PITTSBURGH | Development Rundown II

[Minivan Werner]

My money's on Boston.

[eschaton]

No pictures, but some eyeball reports from this weekend, as I got around a bit more than normal.

1. The Empire at Centre/Craig looks like it only has around four more stories of steel before topping out. On some of the lower stories they're beginning to put up wall sections already.

2. East Liberty Gardens is completely demolished, and mostly cleared of rubble, so real site work could begin soon.

3. Emerald on Centre (which has a new name now, IIRC) is topped off and has all the wall panels in place. It will almost certainly be buttoned up with windows in time for winter.

4. In terms of small East Liberty projects, demo at the corner of Penn/Centre has begun. And a new mini-apartment building has popped up on Centre between Station Street and East Liberty Boulevard.

5. The Penn/Eighth project downtown has pretty much fully excavated the foundation area for the new addition and is working on grading and putting down posts.

[BrianTH]

Fascinating series on Pittsburgh's non-profits, with an entire section dedicated to their role in development, and many related discussions in other sections:

https://newsinteractive.post-gazette.com/nonprofit/

A couple big picture thoughts:

The non-profits running such large surpluses while not paying local taxes is a very big issue. PILOTs (payments in lieu of taxes) might be a reasonable solution, and supposedly they were being negotiated, but where exactly is that deal?

Generally, I am not at all comfortable with the cozy relationship between key local politicians (most notably Peduto and Fitzgerald) and the main non-profits. Obviously there are many opportunities for fruitful cooperation, but I am very concerned about the degree to which the non-profits are getting their way on development issues--including pushing out for-profit developers when necessary--due to these relationships.

[BrianTH]

Some interesting notes in this Amazon HQ article:

http://www.post-gazette.com/business...s/201709120047

Mr. Thompson, who now helps brands optimize their strategies for dealing with Amazon, said Pittsburgh could have a better chance than most cities because of the tech and engineering talent churned out by universities like Carnegie Mellon and Pitt, and the burgeoning tech presence in the city as a whole.

Amazon’s biggest problem, he said, is securing talent. Despite the promise of six-figure salaries, the company has had a hard time recruiting top-flight talent to Seattle. That’s in part because of the high real estate prices that its rapid growth helped to create. The Amazon campus totals 33 buildings and 8.1 million square feet of space. “Even if you make $100,000, you can’t afford a house,” he said. “The reality is, there are not enough nice places to live on that salary.”

Amazon might be willing to take less in incentives, Mr. Thomson said, if it knows it will have a steady stream of talent to draw from at local universities and perhaps even others in the state. Pittsburgh also has the cultural scene and the kind of “curb appeal” that the online retail giant is seeking. “The big question is, what is it worth to the state and the city?” he said. . . .

And if Mr. Bezos needs to know more about Pittsburgh, he won’t even have to leave the office. Jeff Wilke, CEO of the e-commerce giant’s consumer business, grew up in the Steel City and is a huge Steelers fan.

If Amazon is looking to attract talent at lower salaries in light of local cost of living, then Pittsburgh should have a real chance--although Texas locations would have similar appeal on those grounds.

[AaronPGH]

Is there a reason the Lower Hill isn't being mentioned more here? It's a pretty compressed size, but easily has the best access to transit and universities. BRT is coming. It would need a few towers there to accomplish the 8 million sq ft, but that space should exist, right? Is it just that the cost of a tower is much more than a bunch of horizontal mid-rises?

[contellus]

Pretty enormous news coming from the Airport Authority today: they're proposing a $1B renovation that includes demolishing the landslide terminal and constructing a new terminal connected to the current airside facility.

Renderings and more information at a dedicated website: http://www.pittransformed.com

[contellus]

Originally Posted by AaronPGH

Is there a reason the Lower Hill isn't being mentioned more here? It's a pretty compressed size, but easily has the best access to transit and universities. BRT is coming. It would need a few towers there to accomplish the 8 million sq ft, but that space should exist, right? Is it just that the cost of a tower is much more than a bunch of horizontal mid-rises?

I agree. I know that city and county officials are anxious to promote Almono, but the lower hill site - and particularly Bjarke Ingels Group's gorgeous master plan for the site - seems not only much more connected to Amazon's requirements, but is also much more the type of "creative thinking" that Amazon has said that they're looking for.

[Captain Crash]

Originally Posted by AaronPGH

Is there a reason the Lower Hill isn't being mentioned more here? It's a pretty compressed size, but easily has the best access to transit and universities. BRT is coming. It would need a few towers there to accomplish the 8 million sq ft, but that space should exist, right? Is it just that the cost of a tower is much more than a bunch of horizontal mid-rises?

Not to mention it's a short walk over the future parklet over top of the Crosstown Canyon to the Steel Plaza T Station.

[qwho]

Originally Posted by contellus

Pretty enormous news coming from the Airport Authority today: they're proposing a $1B renovation that includes demolishing the landslide terminal and constructing a new terminal connected to the current airside facility.

Renderings and more information at a dedicated website: http://www.pittransformed.com

Looks like a decent plan. Should be able to build it without disrupting passengers too much. I wonder if they will leverage the people mover as transport to/from farther out parking.

[BrianTH]

Originally Posted by AaronPGH

Is there a reason the Lower Hill isn't being mentioned more here? It's a pretty compressed size, but easily has the best access to transit and universities. BRT is coming. It would need a few towers there to accomplish the 8 million sq ft, but that space should exist, right? Is it just that the cost of a tower is much more than a bunch of horizontal mid-rises?

So to begin with, there were some VERY tense negotiations that led to the current master plan for the development of the Lower Hill, and that explicitly included height and use limitations, particularly on the upper (and, unfortunately, wider) part of the site. The upshot is that unless you want to revisit those negotiations--and from what Amazon is saying, they would probably want no part of such a thing--there is some room for high-rise office towers, but only in the lower/narrower part of the site.

And 8 million sqft is a truly massive number. The US Steel Tower, for example, is about 2.3 million sqft. So you would need about 3.5 US Steel Towers to provide that amount of space. That just won't fit into the Lower Hill site, particularly not just the lower/narrower part.

I did mention it above, however, but I think it would have to be just a component of a bigger overall plan. You could offer them the lower part of the Lower Hill to start. Then there is also the big Buncher zone in the near Strip. That's still probably not enough, but there are some possible infill sites in Uptown, and in fact Downtown--that lot across from City-County building, for example. Maybe even you could point them to the fallow area across and to the west of the 16th Street Bridge (doesn't Buncher also control most of that too?).

But the picture here is of a somewhat scattered "campus". It really isn't a huge area as the crow flies, but there are rivers and cliffs and such (Although have you ever heard of aerial gondolas being used for urban transit? But I digress). And ownership is scattered as well--in addition to public sites you've got sites controlled by Buncher, the Penguins, the Williams family, and so on.

Personally, if I was running this show, I would call up the Penguins and Buncher and see if they were interested in putting together some sort of combined proposal. I'd also have a team putting together a proposal for ALMONO, and teams for any other plausible site--Carrie Furnace, maybe something by the airport, and so on. They could all make pitches to Amazon, and the point would be that Amazon would have options, depending on how they wanted to go.

[BrianTH]

Originally Posted by contellus

Pretty enormous news coming from the Airport Authority today: they're proposing a $1B renovation that includes demolishing the landslide terminal and constructing a new terminal connected to the current airside facility.

Renderings and more information at a dedicated website: http://www.pittransformed.com

Well, that's impressive. The short video is definitely worth a watch.

Obviously spending another $1.1B on the airport is going to raise eyebrows. But the way this works legally, they can't spend that money on anything else local. And as they point out, they won't be asking for any contribution from local taxes.

So basically, a whole bunch of that $1.1B would be circulated into the local economy on a net basis. So that would be nice.

Plus, it would seem to open up a bunch more prime land for airport-related development. Again the revenues of that have to stay with the airport, but that plus the estimated savings on operating costs should prevent this from having a negative impact on passengers, and there would likely be other economic benefits flowing out locally (net job additions, for example, which would result in higher local consumption and higher local tax revenues).

So yes, this is a very big deal. And I can't find much bad to say about it, assuming their numbers are anywhere close to right.

[AaronPGH]

I was a skeptic of spending all of this money to make large changes, but it seems this is a pretty well thought out plan by PIT. Looks like they've got buy-in from almost everyone. One thing that isn't clear is how this will impact the landing fees?

[BrianTH]

This slide from the video seems to provide the best annotated overview of the plan:



I have to admit, it would be nice not being embarrassed about how outdated and depressing out Terminal Building looks:

[BrianTH]

Originally Posted by AaronPGH

I was a skeptic of spending all of this money to make large changes, but it seems this is a pretty well thought out plan by PIT. Looks like they've got buy-in from almost everyone. One thing that isn't clear is how this will impact the landing fees?

So in their FAQ, they claim this will result in lower CPE (cost per emplanement). However, they will also finance it in part through facility charges.

I also didn't see something specific on landing fees, but they did say this:

The Proposal:

Modernize outdated facilities to meet the needs of passengers and airlines
Optimize infrastructure for new technology, security and passenger flow
Eliminate space that is not used or needed
Save money on maintenance of old and deteriorating systems
Keep costs to airlines stable and declining
All with no new local tax dollars

So I think what they are saying is that any financing charges they would have to pass on to airlines will be offset by lower operating costs. The result is that airlines won't get the full benefit of the operating cost savings, but nor will they have to pay more to finance the project.

And at a guess, the long term impact on airline fees will really depend on those other development opportunities and associated airport revenues.

[photoLith]

Wow, I really hope that airport redesign happens, thats pretty sick and would bring Pittsburgh into the 21st century finally. What is the probability of this happening? The current airport is about the most depressing experience out of any airport I've been to.

[BrianTH]

Originally Posted by photoLith

]What is the probability of this happening?

Seems pretty high to me. So far it looks like all the major stakeholders have bought in. They don't really have to worries about NIMBYs, zoning, and such. The financing is usually the biggest issue with these mega projects, but in this case most of it is self-generated (bonds, facility charges, and equity (whatever that means)).

However, they did say 17% would come from grants, which is not a small amount of money given the overall budget. But there is money around earmarked for airport projects, and so hopefully they have a good idea about it being available.

By the way, they also said they had a 3-year construction timetable. So this could happen pretty quickly if the financing and approvals are secured.

[BrianTH]

Growing Deeplocal is moving from the Strip to a renovated brewery in Sharpsburg:

https://www.bizjournals.com/pittsbur...strict-to.html

The 35,000-square-feet of new space that Deeplocal will take is on the third floor and part of the first floor of 1601 Marys Ave., Sharpsburg, in the former office of the Fort Pitt Brewing Co. that was built in 1906. The move is scheduled to be concluded by the end of December. The reason? Deeplocal's growth. It follows the company's acquisition in April by worldwide advertising/marketing giant WPP(Nasdaq: WPPGY). Deeplocal had been in the Strip District since 2012, and in 2015 it was one of Pittsburgh's Coolest Offices.

“We like being a part of neighborhoods that are still a bit under the radar. We started in East Liberty, and then moved to The Strip — both neighborhoods which have recently seen a surge in development. We feel that Sharpsburg is now similarly poised to explode in popularity,” said Deeplocal CEO and Co-Founder Nathan Martin in a statement. “We’ve already met with many of our new neighbors and everyone has been very welcoming — we couldn’t be more excited to be making this special community our new home.”

I've long been saying if I was into speculating on real estate, I would be buying in Sharpsburg. Plus, you would be just down the road from the new axe-throwing venue in Millvale:

https://www.bizjournals.com/pittsbur...-millvale.html

[BrianTH]

Article on the former Emerald on Centre, now Coda on Centre:

https://www.bizjournals.com/pittsbur...t-liberty.html

Leasing starts in November, with opening scheduled for March.

[photoLith]

Question, how would the airport operate while this construction is going on? I'm guessing the new terminal is going at a different location from the current terminal. But it would seem they would have to redesign the whole runway set up as well.

[qwho]

I wonder if the Hyatt will still be as convenient as it is today? The only reason I am even willing to pay as much as they charge is so that I can basically fall out of bed into the security line...