Commercial Real Estate Deals Strong in Region

By DaParma, Ron | Tribune-Review/Pittsburgh Tribune-Review, September 16, 2007 | Go to article overview
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Commercial Real Estate Deals Strong in Region

DaParma, Ron, Tribune-Review/Pittsburgh Tribune-Review

While the mortgage credit crisis is causing havoc in the housing market, including some impact in the Pittsburgh area, there's little evidence it has affected commercial real estate deals here.

Even in the case of the recently reported pullout of one buyer for the Union Trust Building on Grant Street because of lack of financing, another willing buyer quickly stepped forward, indicating financing is available for property deals here, experts say.

"Initially, there was some concern that (the crisis) might have some affect on some deals at the margin, but there are a lot of very strong, well-capitalized buyers right now," said Jeremy Z. Kronman, executive vice president, CB Richard Ellis/Pittsburgh.

For example, Kronman sited Wells Real Estate Investment Trust II's purchase for $14 million of the 82-acre site targeted for Westinghouse Electric Co.'s expansion in the Cranberry Woods Office Park in Butler County.

The leasing deal is said to be largest Class-A office build-to- suit project in Pennsylvania history.

Westinghouse eventually will occupy about 770,000 square feet of office space at the park and employ more than 3,000 people.

On a smaller scale, Kronman noted that the Boggs Building in the North Side was another local deal that was recently completed.

Richard M. Stern sold the building for $2.6 million, after acquiring it in May 2006 for $1.47 million. The new owner of the 3 1/ 2-story building is Smith Brothers Boggs L.P., consisting of Bronson, Lindsey and Miles Smith of Sewickley.

Other recent deals here include New York-based Sovereign Group LLC's July purchase of Centre City Tower, 650 Smithfield St., for $16 million through Centre City Tower LP, a Pennsylvania-based limited partnership. The seller was Centre City Partners LP.

Also two local investors, Joe Kallen, owner of Kallen Development Corp. in Oakmont, and Michael Bozzone, president of Bozzone & Associates Inc. in O'Hara, are in the process of acquiring the former Chamber of Commerce Building, called 411 Seventh Ave.

Meanwhile, in August it was announced that former Westinghouse Electric Corp. headquarters building -- known as 11 Stanwix St. -- is part of a $1.4 billion purchase by Dallas-based Behringer Harvard of a portfolio of 35 U.S. office buildings.

Behringer Harvard said it has entered into a definitive agreement to acquire publicly traded Toronto-based IPC US REIT's properties, which includes the 23-story 11 Stanwix St. building.

"To date, I have not seen anything that has affected any deals, with the exception of the Union Trust Building," said Gerry McLaughlin, commercial broker with the Grubb & Ellis Co.

McLaughlin is marketing for sale the 33,000-square-foot Rivercom building on the North Side, where Carrier Corp. recently leased the entire space for regional offices, showroom and a warehouse/ distribution facility.

"So far we're seeing pretty good interest, and no one to date has balked because of financing," he said.

In addition to real estate investment trusts like Wells, those expected to be interested in large real estate purchases here and elsewhere include insurance companies, local experts say.

Real estate notes

* The Veterans Place of Washington Boulevard received a $50,000 grant through the Pittsburgh Urban Redevelopment Authority to help build a 7,400-square-foot community building. Sid Singer, president of the nonprofit organization, said the building will provide a resource to the residents for mental health counseling, veteran's benefits assistance, job training, assistance in locating permanent housing, leisure activities and other programs. Astorino & Co. is the architect, and Marra Construction Co.

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