it in yourselves to preserve our past so that we can have a more colorful future."

Done, although I doubt they’ll ever see the email but who knows.

[Austinlee]

Originally Posted by eschaton

Apparently there's a new (and quite expensive) 14-unit townhouse development going into West Oakland?



I have to say this surprises me. That block of West Oakland might as well be the Hill District, given it's just outside of Oak Hill. I could see market-rate homes there - South Oakland has had a steady drip of market-rate infill. But starting $550,000, and going up from there? A bit shocking.

Good point but I also think this is an interesting trend. I think we will see the urban infill in the Hill District happen on both sides - Oakland & Downtown (w/ the civic arena site) and move inwards. We have already seen more housing infill in the middle of the Strip in the last 10-20 years than almost any other city neighborhood, it's slowly happening. And I do believe the long term residents should be considered and included in the future of the Hill but at the same time there are still tons of vacant lots and vacant/substandard buildings to be developed.

[Austinlee]

Originally Posted by eschaton

So, I crawled through the Troiani website, and they really have six different projects they're attempting roughly simultaniously.

1. The project listed above.

2. A standalone residential building on the corner of First/Wood downtown.



3. The project on Penn and 23rd involving two new midrises, retail, apartments, and a parking garage. This actually cleared zoning awhile ago. That there's no shovels in the ground is troubling.



4. Redevelopment of the Papa J's parking lot in Carnegie as a new, 40-unit residential building.



5. A 17-unit townhouse project in South Fayette.

6. Development of an entire 175-acre parcel outside of Peters Township as a new subdivision.

This seems to be very aggressive for a company which has essentially, up until this point, managed two existing small commercial buildings (one in Carnegie, one in the Strip), owns three units in Gateway Towers, and operates four surface parking lots.

I would assume that the owners came up with the (mostly cheap looking/vague) renderings to help sell their lots at maximum value to other developers who actually have the means to execute such plans.

[eschaton]

Originally Posted by pj3000

True, though I don't doubt that is part of the reason for such a seemingly detailed and professionally-produced proposal... to demonstrate their supposed commitment to the development and request a variance for the parking while they "get the finances in order". I hope I'm wrong, and I probably am... because I think what you note at the end is the most likely scenario. I have a feeling they would much rather sell the site for big bucks, and cleared lot is much more attractive to a would-be buyer, with the demo of historic structures out of the way.

IIRC when they got the earlier approval to demolish the two buildings on Boulevard of the Allies (which were in much worse shape) they explicitly did not ask to be allowed additional parking spaces - just to reconfigure the existing number of spaces. And the current demolition permit doesn't actually mention temporary parking utilization at all.

Mind you, it might be their eventual plan B when the tower financing inevitably fails, but they don't appear to be publicly pushing this now.

[bossride]

I listened to a webinar presented by James L. Klemntisz, Jr., MAI, SRA last week about the real estate market after COVID-19. He spoke about REIT's share of typical rent during April and May. For the industrial sector, it was 98.6% and 95.7%, respectively. For the office sector, 93.3% and 92.1%. For freestanding retail, 71.4% and 70.1%. Finally, for shopping centers, 45.6% and 47.7%. Clearly, shopping centers struggled the most and will likely continue to do so.

He said that many retailers, such as Old Navy, Petco, Nordstrom, Five Guys and Dick's, had stopped paying rent or severely reduced it. He also said the Urban Land Institute had reduced its 2020 Real Estate Transaction volume forecast from $480B (from October 2019) to $275B and its 2021 forecast from $470B to $400B.

[Austinlee]

Originally Posted by bossride

I listened to a webinar presented by James L. Klemntisz, Jr., MAI, SRA last week about the real estate market after COVID-19. He spoke about REIT's share of typical rent during April and May. For the industrial sector, it was 98.6% and 95.7%, respectively. For the office sector, 93.3% and 92.1%. For freestanding retail, 71.4% and 70.1%. Finally, for shopping centers, 45.6% and 47.7%. Clearly, shopping centers struggled the most and will likely continue to do so.

He said that many retailers, such as Old Navy, Petco, Nordstrom, Five Guys and Dick's, had stopped paying rent or severely reduced it. He also said the Urban Land Institute had reduced its 2020 Real Estate Transaction volume forecast from $480B (from October 2019) to $275B and its 2021 forecast from $470B to $400B.

Interesting stuff, thank you for sharing.

As a realtor working on a team that handles property management (We manage roughly 400+ residential units around the city and county) we have surprisingly strong payment thus far. Something like 90% on time payments which is on par or possibly even better payment than normal because of the stimulus checks.
I would guess that retail would be hit hardest. It will probably be a finishing blow to many struggling retailers considering they have been hit so hard by online shopping as well. Some people seem to get sad when well known big box stores go under; Not me. Big box retailers operate on a cannibalistic business model which wipes out smaller businesses and main streets. So when they themselves get cannabilized by a more efficient online storefront/warehouse distribution model I can't really feel sad.
I do hope that locally loved and supported businesses don't get annihilated during this time though.