Developer cancels plans for SouthSide Works project
Highwoods Properties jumped into SouthSide Works in a big way in 2014, with plans for a four-building, 400,000-square-foot office and retail development, nearly all on the Monongahela riverfront.
But four years later, the Raleigh, N.C.-based real estate investment trust is walking away from the venture without turning a shovel of dirt.
Highwoods, owner of iconic PPG Place in Downtown, let its option agreement with the Soffer Organization on the four vacant parcels expire in early October, signaling the end of its involvement.
Andy Wisniewski, vice president of Highwoods in Pittsburgh, said the company just was never able to work out a deal with a tenant to get the development rolling.
“We came close a couple of times. We were unable to achieve the parameters that would have enabled us to move forward,” he said.
Philips Sleep and Respiratory Care is believed to be one of the companies that seriously considered SouthSide Works before settling on Bakery Square 2.0 in Shadyside for its new headquarters.
SouthSide Works, the location of an old LTV steel mill, has been a showcase for the city in terms of brownfield redevelopment — with office, retail and residential elements.
It serves as the headquarters site for teen clothing retailer American Eagle Outfitters, as well as hosting a 10-screen movie theater, The Cheesecake Factory and apartments, although it has been hit with retail closings in recent years.
Soffer has turned to the Pittsburgh office of real estate firm HFF to request proposals to develop the parcels, three of which are directly on the riverfront. Two are adjacent to the Hofbrauhaus restaurant and another is next to the Hyatt House Hotel. The fourth parcel is at Sidney and 28th streets, a couple of blocks away.
According to the HFF marketing flyer, Soffer “desires to venture or partner with” one or more developers on the parcels as part of its exclusive development rights to the land, owned by the city’s Urban Redevelopment Authority.
Alfred Maiello, trustee for the Soffer family, said the organization is looking at a combination of things for the parcels, primarily a mix of office and apartments.
“We are moving forward and getting interest from developers from across the country looking at this. I think there’s a lot of interest in Pittsburgh outside of our local people,” he said.
Mr. Maiello said Soffer had “some philosophical differences toward the end” with Highwoods that led to the breakup. “I think we just wanted to go in a little different direction than they wanted to go,” he said.
The parcels in question are zoned for a wide range of uses, including office, hotel, residential and restaurant.
“We’re progressing in an orderly fashion. We’re working with HFF and we’re working on our own. We’re going to go and see how this progresses,” Mr. Maiello said. “We’ve got to get the right fit, the right kind of project, and the right people involved in it.”
Highwoods originally had planned to develop a sixstory, 158,000-square-foot glass office building next to Hofbrauhaus as a first phase of its proposed development. But that was predicated on finding an anchor tenant — as were the other buildings.
In the end, it was never able to find the right match, Mr. Wisniewski said.
“There are a lot of factors involved and putting them all together takes time, support of the market, a little bit of luck, and hard work,” he said.
Despite the struggles Highwoods had in recruiting a tenant, local real estate experts see potential for the sites.
“SouthSide Works’ riverfront parcels offer striking views of the city, which received strong interest of late but unfortunately they’ve been the bridesmaid on several deals,” noted Dan Adamski, Jones Lang LaSalle managing director.
In the past couple of years, the trendy South Side office, residential, retail and entertainment complex has struggled with retail losses.
Mr. Adamski said that if SouthSide Works can revive its retail, companies “will inevitably seek out the lifestyle experience SSW offers because the more progressive companies know that experience is key to recruiting top talent.”
Gregg Broujos, managing director of the Colliers International real estate firm, expects the request for proposals to attract a lot of interest.
“I just think you can’t underestimate the power of a riverfront site,” he said. “As the old saying goes, they’re not making riverfront land anymore.”
“The infrastructure is there. The amenities are there. It just could have been a matter of timing with Highwoods,” he said.