Latest plan for Saks brings back condos
A hotel and apartments are out and condominiums are back in as part of the redevelopment of the former Saks Fifth Avenue site, Downtown.
Millcraft Investments and McKnight Realty Partners have dropped plans for a 174-room Moxy Hotel and 56 loft apartments at the Smithfield Street location in favor of about 70 condo units in the project’s second phase.
Lucas Piatt, Millcraft president, said the development team senses a “strong pent-up demand” for more for-sale units in the Golden Triangle, which has been dominated by apartment building for much of the past decade.
The condo project, dubbed Lumiere, would be the first Millcraft built Downtown since it completed 65 units as part of the former Lazarus-Macy’s department store redevelopment on Wood Street about 11 years ago.
“We think the timing is right to do this,” Mr. Piatt said. “The financial markets have tightened when it comes to financing new hotels and new multifamily units.”
With the change, the development has come full circle. Millcraft and McKnight originally planned 77 condos in the second phase when they first presented the project to the city’s Urban Redevelopment Authority board in 2014 before switching to apartments and then a hotel.
“That’s really what we wanted to do there from the get-go,” Mr. Piatt said. “We think it’s the most underserved market Downtown right now.”
Millcraft and McKnight hope to complete the $35.5 million first phase of the redevelopment — a 582-space parking garage and 30,000 square feet of retail space — in October and then “roll right into the second phase.”
The condos will be built on top of the garage. They are expected to start at $225,000. The developers are planning one-bedroom units, although buyers will have the ability to customize their space.
Among the amenities being planned are operable windows, terraces, high ceilings and a large rooftop deck.
Mayor Bill Peduto demanded that residential units be built above the parking in exchange for a $7 million loan needed to finance the garage and the infrastructure required to support what would be built above it.
“We are excited for the proposed housing development at a key intersection on a revitalized Smithfield Street overlooking the park at Mellon Square. This was a commitment made by Millcraft and McKnight as a condition to public investment in the project, and we appreciate the efforts to build additional for-sale housing Downtown,” said Kevin Acklin, Mr. Peduto’s chief of staff and URA board chairman.
The developers have signed Fogo de Chao, a Brazilian steak house, to take up part of the retail space being built with the garage. About 13,000 square feet still is available, and Mr. Piatt said retail, restaurants and “eatertainment” — a combination of food and entertainment — are being considered for the space.
While a recent Pittsburgh Downtown Partnership report found a drop in apartment occupancy in or near the Golden Triangle in the last quarter of 2016 and a slight decrease in the rental rate per square foot, it showed that condo sales were doing quite well.
There were 87 such sales last year, including 23 new units. The average sales price was $414,938, a 12 percent increase from 2015, according to the 2017 State of Downtown Pittsburgh report. And since 2013, the average price per square foot for condominiums has jumped from $204 to $281. In the last four years, there have been only 49 new condo units built in or near Downtown compared to 1,163 apartments.
“Our goal was to do something the market really wanted right now and [condos is] where we thought the market was going,” Mr. Piatt said.
With the switch to condos, the Millcraft-McKnight partnership also will gain about 8,000 square feet of retail space on Fifth Avenue that had been earmarked for the hotel lobby.