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DEVELOPINGPittsburgh Fa

ll 20

13

CRE FINANCE UPDATE

2013 BUYER’S GUIDE

MID-YEAR MARKET UPDATES

SOME ADVICE FOR THE NEXT MAYOR

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05 President'sPerspective

23 DevelopmentProjectANSYS/Zenith Ridge at Southpointe II

37 DeveloperProfileImperial Land Corporation

42 EyeOntheEconomy

44 OfficeMarketUpdateGrant Street Associates

46 IndustrialMarketUpdateNewmark Grubb Knight Frank

50 RetailMarketUpdateLangholz Wilson Ellis

54 NationalMarketUpdateCBRE

59 Legal/LegislativeOutlookRevisions to the Mechanics Lien law would give owners more certainty.

69 VoicesDeveloping Leaders offer a suggestion to Pittsburgh’s next mayor.

73 NewfromtheCounties

83 People&Events

CONTENTS | Fall 2013

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

37 DevelopingTrendBus Rapid Transit could be the Oakland-to-Downtown solution.

65 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.

86 Buyer’sGuideThe 2013 NAIOP Buyer’s Guide puts contacts for designers, engineers, contractors and lenders in one easy-to-use resource.

2013 Buyer’s Guide

T 412.471.9500 | cbre.com/pittsburgh#1 IN REAL ESTATE SERVICES WORLDWIDE

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I 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 lead-ership, 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 advo-cacy 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 rel-evant 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 empha-sis on our emerging professionals over the past few years. I feel that reaching back to the next generation of profes-sionals in our industry is an obligation and a privilege we have as an organiza-tion. Engaging younger people in com-mercial real estate is another way that we can ensure that the best young tal-ent is attracted to Pittsburgh and grows here. Those goals are the foundation of our Developing Leaders group. The spe-cifics 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 Lead-ers 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 network-ing events in the city: Night at the Fights and our Annual Awards Dinner. We continually explore other ideas to create additional value for our mem-bers. 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 observa-tions 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 DevelopingPitts-burgh. 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.naioppitts-burgh.com) and look for notes from us as our new programs draw closer.

Regards,

President’s Perspective

PUBLISHERTall Timber Group

www.talltimbergroup.com

EDITORJeff Burd

[email protected]

PRODUCTIONCarson Publishing, Inc.

Kevin J. [email protected]

ART DIRECTOR/GRAPHIC DESIGNCarson Publishing, Inc.Jaimee D. Greenawalt

CONTRIBUTING PHOTOGRAPHYCarson Publishing, Inc.

Port Authority of Allegheny CountyPittsburgh Regional Alliance

The Greater Cleveland Regional Transit Authority

CONTRIBUTING EDITORSAnna Burd

ADVERTISING SALES Karen Kukish

412-837-6971 [email protected]

MORE INFORMATION:

DEVELOPINGPittsburgh is published by Tall Timber Group for NAIOP Pittsburgh

412-928-8303www.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

Daniel P. PuntilNAIOP Pittsburgh President

6 DEVELOPINGPITTSBURGH | Fall 2013

FINANCIALMARKET UPDATE

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Overthepastyeartherehasbeenacalmingofmuchofthevolatilityinthereportingofbusinessandeconomicconditions.Thatchangehascorrespondedtoacalminginthevolatilityoftheactualeconomy.Sincethefinancialcrisis,reportingaboutbusiness–whichishardlyfrontpagenewsinmosteras–hascontinuallyharpedonwhatmaybethenextunknowncrisistotripuptheeconomy.Afterfiveyears,mostmediaoutletsarecoveringbusinessinthemannertheydidpriortothecrashandtheglobaleconomyitselfseemstobeofferinglesstowriteaboutaswell.Businessnewshasbecomeboringagain.

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Eurozone debt cr ises have faded. The stock market is chugging upwards towards new records. The ‘ f i sca l c l i ff ’ and Socia l Secur i ty withholding increases had more impact before than

after the events took place. Even the threat of the Federal Reserve e l iminat ing i ts bond-buying pro-gram has been processed and ab-sorbed – pr iced in to the affected secur i t ies . More important ly, the actual report ing of economic data cont inues to get sunnier, especia l ly reports that look back on the most recent est imates of act iv i ty. With each new report , the previous est i -mates seem to be rev ised upward.

Al l of th is i s good for commercia l real estate. Higher than expected GDP growth, lower than expected unemployment, h igher consumer spending than expected al l add up to better condit ions for the busi-nesses that rent commercia l space. That, of course is better for the developers and landlords of com-mercia l property. The remaining quest ion mark for real estate is whether f inancing is up to the task of lending to meet the demands of the market.

I t was, after a l l , the overexten-s ion of credit that was at the root of the cr is is and recess ion. In response, lenders and regulators went to great lengths to assure that gett ing credit i s not an easy process. In the years fol lowing the crash, banks and other lenders swung the underwrit ing pendulum as far away from the standards of the mid-2000’s as poss ib le. That’s a natural human react ion. As the fear of the meltdown recedes and devel-opers ramp up projects , the ques-t ion is : are lenders ready to support expansion again?

WhattheLendersAreFeeling

Whether the source of the credit i s a tradit ional bank, l i fe insurance company, real estate investment trust (REIT) or commercia l mort-gage backed secur i ty (CMBS), there wi l l be vary ing degrees of support

for a commercia l real estate trans-act ion. What a l l 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 t ime in history. At the same t ime, the spread between the cap rate for commercia l prop-erty and the return on the 10-year Treasury bi l l i s h istor ica l ly h igh, between 400 and 450 bas is points for the last f ive years.

These are condit ions that should be great for commercia l real estate f i -nancing but the condit ions are a lso somewhat extraordinary because both rates and spreads are essen-

t ia l ly art i f ic ia l , the result of Federal Reserve f iscal pol icy rather than the market act ion. The supply and de-

mand fundamentals for commercia l real estate haven’t been good s ince before 2008 but the lack of return for cash in tradit ional conservat ive investments has pushed investors to look at what are normal ly r i sk ier asset c lasses for better y ie lds. One of those asset c lasses that has been in favor is real estate.

This counter intuit ive love affa i r with real estate is a bit confus ing for lenders. Commercia l property values decl ined by more than 40 percent in 2008 and 2009, yet by 2010 the total returns on commer-c ia l real estate in the U. S. aver-aged 14.5 percent. For the t ime be-

ing, low rates are making real estate a hot commod-ity and lenders are returning to the game, especia l ly in areas l ike P i t tsburgh, where com-mercia l prop-ert ies have held up wel l .

“Commercia l real estate is a great loan investment for the bank,” says Northwest Savings Bank

regional pres ident Chr is Mart in. “Most banks are in pretty good shape. They have come through the cr is is , c leaned up their balance sheets and bad loans. They have bui l t up capita l and there are very few ways to earn on capita l except to lend.”

“We feel commercia l real estate in our market terr i tory is sol id. We l ike what we see and want to sup-port our customers in commercia l real estate,” notes David Antol ik, senior execut ive v ice pres ident and chief lending off icer for S & T Bank. “In P i t tsburgh, for one of the f i rst t imes we have investors from outs ide the region just chas ing y ie lds. Ret i rement funds are look-ing at P i t tsburgh, part icular ly the

What a l l the l enders have in common in today ’ s marke t i s tha t the in te res t r a te they can charge fo r the funds they p rov ide i s lower than a lmos t any t ime in h i s to r y.

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CBD, as re lat ive ly cheap compared to other markets.”

These comments are fa i r ly typi-cal for bankers in Western PA and other regions, for that matter. The programs put in place to prop up bad balance sheets and encourage lending after the f inancia l cr is is – remember TARP and TALF – were very good at the former and fa i led at the latter. Lenders were able to borrow money overnight at the Fed’s window for one-quarter of a percent and ‘se l l ’ the funds back to the Fed at a two percent margin. That spread was near ly what the margins were on lending – exc lud-ing fees – and there was no r isk. This certa in ly helped banks bui ld reserves against which they could write down the bad loans on their books. That was a necessary f i rst step but given the uncerta in state of the economy, there was l i t t le incent ive for banks to lend money when the expectat ions were that the rates they could get for loans in a few years would be higher. The r isks associated with lending out money for 10 or 15 years weren’t in l ine with the returns.

S ince 2011, however, many lenders have seen the environment as one in which they could grow by taking share that their compet i tors would not. As the global economy seemed to be repair ing, the perceived r isks of the projects decl ined and the opportunit ies to shift the r isk by se l l ing the loans in the secondary markets increased. Especia l ly in a healthier region l ike P i t tsburgh, banks began to look for deals .

“We have had about 14 stra ight quarters of growing our loan portfol io but we did i t by st ick ing to the bas ics ,” says Bob Powder ly, senior v ice pres ident for investment real estate at F i rst Nat ional Bank. “Our underwrit ing evaluated the cash f low, looked at debt coverage and conservat ive rent increase pro formas. We were pretty conserva-t ive or at least pretty vani l la .”

“Our bank has a growing appet i te for construct ion lending. We’re looking at more deals ,” agrees

BB&T Bank’s senior v ice pres ident Bruce Sharp. “There are too many banks chas ing too few loans, how-ever. Borrowers are seeing favor-able terms and condit ions."

Sharp’s point is being echoed by a number of lenders. Chr is Mar-t in sees interest margins being squeezed. Dol lar Bank’s Jack Shel-ley is concerned that compet i t ion among banks has a l ready heated to the point that underwrit ing stan-dards are becoming more forgiv-ing than the market deserves at the moment. As low interest rates have hung around for half-decade already, pressure is bui ld ing from investors to f ind better earnings and that creates pressure to c lose deals for bankers. Seasoned lend-ers worry that pressure wi l l lead to re laxed disc ip l ine in underwrit ing.

“Convent ional f inance is a thing of the past . The capita l stacks are much more compl icated than be-fore,” observes J im Noland, pres i -dent of PenTrust Real Estate Advi-sory Serv ices s ince 1987. “There are government grants, new market tax credits , h istor ic tax credits and other programs that are needed to br ing the cost down.”

Noland says that the addit ional en-hancements are essent ia l in urban development, where construct ion costs are s ignif icant ly h igher. He feels that one big difference with the r is ing costs f rom previous mar-ket condit ions is the uncerta inty of the project ’s appreciat ion.

“Part of i t i s that inf lat ion has been so low. Inf lat ion is the fr iend

“There a re gover nment g ran t s , new marke t t ax c red i t s , h i s to r i c t ax c red i t s and o ther p rograms tha t a re needed to b r ing the cos t down. ”

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of commercia l real estate but now it ’s hard to project how the bui ld-ing wi l l appreciate,” he says. “You

can’t dr ive the pro for-ma to e ight percent inf la-t ion when i t ’s real ly two or three percent. You have to have other sources to make up the differ-ence.”

Whether concerns are about com-pet i t ion or about the higher costs of develop-

ment, lenders wi l l have to f igure out how to work with the condit ions be-cause the market is looking for more deals rather than

fewer. The economy is improving. In P i t tsburgh, we are seeing an in-

f lux 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 wi l l dr ive more deals .

ChasingYield

One of the best examples of money dr iv ing a market is in the mult i -fami ly sector. At the depth of the recent downturn, the fundamental support for mult i - fami ly housing was very strong, even though that wasn’t necessar i ly a good thing. More people were unable to af-ford to own housing and increased the number of renters. The lack of mult i - fami ly development meant that fewer units were avai l -able when the number of renters jumped. Demand quickly outgrew supply and rents went up.

Whi le those were factors that cre-ated the need for more apartments, recess ionary condit ions aren’t

Rates for the bellwether 10-year Treasury and conventional 30-year mortgages remain below the levels of the first quarter of 2011 and well below historical norms. Source: Federal Reserve Board, Wells Fargo Securities.


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usual ly support ive of new develop-ment. Many apartment developers a lso own other commercia l real estate and weren’t in a posit ion to bui ld. Into the void came the l i fe insurance companies with cash and favorable terms.

The insurance companies needed a way to offset the loss of y ie ld as interest rates plummeted. L i fe insurers have obl igat ions to del iver ‘conservat ive’ returns to their pol i -cy-holders and investors. The def i -n i t ion of conservat ive – anywhere from four to s ix percent depending on when the pol icy was written – was suddenly several hundred bas is points above inf lat ion and much higher than the Treasur ies were y ie ld ing. Part of the solut ion was for insurance companies to invest in apartment complexes. Between 2009 and 2011, rents were c l imb-ing at or above f ive percent annu-al ly, making the k inds of returns the l i fe companies needed. Dur ing that t ime, l i fe insurance investment

in mult i - fami ly grew each year but so did pr ivate investment in mult i -fami ly of a l l k inds.

Money was looking for a place to land and there were only so many mult i - fami ly deals . The common sense result would be for investors to begin to look e lsewhere but in a

boom, common sense usual ly takes a break. Developers were s idel ined dur ing the recess ion and mult i - fam-i ly offered an opportunity to de-velop again because the funds were chas ing the deals . Anxious inves-tors were fuel ing new construct ion

and Fannie Mae, Freddie Mac and HUD were addit ional cata lysts with very favorable f inancing programs.

As of 2013, construct ion of mult i -fami ly units wi l l reach roughly 325,000 units nat ionwide – with some 2,500 units start ing in P i t ts-burgh – and inventor ies wi l l 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 s low down. That doesn’t mean the ap-pet i te for y ie ld is d iminishing.

There st i l l i s an imbalance between the amount of capita l chas ing commercia l real estate and the number of qual i ty deals that ex ist . Transact ion volumes are increas ing. CoStar reports that repeat sa les have increased 25 percent dur ing the f i rst f ive months of the year. T ime on the market decl ined 5.1 percent and the difference between the asking and sel l ing pr ice shrank

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to 2.2 percent. Yet off ice, reta i l and warehouse sa les remained 35 percent below the levels of the last recovery per iod, between 2004 and 2007. This means there is more capita l wait ing to be deployed.

TheReturnofCMBS

One place that the capita l supply is showing up is in the CMBS market. Once the dar l ing of investment products, CMBS essent ia l ly d isap-peared after the f inancia l cr is is . As the appet i te for deals has grown, the tolerance for the r isk inher-ent in commercia l mortgages has a lso increased, a l lowing investment banks to buy and package mort-gages again.

CMBS plays an important role in the f inancia l markets, just as a l l asset backed secur i t ies do. When funct ioning proper ly, CMBS deals a l low investors to a l locate capita l

across a l l segments of the r isk spectrum. Investment banks as-semble commercia l mortgages that banks have sold into bonds of mult ip le loans, with rat ings for the var ious loans according to credit qual i ty. Loans with s imi lar credit worthiness are bundled together into tranches that offer h igher rates of return for lower rat ings, s ince lower credit qual i ty mer i ts a higher interest rate on the loan. Investors can choose to buy the bonds that have a credit qual i ty that matches their comfort level . A transparent, fu l ly-funct ioning CMBS market a l lows for projects with higher r isk to f ind f inancing.

“I th ink CMBS lending wi l l cont inue to return as there is a def in i teneed for i t in the secondary mar-ket. I t provides a source of l iquid-i ty that can’t be f i l led by any other platform in the permanent debt arena. Not every deal f i ts the Fan-

nie Mae, Freddie Mac or l i fe insur-ance company parameters.” says Dan Punt i l , senior v ice pres ident for Grandbr idge Capita l in P i t tsburgh. “Certa in deals cater to CMBS, l ike hospita l i ty for example. There is a lways a need for CMBS execut ion to f i l l the void for other permanent lenders who won’t do certa in k inds of deals .”


“ I th ink CMB S l end ing w i l l con t inue to re tu r n a s there i s a de f in i te need fo r i t i n the secondar y marke t .

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At the peak of the f inance bubble in 2007, CMBS volume reached $225 bi l l ion in the United States and more than $350 bi l l ion world-wide. L ike what happened with res ident ia l mortgages, buyers for CMBS didn’t seem to care what was in the bonds – and the rat-ings agencies helped make that less t ransparent – as much as they did that there were bonds to buy. That’s the difference between CMBS and convent ional forms of f inance. In a convent ional loan s i tuat ion, the lender needs to be comfortable with the r isk of repay-ment. With CMBS, that dynamic st i l l ex ists at the loan level but then there must st i l l be buyers for the bonds to which the loans are t ied. When the crash occurred no one wanted to buy commercia l mortgages.

The recovery has healed the market for the most part . CMBS volume is forecast to be $70 bi l l ion or more in 2013, roughly double that of 2011 and 2012. Mark Popovich, managing director for HFF in P i t ts-burgh sees the recovery as near ly complete.

“CMBS is definitely on the return. I don’t see getting back to the $200 or $300 bil l ion range again but it may get to $90 to $100 bil l ion in the next few years,” he predicts. “CMBS is getting very active. The market had a hiccup after the Bernanke re-marks – 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 l ittle better than expected.”

Pr ic ing for CMBS issuances ref lect the r isk the market is feel ing. L ike with any bond sale, buyers may at-tach a r isk premium that decreases the funds ra ised in the sa le. Bond issuers try to ant ic ipate that r isk premium in advance and pr ice the deal accordingly. When pr ices come in better than expected, the funds ra ised increase.

The attract ion of CMBS to develop-ers is that those deals usual ly result

in s l ight ly h igher funding levels for the developer and no recourse, or col latera l p ledged, because the buyers of the mortgages have – theoret ica l ly at least – factored that r isk into the pr ic ing. Under-writ ing for CMBS had st i ffened dur ing the downturn too but as demand for the bonds grows, the standards are re lax ing.

“Standards are gett ing more ag-gress ive but we aren’t going to see 80 percent loan-to-value and ten-year interest only deals again,” says Popovich. “We are seeing 75 percent loan-to-value and one year of interest only.”

“As long as there are buyers of commercia l paper, the CMBS mar-ket wi l l push to create the addi-t ional va lue that people go to for CMBS,” predicts Punt i l . “We have seen i t go from 65 percent loan-to-value to 70 percent, now 75 percent. Wi l l i t go back up to 80 percent? I don’t know, but theywi l l t ry.”

TheInterestRate/CapRateConundrum

The Federal Reserve’s decis ion to drop interest rates to the f loor may have prevented the f inancia l cr is is f rom becoming a ful l -scale rout but the after effects have created prob-lems for lenders. Even the part ies that benef i t ted most from the low

rates – the borrowers – have to look at deals done dur ing this en-v i ronment as problematic in a few years.

Start ing from the assumption that the interest rates are going to have to r ise again, there are three main r isks associated with higher rates: investment f l ight; operat ing income decl ines and cap rate decompres-s ion.

As the corol lary to the phenom-enon that lower y ie lds have created higher demand for commercia l real estate as an investment and pushed up property pr ices, h igher inter-est rates could have the opposite effect ; that is , investors would opt to have their cash earning interest i f the rates were four percent or more. Whi le there is some merit to the theory that investors measure real estate r isk versus the 10-year Treasury, the evaluat ion isn’t an e i ther or k ind of test . The Treasury bond is a r isk-free investment. Commercia l real estate is inherent ly more r isky but the returns have typical ly been two or three t imes higher than the 10-year y ie ld.

“I th ink the Treasury is about a global event or something that tr iggers fear. There’s a lways a f l ight

Historically low interest rates have held cap rates at or below the norms for the

past two business cycles.

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to safety. Whether the Treasury is y ie ld ing one percent or two-and-half percent, that's where money goes,” says Popovich. “ I f everything else is healthy and the T-bi l l i s at 4.5 percent, then everything else is going to be higher anyway.”

The more real ist ic problem from higher rates wi l l be the impact on a property’s operat-ing income. Operat ing expenses shouldn’t increase just because of higher rates but the cost of f inancing certa in ly wi l l . Such an increase wi l l degrade the bui ld-ing’s internal rate of return, a disappointment for current

performance with a var iable rate loan and a real problem at the t ime of ref inancing.

“An increase in interest rates without a corresponding income growth could cause problems in some regions, and Pittsburgh is one of them,” expla ins Paul Gr i ff i th, managing director for Integra Realty Resources. “That’s part icular ly t rue with these construct ion loans for apartments when they go for permanent f inancing in two years. Wi l l the pro forma st i l l hold up?”

“The new r isk I see is r i s ing rates. What are rates going to do to our ex ist ing loans?” asks Powder ly. “We’re evaluat ing our loans at every 100 bas is point increase.” Powder ly says that they are looking at the differ-ence between any increased

Cap ra te doesn’ t t e l l the l ender the fu l l s to r y bu t i t ’ s one o f many r a t ios used to ana l yze the v i ab i l i t y o f a dea l .

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f e a t u r e

costs and the pro forma rent fore-cast . “We are looking to f i l l any gaps with equity or other proper-t ies.”

Rate-dr iven decl ines in operat ing income performance wi l l have their b iggest impact on cap rates, which wi l l have a s ignif icant impact at ref inance.

Cap rate or capita l izat ion rate is a quick measure of a property’s va lue by compar ing the net operat-ing income to the present value of the property. I t ’s a quick tool for compar ing a bui ld ing’s performance versus the rest of the market and i ts compet i tor propert ies. Each bui ld ing has i ts own set of income and rate of return expectat ions. Cap rate doesn’t te l l the lender the ful l story but i t ’s one of many rat ios used to analyze the v iabi l i ty of a deal . Lenders l ike rat ios, so cap rates count. A quick look at an example wi l l te l l you why that is .

A bui ld ing with a value of $1,000,000 that has a net operat-ing 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 art i f ic ia l ly increase the in-come and therefore, the value of the property. The concern among lenders is that i f rates r ise, prop-erty values wi l l tumble, l i f t ing cap rates. At the t ime of ref inancing or the convers ion of a construct ion to permanent loan, that can mean a more diff icult case for f inancing the property. There is some histor i -ca l ev idence however, that per iods of increas ing rates don’t necessar i ly mean higher cap rates.

According to the Nat ional Counci l of Real Estate Investment F iducia-r ies’ (NCREIF) database, pr ivate real estate had an average annual re-turn of 12.2 percent dur ing the s ix per iods of r is ing rates dat ing back to March 1978. That ranks high-est among the major asset c lasses,

I f i n te res t r a te s do r i se because the economy i s becoming more robus t , then a l l the components o f a bu i ld ing ’ s p ro fo r ma – s t ronger absorp t ion , lower vacancy and h igher ren t s –wi l l a l so improve , l ead ing to h igher ne t opera t ing income.

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f e a t u r e

inc luding bonds, the Standard & Poors 500 Index and equity REIT’s . Moreover, the impact of higher interest rates on cap rates has been muted. Dur ing two of the s ix per iods – from March 1978 to Sep-tember 1981 and from June 2004 to September 2006 – average cap rates actual ly decl ined due to rap-id ly r i s ing property values. In the intervening four per iods of interest rate increases, cap rate growth was less than 50 bas is points. In fact , the NCREIF forecast for the next two years ant ic ipates ten-year Trea-sury bond y ie lds to c l imb towards f ive percent whi le cap rates go from the current average of 6.1 to 6.5 percent.

More re levant to the performance of commercia l real estate are the reasons behind any extended inter-est rate hikes. The 100 bas is point spike that occurred from June to July resulted from the expectat ion that the Fed was going to encour-age r is ing rates, which precipi tated

a s ignif icant rotat ion from investors in bonds to stocks or cash. Bond pr ices fe l l and y ie lds rose, a l though the T-bi l l rates have held steady be-low the ear ly Ju ly levels . For rates to cont inue higher, the impetus wi l l have to be from further improve-ments in the overal l economy.

I f interest rates do r ise because the economy is becoming more robust, then al l the components of a bui ld-ing’s pro forma – stronger absorp-t ion, lower vacancy and higher rents –wi l l a lso improve, leading to higher net operat ing income. Even i f cap rates r ise in i t ia l ly with inter-est rates, the improving NOI and values wi l l hold cap rates in place.

“Construct ion f inancing for new projects i s general ly funded withshort-term, f loat ing rates, which have not been impacted yet and the Fed has given us v is ib i l i ty through 2014,” says Sharp. “The long-term f inancing rates tend to become an issue after construct ion

and stabi l izat ion of the project . The permanent f inancing markets wi l l bear much of that r isk. Most banks stress long-term rates dur ing underwrit ing, so a 100 bas is point move off h istor ic lows should not necessar i ly k i l l a project . I f a deal i s that t ight, i t probably should not have been done in the f i rst p lace.”

Concerns about re-f inancing as ide, most lenders seem to feel that the t ime for low rates has passed. Interest rates that move back to histor ic – or at least recent – levels would make banks more comfort-able.

“The benchmark rate went off a c l i ff in the third and fourth quar-ter of 2011 and i t went as low as 150 bas is points last year,” notes Punt i l . “The 10-year T-bi l l should be at four. That’s where i t wi l l get to within another year or so. The consumer has become spoi led with these rates. I hear about people looking more caut ious ly at buying a

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home at f ive and quarter per-cent. Real ly? These are st i l l very low rates.”

“We are st i l l in such a low rate environment that even a couple of points upward isn’t going to put us in a bad place,” notes Gr i ff i th. “Perhaps i t wi l l even be a more real ist ic p lace, as long as you’re not dependent on ag-gress ive rates for take out.”

FinancingSpeculatively

Few concepts were less v iable for f inancing s ince the recess ion than speculat ive commercia l real estate. Although i t was hous-ing and speculat ive housing that were at the root of the f inancia l cr is is , the decl in ing economic fundamentals caused a steep increase in unemployment and a deleveraging of consumer debt that created big vacancies in off ices, reta i l centers and warehouses around the country. In high-growth markets l ike Las Vegas, Phoenix, Centra l F lor ida and Southern Cal i fornia, where speculat ive development explod-ed in the mid-2000’s, there was pain for a lot of lenders.

There were markets where over-bui ld ing didn’t occur and recov-ery began sooner than the bal-ance of the country. By this t ime we know that P i t tsburgh was one of those markets that didn’t see steep decl ines in commercia l property values or high vacancy rates, even in reta i l centers. The problem for markets l ike P i t ts-burgh is that f inance is a global endeavor, so the pain that lend-ers fe l t about loans in Phoenix created re luctance to take r isk in P i t tsburgh.

Since the f inancia l cr is is , com-mercia l real estate development has been l imited to bui ld-to-suit projects . Even as vacancy rates fe l l in metro P i t tsburgh – leav-ing a lmost no cont iguous vacant space in some submarkets – the appet i te for spec development remained low unt i l that latter

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f e a t u r e

half of 2012 when some thawing f inal ly occurred. For those projects that were able to secure f inancing there were some common de-nominators: good locat ions, strong f inancia ls and very strong sponsor-ship.

“I don’t th ink spec is the four-letter word i t was f ive years ago,” says Chr is Mart in. “ I f you look at the off ice market r ight now, space is at a premium. I f you’re ta lk-ing about a great owner/developer/operator, we real ly want that loan. I ’m not ta lk ing about high-r ise but i f you are bui ld ing a 50,000 to 100,000 square foot off ice bui ld ing that’s a great product.”

Elmhurst Group has developed three speculat ive projects over the past year or so, inc luding a 90,000 square foot off ice in Cranberry Township and two 48,000 square foot f lex bui ld ings in Thorn Hi l l Industr ia l Park. E lmhurst i s a lso working on Schen-ley P lace, a 110,000 square foot of-f ice bui ld ing and 170-car garage in Oakland. E lmhurst ’s CEO, Bi l l Hunt says that gett ing the deals done required some changes in the market condi-t ions and in his expectat ions about the project .

“You have to have a project locat ion that, even without

a tenant has a track record of suc-cessful leas ing,” he expla ins. “The loan-to-value was certa in ly the big difference. We put more equity into the projects than we had usual ly done and that was okay with us too. We didn’t real ly want to over-leverage the bui ld ing before i t was cash-f lowing.”

The freeze on f inancing commercia l real estate ended several years ago

but the thawing out was rather extend-ed, with terms and condit ions that made borrowing fa i r ly un-des i rable. Whi le a l l indicators were that the P i t tsburgh econo-my was growing very ear ly in the recovery – say as ear ly as third quarter of 2010 – the

“The loan - to - va lue was ce r t a in l y the b ig

d i f f e rence . We put more equ i t y in to the p ro jec t s than we had

usua l l y done and tha t was okay w i th us too.

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


f e a t u r e

lending environment wasn’t sup-port ive of development, even as vacancy rates fe l l and rents rose. Hunt is one of several P i t tsburgh developers who judged that the market couldn’t wait any longer for new product and was wi l l ing to take what the market would give him for the t ime being.“It i s important that the transac-t ion be as f lex ib le as poss ib le so when you do lease up you can ref i -nance at favorable terms,” he says. “We understood we would have a lower rate of return on equity for that per iod of t ime. And we couldn’t do a project in a pioneer-ing locat ion. Banks aren’t going to be pioneers.”

In Southpointe I I , Quattro Invest-ments is bui ld ing a 150,000 mult i -tenant spec off ice in tandem with a new 186,000 square foot head-quarters off ice for ANYSY Inc. By posit ioning the project as a s ingle project that was 55 percent pre-leased, Quattro was able to get f inancing but not without the per-sonal sponsorship of the partners.

“Our f inancing worked because we have a good project and strong sponsorship,” notes Quattro partner J im Scalo. “[The lend-ers] were looking for substant ia l net worth, substant ia l t rack record and a project in a good market, supported by a good study.”

“Great sponsorship is the key. Seasoned, wel l -capita l ized devel-opers who know the submarkets and have the abi l i ty to enhance credit are gett ing deals done,” agrees Sharp. “But the debt markets st i l l don’t have the l iquid-i ty they did.”

Elmhurst and Quattro are two of a total of at least e ight projects that have gotten under construct ion s ince late 2012, which are specula-t ive or have less than 50 percent

pre- leased. I t wasn’t long ago that a good story meant l i t t le for a developer’s chances in secur ing f inancing. For now it appears that at least one good story, that of the P i t tsburgh market fundamentals ,

goes a long way, assuming that the project ’s sponsor has stay ing power.

Roughly three-quarters of a mi l l ion square feet of spec off ice space has started. Among the larger bui ld ings are Mi l lcraft ’s Gardens at Mar-ket Square, DiCicco’s Westpointe

Corporate Center IV, Cont inental ’s North Shore P lace, Cont inental /Chaska’s P i t tsburgh Internat ional Bus iness Park and Landmark’s Du-t ih l Road bui ld ings; In the North Hi l l s , ACRES is bui ld ing Stonewood Commons IV and Jendoco is devel-oping the smal ler Sunset Bui ld ing.

Given the dynamics of the off ice market in the region, especia l ly with the steady growth of users in the Parkway West and I -79 cor-r idors, th is new space could wel l be absorbed by the t ime the last of the projects i s completed. Even i f the projects take another year or so to stabi l ize, i t seems l ike ly that the fa i th shown by the lenders wi l l be rewarded. Assuming that global credit condit ions cont inue to moderate, at least unt i l rates begin to r ise in 2015, speculat ive devel-opment should be eas ier to accom-pl ish in the middle of the decade. Whether the overal l economy wi l l encourage more development is an-other thing al together but the cur-rent round of spec projects are l ike

bread crumbs point ing the way towards more normal condit ions.

Of course, ‘normal’ i s a re lat ive term. For J im No-land, normal shifts f re-quent ly.

“Twenty years ago the world was a much s impler place to f igure out. You didn’t have Sep-

tember 11 and wars around the world,” he says. “T ime frames for responding are gett ing shorter. Al l you can do is make your best guess – and i t i s a guess – and i f you’re r ight you make money.” DP

“Our f inanc ing worked because we have a good pro jec t and s t rong sponsorsh ip , ” no tes Qua t t ro pa r tner J im Sca lo. “ [The l enders ] were look ing fo r subs tan t i a l ne t wor th , subs tan t i a l t r ack record and a p ro jec t in a good marke t , suppor ted by a good s tudy. ”

Development Project


ANSYS/Zenith Ridge at

Southpointe II

I n business, as in poker, success often comes from knowing when to stand pat and when to be aggres-

sive. Real estate developers generally don’t l ike standing on the sidelines. Without 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 l ife he decided it was time to shift into a higher gear again.

Burns & Scalo had jo ined with Char les Case to form Scalo Case and developed nine bui ld ings – roughly 700,000 square feet – in the f i rst phase of Southpointe. The developer was se lected as one of the master developers of Southpointe I I , a long with Hor izon Propert ies, but had done no new projects in the park by the t ime the recess ion chi l led development of commercia l real estate. Dur ing that downturn, however, Scalo saw the landscape shift at Southpointe.

“I was watching the park take off again with the oi l and gas industry. CONSOL was the catalyst but then we saw others – l ike MarkWest and Schlumberger – come in,” he re-

cal ls . “The growth came from other business sectors too. Mylan went from 100,000 to 250,000 square feet. Ansys went from 100,000 to 180,000 square feet and Crown Communicat ions just moved into Mylan’s o ld headquarters .”

Scalo found success working in Southpointe in i ts ear ly years and feels the business model for South-pointe was a lways very attract ive to developers.

“ I t real ly, t ru ly i s the best P3 part-nership that ex ists in a success-ful model in the region,” he says. “Washington County put in the roads and infrastructure, prepared the park but they don’t compete with the pr ivate sector for deals . You buy land for $125,000 an acre and get a f ive-year tax abatement. That’s a great investment model .”

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

The only private campus within Southpointe.

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As the economic recovery took hold, Burns & Scalo began to look at the opportunit ies in South-pointe. In September 2011, the company acquired Char les Case’s stake in the partnership and pur-sued development in the park more aggress ive ly. They discovered that a parcel that was held off the market in ant ic ipat ion of being the Wash-ington County Convent ion Center s i te had become quiet ly avai lable again. The land, s i tuated at the top of Hor izon Vue Dr ive, offers the highest s ight l ines in Southpointe I I and is v is ib le from Interstate 79. Burns & Scalo and partners Char les Zappala and John Verbanac put the land under opt ion. In Febru-ary 2012, the partnership – le-gal ly known as Quattro Investment Group LP – announced plans to de-velop the property by bui ld ing two 100,000 square foot off ices. Within a few months, an opportunity arose that would expand the scope of the project s ignif icant ly.

Product s imulat ion software com-pany ANSYS Inc. had outgrown i ts headquarters and wanted to expand and consol idate opera-t ions from other locat ions into a new off ice bui ld ing. ANSYS issued a request for proposals to devel-opers in June of 2012. Scalo/Case had developed the ex ist ing ANSYS headquarters on Technology Dr ive in Southpointe and Quattro was inv i ted to submit a proposal for the new faci l i ty, which would be near ly double the s ize of that f i rst head-quarters .

Responding to the request, Quattro was working a l i t t le ahead of the game because they had already put together a des ign, a lbeit for a dif-ferent concept, and were market-ing the project ’s locat ion and s i te advantages. Given the opportunity to change the program and work with an anchor off ice user, Quattro focused on a unify ing concept for mult ip le bui ld ings a long the r idge of the hi l l . That created a campus feel that made the difference. The RFP was in June of 2012 and AN-

SYS took a couple of months or so to decide (“ I t took a whi le. These big deals take t ime,” Scalo says) . In September 2012, ANSYS agreed to lease the bui ld ing and the project was off and running.

“We had a re lat ionship with ANSYS but what they real ly l iked about the proposal was that we were bui ld ing a campus,” recal ls Scalo. “Their bui ld ing wi l l be 186,000 square feet but they have the op-t ion of a second bui ld ing of up to

130,000 square feet ten years after move- in with a not ice in e ight-and-half years.”

Once Quattro’s proposal was suc-cessful , Scalo had the opportunity to execute an approach that he had been kicking around for a whi le. On a tr ip to the Midwest, Scalo had seen an approach used that he fe l t was not being ut i l ized in Western PA, one that would solve a couple of the problems he fe l t were inher-ent in the tradit ional construct ion process when he hired an architect and general contractor. He commit-ted to doing the ANSYS project as a des ign/bui ld del ivery.

“We knew we were going the general contractor route because of the s ize of the project and the bonding requirements of the lend-ers,” he says. “The problem with the tradit ional 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 cal ls “true des ign/bui ld” was in having one party responsible for both the des ign and construct ion. One weakness of the des ign-bid-bui ld process is that i t re l ies on the interpretat ion of the owner’s intent by two separate ent i t ies – archi-tect and general contractor – that are not contractual ly obl igated to each other. Unless there is perfect , a lmost extrasensory communicat ion between owner and architect , there

The l and , s i tua ted a t the top o f Hor i zon Vue Dr i ve , o f f e r s the h ighes t s i gh t l i nes in Southpo in te I I and i s v i s ib le f rom In te r s t a te 79 .

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.


wil l be occas ions for disagree-ments about scope or intent. Most t imes, those disagreements lead to addit ional costs to resolve. In a des ign/bui ld model , only one party interprets what the c l ient wants. I f that party misunderstands or mis-communicates, the onus is on the des ign/bui lder instead of the owner.

As the hol idays approached, Quat-tro assembled a l i s t of contrac-tors that were des ign/bui ld expe-r ienced. The l i s t had both local and nat ional f i rms, one of which

was Clayco Construct ion from St. Louis . A Burns & Scalo manager had previously worked with Clayco and one of the projects J im Scalo had observed in Indianapol is was a Clayco job. When the RFP was issued, there were nine f i rms asked to compete.

The rev iew process was very thor-ough, with an RFP that requested an unusual level of detai l consider-ing the shortage of detai led draw-ings, a process Scalo cal led “soft des ign, hard bid.”

“The RFP asked for des ign, pr ice and schedule. I t had a GMP [guar-anteed maximum pr ice] essen-t ia l ly,” recal ls Clayco’s senior v ice pres ident and partner Kirk Warden. “When we turned in the in i t ia l des ign we had a pr ice guaranteed with i t . I th ink we had both the de-s ign concept and the r ight pr ice a l l a long. The fact i s that we do this sort of th ing a l l the t ime.”

Throughout the f i rst weeks of 2013, the contractors in the run-ning were asked to supply addi-t ional i terat ions of the des ign with rev ised pr ic ing. In mid-January, the developer se lected Clayco as their des ign/bui lder for the ANSYS cam-pus. Whi le their des ign and pr ice met Quattro’s demands for the project , J im Scalo says they had an edge in the intangibles as wel l .

“Clayco had good developer exper i -ence,” he notes. “Some general contractors don’t work wel l with developers. We’re not easy to work with. We watch our costs . We work within our pro forma very c losely and don’t l ike when things vary from that.

Warden says that Clayco’s model helps them be more sympathet ic to developers, poss ib ly because the issues a developer faces aren’t a l l that unique. “Owners a lways have constra ints , whether i t ’s budgets, schedules, constructabi l i ty or what-ever and both s ides have to keep those constra ints and requirements in mind so everyone can make bet-ter decis ions a l l a long,” he says. “You make better decis ions when al l part ies are at the table at the same t ime.”

Gett ing the des ign/bui ld f i rm on board was a s ignif icant mi lestone for the project but there st i l l re-mained the tasks of complet ing a des ign that met the budget and working through the f inancing for the project .

The f i rst of those tasks wasn’t go-ing to be easy. Both Quattro and Clayco were interested in doing a bui ld ing that was architectural ly d ist inct ive but the pro forma was bui l t on an average $24/square foot rent for 15 years. Any des ign


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choices would ult imately have to meet the test of that pract ica l standard. According to Warden, there wasn’t much t ime wasted gett ing after that task.

“Once we were se lected there was a lot of re-pr ic ing with a lot of a l ternates for the des ign. We probably provided seven or e ight different vers ions,” he recal ls . One of Clayco’s d iv is ions is the archi-tectural f i rm Forum Studios. The team had in mind a des ign that isn’t commonly used in Western PA. “We had been in P i t tsburgh a lot and saw the k inds of corporate off ice bui ld ings that ex isted. [The architects ] fe l t that the P i t tsburgh market was lagging behind some of the newer ideas that are be-ing used in other c i t ies around the country.”

The f inal des ign is a very geometr i -ca l ly- informed br ick and aluminum curta in wal l exter ior, f ive stor ies with several colors of br ick and aluminum windows with colored tr im. The bui ld ing’s exter ior gets texture from the change in mater i -a ls and the shapes that the mate-r ia ls take. What is very different about the bui ld ing is that this exte-

r ior wi l l be architectural structural concrete cast on s i te. S i te cast con-crete structures have been bui l t be-fore in Western PA – a l though not many – but none that casts a f ive-story exter ior wal l with br ick in la id and l i f ted as one ent i re e levat ion. The structure has a greater thermal mass than convent ional steel and cavity wal l construct ion and gives unl imited f lex ib i l i ty to the inter iors because there are no columns. The process a lso shaves cr i t ica l t ime off the schedule.“We’re able to del iver a core and shel l for Class A off ice in e ight months instead of the 12 to 14

months that i t would usual ly take,” notes Scott Caplan, Clayco’s d i rec-tor of business development in P i t tsburgh. “What that means to a developer is four-to-s ix months less general condit ions, four-to-s ix months less winter condit ions and more important ly, four-to-s ix months less construct ion interest .”

The structure wi l l be poured and l i f ted by Concrete Strategies Inc. , a concrete subcontract ing div is ion of Clayco’s . Proving that everyone in the world is just two degrees separated from Pittsburgh, the pres ident of Concrete Strategies is Joe Vita le, father of the Penguins center of the same name.

Quattro Investment Group took a s imi lar approach to f inancing the project as i t d id to contract ing, looking both within the region and across the country for opt ions. “We did a nat ional search for debt, equity and presale and we con-c luded our best opt ion was to se l f -perform,” says Scalo. “We looked at what was our best model , our best gain and that was to se l f -perform. We put in our own equity of ten percent, which has to go in up front.”


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Scalo says he and his partners fe l t there were three r isks asso-c iated with the project and they were comfort-able with their p lan for manag-ing them.

“There is the development r isk. We fe l t we could control the construct ion and costs . We understood the interest rate r isk over the next two years, which is important because the loan has a f loat ing rate. And there is a leas ing r isk but we feel we understand this market wel l enough to take that r isk,” he ex-pla ins. The latter r i sk appl ies to the second bui ld ing under construc-t ion, a 150,000 square foot specu-lat ive bui ld ing. Scalo’s comfort with the leas ing seems just i f ied, as the company is working two requests for proposals for large port ions of the second bui ld ing.

Having a bui ld-to-suit c l ient on more than half of the project reduced the speculat ive aspect of the development but Quattro was st i l l looking at f inding a lender for a 150,000 square foot spec, which is not a product that lenders have been l in ing up for in recent years.

“Spec f inancing general ly i sn’t avai lable st i l l . Banks just can’t do i t because of the regulat ions. Inst i tut ional lenders – investors, l i fe insurance companies – they aren’t interested, even i f they say they are,” observes Scalo. “We

approached i t as one project that was more than half pre- leased.”

That was how a team of lo-cal banks ap-proached the project as wel l .

“Even though there was a spec bui ld ing, we looked at i t as one project ,” says WesBanco senior v ice pres i -

dent John Fetsko. “With the ANSYS deal the project was something l ike 55 percent pre- leased.”

First Nat ional Bank’s Bob Pow-der ly says his bank saw the deal the same way and was wi l l ing to look at the project because of the part ic ipat ing lenders. “On larger projects , banks have to team up. On ANSYS, no one was wi l l ing to take on the r isk of the ent i re project ,” he says. “So we l inked up with WesBanco and F i rst Common-wealth. They are s imi lar banks with


PROJECT TEAMQuattro Investment Group LP ......................................... DeveloperClayco Construction Co. ..............................Design/build ContractorForum Studio ......................................................................ArchitectBurns & Scalo Real Estate Services ........................Leasing BrokerGateway Engineers ...................................................... Civil EngineerWesBanco Bank ................................................................ Co-LenderFirst National Bank ......................................................... Co-LenderFirst Commonwealth Bank ............................................... Co-Lender


s imi lar credit approaches.” The three banks part ic ipated equal ly, taking a third of the $60 mi l l ion-plus loan.

“We got an amazing debt proposal . The banks were very compet i t ive,” says Scalo. “There is one mortgage with two notes, 100 percent person-al ly guaranteed. We got a three-year construct ion loan and three-year mini-perm, which we always l ike to do. That gives us the f lex ib i l i ty to go to a permanent loan, test the capita l markets or se l l the bui ld ing.”

Work started on the project in late June. Clayco is in the process of prepar ing the cast ing pads for pour-ing the exter ior wal ls in late summer. The major subcontractors have been l ined up and construct ion is off to a smooth start , according to Kirk War-den.

“There haven’t been any big chal-lenges, other than educat ing everyone about the whole des ign/bui ld process and architectural s i te cast concrete,” says Warden. “The project has gone pretty wel l , even the subcontractor market, which can be diff icult , went very wel l . The project i s over 75 per-cent bid out.”

Occupancy on the ANSYS bui ld ing is set for October 1, 2014. Construc-t ion on the second bui ld ing is running paral le l to ANSYS. The development has been branded as Zenith Ridge – “You know we love to name our projects ,” says Scalo – a l though ev-eryone cont inues to refer to i t as the ANSYS campus. The Zenith Ridge plan inc ludes a third bui ld ing, which is being marketed as a 150,000 square foot corporate headquarters . Given the t ight Southpointe market and the cont inued high interest in the prop-ert ies there, don’t be surpr ised to see construct ion on that bui ld ing get underway ahead of schedule. DP

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Developer Profile


Imperial Land Corporation

P at ience in the business world is often ta lked about and seldom appl ied as di l igent ly as

the owners of Imper ia l Land Cor-porat ion have. With a bit of v is ion and admittedly l imited exposure to r isk by wait ing, Imper ia l Land has seen the market come to them over the course of a generat ion.

Imper ia l was founded in 1973 by Wi l l iam and Arthur Aloe as the land purchas ing arm of the Aloe Coal Co. The land holdings under

Aloe Coal were shifted to Imper ia l Land, which then leased i t to Aloe Coal . The coal bus iness then paid a royalty to Imper ia l Land, which a lso purchased addit ional lands for mining. The propert ies inc luded roughly 3,000 acres in western Al legheny County a long Potato Garden Run Road and 2,000 acres by Quicks i lver Road in Washington County. The propert ies were both c lose to Route 22 and to Burgett-stown Road.

In the late 1970’s ear ly 1980’s the propert ies were heavi ly mined and the coal workings were removed. New technologies had been devel-oped to e l iminate a l l the voids and the ac id mine drainage stopped because the source of the drainage had been removed. What remained

was re lat ive ly f lat , workable land that was ready for a new purpose.

“It ’s bas ica l ly been a rec lamation project ,” says Gerald Bunda, Impe-r ia l ’s pres ident. “The rec lamation did wel l for Potato Garden Run and the tr ibutar ies that drain this area so i t was an environmental benef i t but i t was a lso a long-term economic benef i t because the land can be used for another use. That’s ca l led re-mining.”

Jerry Bunda came on board in 1991 as the f i rst employee of Imper ia l Land. His job was to help do the things necessary to make the prop-erty more suitable for development for i ts next useful l i fe, l ike improv-ing the access, br inging water, sewers and ut i l i t ies to the property.

Gett ing infrastructure worked out took more than just a few years.

Bunda’s formal educat ion was in community development and regional p lanning. He worked for the Al legheny County Redevelop-ment Author i ty for few years back in 1970’s and then was ass istant manager for Moon Township from 1984 to 1991. Dur ing that t ime he a lso served as director of the Moon Transportat ion Author i ty, which promoted and oversaw the new interchanges in the munic ipal i ty. That exper ience led to re lat ionships that would prove invaluable over the years, as Imper ia l Land sought to expedite the processes of state and munic ipal government.

“My background was more govern-mental but I had some development exper ience because that era was a big per iod of growth in Moon Township,” Bunda says. “That’s the connect ion between the two. The Aloe’s became aware of me through the development work in Moon.”

That process of gett ing the ut i l i -t ies extended and the highway completed was no smal l task and took the better part of 15 years to accompl ish. There was a gap of a couple mi les between the ex ist ing water and sewer system, which ran a long Potato Garden Run Road and the F indlay Industr ia l Park proper-t ies. Bunda found himself making the case for the publ ic investment to catalyze pr ivate development to many levels of government and pol i t ic ians. Imper ia l Land donated the r ight-of-way for the F ind-lay Connector and was wi l l ing to guarantee some of the debt taken on by the munic ipal author i t ies . He says that the exper ience put him in front of some of the most power-ful leaders in Pennsylvania and also pol i t ica l characters l ike Mike Veon and Bi l l DeWeese. Veon success-ful ly pushed for grants and loans that got the park going because

he knew that many of the people employed at F indlay Industr ia l Park would l ive in Beaver County.

“It ’s been quite a chal lenge. I t was a new front ier for Al legheny County and for Washington County to the south,” notes Bunda. “For this property we had to br ing ev-erything out here. The water, sewer and gas a l l had to be run out to this area and i t took a whi le. We had the road coming in but i t then took a couple of years to get pre-pared for development.”

The road Bunda speaks of is the a i rport leg of the F indlay Connec-tor, the port ion of I -576 that runs between Pittsburgh Internat ional Airport and Route 22 near Star-pointe in Washington County. The highway was done in 2006 and f i rst construct ion was in 2008. When Imper ia l Land took their f i rst prospects to the s i te they only had a “brush hog road” and had to v isual ize the property after devel-opment. Imper ia l Land’s or ig inal idea was to se l l bulk land but they

real ized that in order to se l l the land they had to ful ly develop the property.

Construct ion began on F indlay Industr ia l Park in 2008, hardly the best t ime to start a new project but they were able to se l l the f i rst two lots to Appl iance Dealers Coopera-t ive and to Okonite for construc-t ion in ear ly 2009.

“They were the pioneers. I use that term because they were the f i rst 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 lu l l but that was to get phase two going. Phase two is now done and the s i tes are pretty good lots . I won’t say a l l the lots are pad-ready but most are and we’re ready for the next projects .”

“Our job here is to prepare the land for another benef ic ia l use. When I took off ic ia ls out here and we stood on the hi l l I would say here’s the new front ier - in Al-legheny County – but you can’t get out here and you couldn’t unt i l the road was completed,” recal ls Bunda. “That goes to the need for improved transportat ion. There’s land out there, land c lose to im-portant assets l ike the a i rport that doesn’t have access to highways,” he cont inues. “ I wi l l 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 r ight on a highway. Alro is f rom Michigan and they can get r ight on an interstate and connect to there. The Interstate 79 con-nect ion 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-portat ion and i f we can enhance i t with a 22 to 79 l ink that makes i t even better.”


“Our job here i s to p repare the l and fo r another bene f i c i a l u se . When I took o f f i c i a l s ou t here and we s tood on the h i l l I wou ld say here ’ s the new f ron t ie r - i n A l l egheny County – bu t you can’ t ge t ou t here and you cou ldn’ t un t i l the road was comple ted , ” reca l l s Bunda .


While the Findlay Industrial Park and its neighboring Westport Woods have been the focus of Imperial Land’s efforts, the ownership of the business sti l l has diverse assets beyond commercial real estate. They also own the property used as a landfil l by All ied Waste and oper-ate a sister company, called Landfil l Gas that gathers the methane that is emitted at the landfil l . The Aloe’s operate a coal company in West Vir-ginia and now have Marcellus shale gas wells on their Quicksilver prop-erty. There are 5,000 acres under Im-perial 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.

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

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.

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

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-of-way 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 fami ly has been pat ient and invested with a long range expectat ion on returns, they have maintained a conserva-t ive f iscal prof i le for Imper ia l Land Co. Unt i l 2006, Bunda had been the only employee. He and Br ian Temple are the ful l - t ime staff of the company, which contracts out or shares administrat ive and f inancia l

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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.


resources with other Aloe busi-nesses.

In the year or two that fol lowed the successes with Appl iance Deal-ers , Okonite and Alro Steel the economic recovery seemed to take one step forward and two steps back. Bunda says that a number of prospects k icked the t i res but no deals were done. Because Impe-r ia l Land’s business plan doesn’t inc lude any vert ica l construct ion there was no thought of develop-ing a spec bui ld ing. Instead the company used the t ime to complete planning of i ts Westport Woods project and cont inued s i te prepara-t ion to make the F indlay Industr ia l Park lots more marketable.

“One thing our board a lways sa id was that we have to have inven-tory,” Bunda expla ins. “As of the end of last year we have inventory and I hope that helps. I t ’s a whole lot better to have people r ide down a road and say here’s where you’ l l

be rather than saying here’s where I ’ l l bui ld you the road.”

Bunda re lates that interest f rom prospects is notably higher. In late July, the company saw one of those prospects bear fruit , when Gor-don Food Serv ices announced that they would be bui ld ing a 420,000 square foot distr ibut ion center at F indlay Industr ia l Park. With the 83-acre Westport Woods in f inal des ign and construct ion scheduled to start in 2014, Imper ia l Land Corp. has probably moved beyond the stage of prepar ing to develop.

“Once you have some success I th ink people real ize what can be done. We were going to do some-thing with that land anyway,” notes Bunda. “We have 5,000 acres and the next leg of the highway wi l l run through the Quicks i lver property. I ’m sure there wi l l be de-c is ions to make about development in the future but we have work to do with the property we’re working

on r ight now. We’re moving along smoothly and steadi ly, but that’s the P i t tsburgh way isn’t i t?”

Imper ia l Land Corporat ion1009 Beaver Grade Road, Suite 210Moon Township, PA 15108T: 412-446-0670Jerry BundaPres identImper ia l Land Corporat ionwww.imper ia l land.com DP

Imper i a l L and Corp . i s managed by a board o f d i rec tor s , four f ami l y members and th ree ou t s ide members .

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Bus Rapid Transit

O ne of the evolv ing economic stor ies of the past several

years is the connect ion between the Centra l Bus iness Distr ict (CBD) and Oakland. UPMC’s decis ion to gradual ly re locate near ly one mi l -l ion square feet of administrat ive space from its hospita l campuses to 600 Grant Street was the cata-lyst for the act iv i ty but commercia l

and res ident ia l real estate develop-ment has a lso grown organical ly as pr ivate developers and property owners placed bets on the rev i ta l -ized Uptown or Lower Hi l l Distr ict fo l lowing the complet ion of the CONSOL Energy Center.

Al l of th is act iv i ty has occurred without the support of a dedicated mass trans i t connect ion between the CBD and Oakland. Creat ing a l ink between these two main economic centers has thus far been both a regional imperat ive and a pract ica l imposs ib i l i ty. The tradit ional solut ion is a l ight ra i l connect ion but execut ing such an infrastructure project has several s ignif icant obstac les, the most sa l ient of which is that the funding

sources for mass trans i t have v i r tu-a l ly d isappeared and aren’t coming back soon.

“The real idea is that Oakland is the center of innovat ion and entre-preneurship in the whole P i t tsburgh region. Companies want to be in Oakland to get the energy and innovat ion but there is l i t t le devel-opable land,” says Ken Zapinski , senior v ice pres ident, energy and infrastructure for the Al legheny Conference. “How do you do i t? Make Oakland bigger by making i t seamless to get between there and Downtown.”

Whi le there is an argument to be made that the two economic hubs are growing together without such a trans i t system – there are barely ten blocks separat ing the projects at the leading edges of each sub-market – P i t tsburgh’s regional bus i -ness and c iv ic leaders are anxious to create a catalyst to accelerate the inevitable. I t i s looking increas-ingly more l ike ly that the solut ion wi l l be a bus rapid trans i t system.

Pittsburgh Regional Al l iance and Chamber of Commerce pres ident DeWitt Peart probably speaks for most development advocates when he ta lks about the creat ion of a bus rapid trans i t (BRT) solut ion.

“We have got to do something. What that something wi l l be is a bigger issue but we can’t keep go-ing l ike we are,” Peart asserts .

L ike most observers, Peart might prefer that a v iable a l ternat ive ex isted in l ight ra i l . Most urban planning and development studies

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advocate us ing l ight ra i l for mass trans i t systems. Such systems are what communit ies and the com-muting publ ic wants. Moreover, as anchors for pr ivate trans i t -or ient-ed development, l ight ra i l systems are attract ive because of their permanence. L ight ra i l requires stat ions and stat ions become loca-t ions through which thousands of consumers pass each day.

The man responsible for support-ing the solut ion to the trans i t i ssue at the Al legheny Conference says that l ight ra i l i sn’t necessar-i ly the r ight solut ion for l inking Oakland to Downtown. Aside from obvious cost and topographical i ssues, Ken Zapinski points out that the Port Author i ty ’s heaviest t raveled routes for the ex ist ing bus system are to the eastern neigh-borhoods and suburbs, most of which l ie beyond Oakland. A l ight ra i l t rans i t system (LRT) to Oakland wouldn’t serve those commuters or re l ieve any burden on the ex ist-ing system. Regardless of what form the rapid trans i t connect ion

between Oakland and Downtown were to take, a large number of East End commuters would need to r ide buses and transfer to the new system in Oakland. That means that a Downtown-Oakland LRT con-nect ion wouldn’t re l ieve PAT’s bus r idership beyond Oakland and the cost would be diff icult to just i fy.

“We have been studying this problem for a long t ime,” expla ins Al legheny County execut ive Rich F i tzgerald. “At f i rst we wanted l ight ra i l but i t became very ev ident that i t would cost about two bi l l ion dol lars and we didn’t know where the money would come from. Sec-ondly, we real ized i t would take 15 years to bui ld.”

Fitzgerald noted that the ful l cyc le for the North Shore Connector took that long from planning to opening and that dur ing that t ime the fed-eral government reduced i ts match from 80 percent of the project to 50 percent, meaning the local author i t ies would need to f ind one bi l l ion dol lars . For a county and

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


Port Author i ty a l ready stra in ing to regain f iscal foot ing, such a cost i s pract ica l ly unatta inable.

“The other thing about ra i l i s that we’ve been studying i t for about 20 years and never had any con-sensus about how to do i t ,” ob-serves Wendy Stern, PAT’s ass istant general manager for planning. “The advantage of bus – part icu-lar ly th is form – is that i t provides a ra i l - l ike exper ience in the most cost-effect ive manner and can develop incre-mental ly as resources become avai lable. I t can a lso be integrated into the ex ist ing trans i t system, making i t work more eff ic ient ly.”

Stern expla ins that the Oakland-to-CBD tr ip current ly has e ight routes running between those two locat ions and another ten routes that are re lated. When a funct ional BRT system is

in place, most or a l l of those routes could be e l iminated, which means that the BRT’s operat ing costs would not exceed the current costs . Just as important to i ts advocates is the fact that the BRT could be operat ional in three or four years from today. And whi le the cost of a completed BRT system is est imated at $200 mi l l ion – or one-tenth the cost of ra i l – the system could develop in phases that would st i l l accompl ish some of the project ’s

goals for t rans i t and devel-opment.

Stakeholders in a BRT sys-tem have begun evaluat ing the operat ing a l ternat ives and are market ing the BRT concept. Whi le the Port Author i ty i s the logical conduit for communicat ion and contract ing, there are forty groups involved in the project , inc luding Susta in-able P i t tsburgh, the c i ty, county, Al legheny Confer-ence, univers i t ies , hospita ls and business leaders, l ike

S takeho lder s in a BRT sy s tem have begun eva lua t ing the opera t ing a l t e r na t i ves and a re marke t ing the BRT concept .

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NAIOP Pittsburgh. The County Execut ive formal ized the effort by forming the Transportat ion Act ion Partnership. The stakeholders are among 30 community-based groups that have started Get There PGH to explore the impacts of a BRT system, us ing the gettherePGH.org website to connect with commuters and businesses.

"One of NAIOP's top goals in our advocacy efforts has been to 'have a seat at the table' on key issues impact ing our industry,” says Lynn DeLorenzo, of TarquinCoRE and past pres ident of NAIOP Pitts-burgh. “As the BRT connect ion between Oakland and the CBD is of h igh importance to our organi-zat ion, we have been fortunate to have a seat on the Stakeholders Committee. In this regard, we have input into the future route, sta-t ions and potent ia l of surrounding trans i t or iented development s i tes around the stat ions."

In Apr i l , the col laborat ive planning effort received a boost when the Rockefel ler Foundat ion awarded a $1.2 mi l l ion grant to support the planning of the system. P i t tsburgh was one of four c i t ies chosen by Rockefel ler – a long with Nashvi l le , Boston and Chicago – to help with the development of bus rapid tran-

s i t . Engineers Parsons Br inckerhoff are current ly wrapping up a study to ident i fy the a l ternat ives and ob-ject ives of the BRT system.

According to Stern, there are two main goals any trans i t solut ion must meet.

“First i s improving the qual i ty of t rans i t exper ience. We already have this h ighly ut i l ized corr idor that makes up 30 percent of our total r idership. That’s pretty s ignif icant,” she says. “The second goal i s to catalyze new development. From January 2006 unt i l December 2012 the total investment in Downtown exceeded $5 bi l l ion. That’s a lot of development but i f you look at how many opportunit ies there would be in Uptown there is even more potent ia l .”

As far as the f i rst goal i s con-cerned, a trans i t solut ion wi l l have to offer comfortable and c lean vehic les but the main problems are associated with travel t ime and re l iabi l i ty. The PAT bus routes that ex ist have a frequency of 2.5 minutes but the actual f requency is often e ight minutes or more. Be-cause of the heavy traff ic in Oak-land throughout different t imes of the day and year, t ravel t imes are quite var iable.

Wendy Stern expla ins that the operat ing a l ternat ives have a l -ready been whitt led down from ten to two that use F i f th and Forbes Avenues to create dedicated lanes. “One is to operate away from Downtown along Forbes – that lane is a l ready heavi ly used by bus – and to come from Oakland on F i f th Avenue us ing the curb bus lane,” says Stern. “The second [a l ternat ive] has both lanes operat-ing a long F i f th Avenue. I t uses the current bus lane going opposite the direct ion of traff ic and a second lane on the other s ide going with the f low of traff ic .”

The Parsons Brinckerhoff study wil l define the alternatives in detai l and offer recommendations for stations, infrastructure improvements, traff ic l ight and control systems and cost est imates. It should be avai lable in the fal l for the stakeholders to review but Stern says the release of the study may be delayed unti l 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 guar-antee – to f inish the planning and design. Should the project get green l ights al l along – and assemble the funding – construction of the BRT could begin in 2015, with pas-sengers boarding the f irst buses in 2017.

For an idea of how such a BRT sys-tem might work, stakeholders don’t have to merely rely on study and theory; there is a real l i fe system operating for nearly f ive years in Cleveland. Dubbed the HealthLine because it connects Cleveland’s

Photo courtesy Cleveland Regional Transit Authority.

"One o f NAIOP ' s top goa l s in our advocacy e f fo r t s has been to 'have a sea t a t the t ab le ' on key i s sues impac t ing our indus t r y, ” s ay s Lynn DeL orenzo, o f Ta rqu inCoRE and pas t p res ident o f NAIOP P i t t sburgh .


downtown to its hospital distr ict, the BRT traverses nine miles along Eucl id Avenue. As the city’s ‘Main Street’, Eucl id Avenue had seen decl ine as Cleveland’s fortunes sagged over the past decade. After the BRT commenced operations in 2008, the tr ip 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 traff ic receded into other areas as r idership on the BRT took off, nearly doubling that of the predecessor bus routes.

Eucl id Avenue wil l not be compared to Chicago’s ‘Miracle Mile’ just yet – or even Pittsburgh’s Penn Avenue – but the decl ine has been reversed and in-vestment is on the r ise.

County Executive Fitzgerald is one of those leading the charge for a BRT system precisely because he’s seen the r ipple 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 mil l ion r iders in 2012.

“I saw it three years ago but it real ly opened up my eyes when we went again in June. When they bui lt their BRT it l inked those two communit ies but it spurred a lot of development in an area that was bl ighted and di lapi-dated,” he says. “What impressed me was the tremendous increase in prop-erty values along Eucl id. I could see that happening along Fifth and Forbes. The other thing is that it took al l the other buses off the road [on Eucl id]. Think about al l the buses currently go-ing through Oakland on Fifth Avenue.”

That re lated development is what Zapinski v iews as the payoff for the BRT. “It ’s not a trans i t project but a community rev i ta l izat ion, economic and real estate development project ,” he says. “We need to understand from the development community what level of t ransportat ion project would be needed to s ignal commitment. We need to hear what developers want because i f we get the BRT and i t does not st imulate economic rev i ta l izat ion, i t cannot be deemed a success. We don’t want people coming back after-wards te l l ing us that we should have thought of something else.” DP Building Trust for Over 100 Years

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T he summer of 2013 is the f i rst s ince 2009 to have no economic shock to

short-c i rcuit a spr ingt ime recov-ery, a l though that fact shouldn’t suggest that a robust recovery is underway or even on the way soon. What has been revealed s ince spr ing is that the U. S. economy is doing better than expected in a number of key metr ics , whi le fa l l -ing behind on the most common measure of economic growth. I t has a lso become c lear that Ameri-can economic growth is being held back by the cont inued weak global marketplace more than by domest ic t roubles, a l though reduced govern-ment spending is muting expan-s ion. Perhaps most important of a l l measures, employment growth has cont inued to trend upward at a pace that is both unspectacular and better than forecasted.

Dur ing the past few business cyc les U. S. companies have steadi ly grown their share of the global marketplace, with exports making up a s ignif icant port ion of their tota l sa les. The decl in ing growth in China, India and other emerging markets – in combinat ion with the deep recess ion in Europe – have re-duced the s ize of the pie for which American companies can compete. This g lobal decl ine has impacted U. S. gross domest ic product (GDP) as wel l .

Est imat ing GDP has become a more diff icult ass ignment in the past year. After in i t ia l est imates of contract ion in the fourth quarter of 2012 and almost no growth from January to Apr i l 2013, real GDP growth was actual ly 1.1 percent in both quarters . Economists expected the second quarter growth to be barely posi t ive, somewhere be-tween 0.2 and 0.4 percent. Whi le the in i t ia l report of Ju ly 31 showed a surpr is ing jump of 1.7 percent,

the data shows the U. S. economy barely growing as rapidly as inf la-t ion. Dampened demand for manu-factured goods, cont inued decl ines in a l l government spending and a surpr is ing s lowdown in housing starts in June fa i r ly assures that the economy grew at one percent or less dur ing the f i rst s ix months.

Employment growth, on the other hand, cont inued the trend upward in June, with 195,000 jobs added. The June research a lso revealed that previous est imates of job growth for Apr i l and May were understated by 70,000 jobs. Those rev is ions pushed the s ix-month av-erage above 200,000 jobs monthly. That’s a f igure that exceeds the equi l ibr ium for job creat ion by one-third, a pace that wi l l support growth and add to the demand for space. Also encouraging was the decl in ing unemployment rate of 7.4 percent, which fe l l even with the increase in those looking for jobs.

The most encouraging trend in the employment picture is the fact that the steady growth has been in tan-dem with a steady decl ine in publ ic employment. Although the magni-tude of government job cuts has not been great, the decl ine means that pr ivate sector employment has been that much stronger than the overal l job market.

According to the July 23 Pr ice-waterhouseCoopers' U.S. Pr ivate Company Trendsetter Barometer, pr ivate sector employers are dis-play ing increas ing opt imism. The quarter ly survey tracks the mind-set and business pract ices of 202 CEO’s and CFO’s from pr ivate ly held U.S.-based companies. Among the key f indings in the second quarter were: 80 percent of the execut ives were forecast ing growth over the coming year, with one-third expect-ing double-digit growth; two-thirds predicted higher GDP growth than the government’s est imates, with an average of 2.2 percent; 57 per-

cent sa id they expected to hire new employees this year. Ju ly ’s report was the third consecut ive quarter of pos i t ive out look and the most posit ive results s ince the recess ion.

The key underpinning of the economic foundat ion – consumer spending – has shown renewed strength after a s lump of 0.3 per-cent in Apr i l fo l lowing the increase in Socia l Secur i ty contr ibut ions that accompanied the ‘sequester. ’ Personal income has r isen 0.3 to 0.4 percent monthly, whi le the sav-ings rate cont inues to r ise. As the impact of the increased taxes fades and the improvement in home val-ues expands, consumer conf idence and spending should improve. Ju ly ’s spending increase of 1.8 percent thus far va l idates that theory.

Consumers are a lso seeing bet-ter than expected wage increases. Ju ly ’s numbers showed a 3.4 per-cent increase in inf lat ion-adjusted income, whi le personal sav ings 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 scal ing back i ts bond buy-ing program. That’s a prospect that has spooked investors and heart-ened business people at the same t ime. Improving condit ions and the prospect of an end to quant i tat ive eas ing have a lso resulted in the f i rst s ignif icant r ise in interest rates s ince the onset of the f inancia l cr is is .

R is ing short-term and long-term interest rates present a potent ia l problem for the recovery in com-mercia l real estate and for the sud-denly robust housing market. S ig-nif icant increases in rates increase the cost of capita l for acquis i t ion and development. At the consumer level , h igher rates decrease the af-fordabi l i ty of homes, which could put downward pressure on home pr ices that have begun a cyc le of

Eye on the Economy



appreciat ion over the past s ix quar-ters . These higher costs of borrow-ing have the potent ia l for dampen-ing value growth on al l categor ies of real estate but a look at the performance of real estate dur ing past per iods of r is ing rates reveals that concerns about increases may be overblown.

In a l l s ix per iods of r is ing rates go-ing back to March 1978, upward pressures on property pr ices more than offset the impact of higher interest , which could have pushed cap rates higher. I t i s expected that any winding down of the Fed’s bond buying wi l l be accompanied by improved economic fundamen-tals that wi l l boost occupancy and rents, which wi l l boost the income from the property as wel l .

For commercia l real estate many of the bigger concerns from the

past few years are receding. Whi le reduced government spending wi l l cont inue to be a drag on space demand from those serv ing the state and federal government, the growing employment base should cont inue to push occupancy levels h igher. New construct ion addit ions to inventory remain behind the de-mand for space from growth, even in the hot mult i - fami ly category. Across the other commercia l prop-erty types, the extended low levels of construct ion wi l l keep supply below the levels of the pent-up demand.

Consumer and business conf idence remains somewhat lower than the pre-recess ion levels but there is much evidence that the damage done by the f inancia l cr is is has healed. At the root of the f inancia l meltdown was the overheated U. S. housing market. After f ive years of

re-balancing, that segment of the real estate market is again robust. Beyond the posit ive employment impact that would attend a boom in home construct ion, the s ignif i -cant r ise in home values wi l l have a sa lutary effect on the consumer’s mental i ty. The U. S. economy ap-pears to be on f i rm foot ing once more.

I t ’s a lso c lear that overseas mar-kets st i l l have much further to go to reach the same level of recovery that the U. S. i s exper iencing. With exports making up more than 14 percent of GDP, expansion of the magnitude seen dur ing the previ-ous growth cyc les won’t occur unt i l growth returns global ly. DP

PITTSBURGH OFFICE

MARKET OVERVIEW –

MID-YEAR 2013

Economic Overv iew

I n the f i rst half of 2013, there were more people working in P i t ts-burgh than ever before, according

to the Al legheny Conference on Economic Development, who re-ported that 269 separate economic development projects that could generate as many as 8,300 new jobs for the region were in process as of February 2013. The region has seen f ive consecut ive years of cont inuous expansion and a current capita l investment of $3.2 bi l l ion. Despite decl ines in reta i l t rade, administrat ive and support ser-v ices and the le isure and hospita l -i ty industr ies, the region marked a record-high 1,170,500 non-farm jobs in May, a gain of more than 1,000 from Apri l . In May, the un-employment rate in the region fe l l to 6.9%, the fourth stra ight month of decl ines, best ing the Pennsylva-nia rate of 7.5%.

Commercia l Market Overv iew

Class A market tightens throughout region

Class A vacancy in the P i t tsburgh

metro dropped 35.2% in the f i rst quarter 2013, post ing a direct va-cancy of 5.7% versus 8.8% in the same per iod 2012. The largest con-

t iguous blocks of Class A space in the region are located in the CBD, but a l l are marred by chal lenging c i rcumstances – 146,070 square feet at the U. S. Steel Tower, not avai lable unt i l ear ly 2014; and 131,600 square feet at the Union Trust Bui ld ing, which current ly i s in receivership. At present, there are no cont iguous Class A spaces larger than 90,000 square feet avai lable in the suburban markets.

Leasing activity slows, build-to-suit construction

accelerates

Two of the largest lease transactions year-to-date were for law and f inan-cial services groups. Leech T ishman, a ful l-service legal services f irm, expanded its lease at 525 Wil l iam Penn Place in the CBD to 47,000 square feet assuming two ful l f loors in the bui lding. CPA firm, Schneider

Downs, s igned a long-term lease for 46,546 square feet at One PPG Place, also in the CBD. Though leas-ing activ ity from the same period in 2012 to 2013 dropped by nearly 52%, numerous new bui ld-to-suit projects for major tenants are in de-velopment throughout the market. Mylan Pharmaceuticals and Ansys, Inc. are constructing new headquar-ters in Southpointe, consist ing of 280,000 square feet and 186,000 square feet respectively, while ServiceLink is constructing a new 106,000-sf faci l i ty at Pittsburgh International Business Park and PNC continues construction on its 800,000-sf The Tower at PNC Plaza, where it wil l relocate employees from a number of other locations throughout the CBD.

The University of Pittsburgh Medi-cal Center (UPMC) led absorption in early 2013 as it began to f i l l eight addit ional f loors at the U. S. Steel Tower, adding to the 15 it already occupies there. Addit ional space wil l be made avai lable in the Steel Tower when PNC completes renovations on the former Lord & Taylor bui lding and relocates several groups to there later this year.

Airport Corridor emerges as top suburban market

Once the darl ing of the Pittsburgh

off ice market, the Airport Corridor fel l from grace in the last decade, suffering from over-development and the decl ine of the air l ine indus-try. However, the energy sector has brought new l ife – and new devel-opment – to the area over the past 36 months. The direct vacancy rate has fal len 53.7 percentage points s ince 2009, hitt ing a low of 5.7% in the second quarter 2013, while overal l rental rates have edged slowly toward a $20 per square foot (psf) average over the same period.

Leasing activ ity within the submar-ket jumped 65% between 2009 and

Office Market Update


The l a rges t cont iguous b locks o f C l a s s A space in the reg ion a re loca ted in the CBD, bu t a l l a re mar red by cha l l eng ing c i r cumstances – 146 ,070 square f ee t a t the U . S . S tee l Tower, no t ava i l ab le un t i l ea r l y 2014 ; and 131 ,600 square f ee t a t the Un ion Tr us t Bu i ld ing , wh ich cur ren t l y i s in rece i ve r sh ip .


2012, peaking at more than 1.0 mil l ion square feet (msf) in 2012. The reduction in avai lable Class A space has spawned new speculative development in the area, including Westpointe Corporate Center Four, a 130,000-sf off ice bui lding situ-ated adjacent to the FedEx Ground and GlaxoSmithKline headquarters. Scheduled to be ready for occu-pancy in 2014, the bui lding bor-ders the 61-acre tract of land that Chevron recently purchased for its Appalachian regional headquarters. The company plans to construct an off ice and research campus on the site with an est imated budget of more than $200 mil l ion.

Addit ional ly, Dick’s Sport ing Goods s igned a long-term agreement to lease 73 acres at Northf ie ld Com-merce Park so that i t can expand i ts 667,000-sf corporate campus by another 180,000 square feet. This latest expansion should be completed by 2015 and is part of a master plan that could extend the campus to more than 1.0 msf.

Outside investor interest for CBD grows

T ightening occupancy levels and in-creas ing rental rates in P i t tsburgh’s CBD have drawn new interest f rom out-of-town investors. In fact , of the last 13 high-prof i le bui ld ing sa les in Downtown Pittsburgh, 10

have been to out-of-town buyers, inc luding prominent bui ld ings such as the U. S. Steel Tower and PPG Place complex. The 80,000-sf Bank Tower recent ly sold to Rockmere Capita l Partners, LLC, an Er ie, PA group, whi le two addit ional prop-ert ies, inc luding L iberty Center, are under agreement to outs ide inves-tors. The City’s d iverse economy and attract ive business community have placed i t in the company of such notable markets as Boston and Washington, D.C.

Outlook

Overal l absorption should shift s ignif icantly to the posit ive s ide throughout 2013 as a number of

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 al l c lasses of space in the CBD are expected to cl imb sl ightly in response to the dropping vacancy rates and the continued re-duction of class B inventory due to conversion to residential projects.

Cont inued growth in the technol-ogy, energy, educat ion and health care sectors wi l l further escalate rental rates and reduce vacancy rates in the CBD. Speculat ive de-velopment in the fr inge markets should surface in response to the r is ing demands of these tenants.

Timothy R. Goetz, Pr inc ipalGrant Street Associates, Inc.A Cushman & Wakef ie ld Al l iance Member. DP

Source: Cushman & Wakefield Research

Tim Goetz

A t the half-way point of 2013, the In-dustr ia l Mar-ket cont in-ues to send

mixed s ignals as to both the short term and long term direct ion of the market. Whi le we cont inue to exper ience a very healthy market wide occupancy rate of 92% and high occupancy rates across a l l property types, especia l ly Class A space at 95%, the market act iv-i ty i s not as robust as expected at th is point in the year. Year to date absorpt ion is a posit ive 400,000 square feet but not on pace for the histor ica l average of 2,000,000 square feet absorpt ion.

In our 2013 Forecast , we predicted that the histor ica l ly h igh occu-pancy levels which had r isen to the pre-recess ion levels of 2007-2008 should result in an upt ick in con-struct ion act iv i ty in 2013 as Class A space inventory was at dangerously low levels , especia l ly for larger users in excess of 150,000 square feet. Whi le there are some note-worthy bui ld-to-suit projects on the hor izon, the posit ive news has been tempered somewhat by the surpr is-ingly longer shelf l i fe of the few large vacant Class A bui ld ings in histor ica l ly strong submarkets such as the West and Northwest in the 120-130,000 square feet s ize. We stated the Industr ia l Market to be at a t ipping point whereby a few large deals would potent ia l ly create a cr is is as the shortage of compet i -t ive space for larger users would not a l low for the normal expan-s ions, consol idat ions and business attract ion.

I t appears that the P i t tsburgh industr ia l market may be in sync

with the nat ional economy, which is usual ly not the case. Histor ica l ly, P i t tsburgh's Industr ia l market has lagged the trends of the nat ional industr ia l market, both in good t imes and bad. For instance, 2007-2008 and even 2009 were years of posi t ive absorpt ion for P i t tsburgh whi le the nat ional industr ia l market exper ienced negat ive absorpt ion in 2008-2010. Whi le the P i t tsburgh market had negat ive absorpt ion for 2010, i t was a direct result of the c losure of the Sony plant in New Stanton which added over 2 mi l l ion square feet of vacant space to the market. In both 2011 and 2012, the P i t tsburgh market exper ienced posit ive absorpt ion a lbeit at a s low 1-1.5% annual growth rate.

Construct ion act iv i ty in the Indus-tr ia l Market has been very l imited the past several years. Whi le specu-lat ive industr ia l development has histor ica l ly been l imited to a hand-ful of local developers, construc-t ion act iv i ty in 2012 was at h is-tor ica l ly low levels and dur ing the f i rst s ix months of 2013 less than

300,000 square feet was under construct ion. On the posit ive s ide, the Jackson’s Pointe Commerce Park in But ler County came on l ine in the spr ing of 2012 and within 15 months has completed transact ions for 80% of the planned 335,000 square feet industr ia l s i tes. UPS opened i ts 45,000 square feet fac i l i ty in Apr i l ; the in i t ia l 70,000 square foot spec bui ld ing achieved 100% occupancy and a 150,000 square feet warehouse distr ibu-t ion center for Highmark is under construct ion with a fourth quarter 2013 del ivery.

In the Thorn Hi l l Industr ia l Park, Pel la Windows & Doors acquired a 7 acre s i te to construct a new 40,000 square feet off ice/ware-house/showroom with a late Q4/ear ly Q1 2014 complet ion date. With the complet ion of the f i rst of two 48,000 square feet R&D/F lex bui ld ings by The E lmhurst Group this summer, there are only two v iable development s i tes left in one of the region’s most successful bus iness parks.

Industrial Market Update


2,000,000

2,500,000

Industrial Absorption(Sq. ft.)

1,500,000

500,000

1,000,000

‐500 000

0

‐1,000,000

500,000

‐2,000,000

‐1,500,000

2007 2008 2009 2010 2011 2012Total Market 2,088,007 608,875 570,859 ‐1,978,524 1,201,492 2,050,837

‐2,500,000


In c lose proximity to i ts Thorn Hi l l Industr ia l Park headquarters , Mitsubishi E lectr ic Power Products cont inued i ts expansion in the Tr i County Commerce Park. Short ly after leas ing 50,000 square feet construct ion is now start ing on the remaining 70,000 square feet bui ld ing result ing in the comple-t ion of this successful 1,000,000 square foot industr ia l park.

I t was recent ly announced that Gordon Food Serv ice is p lanning to acquire a 62 acre s i te in the F indlay Industr ia l Park at Westport with the expectat ion of beginning construct ion on a 420,000 square foot food distr ibut ion fac i l i ty that wi l l provide over 200 jobs. This i s exact ly the s ize and qual i ty user the developers hoped to attract for th is unique pr ivate ly owned de-velopment project . With over 300 acres placed in serv ice and over 100 acres absorbed s ince the park opened in 2009, the F indlay Indus-tr ia l Park at Westport i s pos i t ioned to provide fee s imple ownership to occupiers and merchant develop-ers with an addit ional 2,000,000 square feet planned for Phase I I in

addit ion to the 350,000 square feet a l ready occupied in Phase I .

Also in the West Submarket, at the Cl inton Commerce Park, the 227,000 square feet F labeg Solar Panel manufactur ing fac i l i ty an-nounced i ts c losure in the spr ing of 2013. Whi le i t i s unfortunate that this h ighly subsidized project d id not achieve the des i red results , th is qual i ty bui ld ing should attract in-terest f rom other manufacturers in the region to take advantage of i ts unique s ize and infrastructure and expected avai labi l i ty in late 2013.

The much awaited decis ion by Royal Dutch Shel l regarding the proposed ethane cracker plant in Potter Township, Beaver County remains in a holding pattern as the June 30 opt ion per iod was extend-ed by Horsehead Zinc, which is st i l l in the process of shutt ing down the 300 acre s i te. Whi le the proposed ethane cracker plant was never expected to start unt i l mid-2014, this remains the largest and most s ignif icant economic development project in Southwestern Pennsylva-nia and i f i t proceeds should have a

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.

Gerard McLaughlin Executive Managing Director [email protected] Louis Oliva Executive Managing Director [email protected]

6 PPG Place, Suite 600, Pittsburgh, PA 15222 T 412.281.0100

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s ignif icant impact on both ex ist ing and proposed industr ia l develop-ment s i tes throughout Beaver County and the West Submarkets as demand for space by both midstream and downstream users should increase s ignif icant ly. In addit ion to the $4 bi l l ion con-struct ion project , both the per-manent jobs at the plant and jobs created by other industr ia l users/occupiers should be a demand dr iver for the region.

There were a few noteworthy In-dustr ia l Investment transact ions in the f i rst half of 2013. Histor ica l ly, the P i t tsburgh market has exper i -enced l imited industr ia l investment sa les as the market is dominated by pr ivate ly held owner occupants and a handful of industr ia l de-velopers who prefer a ‘develop and hold’ strategy rather than a ‘develop and sel l ’ s t rategy. As a result , there are very few nat ional or inst i tut ional owners in P i t ts-burgh. The i rony is the P i t tsburgh market is now on the radar of nat ional and inst i tut ional investors for addit ional acquis i t ion. Howev-er, these investors typical ly look at assets in excess of 200,000 square feet or $10M in value and require Class A construct ion qual i ty. As only 20-25% of our total inven-tory fa l l s into this c lass i f icat ion, i t i s easy to deduce why investment act iv i ty has been l imited.

In the f i rst quarter, the 410,000 square feet Turnpike Distr ibu-t ion Center, a Class A mult i -tenant warehouse distr ibut ion

center in Beaver County was sold to a nat ional pr ivate investor for $20,000,000. The offer ing received bids from investors throughout the northeast , Midwest and Mid-At lan-t ic regions. In the second quarter, the 53,000 square feet R&D/F lex bui ld ing at 700 Waterfront Dr ive was acquired by a local investor. This was an encouraging s ign and should reassure both local devel-

opers in P i t tsburgh and regional /nat ional developers consider ing P i t tsburgh that there is a v iable ex i t strategy for invest ing in our market.

In c los ing, i f we are able to reach 2,000,000 square feet in absorp-t ion for the year, i t should bode wel l for 2014 and beyond as the expectat ion of an improving na-t ional economy coupled with the local dynamics of the energy in-dustry should increase demand for industr ia l space in our region.

Louis V. Ol iva, CCIM, S IOR is the Execut ive Managing Director for Newmark Grubb Knight Frank and specia l izes in the Industr ia l Prop-erty Market. He can be reached at lo l [email protected] or (412) 434-1053. DP

Lou Oliva

5.0%

6.0%

7.0%

8.0%

9.0%

Class A Industrial Vacancy

0.0%

1.0%

2.0%

3.0%

4.0%

2007 2008 2009 2010 2011 2012Total Market 8.3% 5.7% 5.0% 5.6% 5.7% 3.9%

12.0% Overall Industrial Vacancy

10.0%

8.0%

6.0%

4.0%

2.0%

0.0%2007 2008 2009 2010 2011 2012

Total Market 7.7% 7.1% 8.3% 10.4% 9.2% 7.4%

Source: Newmark Grubb Knight Frank

There were a f ew notewor thy Indus t r i a l Inves tment t r ansac t ions in the f i r s t ha l f o f 2013 . H i s to r i ca l l y, the P i t t sburgh marke t has exper ienced l im i ted indus t r i a l i nves tment s a l e s a s the marke t i s domina ted by p r i va te l y he ld owner occupant s and a hand fu l o f indus t r i a l deve lopers who pre fe r a ‘deve lop and ho ld ’ s t r a tegy r a ther than a ‘deve lop and se l l ’ s t r a tegy.

P i t tsburgh is booming! Our metropol i tan market area exper ienced an increase in

employment with 11,888 new jobs added in the 2nd Quarter 2013, plac ing the seasonal ly adjusted unemployment rate at 6.8% in June 2013. Housing within the region remains highly affordable even with average sales pr ices increas ing 2.8% year to date.

Dist inguished regional medical systems inc lude UPMC and High-mark. Prominent urban univers i -t ies located within the urban core inc lude Carnegie Mel lon Univers i ty, the Univers i ty of P i t tsburgh and Duquesne Univers i ty. The P i t tsburgh region has become the epicenter for an emerging natural gas indus-try and is poised to see the num-ber of energy-re lated careers grow

s ignif icant ly by the end of this decade. As a result , P i t tsburgh has received much attent ion nat ional ly and the accolades inc lude:

• Top 10 Great Cit ies for start ing a business

• Top 10 Cheapest Cit ies to L ive in

• Top 10 Greatest P laces to L ive

• Top 10 Dest inat ion City for Travel and Leisure

Retai lers seeking a new front ier for expansion have credited the success and reposit ioning of the Centra l Bus iness Distr ict (CBD) as the pr imary ingredient for the rediscovery of the P i t tsburgh region for development. Dozens of new restaurants, several new hotel an-nouncements, and thousands of

new urban dwel lers compl iment near ly 168,000 commuters to the CBD.

Retai ler Scene: Grocery compet i tors inc luding Whole Foods, Fresh Market, Trader Joe’s , Rare Earth, Bottom Dol lar Food and Aldi ’s are chal lenging the regional dominance and market share of Giant Eagle. Restaurateurs Chipot le, Starbucks, DiBel la’s and Panera Bread cont inue to expand within the region. Meanwhi le new emerging concepts grabbing a foothold within the ful l serv ice and QSR concepts inc lude: Noodles & Company, P iada I ta l ian Street Food, Panda Express, Bonef ish Gr i l l , Carrabba’s, Longhorn Steakhouse, P izza Cuccinova, Burgatory and Jason’s Del i . Convenience store compet i t ion is ongoing with Speed-way, Sheetz, Get Go and 7-Eleven vy ing for key corner locat ions throughout the metro area. On the

Retail Market Update



junior anchor box front LA F i tness, Ross Dress for Less, HomeGoods, Petco, Hobby Lobby and Dick’s Sport ing Goods are most act ive. The inaugural locat ion of F ie ld & Stream (50,000 square feet) , Dick’s Sport ing Goods newest concept, opened in August of this year in the former Dick’s locat ion in Cran-berry Township.

Development Scene: Vacancy rates for Regional Shop-ping Centers have approached al l t ime low rates of 3.8%. L ikewise, Regional Mal ls share equal ly low vacancy rates of 4% in the pr imary markets. Whi le most nat ional met-ropol i tan reta i l markets are expe-r iencing across the board lower reta i l rates, P i t tsburgh is quite the opposite. High demand and low supply of product have e i ther stabi l ized or increased base rental

rates whi le tenant incent ives have evaporated and operat ing expenses cont inue to increase.

Nat ional ly, new ground-up reta i l developments cont inue in large part to be non-existent. P i t tsburgh has several ground up projects underway inc luding Phase 4 of McCandless Cross ing (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 . Cla i r (131,000 square feet) .

The demand for supply wi l l be in part answered through the redevel-opment of several wel l establ ished and mature regional centers. The Shoppes at Northway (495,000 GLA) in the North Hi l l s on McK-night Road was acquired by LRC Realty and is p lanned for a rede-

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velopment in 2014. Several new retai l anchors wi l l compl iment a new merchandis ing mix that wi l l inc lude restaurants, apparel and grocery. Century I I I Mal l (1,720,000 GLA) in the South Hi l l s at Rt . 51 was acquired by Moonbeam Capi-

ta l Investments ear l ier th is year. P lans for Century I I I Mal l inc lude a consol idat ion of the reta i l GLA to 1,100,000 square feet whi le introducing a focused redevelop-ment master plan that inc ludes enterta inment, restaurants, medical and hospita l i ty. Washington Crown Center in Washington, PA wi l l wel-come Marshal l ’s and several new merchants to reposit ion the center as an apparel dest inat ion.

Our univers i t ies , energy resources, innovat ive technology, f inancia l inst i tut ions, research, and hospi-ta ls are the foundat ion on which P i t tsburgh wi l l cont inue to grow and expand into the coming de-cades. The CBD and the three r ivers which def ine i t , embrace the many recreat ional act iv i t ies , l ive theatre performances, profess ional sports teams and the arts that dist inguish our region from so many others. As we cont inue to f lour ish from the core outward, the goods and serv ices offered by reta i l wi l l be in demand. Topography, infrastructure and matur i ty of market wi l l con-

t inue to chal lenge us to meet these demands with suff ic ient supply.

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

U.S. employment gains aver-aged 188,000 new jobs per

month during Q2 2013, with increases in business and professional service jobs ac-counting for 31% of the quar-ter ’s employment gains.

The positive effect of employ-ment gains were dampened

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

D espite eco-nomic head-winds from

federal budget sequestra-t ion, the U.S. off ice market cont inued i ts steady pace of recovery dur ing Q2 2013. Of-f ice demand benef i ted from a s l ight ly lower unemployment rate, at 7.6% as of June, and growth in profess ional and business serv ice jobs, with the nat ional vacancy rate decreas ing by 20 bas is points (bps) dur ing the quarter to 15.2%. This was the fourth quarter ly decl ine in the last f ive quarters .

Whi le economic growth was apparent across the country, we saw some regional d iver-gence in the performance of the off ice market. Three of the four U.S. regions posted an overal l decrease in va-cancy dur ing Q2 2013. The lone except ion was the East , where the regional vacancy rate held steady at 13.2%—sti l l the lowest of a l l U.S. regions. The lack of improve-ment in the East was a result of d iminished act iv i ty by the federal government and the f inancia l serv ices sector, as wel l as r ight-s iz ing by occu-piers .

The technology and en-ergy sectors cont inued to fuel demand across the country. Energy companies accounted for the bulk of metro Houston’s 1.2 mi l l ion sq. f t . of pos i t ive ab-sorpt ion, whi le tech-nology and healthcare users contr ibuted to the near ly 1.0 mi l -l ion sq. f t . of pos i t ive absorpt ion in metro Boston. In Midtown South Manhattan, a lso known as S i l icon Al ley, tech demand fueled 700,000 sq. f t . of pos i-t ive absorpt ion dur ing Q2 2013, the high-est level of pos i t ive absorpt ion of a l l U.S. downtown markets.

Minimal levels of new off ice construct ion cont inued to keep va-cancy levels re lat ive ly low. However, a l though Q2 2013’s 3.9 mi l l ion sq. f t . of new supply more than doubled Q1 2013’s complet ion level , del ivery levels remained s ignif icant ly below pre-2008 lev-e ls . Most mult i - tenant construct ion projects st i l l required an an-chor tenant, though several major markets had speculat ive con-

National Market Update


struct ion projects underway as of the end of the quarter. Speculat ive projects in des i rable submarkets with s ingle-digit vacancy rates in Houston, San Francisco, Boston, Manhattan and Denver have gener-ated s ignif icant tenant interest .U.S. employment gains cont inued their fa i r ly steady pace, averaging an increase of 188,000 new jobs per month dur ing Q2 2013. Busi-ness and profess ional serv ices ac-

counted for 31% of both the quar-ter-over-quarter and year-to-date gain in pr ivate sector employment, outpaced only by le isure and hospi-ta l i ty, which accounted for 34% of the year-to-date gain. Meanwhi le, government posted a 1.3% year-to-date loss in employment due to automatic budget cuts which a lso negat ive ly impacted aerospace and defense contractors. With stronger employment, an improving hous-

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

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

Speculative construction, while still at historic lows,

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



ing market and indiv idual investors more bul l i sh on the stock market, the consumer comfort index improved to -28 versus the 12-month average of -35, according to Moody’s Analyt ics . The pace of off ice investment sa les act iv i ty p icked up dur ing the Q2 2013, with strong interest f rom overseas buyers. Federal Reserve Chairman Bernanke’s comments in June drew attent ion to the inevi-table taper ing of the Fed’s quant i tat ive eas ing program, leading to further interest rate volat i l i ty dur ing the latter part of the quarter.

While 2013 investment activ ity remained on track for a strong year—transaction volume for the f irst half of 2013 paced 22% ahead of the same six-month period in 2012, according to Real Capital Analyt ics—the return parameters of leveraged transactions wil l be affected by recent increases in 10-year treasuries. Any actions taken by the Fed in response to economic growth, however, wil l be somewhat mit igated by improving market fundamentals. In markets l ike Manhattan, part ial interest transfers and a bifurcation of assets have increased, al lowing landlords to capital ize on price gains and investors to obtain a piece of the most desirable, but st i l l l imited, product. Secondary and suburban markets recorded an uptick in sales volume as investors were more wil l ing to venture further out on the r isk spectrum in l ight of improv-ing market fundamentals.

CBRE U.S. Research Team is part of CBRE Global Research and Consult ing – an integrated com-munity of preeminent researchers and consultants who provide real estate market research, econo-metr ic forecast ing, and corporate and publ ic sec-tor strategies to investors and occupiers around the globe. For more information contact:

Jeffrey Ackerman CBRE | Managing Director P i t tsburgh Market Leader600 Grant Street, Suite 4800 Pittsburgh, PA 15219(412) [email protected] DP

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Legal/Legislative Outlook

Significant Amendments to Pennsylvania’s

Mechanics’ Lien Law Appear Imminent

ByRichardD.Kalson,Esq.andJamesD.Miller,Esq.

I . Introduct ion and History The Pennsylvania General Assembly is ser ious ly consider ing enact ing i ts th i rd set of amendments to the Me-chanics’ L ien Law of 1963, 49 P.S. § 1101 et seq. ( the “Lien Law”), within a f ive year span. House Bi l l No. 473 (the “Bi l l”) would add new not ice requirements to the L ien Law, as wel l as a number of other rev is ions. After decades of remaining un-changed, the L ien Law received ma-jor rev is ions in 2007, fol lowed by addit ional amendments in 2009. A frequent cr i t ic ism of the L ien Law, a descendant of a remedial statute f i rst enacted in Pennsylvania dur-ing the late 1700s, i s that i ts r ig id and ant iquated provis ions are not adequately equipped to respond to many modern day construct ion s i tuat ions and payment issues. The Bi l l i s another attempt by the General Assembly to modernize and improve the provis ions of the L ien Law whi le balancing the interest of owners and lenders against the interests of constructors and sub-contractors.

I I . Amendments Proposed by the Bi l l

A. New Notice Requirements The major i ty of the Bi l l focuses on

the creat ion of a new l ien not ice system for project owners and subcontractors to fol low. In order to man-age and fac i l i tate the new not ice requirements, the Bi l l ca l l s for the creat ion of a “State Construct ion Not ices Directory” (“Direc-tory”) website by July 1, 2015*. The Pennsylvania Department of Labor and Industry wi l l be respon-s ib le for the Directory. The Directory wi l l serve as the database for owners to f i le a “Notice of Com-mencement” and subcon-tractors to f i le a “Notice of Furnishing.” These two types of not ices are cr i t i -ca l creat ions of the Bi l l . I t i s poss ib le that f i l ing fees payable by the project owner may be required. These new not ice require-ments seek to address the longstanding problem in Pennsylvania of own-ers and contractors not knowing the ident i ty of subcontractors or mater ia l suppl iers furnishing labor or mater ia ls for a project . As a result , an owner or contractor often did not even have knowledge of the ident i ty of a potent ia l l ien c la imant, let a lone the fact that they possessed a c la im, unt i l receiv ing a no-t ice of intent to f i le a l ien. The Bi l l provides the owner with the r ight to f i le a Not ice of Commencement with the Directory before work on an improvement begins in order to iden-t i fy a l l subcontractors and mater ia l suppl iers that may have l ien r ights through their subsequent required f i l ing of a Not ice of Fur-nishing.



1. Notice of Commencement In order for a Not ice of Commence-ment f i led by an owner to be effec-t ive, the owner must inc lude, at a minimum, the fol lowing informa-t ion: (1) name, address, and e-mai l address of the contractor; (2) name and locat ion of the construct ion project ; (3) legal descr ipt ion of property upon which the improve-ment is being made; (4) name, address, and e-mai l address of legal owner of record of the prop-erty; (5) name, address, and e-mai l address of person other than true legal owner at whose direct ion the improvements are being made, i f any; and, (6) i f appl icable, the name, address, and e-mai l address of a surety providing performance and payment bonds. H.B. 1602 § 501.2(A)(1) . Although the Bi l l fa i l s to express ly address the s i tuat ion where a project has several con-tractors that have contractual pr iv-i ty with the owner, i t can reason-ably be presumed that the owner is required to inc lude the specif ied in-formation for a l l contractors in the Not ice of Commencement. The Bi l l a lso does not address whether an owner has a duty to amend a f i led Not ice of Commencement i f the ident i ty of a contractor changes or the owner contracts with an addi-t ional contractor.

The owner’s f i l ing of a conforming Not ice of Commencement should prevent certa in diff icult s i tua-t ions that ar ise in mechanics’ l ien cases. For example, the Not ice of Commencement should e l imi-nate instances where a contractor mistakenly bel ieves i t i s contract-ing with the property owner, but later d iscovers that the contract ing party is not the legal owner or that the work was not performed at the direct ion of the legal owner. The Bi l l cr i t ica l ly requires that subcontractors have an aff i rma-t ive duty to check the Directory to determine whether a Not ice of Commencement has been f i led for a project before performing work or furnishing mater ia ls . H.B. 1602 § 501.2(B) (1) . In addit ion to f i l ing the Not ice of Commencement with the Directory, the owner a lso must conspicuously post the Not ice of

Commencement at the project s i te before work commences, and take reasonable measures to ensure the Not ice of Commencement remains posted throughout the durat ion of the project . “Reasonable measures” is def ined in the Bi l l as the owner

repost ing the Not ice within 48 hours of being not i f ied in writ ing or by e-mai l that the Not ice is not posted at the project s i te. The Bi l l does not expla in the ramif icat ions of fa i l ing to use reasonable mea-sures to ensure the Not ice remains posted at the project s i te, but a subcontractor might poss ib ly be able to take advantage of such a fa i lure to excuse an unt imely f i l ing of a not ice of furnishing, at least for the durat ion that the owner fa i led to comply with the post ing requirement. There a lso is no indi-cat ion in the Bi l l of whether sub-stant ia l compl iance with the Not ice of Commencement requirements wi l l be considered to be suff ic ient, or i f the fa i lure to str ict ly comply with the provis ions wi l l excuse the subcontractor from having to f i le the Not ice of Furnishing. 2. Notice of Furnishing I f the owner proper ly and t imely f i les the Not ice of Commencement, the Bi l l provides that a subcon-tractor must serve a “Notice of Furnishing” in order to preserve i ts r ight to f i le a mechanics’ l ien. Id . at § 501.2(B) . The Not ice of Furnishing must be served on the owner e i ther by personal del ivery (with a s igned acknowledgment by the owner) , cert i f ied mai l , or f i led with the Directory within 20 days of f i rst performing work in connec-t ion with the construct ion of the improvement in order to have the l ien cover a l l work performed for the project . Id. at § 501.2(B) (2) ( I I ) . Otherwise, a l ien c la im wi l l be val id only for the labor and mater ia ls furnished beginning on 20 days be-fore the date on which the Not ice was served.

The Bi l l requires that the Not ice of Furnishing must inc lude the fol lowing information: (1) gen-eral descr ipt ion of the labor, sk i l l , mater ia ls or equipment furnished; (2) name and address of the per-son supply ing the i tems stated in the work descr ipt ion; (3) name and address of the person with whom the subcontractor contracted with for the work, and, (4) a descr ipt ion of the property being improved. In determining whether the subcon-tractor has met these requirements,

The B i l l c r i t i c a l l y requ i res tha t subcont rac tor s have an a f f i r mat i ve du ty to check the D i rec tor y to de te r mine whether a Not i ce o f Commencement has been f i l ed fo r a p ro jec t be fo re per fo r ming work o r fu r n i sh ing mate r i a l s . H .B . 1602 § 501 .2 (B)(1) . In add i t ion to f i l i ng the Not i ce o f Commencement w i th the D i rec tor y, the owner a l so mus t consp icuous l y pos t the Not i ce o f Commencement a t the p ro jec t s i t e be fo re work commences , and t ake reasonab le measures to ensure the Not i ce o f Commencement rema ins pos ted th roughout the dura t ion o f the p ro jec t .

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the Bi l l declares that a standard of “substant ia l compl iance” must be used. Therefore, a subcontractor forfe i ts i ts r ight to f i le a mechan-ics ’ l ien i f i t fa i l s to substant ia l ly comply with the Not ice of Furnish-ing requirements.

B. No L ien on Res ident ia l Prop-erty is Permitted for Amounts Paid by Owner to Contractor

The f inal change proposed by the Bi l l modif ies the L ien Law to provide that a subcontractor does not have a r ight to f i le a l ien on a res ident ia l improvement when the owner paid the contractor the ful l contract pr ice, and the property is or wi l l be used as the res idence of the owner. H.B. 1602 § 301(b) . The Bi l l further provides that a l ien f i led against res ident ia l property wi l l be discharged when the ful l contract pr ice is paid to the con-tractor or wi l l be reduced to the amount of the unpaid contract pr ice owed by the owner or tenant to the contractor. The amendments in this instance serve the publ ic pol icy of consumer protect ion and protect ing homeowners who may not be equipped to deal with the onerous requirements of the L ien Law.

I I . A Look into the Future in Pennsylvania by Examining the Past in Ohio:

Ohio Courts ’ Interpretat ion of Not ice of Commence-ment and Not ice of

Furnishing Requirements under the Ohio L ien Law

For those who have been involved in construct ion projects in Ohio, the not ice requirements contained in the Bi l l certa in ly are fami l iar as they c losely resemble provis ions in Ohio’s Mechanics’ L ien Law. Ohio employs a s imi lar not ice method involv ing a Not ice of Commence-ment f i led by the owner (or i ts des ignee) and a Not ice of Furnish-ing served by subcontractors and mater ia l suppl iers . See ORC §§ 1311.04-1311.05. Unl ike the Direc-tory website proposed by the Penn-sy lvania Bi l l , however, Ohio has no centra l database for such not ices. Instead, not ices of commencement must be f i led with the off ice of the

county recorder where the prop-erty is located and are subject to addit ional provis ions to ensure that the appropr iate part ies receive the not ices. The fol lowing Ohio court decis ions interpret ing Ohio’s not ice provis ions may prove to be a useful guide in predict ing how the Bi l l wi l l be interpreted and enforced by Pennsylvania courts .

For example, in L inworth Lumber Co. v. Z.L.H., Ltd. , 802 N.E.2d 736, 742 (Ohio C.P. 2003), aff ’d , 2003 Ohio 4190, P24 (Ohio Ct. App. Aug. 4, 2003), an Ohio tr ia l court held that a subcontractor is excused from serv ing a Not ice of

Furnishing by the owner’s fa i lure to inc lude required information in the Not ice of Commencement only when the omitted information is necessary to complete serv ice of the Not ice of Furnishing on the owner or i ts des ignee. The court found that the inc lus ion of the name and address of the prop-erty owner and or ig inal contractor in the Not ice of Commencement was a l l that was necessary for the subcontractor to serve the No-t ice of Furnishing. The tr ia l court d iscounted the s ignif icance of the owner’s omiss ion of the date the owner f i rst executed a contract , a complete l i s t of a l l or ig inal contrac-tors, and the address of the person prepar ing the not ice form, and mis ident i f icat ion of the or ig inal contractor from the Not ice of Com-mencement. Thus, the subcontrac-tor was not excused from fai l ing to serve the Not ice of Furnishing. On appeal , the Ohio Court of Appeals aff i rmed the lower court ’s deci-s ion on the bas is that the owner’s Not ice of Commencement substan-t ia l ly compl ied with the Ohio L ien Law the Not ice, and was suff ic ient to put subcontractors and mater ia l suppl iers on not ice of the owner’s ident i ty and the locat ion of the construct ion work.

Conversely, in Cl inton Elec. & P lumbing Supply v. Air l ine Profes-s ionals Assn. , Loc. 1224, 2006 Ohio 1274 (Ohio Ct. App. Mar. 20, 2006), the court of appeals excused a subcontractor from f i l ing a Not ice of Furnishing when the owner ab-breviated i ts name in the Not ice of Commencement, which fa i led to comply with the requirement that the Not ice of Commencement contain the name of the owner of the real property. The dist inguish-ing character ist ic of th is case is that the mistake was deemed to be a substant ia l def ic iency because i t prevented the correct indexing of the Not ice of Commencement un-der the owner’s proper name, and a search of the owner’s name fa i led to show the ex istence of the Not ice of Commencement. The court a lso refused to interpret the Ohio L ien Law to place a burden on the l ien c la imant to prove that i t was preju-diced by the defect in the Not ice of Commencement before the l ien

For those who have been invo l ved in cons t r uc t ion pro jec t s in Oh io, the no t i ce requ i rements conta ined in the B i l l ce r t a in l y a re f ami l i a r a s they c lose l y re semble p rov i s ions in Oh io ’ s Mechan ic s ’ L i en L aw. Oh io employs a s im i l a r no t i ce method invo l v ing a Not i ce o f Commencement f i l ed by the owner (o r i t s des ignee) and a Not i ce o f Fur n i sh ing se r ved by subcont rac tor s and mate r i a l supp l i e r s .


c la imant’s fa i lure to f i le the Not ice of Furnishing would be excused. The establ ishment of the Direc-tory may e l iminate this potent ia l indexing mistake because the Bi l l provides that the Not ice of Com-mencement must be searchable, at minimum, by the owner’s name, contractor’s name, and the prop-erty address. Thus, a mistake in the owner’s name would not affect a subcontractor’s abi l i ty to search the Not ice based on the property ad-dress and contractor’s name.

An excel lent example from Ohio of the cr ippl ing effect of a sub-contractor’s unt imely f i l ing of the Not ice of Furnishing is J im Morgan Elec. Co. v. Smith , 684 N.E.2d 117, 120 (Ohio C.P. 1996), in which the court held that a subcontractor’s fa i lure to f i le i ts Not ice of Furnish-ing unt i l forty-e ight days after the last day i t performed work on the project prec luded the f i l ing of a l ien a l together. The Ohio L ien Law, l ike the proposed Pennsylvania amendments, permits a l ien c la im to re late back to a certa in def ined

per iod before the f i l ing or record-ing of the Not ic ing of Furnishing. In Ohio, the l ien c la im re lates back to 21 days before the Not ice of Furnishing is served or recorded. Because the Not ice of Furnishing at issue in that case was recorded outs ide the 21-day per iod, none of the work furnished by the subcon-tractor was covered by the l ien and the l ien was inval id. The court a lso held that the owner’s fa i lure to proper ly post the Not ice of Com-mencement at the project s i te, and the owner’s fa i lure to inc lude the date on which the owner f i rst con-tracted with an or ig inal contractor in the Not ice of Commencement did not excuse the subcontractor from t imely serv ing i ts Not ice of Furnishing.

Whi le these Ohio cases may not prove to be accurate predict ions of how Pennsylvania courts wi l l interpret and apply the amend-ments contained in the Bi l l , they are the best guidance avai lable at th is t ime. Pennsylvania’s statutory language with respect to Not ices

of Commencement and Furnishing wi l l contain several subt le var iances from Ohio’s statutory language, which may lead to different out-comes under s imi lar facts . More-over, the ex istence of the Directory, which does not ex ist in Ohio, may compel Pennsylvania courts to treat certa in not ice def ic iencies in a less lenient manner. Nonetheless, the Ohio decis ions serve as a useful warning to owners, subcontrac-tors and mater ia l suppl iers of the potent ia l p i t fa l l s involved with the proposed not ice requirements, and i l lustrate important considerat ions that should be taken into account when beginning a construct ion project and fulf i l l ing the not ice mandates.

Rick Kalson and James Mi l ler are attorneys in the construct ion and land development pract ices at Babst Cal land. DP

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Barbara McNees Reflects on Pittsburgh

O n August 15, Barbara A. McNees ret i red as pres ident of the

Greater P i t tsburgh Chamber of Commerce after 16 years in that off ice. Her career in economic development inc luded work at the Beaver County Chamber of Com-merce and eight years working for Governors Casey and Ridge. Dur ing that t ime she witnessed the region exper ience “cr is is , recovery and transformation” and takes pr ide in leaving at a t ime when Pitts-burgh’s future looks even br ighter. DevelopingPittsburgh sat down with McNees and asked her to take stock of what has transpired dur ing her tenure.

DP: What are the accompl ishments of the Chamber that you feel had the biggest impact?

BAM: Coming to the Chamber in 1997, i t was about the t ime that the leadership began to look at merging the four organizat ions [Greater P i t tsburgh Chamber of Commerce, P i t tsburgh Regional Al l iance, Al legheny Conference On Community Development and Pennsylvania Economy League], and a few of us that were hired then were actual ly brought in to make that happen. There were a lot of organizat ions doing a lot of d i f-ferent things and the same people were leading al l of them. The word

came down from leadership that we needed to combine the efforts of a l l the organizat ions to get the most out of their efforts and maxi-mum the return on what they were invest ing.

That was r ight about the t ime that the Al legheny Conference had done the Working Together Consort ium that was led by Dr. Mehrabian, who was pres ident of Carnegie Mel-lon. Dr. Mehrabian in that report ta lked about the need to become a region, that the areas that were doing wel l across the country were act ing as a region. So as we moved forward there was real ly a strong support f rom leadership to put together an organizat ion so that we could funct ion as a region. The result of a l l that is what we have now, the Al legheny Conference and i ts aff i l iates so that we could del iv-er on the organizat ional structure and then work through leadership throughout the region to develop what the issues are so we can de-c ide where to put our resources.

We do that in three-year chunks, putt ing together a strategic plan every three years with our leader-ship. I th ink that’s very important. This i s a leadership-dr iven effort not a staff-directed effort . I t ’s an important reason why we’re now seen as a region and real ly do func-t ion wel l regional ly.

You ta lk about the transformation of P i t tsburgh the c i ty and that’s the brand but a lot of the real develop-ment has been done in the count ies outs ide of the c i ty. That truly is a result of turning us into a region and developing a strategy to enable us to work 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 pass-ing of the Brownfie lds Act so that we could get the Commonwealth of Pennsylvania to put dol lars in and we could begin c leaning up the s i tes so that development could occur. The f i rst brownfie ld I was in-volved with was the Second Avenue s i te [ the former J & L s i te] which is now the technology corr idor. Pr i -vate developers and banks wouldn’t touch that s i te because of the cyanide in the s lag. You couldn’t get f inancing. So the RIDC came in and put up the f i rst bui ld ing and did some of the f i rst environmental work that needed to be done. I t was real ly one of the f i rst ventures we did on a contaminated s i te. So to see that turn around and then move down the r iver to the next s i tes fe l t very good.

One of the biggest chal lenges we had with the brownfie lds was with the people who l ived in those com-munit ies. When we came in to tear those bui ld ings down there was tremendous object ion from the communit ies because even though the steel industry had gone away, people in those communit ies didn’t want to see those bui ld ings come down because they st i l l had hope that the industry would return. So even though we were c leaning those s i tes up and making them ready for the future i t was pretty stressful for those communit ies and their leadership. I f you look now at what’s developed on those s i tes and the economic generators that are there now, i t was the r ight thing to do.

Benchmarks


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 South-western 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 commit-ment to keep the l icensing here and grow the companies here and the abil ity 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 leader-ship. We’ve been very blessed in terms of commitment to have PNC, BNY/Mellon and all the law firms that make their worldwide head-quarters 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 Gate-way 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 them-selves. When I first moved back here and we had lost the steel industry, we looked at the strategic opportu-nities and would bring site location experts in and the first thing a Pitts-burgher would say to them would be ‘why do you want to be here, why do you want to be in Pittsburgh’?After Bil l Flanagan came in, we went through a whole communica-

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 deroga-tory about Pittsburgh but are very proud of where we are.

DP: What would you want to accom-plish 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 l ittle younger but not necessari ly gaining more people. No region is growing by having more babies; they are growing through im-migration, talent attraction. And as you look at people l ike 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 skil ls, the right education to take the jobs that are going to be available.

The whole diversity and immigra-tion 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 skil ls they need to do the work. We have a great history with immigra-tion in this city; that’s who we are. But there has to be a federal im-migration policy that works so that the people with the skil ls that are needed can come to Pittsburgh and be part of the economy.

The other thing that would be on my ‘to do’ l ist would be the whole ener-gy industry. That’s either going to be a big boom or not but we’ve done a good job in Pennsylvania of regulat-ing the industry so that it’s envi-ronmentally friendly. I think states

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 sti l l 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 Pennsylva-nia is going to be a huge player in the energy industry just l ike we were back when they first discovered oil in T itusvil le.

And the other issue that is important is the whole air service area. It’s not just for Pittsburgh but for Cincin-nati, 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 crit ical to the attraction and retention of jobs.

DP: What wil l you do all day now?

BAM: (Laughs) I don’t know! It wil l be interesting to see. I told my hus-band 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 f ind things to do to stimulate us intellectually. DP

Barbara McNees


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Voices


MaryMargaretMcCartySalesExecutiveHerbert, Rowland&Grubic, Inc.

Having been born and ra ised less than 10 mi les from down-town Pitts-burgh (Mt. Lebanon) I ’ve been fortunate enough to grow up exper ienc-

ing everything the c i ty has to offer. Now, as a young profess ional , I am especia l ly interested in fol lowing the developments in P i t tsburgh’s rev i ta l izat ion. To the new mayor of P i t tsburgh, I would l ike to see you re-capture younger suburbanites. I see many young adults choosing to move out into evolv ing sub-urbs such as Robinson, Cranberry, and Washington, PA. P i t tsburgh is undergoing an exc i t ing resur-gence in commercia l and res iden-t ia l development and I bel ieve the mayor should play an act ive role in attract ing people and businesses back to the c i ty. There are several new and planned projects contr ib-ut ing to our rev i ta l izat ion, such as the loft apartments in the Str ip Distr ict , restaurants and night l i fe in Market Square, and the r iver-front developments on the North Shore. I t i s my hope that the new mayor of P i t tsburgh wi l l be com-mitted to promoting the c i ty as a premier spot for profess ionals to l ive, work, and enjoy. I ’m excited for P i t tsburgh’s rev ived growth and I ’m looking forward to i ts br ight future.

AdamViccaroAssociateCBREInc. The f i rst th ing I would l ike to see the new mayor of P i t ts-burgh do is to l i f t the natural gas dr i l l ing ban in the City of P i t ts-burgh. I t ’s wel l known that many of the oi l and gas com-panies who are opening off ices in the region are avoiding the City of P i t tsburgh because of the natural gas dr i l l ing ban. I don’t bel ieve that any of these companies wi l l actual ly dr i l l in the c i ty l imits but knowing that the City of P i t tsburgh supports dr i l l ing just may attract a large corporate user to construct a high r ise Class A off ice tower for i tse l f or to lease a large block of vacant space in the CBD.

KylePrawdzikDirectorHFF

The f i rst th ing that I would l ike to see the new mayor do is to take a more ac-t ive role in market ing the c i ty to outs iders. The c i ty of P i t tsburgh is going through a major renais-sance, and as locals we are a l l aware of the posit ive press about our c i ty. Outs iders are a lso start ing to not ice that our c i ty has changed. We have had face-to-face meet ings with over 60 inst i tut ional commer-c ia l real estate investors in the last year that a l l want to invest capita l in our region. The problem is that for every one person who has heard about the new Pittsburgh there are st i l l ten people who think of P i t ts-burgh as a smoky post- industr ia l c i ty. We need the new mayor to jump on the posit ive press tra in and take a keen interest in orga-nizat ions l ike Vis i t P i t tsburgh, the Al legheny Conference, the PDP and the PRA. I f we cont inue to heavi ly market the c i ty on a global scale we wi l l cont inue to see outs iders want to l ive, work and invest in our c i ty.

Developing Leaders Offer a Suggestion to Pittsburgh’s Next Mayor


StaceyWatsonVicePresidentHuntingtonNationalBank

The f i rst th ing I would l ike to see P i t ts-burgh’s next mayor accom-pl ish is to meet with US Steel and en-sure they remain downtown. From a micro level , i f US Steel left the CBD, i t would cer-ta in ly hurt the off ice market by in-ject ing s ignif icant off ice space into the market just as we are start ing to see rental rates increase and s ignif icant new product is about to come on- l ine. Maybe more impor-tant ly, f rom a macro level , i f US Steel left the CBD i t would be a blow to the ident i ty of our City. A s ignif icant move out of the CBD by a cornerstone of the P i t tsburgh economy could potent ia l ly create doubt in the rev i ta l izat ion of down-town. Accompl ishment #1B would be to re locate the bus transfers out of the CBD to reduce pedestr ian con-gest ion and traff ic . This would a l -low people that are e i ther working or v is i t ing downtown conduct their bus iness eas ier and attract more v is i tors to the area.

PeterArnoldtConsultantRCxBuildingDiagnostics

Pitts-burgh’s a proud c i ty with good reason. Regardless, we can’t rest on our laurels . Publ ic-transporta-t ion by far i s the #1 opportu-nity for improvement in the region. From the inact iv i ty at the a i rport to the Port Author i ty debacle, our transportat ion issues are abundant. For a c i ty that often excels and leads the way, th is i s an area where we’ve fa l len behind. The focus of the incoming mayor’s off ice should address this d i lemma which would improve far more in our c i ty than just the transporta-t ion headache. The answer won’t be s imple or cheap, but as the ad-age goes, ' i t takes money to make money' . Imagine the economic im-pact poss ib i l i t ies . With re l iable and readi ly avai lable transportat ion op-t ions, the regular 'burb-to-'burgh commuter's t ransportat ion costs drop s ignif icant ly. The idea of e l im-inat ing parking fees and reducing maintenance and fuel expenses for personal vehic les increases the l ike-l ihood that consumers wi l l spend that money e lsewhere (especia l ly i f they have a safe, cheap way to get there) . And, on top of the "green" being spent at area businesses, an increased use of publ ic t ransporta-t ion fa l l s in l ine with the susta in-able endeavors we've pioneered such as the P i t tsburgh 2030 Distr ict miss ion. We are proud of our many accom-pl ishments that have improved our world and the world around us. Let us cont inue to ra ise the bar. Let us cont inue to be a c i ty of champions.

Bil lyHintonDirectorofBusinessDevelopmentNelloConstructionCo .

We need a strong advocate in the mayor’s off ice to expedite the approv-al of large commercia l projects . The not ion of onl ine permitt ing was recommended in 2008 when an audit of P i t tsburgh BBI took place, however, was never ful ly imple-mented. Around that t ime, per-mit appl icat ions became avai lable onl ine but were st i l l accompanied by the age-old requirement of a walk- in submiss ion process. Br ing-ing the permit submiss ion process onl ine as wel l as payments ( the c i ty should devise a transact ion fee to cover their costs ) wi l l minimize paperwork and help streaml ine the overal l turnaround for approval . S impl i fy ing the permit appl icat ion bank of the DCP’s major depart-ments and tracking permit appl ica-t ions onl ine would be a huge plus.

To their credit , the DCP has done a fantast ic job with fast-tracking the approval of smal l commercia l proj-ects (SCPR) and accept ing walk-through permitt ing weekly.

Less turnaround t ime and process ineff ic iencies means more t ime for bui ld ing our c i ty. To that I th ink we could a l l say, amen.

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News from the Counties


Armstrong CountyArmstrong CountyArmstrong County Department of Economic DevelopmentNorthpointe Technology Center Center II 187 Northpointe Boulevard Freeport, PA 16229724-548-1500 (T) 724-545-6055 (F)Michael Coonley, Executive [email protected]

The f i rst half of 2013 was suc-cessful for Armstrong County. The

Armstrong County Industr ia l De-velopment Counci l (ACIDC) sold several lots within their indus-tr ia l parks, leased space within their new mult i - tenant fac i l i ty, provided f inancing ass istance and borrowed state funds to make pad-ready s i tes.

Metal Solut ions, Inc. received a Smal l Bus iness F i rst loan to construct a new 12,350 square foot bui ld ing. The business wi l l be located in southern Arm-strong County in the Parks Bend Farms Industr ia l Park. Project i le Tube Cleaning, Inc. purchased a lot in the Manor Township Business Park to construct a 9,000 square foot bui ld ing, and several propert ies have been opt ioned and are expected to c lose in the coming months.

Ear l ier th is year, the ACIDC in i -t iated the f i rst of two major s i te improvement projects at North-pointe. The f i rst s i te improve-ment project , which consists of the development of 42 pad-ready acres, began ear l ier th is year and wi l l be completed in September 2013. The s i tes are des ignated for off ice and l ight


industr ia l development with f in ished grades at approximately 1%. The pad-ready lots , ranging from 2 acres to 20 acres, wi l l a lso be inc luded in a Keystone Opportunity Expansion Zone appl icat ion.

The second s i te improvement proj-ect wi l l commence in ear ly 2014 and wi l l inc lude more pad ready de-velopment at Northpointe. The proj-ect scope wi l l inc lude the extens ion of infrastructure and grading of the unoccupied reta i l acreage at North-pointe. The ACIDC wi l l so l ic i t pro-posals f rom retai l developers dur ing the fourth quarter of 2013 with the intent of partner ing to complete the project . This property wi l l a lso be inc luded in the Keystone Opportu-nity Expansion Zone appl icat ion.

For addit ional information about the ACIDC, please v iew our l i s t ing in the Buyer’s Guide.

Beaver CountyBeaver County Corporation for Economic Development 250 Insurance Street, Suite 300 Beaver, PA 15009 724-728-8610 (T) 724-728-3666 (F) James Palmer, President [email protected] www.beavercountyced.org

In May 2013, the Beaver County Cor-porat ion for Economic Development (CED) began an $800,000+ earth-moving project as part of i ts cont in-ued expansion of the Hopewel l Bus i -ness and Industr ia l Park, located at Ex i t 48 of Interstate-376. The project involves moving more than 200,000 cubic yards of earth as part of creat-ing an addit ional 15 acres at the s i te. To date, the Hopewel l project has become home to ten projects employ-ing over 1,500. Current ly a l l improved property at the s i te is e i ther sold or under agreement.

Loan act iv i ty was br isk dur ing the f i rst half of 2013. CED approved: equipment loans for four manufac-tur ing projects ; $700,000 in direct loans from its Bus iness Development Fund; and more than $500,000 in i ts

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Armstrong County (continued)


Butler CountyCommunity Development Corporation of Butler County112 Woody DriveButler, PA 16001724-283-1961 (T) 724-283 3599 (F)Ken Raybuck, Executive [email protected] The purchase by Yeltrah, LLC of the Tr in i ty Bui ld ing located at 140 Hol-lywood Dr ive in the Pul lman Center Business Park Expansion has taken place. The Community Development Corporat ion of But ler County (CDC) is current ly working with Johnstone Sup-ply, the new owner of the bui ld ing, to complete the bui ldout. I t i s ant ic ipat-ed that Johnstone Supply wi l l have a grand opening at the fac i l i ty th is fa l l .

A local f raternal organizat ion is in the process of purchas ing a two-acre par-cel that wi l l house their new bui ld ing at the Pul lman Center Business Park Expansion. Addit ional detai ls wi l l be announced once the sa le is f inal ized.

The CDC is a lso working with a manu-facturer to f inal ize a sa le at the Vic-tory Road Business Park. The business manufactures actuators for use on the locks and dams that are found on the many r ivers in Western PA.

capacity as a conduit lender through the Commonwealth of Pennsylva-nia’s Smal l Bus iness F i rst Program, for the projects . I t i s est imated that the projects wi l l create 50+ jobs and reta in an addit ional 90 jobs with total capita l investment of more than $3,000,000.

F inal ly, i t was announced that VEKA, Inc. , a manufacturer of v iny l doors and windows, wi l l invest $6 mi l l ion in capita l improvements and employ an addit ional 38 people at i ts Mar ion Township plant. CED was involved in obtaining f inancing and construct ing a port ion of the infrastructure necessary for the company to bui ld i ts in i t ia l fac i l i ty in Marion Township, Beaver County. The project wi l l help reta in the 350 jobs that current ly ex ist at the s i te.

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Fayette County

Fay-Penn Economic Development Council1040 Eberly Way, Suite 200Lemont Furnace, PA 15456724-437-7913 (T) 724-437-7315 (F)Michael A. Jordan, Jr., Executive [email protected]

During the f i rst half of 2013, Fay-Penn Economic Development Counci l (Fay-Penn) cont inued to see a tremendous amount of growth from Fayette County busi -nesses as wel l as an increase in in-terest f rom businesses potent ia l ly re locat ing to the area.

The U. S. Army Reserves (USAR) purchased approximately 20 acres in the Fayette Business Park, Smithf ie ld, Georges Township for a new Reserves center in Fayette County. The construct ion of the est imated $11.8 mi l l ion project i s ant ic ipated to serve 150-mem-ber reserv ists f rom Pennsylvania, Mary land and West V irginia. This state-of-the-art center is expected

to house the Army Reserve 401 Medium Truck Company under the USAR’s Grow the Army in i t iat ive. The new unit would be part of the Army’s Combat Serv ice Support Reset In i t iat ive to support new br igade combat teams.

P lans for the new center inc lude a 30,000 square foot tra in ing fac i l -i ty, a 4,800 square foot mainte-nance bui ld ing and a storage s i te that wi l l provide administrat ive, educat ional , assembly, l ibrary, learning center, vault , weapons s imulator and phys ica l f i tness ar-eas for the unit . The USAR would employ one ful l - t ime employee dur ing the week and support t ra in-ing of approximately 150 reserv ists on tra in ing weekends.

Gerome Manufactur ing held a groundbreaking for their new $9 mi l l ion, 150,000 square foot fac i l -i ty in the Fayette Business Park in June. Gerome Manufactur ing Com-pany has become a wel l -known producer of custom precis ion sheet metal products serv ing both East and West Coast c l ients as wel l as fore ign markets. The decis ion was

made to consol idate operat ions of their two exist ing bui ld ings, com-pr is ing a total of 121,000 square feet, in the Uniontown area into one fac i l i ty.

The new faci l i ty wi l l house a lmost $2 mi l l ion worth of new produc-t ion equipment that wi l l a l low the business to grow and plans for future purchases of new, cutt ing-edge equipment have a l ready begun.

Fay-Penn Economic Development Counci l , a long with Washington F inancia l Corporat ion and the Department of Community & Eco-nomic Development provided the f inancing for Gerome’s new bui ld-ing and new manufactur ing equip-ment.

Gerome current ly employs approxi-mately 100 people and ant ic ipates eventual ly adding an addit ional 20 to 25 employees. The plant in the Fayette Business Park wi l l be operat ional by ear ly Spr ing 2014.

Greene County

Greene County Industrial Developments, Inc.300 EverGreene DriveWaynesburg, PA 15370724-852-2965 (T)724-852-4132 (F)Don Chappel, Executive [email protected]

County Industr ia l Developments, Inc. , dba Greene Al l iance for

Development, ce lebrated i ts 56th year of serv ice to Greene County this past February in business park development and business f inanc-ing. The organizat ion owns and manages the 248 acre EverGreene Technology Park in Waynesburg and the 72 acre Pais ley Industr ia l Park in Carmichaels .

Recent ly Pais ley Park has seen Stal-l ion Oi l f ie ld Serv ices construct a new bui ld ing on the 10 acre parcel they acquired in 2012 and this spr ing RG Johnson Co., Inc. began construct ion of a new 37,000

square foot bui ld ing in EverGreene Technology Park. L ike RG Johnson, a second coal mine re lated com-pany, I rwin Car & Equipment wi l l soon cal l EverGreene home with their purchase of a 2 acre parcel . Addit ional ly several land sales have been approved for both parks with c los ings scheduled for the coming months.

EverGreene has 30 acres of pad-ready acreage avai lable for imme-diate development whi le Pais ley Park has 15 acres readi ly avai lable.

Avai lable now, the CDC has: 3,600 square feet of f i rst f loor off ice space avai lable for lease at the Pul lman Commerce Center; 3,400 square feet for sa le or lease at the Bantam Commons; 40 acres of land at the Victory Road Business

Park which has a KOZ des ignat ion through December 31, 2017; 30 acres of land at the Pul lman Center Business Park Expansion. The Pul l -man s i te inc ludes ra i l access and is located in the City of But ler and But ler Township.

Contact the CDC at 1 (800) 283-0021 i f you have are looking for off ice or f lex space or shovel-ready land in But ler County.

Butler County (continued)


Indiana CountyIndiana County Center for Economic Operations801 Water StreetIndiana, PA 15701724-465-2662 (T) 724-465-3150 (F)Byron G. Stauffer, Jr., Executive [email protected]

Two new business parks are under development in Indiana County. They wi l l add more than 20 new business s i tes, tota l ing about 155 acres of new shovel-ready pads.

The Windy Ridge Business & Technol-ogy Park is underway, with construc-t ion of a 95,000 square foot bui ld ing for Creps United Publ icat ions. Pre-l iminary work is a lso underway on the second phase of the new park, which is located at the intersect ion of US 422 and SR 286 in White Township. Windy Ridge wi l l be a premier park featur ing a mix of commercia l and l ight indus-tr ia l s i tes with a broad array of ameni-t ies. The 119 Business Park is located along US 119 in Center Township and wi l l feature 3 to 5 pad-ready s i tes rang-ing from 3.5 to 8 acres. Construct ion of road and ut i l i ty infrastructure wi l l begin in August and f inal paving and landscaping wi l l be completed in 2014.

Three hotel projects are a lso mov-ing forward. A new 82-room “select serv ice” hotel wi l l be constructed near the intersect ion of US 422 and SR 286. A bout ique hotel i s a lso being planned in downtown Indiana, featur ing 47 up-scale guest rooms and meet ing rooms with int imate character. A 120+ room hotel adjacent to the Kovalchick Con-vent ion & Athlet ic Complex at Indiana Univers i ty of Pennsylavania is a lso in f inal p lanning stages.

Two new restaurants are a lso opening in downtown Indiana. The Blackhorse Steakhouse, a farm-to-table sty le res-taurant is opening in the newly reno-vated Brown Hotel , and Tazé, a Medi-terranean Ristorante, i s opening in the histor ic t ra in stat ion.

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Lawrence CountyLawrence County Economic Development Corporation100 East Reynolds StreetPlaza South, Suite 100New Castle, PA 16101724-658-1488 (T) 724-658-0313 (F)Linda Nitch, Executive [email protected]

The Lawrence County Economic Development Corporation is now ready to lease its 50,000 square foot s ingle tenant or mult i-tenant bui ld-ing. With construction expected to be completed in September 2013 this faci l i ty offers 45,000 square feet of total manufacturing/warehousing space with 5,000 square feet of of-f ice space sitt ing on f ive acres. The cei l ing height to eave is 25' and to the center of the roof is 31'. The bui lding is located in a Pennsylva-nia Keystone Opportunity Tax Free Zone I Mil lennium Park adjacent to

Interstate 376 with direct access to Pittsburgh, Youngstown and Hermit-age. These four projects represent $13 mil l ion of new investment and create 132 new jobs in the community:Upstate Shredding – Upstate Shred-ding/Weitsman Recycl ing of Owego, NY purchased the former Ferrotech recycl ing faci l i ty on Moravia Street in New Castle. This is a $6 mil l ion project which includes demolit ion of the exist ing structures, construc-t ion of 33,000 square feet of ware-house and off ice space. Addit ional ly a state-of-the-art shredder wil l be instal led. The project is completing the permitt ing process and is expect-ed to create 30 new posit ions.

RW El l iott expansion – RWE Hold-ing is constructing a 30,000 square foot processing faci l i ty at their s ite located in Taylor Township with total project cost est imated at $1.2 mil-l ion. The company processes carbon, graphite and coke for the steel in-

dustry and is enclosing its activ it ies. There are currently 10 jobs at the site and 7 addit ional jobs are be-ing projected. The LCEDC working with the PA Dept of Community and Economic Development obtained a Pennsylvania Industr ial Development Authority Loan to assist with the f inancing of the project.

Magnetic Lift ing 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 faci l ity. Fifteen new jobs are being created with an additional f ive proposed. The LCEDC provided assistance by working with the Governor’s Action Team to provide Pennsylvania Industrial Development Authority f inancing for this $2.3 mil-l ion project. The company expects to break ground in September.

Portersvi l le Valve is relocating from Portersvi l le, Butler County, PA to Shenango Township. The company


Washington County Washington County Economic Development Partnership20 East Beau StreetWashington, PA 15301724-225-3010 (T) 724-228-7337 (F)Jeff Kotula, [email protected]

Gallaway Safety & Supply (GSS) held groundbreaking ceremonies recently for a 27,000-square-foot office and ware-house 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-

printing service so company names, logos or slogans can be printed or embroi-dered 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 Commis-sioners approved the sale of property in the Starpointe Business Park, Ha-nover Township, to Lifting Gear Hire, an I l l inois-based firm that is the largest company in the country devoted exclu-sively to the rental, sale and service of l ifting, 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 wil l initial ly have a 25,000-square-foot

building with the abil ity to add another 15,000 square feet. The company expects to begin construction as soon as it re-ceives 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 I I. The company was assisted by the Wash-ington 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 mill ion 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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has purchased 23 acres along Route 422 east including the former Shenango Bowl-away. This a $4.3

mil l ion project that should be com-pleted in 2014. New jobs to Law-rence County wil l be 50 with anoth-

er 25 proposed. The LCEDC again provided project assistance working the Governor’s Action Team.


Westmoreland CountyWestmoreland County Industrial Development Corporation40 North Pennsylvania Avenue, Suite 520Greensburg, PA 15601724-830-3061 (T) 724-830-3611 (F)Jason W. Rigone, Executive [email protected]

The new 73,500-square-foot Advanced Technology Center wi l l be dist inct ly located within the county’s 2.8 mi l l ion square-foot RIDC Westmoreland (former Sony fac i l i ty ) in East Hunt ingdon Township, one of the largest mult i - tenant fac i l i t ies in eastern United States. WCCC ant ic ipates the center wi l l be complet-ed and open for c lasses beginning Fal l of 2014.

In addit ion to Aquion Energy gear ing up for produc-t ion of i ts f i rst fu l l -scale manufactur ing fac i l i ty at the RIDC Westmoreland complex by year’s end, DNP (Dai Nippon Pr int ing) recent ly added 26,000-square-feet to support a new product l ine increas ing i ts space to a lmost 161,000-square-feet. DNP produces spools of thermo-transfer r ibbon str ips used on the back of credit cards and operates three shifts per day.

“The locat ion of the new Advanced Technology Center is s ignif icant in that i t wi l l thr ive amongst industry,” sa id Jason Rigone, Execut ive Director of the Westmoreland County Industr ia l Development Corporat ion. “Not only wi l l i t wi l l be an incent ive for new employers who have a need for specia l ized pro-grams to re locate here, but i t wi l l a lso be an asset to the ex ist ing businesses in this regional employment center.”

Some other major developments in the county in-c lude:

• A 75,000-square-foot f lex-warehouse un-der construct ion at Westmoreland Airpark by EFR L imited Partnership in Latrobe. Phase I I construct ion underway at the Westmoreland Airpark opening up an addit ional 52 acres of developed property crucia l for new and expand-ing businesses in the region.

• Arnold Palmer Regional Airport in Unity con-

struct ing an addit ional 250 parking spaces. • WCCC breaking ground on an $8.4 mi l -

l ion 30,000-square-foot educat ion center in Latrobe.

• Seton Hi l l Univers i ty breaking ground on an $11

mi l l ion 46,000-square-foot dance and v isual arts center in Greensburg.

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In addit ion to the above construct ion act iv i t ies , Westmoreland County’s brownfie ld redeveloped s i tes have shown some promis ing movement in-c luding the 26,000-square-foot lease extens ion for Glassautomatic, a 1,200-square-foot re loca-t ion of the Mount P leasant Glass Museum at the Mount P leasant Glass Centre in Mount P leasant, 17,182-square-feet of short-term lease area for Forest Hi l l s Transfer and 20,000-square-feet of space for Ste l lar Prec is ion Components, both at the Jeannette Industr ia l Park in the City of Jean-nette.

Information on these and many more sites located throughout the county can be found on the county’s website at www.westmorelandcountyidc.org or by call-ing Joseph D. Sisley, Marketing Director of the West-moreland County Industrial Development Corporation – (724) 830-3061. DP

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(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.

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

(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.

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


(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.

Panelists at NAIOP Pittsburgh's July 18 program on down-town were Michael Sriprasert from Landmarks Commu-nity 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.

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

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

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Architect

Astorino227 Fort Pitt BoulevardPittsburgh, PA 15222T: 412-765-1700www.astorino.comJohn D. Francona, RA, LEED [email protected]

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 solu-tions 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 re-imagine landscapes.

Design 3 Architecture PC300 Oxford Dr. Ste. 120Monroeville, PA 15146T: 412-373-2220 www.d3a.com William Snyder [email protected]

Design 3 Architecture has been offering architecture, planning, and interior design services to the Pitts-burgh 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 FloorPittsburgh, PA 15222T: 412-391-4850F: 412-391-4815www.drsarchitects.comKathryn A. Jolley, MBA, ASID, LEED [email protected] for the future, DRS Architects continues toprovide innovative and creative architectural solutionsas we have for more than 50 years. We listen carefullyto our clients’ needs and develop customized respons-es to each design challenge. We provide architecture,interior design and master planning services throughthe varied markets of higher education, laboratories,health and wellness, government, hospitality, andcorporate offices. Our talented design teams work todevelop exemplary projects which enrich daily life,improve communities, advance a sustainable futureand promote design excellence.

Front Studio Architects357 N. Craig Street Pittsburgh PA 15213 T: 412-682-2121 www.frontstudio.comArt Lubetz [email protected] Studio’s architecture is experientially powerful and environmentally responsive. For 45 years, we have taken a creative approach to architecture, work-ing 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 col-laboration 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 Building401 Wood StreetPittsburgh, PA 15222-1838T: 412-566-1531www.gerardassociatesarchitects.comDawn Danyo DiMedio, AIA, LEED AP [email protected] 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 techni-cally and aesthetically complete. Every project is given principal attention. We believe this commitment to service yields superior design.

HHSDR Architects / Engineers40 Shenango AvenueSharon, PA 16146-1502130 7th Street, 201 Century Bldg.Pittsburgh, PA 15222-3413T:800-447-3799T: 412-281-2280F: 724-981-4515www.hhsdr.comFrank [email protected] 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 sustain-ability 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.

IDC ArchitectsFive Penn Center West Suite 300Pittsburgh, PA 15276T: 412-848-2275 x44576Gary HomonaiBusiness Development Director, NE [email protected] Architects is a multidisciplinary planning and de-sign 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.

IKM IncorporatedOne PPG PlacePittsburgh, PA 15222T: 412-281-1337F: 412-281-4639www.ikminc.com Joel R. Bernard, AIA, NCARB, LEED [email protected] 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.

Renaissance 3 Architects, P.C.48 South 14th StreetPittsburgh, PA 15203 T: 412-431-2480www.r3a.com Deepak [email protected] 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 archi-tectural, 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.

RSH Architects363 Vanadium Road #200Pittsburgh PA 15243T: 412.429.1555 x 19 F: 412.279.7285www.rsharc.comJoel C. Cluskey, AIA, [email protected] Architects celebrates its fourth decade of profes-sional practice with renewed ownership, enthusiasm, and a commitment to quality architecture that endures - aesthetically, functionally and environmen-tally. 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 Architects470 Washington RoadPittsburgh, PA 15228T: 412-561-7117www.vebh.comContact: Daniel [email protected] Architects has been serving the communities of Southwestern Pennsylvania and beyond for more than 65 years. We are passionate about creating quality en-vironments 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.385 E. Waterfront DriveHomestead, PA 15120T: 412-476-2000www.gaiconsultants.comPatrick M. [email protected]

Transforming ideas into reality for over 50 years, GAI’s teams of real estate and economic counselors, urban planners, engineers, environmental specialists, sur-veyors, and landscape architects provide innovative, practical, and cost-effective solutions for all stages of land development. Our award-winning land develop-ment 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.


The Gateway Engineers400 Holiday Drive, Suite 300Pittsburgh PA 15220T: 412-921-4030F: 412-9219960www.gatewayengineers.comRyan L. Hayes, Director of Business Development [email protected]

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 mu-nicipal engineering, consulting work, and all facets of private development including the burgeoning energy industries. The tradition of providing value-added engi-neering solutions carries on as the company continues to grow. Gateway’s staff of registered professional en-gineers, surveyors, construction inspectors, and land-scape 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

Pennoni Associates Inc.700 Seco RoadMonroeville PA 15146T: (412) 229-2778 www.pennoni.comJohn [email protected] Associates is a multi-disciplined consulting engineering and design firm employing 900 profes-sional, technical, and administrative personnel with 28 offices throughout the eastern United States. Pen-noni, an ESOP company, offers services in Site Design, Landscape Architecture, Environmental, Health and Safety, Indoor Air Quality, Surveying, Transportation, Land Development, Construction Inspection and Test-ing, 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.

Red Swing Group4154 Old William Penn HwySuite 300Murrysville, PA 15668T: 724.325.1215F: 866.295.5226www.RedSwingGroup.comMatthew Smith [email protected] 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 develop-ment consulting services to take a project from concept through construction. Red Swing possesses experience in land development, infrastructure, utility, environ-mental and communication projects. Red Swing ef-fectively 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

Campayno Consulting Services, LLCP.O. Box 554 Oakmont, PA 15139 T: (412) 794-8129 F: (412) 794-8130www.campaynoconsulting.com Jesse C. Campayno T: 412-302-0035 [email protected]

Campayno Consulting provides construction consult-ing services for owners and developers who need assistance managing the complex contractual relation-ships 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 resolu-tion and business consulting. Our clients rely on our expertise to add value to their projects by providing clear direction, maintaining open lines of communica-tion and placing the project owner’s goals as the top priority.

RCx Building Diagnostics210 Fifth StreetCharleroi, PA 15022T: 866-382-8628Web: www.RCxBD.comContact: Peter Arnoldt, LEED GAEmail: [email protected]

RCx Building Diagnostics' certified engineers and con-sultants 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, Retrocommission-ing, Sustainability Consulting, Building Certification Assistance (i.e. LEED®, EnergyStar®, etc.), and Retrofit Project Management.

Consultant

RRC Consulting Group, Inc.100 W Station Square Drive, #1910 Pittsburgh PA 15219 T: 412-364-3035 www.rrcconsulting.com Angela Alfonso 412-651-9333 [email protected] Consulting Group (RRC) provides Facilities Support Services, Environmental Consulting, and Environmental Health Services for Commercial, Public, Indus trial, 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

Contractor

A. Martini & Company320 Grant StreetVerona PA 15137T: 412-828-5500www.amartinigc.comEmily [email protected] in 1951, A. Martini & Co. is not just a general contracting and construction management firm – it is a family business that embodies the dedica-tion, 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. 500 Lowries Run RoadPittsburgh PA 15237T: 412-369-9700www.burchick.comJoseph E. [email protected] Construction is a full-service general contrac-tor founded on the commitment to excellence that Joe Burchick brings to each project the company under-takes. 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, re-gardless 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 Industries108 Commerce Blvd. Suite ALawrence, PA 15055T: 724-746-5400 F: 724-746-5410Joe Scalisejscalise@scaliseindustries.comwww.scaliseindustries.comEMCOR 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 inte-grated workflow solutions. We deliver superior service through our 65+ years of facilities expertise and trade knowledge, and continuously implement new tech-nologies 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?


Restoring the Past Building the Future

Jendoco Construction Corporation2000 Lincoln RoadPittsburgh PA 15235T: 412-361-4500F: 412-361-4790www.jendoco.comDomenic [email protected] 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 renova-tions, 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, renova-tion, historical restoration and preservation, research facilities, hospitals and medical facilities, schools and universities, religious facilities, water treatment facili-ties, multi-tenant residential, commercial, industrial, institutional, retail and sustainable construction.

LANDAU BUILDING COMPANY9855 Rinaman RoadWexford, Pennsylvania 15090T: 724-935-8800www.landau-bldg.comThomas [email protected] our inception nearly 120 years ago, Landau Build-ing Company has evolved into a premier commercial construction firm. For over five generations we have in-sisted 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. Demon-strating our integrity, value, and quality on every proj-ect 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 & AVRRPittsburgh PA 15201T: 412-781-6262F: 412-781-2007www.mckamish.comDave [email protected] 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 Mechani-cal 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!

Nello Construction Company100 Houston Square #200 Canonsburg, PA 15317 T: 724-746-1900F: 724-746-7032www.nellloconstruction.comBilly Hinton [email protected] 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 ten-ant 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 DrivePittsburgh PA 15212T: 412-807-2000www.pjdick.comBernard J. [email protected] Dick – Trumbull – Lindy Paving is a Pittsburgh, PA based contracting entity providing building construc-tion, highway, site, and civil construction and asphalt paving services. Since 1979, the companies have served a number of different owner groups including com-mercial, 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 AvenuePittsburgh PA 15222T: 412-392-2525F: 412-392-2526www.ryconinc.comTodd [email protected] Construction, Inc. is a premier preconstruction,general contracting and construction managementfirm with expertise in new construction, renovationsand design-build projects for owners of commercial,industrial, institutional and governmental buildings.Rycon’s stellar reputation for quality service is built ona solid history of successful projects completed on timeand on budget and an unwavering business philosophythat puts customer satisfaction first. The results arereturn customers and impressive company growth.Rycon has executed more than $1.7 billion of work andcurrently averages in excess of $140 million annually.

Volpatt Construction100 Castleview RoadPittsburgh PA 15234T: 412-942-0200F: 412-942-0280www.volpatt.comRay Volpatt [email protected] Construction, a General Contractor/Construc-tion 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 Pitts-burgh 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 410Canonsburg, PA 15317T: 724-743-7722 ext 2502Michael Swisher [email protected] Properties Group, Inc. is a full service real estate development company with extensive experi-ence 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 devel-opment of Southpointe including the master planning. Horizon Properties Group is comprised of an in-house staff of architects, planners, engineers, landscape ar-chitects, interior designers and financial professionals that enable Horizon to excel in all facets of real estate development.

Document Handling

Multiscope Document Solutions135 Technology DriveCanonsburg, PA 15317T: 724-743-1083F: 888-515-7120www.multiscope1.comDouglas Beck, Managing [email protected] 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 ef-ficiency, 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 [email protected] 70 years, Tri-State has provided printing and docu-ment management to Architects, Engineers and Con-tractors. 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 specializ-ing 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.


Economic Development

Ambridge Regional2301 Duss Avenue Suite 1Ambridge PA 15003T: 724-266-4661 www.ambridgeregional.comGene Pash, President [email protected] 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.

Armstrong County Industrial Development CouncilNorthpointe Technology Center II187 Northpointe BoulevardFreeport, PA 16229T: 724-548-1500www.armstrongidc.orgMichael P. Coonley, AICPExecutive [email protected] 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 emerg-ing or expanding business and industry. Owners and operators of four industrial parks, single use and multi-tenant 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 County111 Woody DriveButler, PA 16001T: 724-283-1961F: 724-283-3599www.butlercountycdc.comKen Raybuck, Executive [email protected] 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 foryour 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.

Fay-Penn Economic Development Council1040 Eberly WaySuite 200Lemont Furnace, PA 15456T: 724-437-7913www.faypenn.orgDana [email protected] 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 mainte-nance of buildings; business park development; tenant lease development and management; state and federal grant writing, management, and administration; work-force development; low-interest business financing solutions; and real estate managing and marketing.

Washington County Chamber of Commerce20 East Beau StreetWashington, PA 15301T: 724-225-3010F: 724-228-7337Mary StollarDirector of Business Investmentwww.WashingtonCountyWorks.comThe Washington County Chamber of Commerce is the largest business organization in Washington County and the second largest chamber of commerce in South-western Pennsylvania. The Chamber focuses on eco-nomic 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

Civil & Environmental Consultants, Inc.333 Baldwin RoadPittsburgh, PA 15216T: 800-365-2324www.cecinc.comGregory P. Quatchak, [email protected] & Environmental Consultants, Inc. (CEC) is a com-pany 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 build-ing trust and our reputation on a local level through personal business relationships while continually as-sessing our environmental and economic sustainability in the communities where we practice.

Firsching, Marstiller, Rusbarsky & Wolf Engineering, Inc.1500 Ardmore Boulevard, Suite 200Pittsburgh, PA 15221T: 412-271-5090 F: 412-271-5193www.fmrwengineering.comJoseph Loizzo, [email protected], 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 up-grades. We use both Revit and AutoCAD to develop our construction documents.

Fisher Associates Southpointe135 Technology Drive, Suite 100Canonsburg, PA 15317T: 724-916-4250Brian L. Fischbach, P.E., [email protected] comprehensive, professional engineering consulting solutions since 1984, Fisher Associates, P.E., L.S., P.C. specializes in Civil Infrastructure & Land Devel-opment 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 Compli-ance, 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:

Herbert, Rowland & Grubic, Inc. 200 West Kensinger Drive, Suite 400Cranberry Township, PA 16066T: 724-779-4777www.hrg-inc.comJames M. Lopresti, P.E., Vice [email protected] is a full-service consulting engineering firmcelebrating 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 Vir-ginia, and Ohio, and a staff of 215 engineers, surveyors,geologists, landscape architects, environmental spe-cialists 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.

KU Resources, Inc.22 South Linden StreetDuquesne, PA 15110T: 412-469-9331F: 412-469-9336www.kuresources.com Mark [email protected] Resources, Inc. provides a full range of environmen-tal management and site development engineering services to industrial, commercial, and community-based clients. The firm specializes in brownfield rede-velopment, 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 capa-bilities 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

GAI Consultants, Inc.385 E. Waterfront DriveHomestead, PA 15120T: 412-476-2000 Twww.gaiconsultants.comPatrick M. [email protected] 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 develop-ment 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 com-mitment 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.

KU Resources, Inc.22 South Linden StreetDuquesne, PA 15110T: 412-469-9331F: 412-469-9336www.kuresources.com Mark [email protected] Resources, Inc. provides a full range of environmen-tal management and site development engineering services to industrial, commercial, and community-based clients. The firm specializes in brownfield rede-velopment, 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 capa-bilities 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.



Finance

Dollar BankThree Gateway Center401 Liberty AvenuePittsburgh PA 15222T: 412-261-7515www.dollarbank.comDavid [email protected] As your business changes, you'll need the flexibility to respond to market opportunities by purchasing equip-ment, 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.

First National Bank12 Federal StreetPittsburgh, PA 15212Robert B. Powderly, SVP, Managing DirectorInvestment Real Estate GroupT: [email protected]

First National Bank offers diversified financial solutions to our commercial clients, including corporate banking, small business banking, investment real estate financ-ing, 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.

Northwest Savings BankSouthwest Region Headquarters125 Emeryville Drive, Suite 100Cranberry Township, PA 16066T: (724) 778-0200www.northwestsavingsbank.comNorthwest Direct: 1-877-672-5678Christopher Martin, Regional [email protected] in 1896, Northwest Savings Bank is a full-service 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 prod-ucts that meet the needs of both business and personal customers. Member FDIC, Equal Housing Lender.

PNC Real Estate249 Fifth Avenue Pittsburgh PA 15222 www.pnc.com/realestate Joe Pascarella, VP T: [email protected] Autumn Harris, AVP T: 412-762-4702 [email protected]

PNC Real Estate is a leading provider of banking, financing and servicing solutions for commercial real estate clients. Our capabilities include acquisition, con-struction 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. 410 North Balph AvenuePittsburgh, PA 15202T: 412-761-1990www.acaengineering.comThomas R. Beatty, [email protected] Engineering, Inc. is an independently ownedand operated geotechnical and environmental engi-neering, materials testing and inspection firm withoffices in Pittsburgh, Mechanicsburg, and LaportePA, and Youngstown, OH. Our engineers, geologist,draftspersons, inspectors, and technicians providequality designs, engineering studies, surveys, andproject management. Our senior staff has a combinedexperience of over 100 years in engineering, construc-tion inspection, and laboratory testing. ACA maintainsan in-house laboratory that has been inspected andaccredited by AASHTO Materials Reference Laboratory,Cement and Concrete Reference Laboratory, and theU.S. Corps of Engineers.

Green Building/ Energy Consultant

Trane400 Business Center DrivePittsburgh, PA 15205T: 412-747-3000 www.Trane.com Tim White, Sales Manager Complex Solutions [email protected], a wholly owned subsidiary of Ingersoll Rand (NYSE: IR), is a world leader in creating and sustaining safe, comfortable and efficient environments in com-mercial, 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, prod-uct innovation, and a powerful distribution network. Visit www.trane.com.

Industry/Trade Association

Builders Guild of Western PA, Inc.650 Ridge Road, Suite 301Pittsburgh, PA, 15205T: 412-921-9000www.buildersguild.orgBuilding trade unions and contractors working to-gether 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 commit-ted to customer satisfaction and are drug free. Today’s building trade unions are setting a new standard of excellence. Get to know us.

IRONWORKER EMPLOYERS ASSOCIATIONOf Western PennsylvaniaFoster Plaza 9750 Holiday Drive, Suite 615Pittsburgh, PA 15220T: 412-922-6855www.iwea.org William C. Ligetti, [email protected] 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 work-force. Visit our website or call our office for additional information.

Master Builders’ Association of Western Pennsylvania, Inc.631 Iron City DrivePittsburgh PA 15205T: 412-922-3912www.mbawpa.orgJon O’[email protected] the Industry, Building the Region!The Master Builders’ Association represents the preferred commercial contractor in our region. Col-lectively, 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 PC300 Oxford Dr. Ste. 120Monroeville, PA 15146T: 412-373-2220 www.d3a.com William Snyder [email protected]

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 solu-tions. With a philosophy grounded in team collabora-tion, providing both personal attention and project leadership, Design 3 Architecture does more than solve problems. We provide solutions that are unique, excit-ing and affordable.

Land Surveyor

Pennoni Associates Inc.700 Seco RoadMonroeville PA 15146T: (412) 229-2778 www.pennoni.comJohn [email protected] Associates is a multi-disciplined consulting en-gineering 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 Ar-chitecture, 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.


Landscape Architect

GAI Consultants, Inc.385 E. Waterfront DriveHomestead, PA 15120T: 412-476-2000www.gaiconsultants.comPatrick M. [email protected] 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 develop-ment 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.


Maintenance/ Service Contractor

Multiscope Document Solutions135 Technology DriveCanonsburg, PA 15317T: 724-743-1083F: 888-515-7120www.multiscope1.comDouglas Beck, Managing [email protected] 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 ef-ficiency, improve productivity and add to their bottom lines with document solutions tailored to their needs. Our award-winning services are custom-designed inde-pendent 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 busi-ness world.

Trane400 Business Center DrivePittsburgh, PA 15205T: 412-747-3000 www.Trane.com Tim White, Sales Manager Complex Solutions [email protected] Trane, a wholly owned subsidiary of Ingersoll Rand (NYSE: IR), is a world leader in creating and sustaining safe, comfortable and efficient environments in com-mercial, 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, prod-uct innovation, and a powerful distribution network. Visit www.trane.com.

Professional Services

Babst CallandTwo Gateway Center 603 Stanwix Street 6th Floor Pittsburgh, PA 15222T: (412) 394-5400www.babstcalland.comMarcia L. Grimes, [email protected] D. Ackerman, [email protected] 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.

Schneider Downs1133 Penn AvenuePittsburgh, PA 15222T: 412-261-3644www.schneiderdowns.comGennaro [email protected] 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 consult-ing 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 inte-grating 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

CBREU. S. Steel Tower, Suite 4800600 Grant StreetPittsburgh, PA 15219412-471-9500www.cbre.com/pittsburghJeffrey Ackerman [email protected] 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 es-tate 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 Ser-vices. The CBRE Pittsburgh, Erie and State College offices are committed to providing clients with quality support

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

Grant Street Associates, Inc.The Grant Building310 Grant StreetSuite 1550Pittsburgh, PA 15219T: 412-391-2600www.gsa-cw.comAt Grant Street Associates, Inc., we aim to be your com-mercial real estate provider of choice - the standard for industry knowledge, service and execution in the Pitts-burgh 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 repre-sentation 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 FrankSix PPG place, Suite 600 Pittsburgh PA 15222 T: 412-281-0100 www.ngkf.comGerard McLaughlin [email protected] Louis Oliva [email protected] 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 informa-tion, visit www.bgcpartners.com.

TARQUINCoRE, LLC2403 Sidney Street, Suite 200Pittsburgh, PA 15203T: 412-381-7433F: 412-381-6793 www.Tarquincore.comRonald J. Tarquinio, [email protected] you’re an investor, developer, landlord or tenant, you need a partner who can provide you with compre-hensive 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 transac-tion, 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 maxi-mize options, seize opportunities, avoid potential pitfalls and expedite transaction times.

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