Oxford abandons plans to build office tower
In May 2012, Oxford Development Co. set out with high hopes to build the next big iconic skyscraper in Downtown Pittsburgh — a 33-story, glass-encased gem designed to serve a tightening office market. And then reality intruded.
Unable to secure the anchor tenant needed to start construction, Oxford has abandoned plans to build the office tower on Smithfield Street.
Instead, it has reached a deal to sell the property at 441 Smithfield on which the high-rise was to be built to Stark Enterprises, a Cleveland-based real estate development company with more than 7 million square feet of retail, office, apartment, and hotel holdings, mainly in Ohio.
Herky Pollock, executive vice president of the CBRE real estate firm, mentioned the sale Wednesday at a developers forum sponsored by the Pittsburgh Downtown Community Development Corp. The sale was confirmed by two other real estate sources.
Oxford had dubbed the skyscraper project 350 Fifth. The
Downtown-based developer had emptied a seven-story office building it owned at the site with plans to demolish the building to clear the way for the new office tower. It also revised the skyscraper plans — including how many stories it would include — several times to try to attract a tenant, all to no avail. Among those courted was U.S. Steel.
Stark, according to sources, intends to renovate the existing building — the former Frank & Seder department store. It sits across the street from the old Macy’s/Kaufmann’s department store, which also is being redeveloped.
Representatives for Stark could not be reached for comment. However, Stark, on its website, lists as “in development” a residential and office project in Pittsburgh without giving an address. Megan Stearman, an Oxford spokeswoman, declined comment.
Gerard McLaughlin, executive managing director of the Newmark Grubb Knight Frank real estate firm, said that Stark likely offered Oxford a sum for the property that was too good to turn down.
“The one thing about real estate is that everyone has a price,” he said.
Mr. McLaughlin was not surprised that Oxford had abandoned the office highrise. He said finding one large anchor tenant or two medium-size tenants to fill such a building is difficult, particularly given that rents for new construction likely would push $40 a square foot, well above the average for Downtown office space.
“It’s not easy to find large tenants for a new building like that and pay the rents you would have to pay for new construction,” he said.
Mr. Pollock, one of the region’s top commercial real estate brokers, said he has talked to retailers who have discussed possible ground level spots with Stark.
“My opinion is that redevelopment is as vital as anything else to the urban core because it’s right in the heart of Downtown,” Mr. Pollock said. “That, in fact, could jumpstart Macy’s to be more successful.”
Philadelphia-based Core Realty is converting the former Macy’s/Kaufmann’s building into a retail, office, hotel, and apartment complex.
Part of Wednesday’s forum focused on retail in the Golden Triangle. John Valentine, executive director of the Pittsburgh Downtown CDC, said the group is working on what it calls the 15minute project. The goal is to give Downtown residents everything they need retail-related within a 15-minute walk of their homes.
Gregg Broujos, managing director and founding principal at Colliers International, said there is still work to do in that regard.
While Downtown has exploded with new restaurants over the last few years, Mr. Broujos said there is a need for more clothing, shoe, and cosmetic stores in the city’s core.
But such space is more expensive to develop than restaurant space and may have to be subsidized in some way, he said. However, he believes such investment would be worth it.
“We can’t keep relying on restaurants,” he said.
Mr. Pollock said he expects to see a Target Express store Downtown “at some point” as well as an Ulta cosmetics store and another shoe store. While there have been cries for more retail, he noted that there are now five men’s stores in the Golden Triangle.
“We have probably more men’s stores than any regional mall in the whole entire city, including Ross Park Mall,” he said, adding that there are two women’s stores Downtown with another in the works.
“Our retail is vibrant in Downtown. It’s just not the way it’s been historically in our life,” he said.
Mr. Pollock also said that he sees one to three “food halls” — trendy indoor markets featuring specialty chefs, local food vendors, and even full-service bars — popping up Downtown in the years to come.