DevelopingPittsburgh Spring 2025

Spring 2025

OAKLAND

MARKET UPDATE

www.mckamish.com

CELEBRATING 50 YEARS OF CHALLENGING OURSELVES TO EXCELLENCE AND BEING THE LEADER IN THE MECHANICAL CONSTRUCTION INDUSTRY

CONTENTS

| Spring 2025

05

President’s Message

07

Executive Director’s Message

09

NAIOP Pittsburgh Awards

53

Eye on the Economy

57

Office Market Update

24 Oakland Market Update

Newmark

61

Industrial Market Update Hanna Commercial Real Estate

41

Development Profile The Caroline

47 Developing Trend

65

Capital Market Update

69

Legal/Legislative NAIOP Corporate Lays Out its Legislative Agenda

73

Voices

76

News from the Counties

87

People / Events

Are Corporate Initiatives Driving People Back To The Office?

Spring 2025 | DEVELOPING PITTSBURGH

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SEE WHAT WE’RE WORKING ON NOW

Photo of Mill 19 courtesy of RIDC.

Want exclusive research briefs, fact-based stories and data-driven insights on labor, business and Western PA’s economy?

Subscribe to our newsletter, The Works Report, at pghworks.com.

PUBLISHER Master Builders’ Association of Western PA www.mbawpa.org EDITOR Jeff Burd 412-366-1857 jburd@talltimbergroup.com PRODUCTION Carson Publishing, Inc. Kevin J. Gordon kgordon@carsonpublishing.com GRAPHIC DESIGN Blink CONTRIBUTING PHOTOGRAPHY CREW Pittsburgh Roy Engelbrecht Photography Chad Isaiah Photography NAIOP Pittsburgh Tall Timber Group CONTRIBUTING EDITORS Karen Kukish ADVERTISING SALES Karen Kukish 412-837-6971 kkukish@talltimbergroup.com MORE INFORMATION: DevelopingPittsburghTM is published by Tall Timber Group for NAIOP Pittsburgh 412-928-8303 www.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.

Roy Engelbrecht Photography

President’s Message

I

t’s been said that in policy making, if you’re not at the table, you’re on the menu.

I joined NAIOP about 13 years ago as a Developing Leader and knew the organization as the preeminent real estate networking organization in Pittsburgh with great events and lots of happy hours. Since then, NAIOP Pittsburgh has done yeoman’s work on the advocacy front, inching our way off the proverbial menu and towards the dinner chair, earning policy wins along the way. While we won’t stop our educational and social initiatives (we all look forward to sharing a few beverages on May 22nd at the Awards Banquet), know that the NAIOP Pittsburgh Board and I remain focused on promoting the interests of Pittsburgh’s real estate developers, our principal members.

state and kept Pittsburgh from being the counterweight to Ohio’s success.

Wondering why your site can’t get electric power? Well, we’re working on that too, and we need your experience in the mix.

Our chapter is as strong as ever, and we have an incredible opportunity to make the Pittsburgh region a model for strong economic growth, led by the development community.

Reach out, get involved, and let’s get to work.

Advocacy is front and center in our agenda, and we have got lots of policy threats and opportunities for wins on the horizon. But the reality is that we are an organization of volunteers, and while committed to the success of our region, we need more input from our Principal Members to get things done. Our NAIOP chapter is healthy financially and is 500 members strong. We have a wealth of resources available to implement positive changes, and we have opportunities in both City Hall and Harrisburg. What we are missing, though, is your voice.

To those Principal Members (or developers that aren’t yet members) that are frustrated with the status quo, I urge you to add your voice to our advocacy efforts. Sitting on the sidelines has gotten us a city that generally discourages development, and makes developers negotiate individually on their projects instead of building an ecosystem where projects can proceed quickly and with certainty.

It’s allowed our regional Department of Environmental Protection to become the most restrictive in the

Nate Phillips NAIOP Pittsburgh President

Spring 2025 | DEVELOPING PITTSBURGH

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EXECUTIVE DIRECTOR’S MESSAGE

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ast year passed quickly, and I am deeply appreciative of our former president, Brandon Snyder, for his guidance as I transitioned into this role. During his tenure, we expanded our advocacy initiatives, hosted several successful events, and achieved a strong financial performance, enabling us to reinvest in our chapter’s growth. Now, under the leadership of our new chapter president, Nate Phillips, we are further strengthening our advocacy efforts. We are focused on promoting responsible development, influencing affordable housing policies in the city, and eliminating obstacles to new projects. Our advocacy now extends to both state and local levels, and we are collaborating with organizations such as the Allegheny Conference, BAMP, the AIA, other NAIOP chapters, and our members. Together, we are addressing critical priorities, including the DEP’s redefinition of coal, advancing energy solutions for Pennsylvania, and securing increased funding for building conversion projects. Our chapter also participated in the Legislative Retreat in Washington, D.C., hosted by NAIOP

Corporate, advocating for federal policies such as a development-friendly tax code, funding for building conversions, and national energy solutions. Additionally, our NAIOP Pittsburgh PAC has been actively raising funds—thanks to the generous support of our members—and has successfully hosted its first two PAC events. To keep our membership informed and engaged, we will begin hosting quarterly chapter-wide advocacy meetings to provide detailed updates on state and regional developments while welcoming your valuable input.

Looking ahead, we have an exciting lineup of events. I invite you to join us at our Annual Awards Banquet on May 22nd, where we anticipate a significant turnout, potentially surpassing last year’s impressive attendance. In June, our chapter breakfast will focus on the industrial market. Over the summer, our Bus Tour, in collaboration with the Washington County Chamber of Commerce, will target new industrial sites, a tour of a distillery, and other locations showcasing the region. We have also scheduled an engaging project tour at

Collaborative Real Estate’s 700 Technology Drive. In June, we will host our annual golf outing at Fox Chapel Golf Club, a highlight of our event calendar.

These initiatives and events require dedication and effort. I extend my heartfelt gratitude to all our members who volunteer their time to NAIOP—your contributions significantly benefit our region. Our events would not be possible without your attendance and sponsorship, which have been instrumental in establishing this chapter as one of the strongest in the nation. Finally, I wish to express my appreciation to Erica Loftus, David Caliguiri, Nate Phillips, and our board of directors for their support and for positioning our chapter for continued success.

Thank you.

Tom Frank Executive Director NAIOP Pittsburgh

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Annual Awards BANQUET

BEST INDUSTRIAL RENOVATION

The Park by SomeraRoad

BEST BUILT TO SUIT INDUSTRIAL

BEST NEW SPEC OFFICE BUILDING Diamond Ridge I by NAI Burns Scalo

Samuel, Son & Co. by Chapman Properties

BEST NEW DEVELOPMENT

LEO CASTAGNARI

Hall of Fame Inductee Former Executive Director of NAIOP Pittsburgh

BEST NEW BUSINESS PARK Northfield Industrial Park by the Allegheny County Airport Authority

Allegheny County Airport Authority Ambridge Regional Center Bohler Buccini Pollin Group Buchanan Ingersoll & Rooney PC Buncher Company & Buncher Realty Services Civil & Environmental Consultants, Inc. Cohen & Company Crossgates, Inc. Desmone Eastern Atlantic States Regional Council of Carpenters The Elmhurst Group Franjo Construction Gateway Engineers

HDR Inc. Imperial Land Corporation JENDOCO Construction & SPONSORS AS OF APRIL 1, 2024 Real Estate Kimley-Horn LLI Engineering Lee & Associates M&T Bank Mascaro Construction Master Builders’ Association of Western PA McCaffery Merus Piatt Companies S&T Bank Sebring & Associates Sentinel Construction Turner

BEST NEW MULTIFAMILY

RE:Build Manufacturing at NKAMP by RIDC & WCIDC

#CREpgh

FNB Financial Center, F.N.B. Corporation & The Buccini Pollin Group

BEST NEW TECH FLEX PROJECT

The Allegheny Health Departments Public Health Laboratory by The Elmhurst Group

www.naioppittsburgh.com

NAIOP PITTSBURGH AWARDS

HALL OF FAME Leo Castagnari, Retired Executive Director, NAIOP Pittsburgh Leo Castagnari was executive director of NAIOP Pittsburgh for 20 years until his retirement in Spring 2018. During his tenure NAIOP Pittsburgh experienced substantial growth in size and reputation, with its membership more than doubling. Castagnari, a former staffer for Senator John Heinz, led NAIOP Pittsburgh to be a strong legislative advocate. Among the initiatives that led to impactful wins for the region during his leadership were the interstate highway designation of the Parkway West, the completion of the I-79/I-376 interchange in Robinson Township, and the revision of PA’s mechanics lien law. Also, during this time, the NAIOP Pittsburgh chapter has won multiple national industry awards for its Developing Pittsburgh magazine, educational programming, and advocacy efforts. Castagnari can be credited with growing the NAIOP Pittsburgh Annual Banquet to be the largest commercial real estate event in Western PA, both in attendance and sponsorship.

Outside of his work with NAIOP Pittsburgh, Castagnari was a partner in King Communications, a management and marketing consultancy that specialized in helping non-profit organizations.

Castagnari served on the boards of Leadership Pittsburgh and Contemporary Craft. Since establishing the Castagnari Family Charitable Fund at The Pittsburgh Foundation in October 2002, Leo has continued to give time, as well as financial support to The Greater Pittsburgh Community Food Bank, Planned Parenthood of Western Pennsylvania, The Pittsburgh Symphony Orchestra and Quantum Theater.

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Spring 2025 | DEVELOPING PITTSBURGH

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PROJECT FEATURE

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NAIOP PITTSBURGH AWARDS BEST NEW DEVELOPMENT FNB Financial Center Developer: Buccini Pollin Group in partnership with F.N.B. Corporation Construction Manager: PJ Dick/ Mascaro/Massaro Jt. Venture Architect: Gensler Located on the site of the former Pittsburgh Civic Arena, F.N.B. Corporation’s (FNB) headquarters, FNB Financial Center, serves as the cornerstone of the 28-acre, $1 billion Lower Hill District redevelopment.

Commissioned by FNB to accommodate its significant growth, the $250 million LEED Gold-certified, mixed-use tower was delivered in Fall 2024. This achievement — made even more significant by the site’s complex history and unique construction challenges faced during COVID-19 — was made possible through FNB’s substantial equity commitment, as well as the determination of its leadership and supporting organizations that included Buccini Pollin Group, the Pittsburgh Penguins and Clay Cove Capital.

The 550,000 square foot tower stands 26 stories tall and is the first high-rise, multi-tenant office tower built in Pittsburgh’s Central Business District in forty years. While anchor tenant FNB occupies the majority of the building, it also is home to leading professional service firms including GH Advertising, Cohen Seglias, and BDO.

PROFESSIONAL. SKILLED. COMMITTED. PROUD. C ATED ~ AFL-CIO, CL

Local Union #9

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Local Union #526

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Local Union #154

These are the hallmarks the region’s union construction trades and contractors bring to the jobsite everyday. Our professional tradespeople and contractors bring the dreams and visions of our fast-growing region to life with a dedication that only those who live here, work here, and raise their families here can commit to. It is, after all, our home, our legacy.

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Local Union 66

We are also committed to providing opportunity for all who share these values and want to pursue a lifelong, lucrative and satisfying career. For more information on building with our union trades and contractors, or to explore career opportunities, please visit www.buildersguild.org where you will find direct links to our Trade Unions, Joint Apprenticeship Training Centers and Contractor Associations.

Local Union #37

of Western Pennsylvania

Local Union 27

District Council #57

Local Union #5

Local Union #6

Jeff Nobers • Executive Director • 631 Iron City Drive • Pittsburgh, PA 15205 • 412.921.9000

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Spring 2025 | DEVELOPING PITTSBURGH

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We’re invested in the Pittsburgh region.

Are you?

Regional Investor Council members represent the best of our region’s AI and robotics, energy, and life science businesses and organizations who are helping shape our regional agenda.

We can’t do it without you. Join more than 80 years of economic development legacy with the Allegheny Conference.

Learn more at AlleghenyConference.org/membership.

Contact: Kaitlyn Hendrickson, Vice President, Investor Relations, khendrickson@alleghenyconference.org, 724-601-4505

ALLEGHENY CONFERENCE ON COMMUNITY DEVELOPMENT

NAIOP PITTSBURGH AWARDS

BEST NEW BUSINESS PARK Northfield Industrial Park Findlay Township, Allegheny County Developer: Allegheny County Airport Authority The Allegheny County Airport Authority is a key economic driver for the region – from air service to real estate development. Northfield Industrial Park is a premier 90-acre Class A development situated on the campus of Pittsburgh International Airport. Developed by the Airport Authority, the park is designed to support industries such as technology, life sciences, and specialized manufacturing, with infrastructure including roadways, utilities, regional stormwater facilities, and pre-graded pads for development. Since 2020, Merus (formerly Al. Neyer) has built three buildings, totaling 400,000 square feet of prime industrial space. These facilities are now fully leased to industry leaders such as Krystal Biotech, PepsiCo, and Legrande, making Northfield a hub for life sciences and specialized manufacturing/distribution.

The development has already generated a direct and indirect economic impact of over $60 million and created more than 400 jobs, driving economic impact for the region.

The next era of Al. Neyer is When you’re responsible for a career-defining project, you need a partner as invested as you are.

Learn more at merus1894.com.

Spring 2025 | DEVELOPING PITTSBURGH

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WESTMORELAND COUNTY BUSINESS PARKS Business-friendly Westmoreland meets your site-selection needs

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NAIOP PITTSBURGH AWARDS BEST INDUSTRIAL RENOVATION BUILDING Re:Build Manufacturing at NKAMP by RIDC and WCIDC New Kensington, Westmoreland County Developer: RIDC of Southwestern PA Co-Developer: Westmoreland County Industrial Development Corporation (WCIDC) Contractor: Mascaro Construction, LP Architect: Renaissance 3 Architects The 175,000 square foot Re:Build Manufacturing project, a partnership between RIDC and WCIDC, is revitalizing New Kensington and bringing manufacturing jobs back to the Pittsburgh region. Instead of building new, Re:Build chose to renovate five century-old buildings, preserving the site’s industrial legacy while modernizing its infrastructure. As a contract manufacturer, Re:Build needed flexibility. The site was in severe disrepair, requiring $30 million in renovations, including structural upgrades, electrical system overhauls, and energy-efficient improvements like spray foam insulation and Extech polycarbonate windows. Funding from the Commonwealth of PA, Westmoreland County, and the Richard King Mellon Foundation was crucial, alongside equity investments from RIDC and WCIDC. Re:Build’s New Kensington facility is its first ground-up U.S. manufacturing site, focusing on high-tech industries like energy, life sciences, robotics, and aerospace. The company invested $50 million in the project, set to create 300 full-time jobs in three years, plus 100 construction jobs.

“From revitalizing abandoned steel mills and industrial sites into thriving business and technology parks to transforming underutilized land into locations built for job-creating companies, RIDC has created a unique blend of economic development advocacy, community and regional revitalization, and high-quality job creation that could be a model for other regions that were once powerhouses of America’s industrial economy.”

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Spring 2025 | DEVELOPING PITTSBURGH

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NAIOP PITTSBURGH AWARDS BEST NEW TECH FLEX BUILDING Allegheny County Health Department’s Public Health Laboratory Commonwealth Manor, Marshall Township, Allegheny County Developer: The Elmhurst Group Contractor: Mascaro Construction, LP Architect: Stantec Lender: First Commonwealth Bank In 2019, Elmhurst Group acquired Commonwealth Manor, a two-building flex property in Marshall Township.

Building One, comprised of 45,900 square feet of vacant pharmaceutical space, was proposed to the Allegheny County Public Health Department as a candidate to be their next new Public Health Laboratory. After extensive collaboration with Marshall Township’s Planning Commission, the project was approved to move forward in September 2023 and was completed in March 2025. The project includes nearly 25,000 square feet of biosafety laboratory (BSL) space of which 12,000 square feet is classified as BSL 3. The remaining space is utilized as office, teaching and staff areas. The new Public Health Laboratory will serve Allegheny County and Western Pennsylvania and will accommodate growth of the County’s staff for this purpose.

Building the future.

Congratulations to our friends at Elmhurst Group on your 2025 NAIOP award. It’s a privilege to provide financing for the companies that are relentlessly focused on responsible development in our region. Thank you for considering us to be the best bank for your business for nearly 20 years.

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Spring 2025 | DEVELOPING PITTSBURGH

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INDUSTRIAL REAL ESTATE ADVISORS Genfor is an entrepreneurial, relationship driven commercial real estate services firm focused on industrial properties.

Whether you are an industrial business owner, investor, tenant, or developer, we are here to serve you and help you make informed and strategic real estate decisions.

L A N D LO R D / S E L L E R R E P | T E N A N T/ B U Y E R R E P | I N V E S T M E N T S A L E S & A CQ U I S I T I O N S | CO N S U LT I N G w w w. g e n f o r r e a l e s t a t e . c o m | 4 1 2 . 5 6 4 . 0 7 5 0 | r g a s p e r i n i @ g e n f o r r e a l e s t a t e . c o m

& we applaud you!

Congratulations to Chapman Properties, winner of Best Built to Suit Industrial Building for the 2025 NAIOP Pittsburgh Awards.

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www.naioppittsburgh.com

MEMBER FDIC

NAIOP PITTSBURGH AWARDS BEST BUILD-TO-SUIT INDUSTRIAL BUILDING Samuel Son & Company, Ridge Road Industrial Park Robinson Township, Washington County Developer/Contractor: Chapman Properties Architect: NEXT Architecture Lender: S&T Bank The first of five buildings at Chapman’s Ridge Road Industrial Park, the 85,000 square foot steel and aluminum warehouse represents a major reinvestment in Pittsburgh by Samuel Son & Company. The building features heavy structural concrete floors, four 10-ton overhead cranes, and two truck drive-through lanes. The design allows for rapid loading and unloading of products for up to four trucks at a time, a massive improvement over their previous facility in Carnegie. The building’s 30-foot clear height accommodates custom cantilevered racking to maximize density and variety of their customers’ proprietary aluminum extrusions. The building is a 40 percent increase in floor area over their previous facility, but the height and configuration can accommodate double Samuel’s inventory. A 20,000 square foot machining area, with CNC cut-to-length, drilling, and finishing processes, allows Samuel to capture greater revenue through value-add services. The building is on a 9.5-acre site overlooking I-576 near the Westport Interchange. Growth of Samuel’s business was considered at every level, and as a result the tenant signed a 10-year lease with multiple five-year options.

Spring 2025 | DEVELOPING PITTSBURGH

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NAIOP PITTSBURGH AWARDS BEST NEW SPECULATIVE OFFICE BUILDING Diamond Ridge I Moon Township, Allegheny County Developer/Contractor: NAI Burns Scalo Architect: NEXT Architecture Lender: First National Bank Diamond Ridge I is a 165,200 square-foot, Class A office building, the first phase of a 500,000 square foot, three-building campus developed by NAI Burns Scalo.

Strategically located in Moon Township’s Parkway West corridor, the development sits within a 780-acre specially planned district near Pittsburgh International Airport, offering seamless access to shopping, dining, and growing residential options. Designed to meet the needs of modern tenants, Diamond Ridge I features a striking lobby, public art, premium fitness center, pickleball courts, a conference facility with hospitality kitchen, outdoor collaboration spaces, and a wellness-focused design. This speculative development has been well received by the marketplace and was roughly 50 percent leased prior to obtaining a certificate of occupancy. Tenants include Edgeworth Security, Coterra Energy, and Assured Partners. Supported by private and public funding, including a $1.5 million Redevelopment Assistance Capital Program grant, the project also contributed to key infrastructure improvements.

CONNECT WITH US

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Spring 2025 | DEVELOPING PITTSBURGH

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The real estate development life cycle.

CEC congratulates our partners on two award-winning projects: Burns Scalo: Diamond Ridge is the Best New Speculative Office Building Somera Road: The Park at South Side Works Apartments is the Best New Multi-Family Residential Building

At CEC, we thrive on dynamic collaboration, celebrate bold creativity, and champion unstoppable growth. Here, your contributions and collaboration aren’t just recognized — they’re celebrated. As employee-owners of the firm, we are all personally accountable for building lasting relationships and delivering outstanding results.

Learn more about our Real Estate services:

Air Quality | Civil Engineering | Cultural Resources | Ecological Sciences | Environmental Engineering and Sciences | Manufacturing Infrastructure Services | Survey/Geospatial | Waste Management | Water Resources

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NAIOP PITTSBURGH AWARDS BEST NEW MULTIFAMILY BUILDING The Park at SouthSide Works Apartments Pittsburgh, Allegheny County Developer: SomeraRoad Architect: Desmone Architects Contractor: Rycon Construction Inc. Lenders: Related Fund Management, Bank OZK The Park at SouthSide Works is a vibrant waterfront community nestled along the Three Rivers Heritage Trail and within Pittsburgh’s premier live, work, play, stay destination – SouthSide Works. Located on the site of a former steel mill, The Park brings new life into the iconic neighborhood and redefines the area’s relationship with the river. The 247-unit new development residential project from SomeraRoad offers one- and two-bedroom apartments and two-story townhomes boasting an array of upscale amenities. The community’s sleek design draws inspiration from its riverside location, as spaces indoors and out reflect nature’s palette, energy and warm welcome. Amenities include high-end finishes, waterfront and downtown views, building lounge with shuffleboard, billiards, kitchen, and hosting venues, pool with river views, courtyard with grilling areas, fitness center with yoga space, a remote workspace and podcast room, bike and resident storage, an on-site dog wash, and much more. The project has seen great leasing traction, attracting residents looking for urban, walkable living within a peaceful and natural location.

DESIGNED TO THRIVE Great design is inspired by vision. We design buildings and spaces that allow people to thrive – physically, emotionally, and spiritually. Our unique service journey is rooted in effective delivery strategies and informed by principles of health and wellness. We believe that healthy spaces lead to healthy people, and healthy people lead to a healthy world.

At Desmone, we design buildings and spaces that allow people to thrive – physically, emotionally, and spiritually.

Our unique service journey is rooted in effective delivery strategies and informed by principles of health and wellness. We believe that healthy spaces lead to healthy people, and healthy people lead to a healthy world.

Pittsburgh, PA | Morgantown, WV | Cleveland, OH

desmone.com Spring 2025 | DEVELOPING PITTSBURGH

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Oakland Market Update

Pittsburgh’s “Innovation Corridor” was articulated by former CMU president Subra Suresh a decade ago.

It envisioned a connected economic engine linking CMU (foreground), Pitt, and Downtown (upper left).

Photo by Roy Engelbrecht Photography.

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www.naioppittsburgh.com

Oakland is the economic heartbeat of the Pittsburgh region. It would not be a stretch to call it the economic heartbeat of Pennsylvania. Oakland is acknowledged to be the third largest business district in the commonwealth. So, it is reasonable to look at the current conditions in Oakland with concern.

Spring 2025 | DEVELOPING PITTSBURGH

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PITTSBURGH, PA | CHARLESTON, WV | HARRISBURG, PA | STATE COLLEGE, PA | WASHINGTON, DC

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Expansion at Carnegie Mellon University’s campus only went beyond the original Carnegie Tech boundaries within the last decade, although its economic impact has driven development throughout the region. Photo by Roy Engelbrecht Photography.

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rbitrary cuts in federal research grants are sending a chill through the research universities and the University of Pittsburgh Medical Center (UPMC) at a time when these economic drivers were already pulling back from expansion due to other cyclical concerns.

Local government has survived on the fruits of the growth of jobs in technology, education, and healthcare that can be traced to Oakland’s institutions, but has been less than helpful in fostering more opportunities. Instead, the Gainey administration has been targeting not-forprofit institutions, like those in Oakland, to drain more revenue at a difficult time.

To look at the economic fundamentals of Oakland – its employment and real estate data – it is hard to see problems, let alone a crisis. While it is true that the supply and demand fundamentals of the neighborhood are enviable, the trends point to more difficult conditions. The good news is that many of the problems facing Oakland are not insurmountable.

The institutions that rely on federal funding will adjust to new realities

if necessary, and that will dull the economic impact for a time; however, the fruits of the work done in Oakland will continue to be in higher demand across the globe. That bodes well for the 2030s and beyond.

In the meantime, the ingredients for Oakland’s continued thriving are mostly in place. The vision of an innovation corridor stretching from Carnegie Mellon University through the University of Pittsburgh to the heart of the region’s business center is as valid as it was a decade ago.

Oakland’s Economics As go education and healthcare, so go Oakland (and Pittsburgh). Through the end of February, the Bureau of Labor Statistics reported that education and healthcare jobs made up 22 percent of Pittsburgh’s total employment, totaling 271,600 jobs. While not all education and healthcare jobs are in Oakland, most jobs in that neighborhood are in those two sectors. Education and healthcare employment grew by 3.2 percent in 2024

and employed 8,000 more workers in February 2025 than a year earlier.

The improvement in employment is a welcome shift from what has generally been bad news about education and healthcare industry trends. Both industries face challenges that linger from the pandemic, as well as long-term structural challenges that can be traced to demographics. Now, each faces additional challenges stemming from changes in federal policies.

Higher education has been barreling towards a demographic cliff for more than a decade. Lower birth rates have led to fewer college students. Social pressures that favor college attendance have waned, at least somewhat, suggesting that fewer graduating high school students will choose to attend college. Moreover, after decades of riding aggressive tuition hikes, universities are now faced with much larger staff and overhead costs than 20 or 30 years ago.

In Oakland, the negative structural trends have been less pronounced. One of the

Spring 2025 | DEVELOPING PITTSBURGH

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emerging counter trends of this era of declining enrollment is that universities among the top 50 or 100 in the U.S. have struggled less or even thrived. Oakland is home to two of those universities – Pitt and CMU – perceived to be among the nation’s best.

At Pitt, enrollment in 2023 exceeded the previous year by 1.7 percent at the Oakland campus. In June 2024, Chancellor Joan Gable announced that the university’s strategic plan calls for increasing enrollment by more than 11 percent, or 3,200 students, by 2028. That news preceded an increase in applications for 2025 to more than 60,000. With an acceptance rate just under 50 percent, the increased enrollment is achievable without a significant change in standards.

Carnegie Mellon bucks most of the trends that are driving higher education today. At roughly 16,000 students, CMU’s enrollment in Oakland is roughly half that of Pitt’s. With an acceptance rate of less than 15 percent, CMU’s enrollment ebbs and flows slightly depending upon the makeup of that year’s applicants. Between

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2021 and 2022, for example, applications rose by 4.15 percent while admissions fell by 13 percent because the acceptance rate tightened to 11.3 percent. CMU has been able to maintain price increases, with the 2024-2025 published tuition, room and board costs topping $80,000.

Almost 94 percent of CMU’s students are full-time students.

Pittsburgh’s Medical School is located in the midst of these institutions as well.

Oakland’s third university, Carlow University, does not have the advantages of its neighbors, but has worked hard to reverse its long-term enrollment decline with some success. After losing 17 percent of its enrollment from 2011 to 2021, Carlow saw enrollment grow by 5.7 percent in 2022 and nine percent in 2023.

A mix of related and unrelated issues have plagued healthcare operations since the late 2010s. Like most industries, healthcare has a demographic problem.

An aging patient population requires more healthcare services while an aging physician and nursing provider population shrinks with retirements that are growing faster than new providers are joining the ranks. This imbalance is driving salaries for doctors and nurses higher at a faster rate than the overall wage growth rate. It has also pushed recruitment costs much higher, as turnover in larger healthcare systems is virtually continuous.

The other dominant force in Oakland’s economic impact is healthcare.

Oakland is home to most of UPMC’s major hospital facilities, including its billion-dollar new Heart and Transplant Hospital at UPMC Presbyterian. Within a few blocks of Presbyterian Hospital are UPMC Montefiore, Western Psychiatric Hospital, Eye and Ear Hospital, and UPMC Magee Women’s Hospital. University of

Higher salaries are one of many areas that have become more expensive for hospitals. The pandemic-era supply chain disruptions led to shortages and price spikes. The inflation cycle of 2021-2023 affected healthcare products more severely than goods inflation overall.

Construction and maintenance costs for healthcare facilities also rose sharply during that period, likely ending 40

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Oakland’s office vacancy is among the region’s lowest and its rents are among the region’s highest. Source: CoStar, Cushman & Wakefield.

percent higher than the costs in 2019.

Hospitals also require more frequent investments in new technologies and upgrades of existing technology.

This rising tide of operating and capital costs is occurring at the same time that revenue streams for hospitals are becoming less reliable. Reimbursements from Medicare, Medicaid, and private insurance have declined from pandemic highs. Federal and state policies are threatening to reduce those reimbursements further. Insurance premiums and deductibles have also increased at higher rates during the past two years, which pushes more patients into uninsured status and more hospitals delivering uncompensated care.

Taken together, the trends of higher costs and lower, less reliable revenues

have dampened healthcare capital spending since 2022, including spending on additional commercial space for rent. In Oakland, however, neither of the business cycle problems will be as impactful as the decline or loss of federal funding for research.

The federal government’s backlash against diversity, equity, and inclusion programs looms as a threat to funding for numerous student-focused programs at universities. Pitt, CMU, and Carlow each have programs that give opportunities to segments of the population that have been underserved or historically victims of discrimination. Those programs, and the federal funding that helped support them, are under attack for being discriminatory.

While none of Oakland’s universities seem to be under the Trump administration’s microscope for their response to

anti-Israel demonstrations, Pitt and CMU are vulnerable to policies that are targeting foreign-born students.

The biggest economic threat associated with the new administration’s change in focus for higher education is its radical cutback on research funding.

For Pitt, the threatened cuts in NIH grants would amount to $185 million annually.

The NIH cuts would eliminate $8.5 million from CMU; however, CMU received $214 million from the Department of Defense, $61 million from the National Science Foundation, and $40 million from the Department of Health and Human Services in the current fiscal year.

At a minimum, the loss of funding has effectively frozen capital spending plans for the universities and UPMC. In some

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ways, the timing of the administration’s cuts could have been worse. Both Pitt and CMU were at a point of pausing after years of major construction projects. UPMC’s capital spending has become more diffused as it expands beyond Western PA, and its attention has been primarily on the completion of its billion-dollar Heart and Transplant Hospital, which will replace the Presbyterian University Hospital bed tower. There was going to be a slowdown in construction in Oakland for the next couple of years; however, the funding cuts, especially those that are affecting some of the most innovative research being conducted, bring paralyzing uncertainty.

The three major institutions anchoring Oakland’s economy have typically been transparent neighbors when discussing their plans. Today, the best that any of them can articulate is that all capital spending is being evaluated.

Market Fundamentals Oakland’s real estate is primarily an owner-occupied, institutional building market. To the extent that there is commercial space for rent, Oakland is an office and multifamily market. The ground floor spaces of most commercial streets in Oakland are filled with retail and hospitality tenants, but upper floors make up 3.5 million square feet of office space.

The fundamentals of the office market in Oakland are among the strongest in the region. At the end of the first quarter, office vacancy was lower than most submarkets, ranging from 6.8 per cent to 8.5 percent, depending on which data you were reading. The strong occupancy level comes following a year in which Oakland office buildings saw negative absorption of roughly 16,000 square feet.

Demand for purely office space is solid in Oakland, but not spectacular. Despite its low vacancy rate, which has been relatively consistent for many years, there has been little addition to supply in recent decades. The most recent was the 95,000 square foot Murdoch Building at 3420 Forbes developed by Murland Associates. Elmhurst Group’s Schenley Place added 105,000 square feet in 2014. Elmhurst also developed a 106,000 square foot office at Fifth and Craig, home to Rand Corporation, in 2006. Prior to Fifth and Craig, Sterling Land Company built its 90,000 square foot Sterling Plaza in 1991. Sterling Land Company has proposed the companion Two Sterling Plaza several times, including as recently as 2017, without starting construction.

Oakland has not been immune to the dynamics that are challenging the office market everywhere. Even before the grant funding cuts were made, the Oakland institutions were reducing their real estate footprint.

“We have had some vacancy in the past year, although not much,” says Blake Stanton, co-president of Sterling Land Company. “If we’re talking about traditional commercial office space, there has been a flight to Class A. There has also been a general rightsizing among tenants.”

“Tenants are not changing their staffing, but workers are parttime in the office and they’re able to share offices, hoteling,

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depending upon the day of the week” agrees Sterling Land’s co-president, Amy Adams.

Brad Totten, principal and managing director for the Pittsburgh office of Avison Young, says that he has observed that several blocks of available space have been from the Oakland institutions choosing to vacate.

“It was in the news recently that UPMC decided not to renew a 21,000 square foot lease at 450 Melwood. The lease expired in January, and it was clearly on the chopping block. That’s one lease of many,” he says. “The funding cutback is a hot subject relative to future budgets and future rent commitments. I wouldn’t say any requirements have been pulled but there is a wariness. The playing field has shifted and, if it continues, there will be some longer-term adjustments from a lease commitment standpoint.”

“Where there is a neighborhood with a finite amount of space, properties are generally going to perform well, especially when you have institutions so heavily invested and committed to long-term plans of expansion,” says Michael Connor, vice president and market leader for Hanna Commercial Real Estate. “But without that funding they’re used to getting, I think it’s pencils down until there’s a sense of what the funding will be.”

The other major commercial real estate property type in Oakland is multi-family, driven primarily by demand from students. According to the 2024 Comprehensive Housing Analysis for Pittsburgh done by the U.S. Department of Housing and Urban Development, 70 percent of the student population in Oakland lives in housing that is not owned by the universities.

Pitt has added four new residence halls over the past 20 years but still cannot provide sufficient housing for its undergraduate population. During the same period, private developers have added even more beds to the inventory in Oakland. Pitt’s 2019 master plan called for the addition of 2,400 beds on campus, but that is not expected to provide adequate housing for its graduate student and upper-class undergraduate students who wish to live off campus. Currently, the most viable private developments in the pipeline are student residences.

It is the size of the student rental market that is the root of the unusual characteristics of the Oakland housing market. Demand so far outstripped supply for so long that the opportunity for single-family homeowners to convert properties into rental units was too good

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to pass up. The result is a neighborhood that has pockets that are undesirable for single-family living, even as the value of the homes there soars. In South and Central Oakland in particular, the conditions are a kind of reverse gentrification.

is intended to be a guiding document to which all stakeholders in Oakland contribute. Boykowycz explains that creating housing options across all income depends upon solving the student housing dilemma.

“Our goal is to upgrade the housing inventory in Oakland to free up the redevelopment of homes that had been converted for student housing. Those can be renovated and made more appropriate for people that are living and working in Oakland,” says Todd Reidbord, president of Walnut Capital, which is developing The Caroline, a 160-unit student apartment on McKee Street.

“A lot of the problems the permanent residents of Oakland face are because there are not enough legal beds for the student demand,” she says.

“We want to reduce some of the rental pressure on the lower density areas of Oakland. By advocating for and supporting appropriate high density student rental development in the places that the Oakland plan, for instance, prioritizes, we’ll be making space in Oakland for everyone,” says Andrea Boykowycz, executive director of Oakland Planning and Development Corporation (OPDC). “That works very well in the context of the inclusionary zoning overlay that Oakland is in.”

The Oakland Plan is a 10-year plan for the neighborhood that is adopted by the Pittsburgh Planning Commission. It

“You can create neighborhoods that are appropriate for people that are working, whether it’s in the hospitals or elsewhere in Oakland. Right now, if you live there, you have students surrounding you,” continues Reidbord. “There’s nothing wrong with students, but those may not be the kind of neighborhoods that we think of as appropriate for people that are working in the hospitals and universities and want to raise a family. I think we want those family neighborhoods in Oakland.”

Developers also believe there is unmet demand for market rate apartments in Oakland. Since the zoning changes were made in 2022 to accommodate the Oakland Crossings development, numerous sites below Forbes Avenue have been reported to be under consideration for new multi-family projects.

Radnor Property Group has been rumored to be interested in developing the Quality Inn site at 3401 Forbes Avenue. Radnor completed McGinley Hall, a student residence building serving Duquesne University at 1045 Forbes Avenue, in summer 2024. Asked about what is appealing about Oakland as a location for a new investment, Tim Gigliotti, managing director/partner, pointed to the shortage of housing of all types.

“It’s a dynamic market with the strong education and healthcare base that is there.

Not only is the undergraduate population strong, the graduate student market, as well as the young professional market, which includes researchers and resident doctors, is a very deep base of young people that seems to be underserved in the neighborhood,” Gigliotti says. “It is traditionally known as an undergraduate housing neighborhood. Once you move up to the professional class, you have to move out of the neighborhood to have your housing needs met.”

For the coming 24 to 36 months, development in Oakland will be mostly focused on the opportunities to close the gap on student housing and the goal of returning the neighborhoods south of Forbes Avenue to single-family ownership

The Murdoch Building, developed

by Murland Associates before the pandemic and occupied by Pitt, was the last new speculative office building in Oakland. Photo courtesy Mascaro Construction LP.

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A key element in Pitt’s 2019 master plan, to be updated over the next year, is the private development of mid-rise commercial buildings at the western end of Fifth and Forbes. Rendering from University of Pittsburgh, Envisioning the Future.

and appropriate multi-family housing.

The Development Environment While the issue of adequate affordable housing is top of mind among Oakland’s stakeholders, there seems to be less concern about the inclusionary zoning than in other neighborhoods. That is most likely because the tight supply allows for rents that make it economically feasible to set aside 10 percent of the units for affordable housing. Those dynamics will be tested if a burst of supply enters the market over the balance of the decade.

The first neighborhood to potentially feel the impact of the new supply will be North Oakland. This year the 148-unit Julian Apartments at 419 Melwood Avenue will hit the market. Julian’s owner/developer, the

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Hudson Companies, has plans to develop 166 units in a 12-story apartment called The Parker at 435 Melwood and convert an office building at 450 Melwood to 48 apartments. The 352 new apartments will be the first in North Oakland since the Metropolitan was built in 2006. North Oakland is home to many of the older multi-family buildings that have served as housing for permanent residents, and for students. Blake Stanton feels the new supply will offer variety without diminishing the prospects for the older buildings that Sterling Land and others operate.

“When I look at the newer product being built, the price point is going to attract different tenants than we have in ours.

Ours are a little more price conscious,” Stanton says. “We certainly reacted to the realities of the market by upgrading our

common spaces, but our price point and value per square foot is stronger. We’ll see what the appetite for a brand-new product is like in North Oakland. We’re in the thick of it right now so we’ll see how the new product shakes out through year end.”

Stanton is describing a market reaction commonly called filtering. In a market with tight supply, new apartments attract tenants who can afford higher rents, allowing those who cannot to find lower-priced apartments as renters “filter” up to newer product. Filtering is an approach to affordable housing that is supported by opponents of inclusionary zoning, who argue that more inventory ultimately frees up more units at the lower end of the market, forcing landlords to be more competitive. The theory is supported by data from markets where

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“The new development here is primarily Class A rental. That doesn’t leave room for the kind of affordability that Oakland needs. We’d like to see new development benefit a larger swath of the population,” Boykowycz notes.

The 2022 zoning changes that were adopted to allow higher density in the traditional low-density neighborhoods south of Forbes Avenue should facilitate more high-quality multi-family, both for students and permanent residents.

Developers have responded to the opportunity with new projects in the pipeline. In addition to The Caroline and the former Quality Inn site, for which Pitt is expected to approve a new development agreement this spring, Trinitas Ventures has proposed a 326-unit apartment on Halket Street.

There are reports of early-stage activity by developers of multi-family projects on Meyran Avenue and Fifth Avenue, west of Carlow University. And Elmhurst’s Bill Hunt reports that plans are being developed to expand Webster Hall.

new construction has boomed since the pandemic. According to the Zumper National Rent Report, the cities that saw the biggest declines in rent over the past 24 months were the Sun Belt cities that delivered the most new units. For example, San Antonio saw rents drop three percent as 10,000 units delivered in 2024. Rents for one-bedroom units in Austin were 10 percent lower in February 2024 than a year earlier. Raleigh-Durham rents fell 7.6 percent for a one-bedroom apartment. Not coincidentally, deliveries of new apartments in Pittsburgh slowed in 2024 following a steep decline in construction in 2022-2023, while multifamily construction boomed nationwide.

Proponents of inclusionary zoning, like Boykowycz, prefer to see new construction include units that are affordable, rather than trusting the market to filter renters to their individual levels of affordability.

The hope is that the higher density allowed, along with the opportunity to achieve more density through energy conservation or environmental measures, will create enough vacancy in South and Central Oakland to incentivize the conversion of rentals to single-family homes. The economics of this aspiration are not simple, however, as the rental income of the homes has pushed prices well beyond the value per square foot for a single-family home.

“It’s a complex issue that does not lend itself to simplification. It has been a while since Oakland has had both the zoning and development interests to support the construction of high-density rental housing that’s geared towards student needs,” Boykowycz says.

“The universities have increased their undergraduate enrollment, but without a corresponding increase in the supply of student beds, either on campus or off, the pressure from student rentals has driven displacement and a strange kind of gentrification in Oakland.”

Under its past leadership, OPDC was skeptical of higher density development south of Forbes. To the development community, OPDC’s Oakland Plan and the Pittsburgh Planning Commission

were at odds with many of the specifics of the innovation corridor vision. The well-organized opposition to projects often included the property owners of the singlefamily-turned rentals that benefitted from the status quo. It remains to be seen whether new leadership and direction will be more accommodating to new development.

New commercial development, which would support more university-related research and, ideally, the growing companies that result from technology transfer, is likely at a standstill until there is clarity about funding. But, even without that recent uncertainty, technology-driven commercial development has been slowed.

Pitt’s Fifth and Halket project, which the university developed after purchasing the fully-prepared project from Walnut Capital, is a 306,000 square foot office and lab that was to be home to several Pitt departments. The construction is being done on the fit-out for those spaces but occupancy is uncertain since the funding cuts. Should Pitt not occupy the building, the market would have a difficult time absorbing the space. Such a turn of events would also make it more difficult for Wexford Science + Technology’s to build its 10-story office/research tower at 3440 Forbes Avenue, which has battled through entitlement and neighborhood challenges since 2019. That project is awaiting a lead tenant.

“Our technology growth is not where it could be. We’re not seeing a lot of high-end demand for 20,000 square feet of office or dry lab space near the universities. I’d love to see three or four new buildings going up along Forbes or Fifth Avenue, but we don’t have that yet,” says Hunt. “To grow as a region, we need a tech corridor, and I think it needs to be in Oakland. You want to have adjunct professors who work in technology or graduate students being able to walk across the street from business to university, like in Cambridge or Atlanta.

That requires an ecosystem that I don’t quite see yet in Oakland.”

Sean Luther is president and CEO of InnovatePGH, a public-private partnership aimed at accelerating Pittsburgh’s status as a technology center. He sees the most robust economic growth coming from artificial intelligence and the life science/ healthcare collaborations between Pitt

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and CMU. Luther says that there are some practical reasons why the region’s best innovations are not yet driving real estate demand.

“Anything that Pitt and CMU are working on together is a unique value proposition for Pittsburgh and will become important for the development strategy for growth in Oakland,” Luther says. “I think we’re starting to see things getting to scale already, but it is quiet. A lot of the technologies Pittsburgh is really good at are really hard.

With digital health you’re talking about considerable government oversight, patient safety, and data safety. When you talk about medical devices, you’re talking about significant FDA approval and other layers of federal regulation.”

Collaboration between the two universities is also on Hunt’s mind. Elmhurst’s Fifth and Craig location is home to Rand Corporation, which cited its location directly between Pitt and CMU as an attraction to the Oakland building. During the administrations of Jared Cohon at CMU and Mark Nordenberg at Pitt, the two institutions collaborated to form several key technology-focused initiatives, including the Pittsburgh Digital Greenhouse and the Pittsburgh Life Science Greenhouse.

Collaboration continues between the schools but the current challenges facing

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universities would seem to be a strong incentive for more.

“Chancellor Gabel at Pitt is pushing for a strategic plan between the universities but that’s going to be another two years. I hope the two universities begin to work together more and maybe the physical space should be part of that,” Hunt suggests.

For now, collaboration might mean less real estate leased in the aggregate, which would exaggerate the recent trend. Luther notes that the shift in the absorption strategies of the universities and UPMC offers more opportunities for private companies to locate in Oakland at rents that are competitive to the neighborhoods, like the Strip District, where tech companies have leased after growing. Up until now, Oakland has been home to the startups, which demand less space.

“The companies in Oakland are almost exclusively smaller than a 10-person head count. They are in the early stages of commercialization and just getting ramped up,” says Luther. “That reinforces that Oakland’s core job as an economic driver for the region is to be the engine.

It’s difficult also for it to be the drivetrain and wheels and other parts of the vehicle. Most of the companies that need proximity back to the university are younger and therefore smaller.”

The kind of growth that will spark the kind of innovation corridor that former CMU President Subra Suresh called for in 2015 will take more than collaboration and commercialization. There are barriers to growth that go beyond those that might be inherent to Oakland or the City of Pittsburgh. The corner of Fifth and Craig is located in Pennsylvania, which has room to improve its competitiveness for technology companies, according to Stefani Pashman, CEO of the Allegheny Conference on Community Development.

“Significant elements of our plan are built around fostering a better business environment. A lot of that is centered around the innovation economy, which is anchored in Oakland,” Pashman explains. “A couple of specific policies that we think will help Oakland are streamlining permitting and regulatory processes to reduce hurdles for startups and life sciences companies. How do we make sure high growth sectors can support talent attraction and investment with reduced regulation? The PA SITES program is critical for life sciences. That program is live, and we’ll see the first round of applications soon.

“There are other things that we are advocating for in Governor Shapiro’s budget. One is establishing a Statewide

Photo by University of Pittsburgh.

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Innovation Fund, which would directly benefit Oakland. This fund would directly invest in early-stage companies to help foster an ecosystem for the research institutions and startups. We are also advocating for having the state match federal Small Business Innovation Research and Small Business Technology Transfer grants. All other states in the country provide matches for these and Pennsylvania does not. This is a loud cry we hear from the universities and companies coming out of Oakland. It’s the kind of investment that helps drive advancements and growth.”

locations, Strip District or Hazelwood Green, where technology transfer investments have been made.

Oakland, and the region overall, would also greatly benefit from state investment in infrastructure to improve important connections to and within the neighborhood. Improvements are needed on Craig Street and the Forbes Avenue bridge to make it safer for pedestrians moving from CMU to the Craig Street shopping district. Oakland is getting a major investment with the Bus Rapid Transit System (BRT), but that improvement only highlights the poor connection that exists between the universities and the other

“The one main difference between Midtown and Oakland is Oakland is an authentic and real neighborhood. That asset is nearly impossible to replicate,” Hunt says.

Elmhurst’s Hunt suggests that a single Oakland advocacy entity that represented all the neighborhood’s stakeholders, including the city, could better coordinate for development. He also advocates for development of commercial area like Midtown Atlanta, which markets corporations to locate in proximity to Georgia Tech and promotes opportunities for students, like internships, that serve to anchor the companies in Atlanta.

The next few years are likely to see less commercial development in Oakland, as the major economic drivers respond to uncertainty. Even without the challenges that Pitt, CMU, and UPMC face, the development environment faces its own challenges of higher interest rates and construction costs. These could be ideal years for state and local governments

to invest in future growth and to set the agenda for private development to more easily respond to that growth. Assuming that life science and information technology return as economic drivers in Pennsylvania, developers would be prepared to invest in Oakland and remake its residential and commercial corridors.

The City of Pittsburgh would do well to prepare to meet that kind of investment potential with certain and rapid processes for entitlement and permitting.

“The idea that Oakland is built out is far from reality,” says Luther. “We still have single-story bank branches directly across the street from $900 million hospital expansions. We have single-level fast food restaurants staring down major investments that CMU and Pitt are making. We recognize that it is a greater challenge to put these projects together because of site assembly and costs, but we are committed to the idea that the return on that is the highest that you can achieve in the region. We’re excited to be working with developers who can see that vision and are aware of where the economic center of Western Pennsylvania has moved.” DP

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Development Profile

The Caroline at University Commons Rendering by Strada Architecture LLC.

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ime kills all deals in commercial real estate. Commercial developments, especially ambitious ones, take time to come to fruition and much can happen on the way to fruition. For Walnut Capital and its Oakland Crossings development, time – plus some local politics and a global pandemic – did not kill the deal, but time certainly transformed it.

The Caroline at University Commons, a 12-story, 488-bed student residence being developed by Walnut Capital on McKee Street in Oakland, is the first building in what the developer hopes will be a transformative project for the community. The Caroline was initially proposed in 2021 as part of the Oakland Crossings. Oakland Crossings aimed to

create 1,000 new student and workforce housing units to spark the revitalization of the South Oakland single-family housing stock. Along with new retail, grocery, and miscellaneous commercial users, Oakland Crossings was intended to fill 18 acres with the kind of development that has transformed neighborhoods surrounding thriving universities in other cities across the U.S. City of Pittsburgh and neighborhood politics slowed the development, and the effects of a global pandemic altered the execution.

Todd Reidbord, president and co-founder of Walnut Capital, says that the larger purpose for the new development has not changed, even if the scope of Oakland Crossings has been revised.

“We had spent a fair amount of time, even pre-COVID, thinking about transforming Oakland and how Oakland Crossing could impact the ecosystem around the University of Pittsburgh and Carnegie Mellon,” he says. “There are a lot of other cities with great universities that have even more of a mixed demographic living around those universities, cities like Philadelphia, Boston, St. Louis, or wherever there are great universities in urban settings.

You see living and shopping and working not 100 percent geared toward students but towards working people that want to live in an urban environment. Those places attract people from all over the world that are comfortable in that environment. We thought that was something that could benefit Oakland.”

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“We’re of the opinion that Oakland has evolved the way it has because of the lack of appropriate housing for students.

Most of that was due to zoning and other restrictions. There were people that had generational homes that were converted to student apartments because that was the best way to make money.

People moved out to the suburbs but kept the family house as an apartment for students. That wasn’t the best for the neighborhood, but it evolved that way because of a lack of planning,” Reidbord continues. “We tried to spearhead changing the zoning in Oakland. It took two years. It wasn’t supported by everybody, but we were able to convince City Council and others that the appropriate way to move Oakland forward was to change the zoning.”

After the pandemic eased in 2021, Walnut Capital began the process of neighborhood meetings, design, and entitlement for what it proposed.

Getting The Caroline to the point of

construction required overcoming two major challenges: reaching an agreement with the City of Pittsburgh and Oakland neighbors; and making the project economically feasible at a time when construction costs were rising rapidly and borrowing costs were two points higher.

Walnut Capital proposed changes to Pittsburgh’s zoning for Central and South Oakland to create higher density and commercial uses. At the city, the proposed changes were submitted as a bill by then-mayor Bill Peduto in September 2021, Councilman Bobby Wilson then introduced the bill (20211096) to City Council four days later. The new bill did not go through Pittsburgh’s Department of City Planning. It was also not a product of the Oakland Plan, a longterm evolving master plan coordinated

by Oakland Planning and Development Corporation (OPDC), the neighborhood’s advocate organization.

Opposition to the zoning changes formed quickly. OPDC objected to some of the

substance of the bill and to the lack of due process. Mayor Peduto perhaps hoped to leave the revised zoning as part of his administration’s legacy in its final days, but the political realities would not allow that. Initial council hearings attracted significant opposition.

Oakland Councilman Bruce Kraus worked with Walnut Capital to revise the proposed zoning, which were referred to Planning Commission just before the mayoral election. More public hearings were scheduled for January 2022, but incoming Mayor Ed Gainey requested two extensions, which pushed the hearing to early March.

Over the next few months, Council Bill 2021-1096 was reviewed by committees and publicly debated. On June 28, 2022, City Council passed the bill, which expanded the uses, increased the density and building sizes permitted in the Oakland Subdistrict.

“We’re not happy about everything in the zoning envelope - I think it should include

Rendering by Strada Architecture LLC.

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more incentives for new construction but we can work with it,” says Reidbord.

“Since we owned this property for many years, we were able to make this project work. Then, of course, the other challenge was the higher cost of construction. We were fortunate to have good partners in PJ Dick, Strada, and others to make it work, but it has taken a fair amount of time to get the subcontractors on board and within budget.”

way to build the building. We turned over every stone to figure out a way to help with the budget,” recalls Tom Price, principal at Strada Architecture.

“That’s what we would do on every job but here we really worked hand in hand with the engineering team and PJ Dick’s construction team. It’s also a high quality 11-story building that’s going to be here for a long time. We made sure not to sacrifice material durability.”

Getting the project under budget required an unusually high level of collaboration between the general contractor, architect, developer, and specialty contractors. Virtually every design decision was scrutinized in a way that many architects might find intolerable. Strada and PJ Dick have worked together on numerous Walnut Capital projects and have developed a mutual professional respect that allows for a high level of communication.

“Early in the design process, we budgeted the job several times, and it was always over the owner’s budget. Through the pre-construction process we did an analysis by trade, by system, of what was over budget,” explains Frank Babik, vice president for PJ Dick. “We reviewed three or four structural options, working with Strada and Atlantic Engineering to come up with the most cost-efficient system that had the least variation in this crazy market. We looked at several foundation systems and landed on a design-assist ground improvement plan rather than

“We worked hard as a team early on to identify the most efficient, effective

more conventional foundations. When that package bid, it came in under budget. We also exhaustively looked at the exterior wall details with our quality control department, in collaboration with Strada, to make sure every detail was accurate before it went out to bid.”

The team settled on a girder slab system that saves significantly on structural steel and is erected more quickly. Babik notes that the structural packages were bid early, while design on the interiors was being completed. That acceleration locked pricing in early and trimmed several months from the schedule.

“We also worked hard as a team to get the layout efficient. Apartment kitchens and bathrooms are back-to-back so that we can combine plumbing stacks and the electrical feed, for example. Before the project was even designed, PJ Dick and Walnut Capital went out to the mechanical and electrical suppliers and negotiated commodity pricing for the fixtures so that when the project went out

Rendering by Strada Architecture LLC.

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to bid, the subcontractors knew those prices,” continues Babik. “When we hit the market, the pricing came in under budget. We think that’s the benefit of a well-planned, well-thought-out design.”

“The other big thing was being able to use performance points built into the city’s zoning for this district to maximize the building height. We needed that volume that many apartments to make the pro forma work,” says Price. “We’re doing zero energy and rainwater performance points.

That’s great for the environment, but it also works for the application. Sometimes those things can be a hurdle but, in this case, they were helpful. If we hadn’t had that volume, we might not have been able to make the project happen.”

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Price credits Allen & Shariff Engineering and Hampton Technical Associates for their work in doing the mechanical/electrical design and site engineering respectively.

Reidbord notes that, even with the hard work that brought the project under budget, the project might have stalled without the $6 million Redevelopment Assistance Capital Program grant.

“It took the design and construction team, Dollar Bank, PenTrust, and the ERECT Funds to bring The Caroline to fruition.

Everybody put their heads down and made it work,” Reidbord says.

As of spring 2025, the demolition of properties on the site has been completed and construction is getting underway.

Occupancy is scheduled for August 2027.

Walnut Capital is confident that The Caroline will be the first of numerous multifamily projects that will up the ante on student housing and change the character of the Oakland residential market.

“It has lots of amenities. It’s ADA accessible and is safe. It’s fully sprinklered, which you don’t see throughout South Oakland or even Central Oakland,” Reidbord says. “It will provide a place for students to live so that they’re not scattered in random homes or older apartment buildings throughout South Oakland. It’s a first step to make Oakland a community that’s appropriate for all demographics and income levels.”

Reidbord points to other neighborhoods in Pittsburgh that had much weaker

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Rendering by Strada Architecture LLC

Rendering by Strada Architecture LLC.

fundamentals than Oakland but are experiencing a residential resurgence because of the infusion of new high-quality multi-family housing nearby. He points to Friendship, Morningside, and Garfield as neighborhoods where homes have been converted back to single-family use.

“I think that’s great and what you could see in Oakland. There is an opportunity to build more apartment buildings that cater not just to students now that the zoning allows greater density. It’s a snowball effect,” he says. “We believe that there are opportunities to create additional development in Oakland without relying on the universities or UPMC to attract people. We believe in the strength of the Oakland market. It’s a long-term plan but we’re long-term holders.” DP

The Caroline at University Commons - Developed by Walnut Capital

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Developing Trend Are Corporate Back-to-Office Initiatives Driving Occupancy Higher?

by Ben Atwood

I

n late 2024, Amazon, Dell, and Starbucks all announced an enforced return to office (RTO) policy in the new year. Jamie Dimon, CEO of JP Morgan, added fuel to the fire when a leaked tirade against remote workers went viral. Then, shortly after assuming power, the Trump administration quickly implemented a full time return policy for federal employees.

This led many to suspect that 2025 would be the year Pittsburgh businesses put their pandemic policies permanently behind them. However, those yearning for an immediate return to 2019 will likely be disappointed with what the year brings.

That is because while there is ample evidence showing an uptick in office use, none of it yet suggests that employers are beginning to seriously enforce a full return.

In fact, the opposite may be the case. A 2025 report from Flex Index, a research firm centered around office attendance, shows that only 32 percent of U.S. companies required full time in person office for corporate employees, a 17 percent decline since 2023.

This is due in large part to serious resistance from employees who, in the current tight labor market, retain a good bit of leverage. And the data is quite clear what this cohort wants: flexibility.

A 2024 survey by Owl Labs asked employees how they would react if their employer enforced RTO policy. Over 40 percent of respondents said they would immediately begin searching for a new job. This is in line with a 2024 Bamboo HR survey which indicated that 50 percent of employees would look for a new job if they were forced to return for three days or more.

These are not idle threats. A 2024 academic study by researchers at the University of Chicago, University of Michigan, and the International Institute for Management Development found companies which implemented a strict RTO plan (particularly with more than three days back in office) could quickly expect 10 to 20 percent turnover. The study indicates that a disproportionate number of those who leave are high performers and critical thinkers, not

front-line workers. Replacing them can be difficult and time consuming, leading to losses in productivity and innovation.

That helps explain why many firms remain committed to the hybrid model, however, there is data and plentiful anecdotes showing a real drift away from full time remote. Flex Index also shows a notable uptick in the number of firms that moved to a “structured hybrid” schedule since 2023.

“It’s interesting to look at technology sector,” says Sam McGill, managing director at Cushman Wakefield. “It was the largest absorber of office space pre-2019 and arguably the most important industry to the office market. It was also once thought to be the industry that would work from home forever. That dynamic has shifted, with 43 percent of surveyed firms adopting flexible office policies.”

McGill believes the remote pendulum has finally begun to swing in the other direction, citing conversations with his own clients as well as an uptick in leasing activity. This spike can clearly be seen in CoStar data. The commercial real estate research firm, which closely monitors the office market at both a local and national level, reports that the fourth quarter of 2024 saw positive office absorption of 3.3 million square feet, the highest level since 2022.

CoStar’s local data indicates that Pittsburgh’s office recovery may have begun in 2024. Net absorption was close to 500,000 square feet in 2024, the first year with positive net absorption since the pandemic and one of the strongest years for that measurement in the past decade.

Additionally, the total number of square feet leased jumped by over one million square feet and the market has seen four straight years of increasing lease counts.

While there are still 4.6 million more square feet of available office space on the market now than there was in 2019, and total leasing volume is about 20 percent

The daily employee visits to downtown Pittsburgh continue to increase slightly, but the current level is 59.9 percent less than January 2020. Source: Pittsburgh Downtown Partnership, Placer:ai.

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lower than pre-pandemic averages, McGill says the strong absorption figures are not possible if firms planned on being fullremote into the future.

“A good rule of thumb is if you are in the office three days a week, firms need to allocate a seat for you, or you will have seating overlap. Businesses aren’t reducing their headcount; they are consolidating their space. Smaller offices, more utilitarian approaches to foster

collaboration,” McGill says. “These savings are translating into a 20-30 percent reduction in new space, which matches up with 2024 leasing data. If most firms were still doing remote or two days, the leasing data would still be falling off.”

McGill says the consolidation is coming from smaller offices and workstations with more focus on collaboration, and this is occurring now because many tenants who had to make decisions in the

chaotic years of 2020-22 are coming up on renewals.

That sentiment is shared by the tenant rep team at Colliers. Cody Sharik, a senior associate at the firm, noted that in the immediate aftermath of the pandemic, “Businesses who had leasing decisions to make during the pandemic signed shortterm deals kicking the can down the road a few years. These leases are now coming up and more businesses have committed game plans for making use of their office.”

A big part of that game plan is adapting the office for hybrid use while fostering an environment where employees want to return.

Architects who design office space also see evidence of increased daily occupancy and the durability of the three- or four-day hybrid model. Dan Delisio, principal at NEXT Architecture, says the feedback from clients who have invested in upgraded space and amenities when moving or renewing leases in place was that more employees were returning to the office, whether that was on a full-time or hybrid basis. Jeff Young, managing principal of Perkins Eastman’s Pittsburgh studio, concurs, adding that many clients were beginning to realize that the pressure to downsize was going to lead to offices that were too small to meet future needs.

“No one wants to return to the space they left in 2019,” says Kate Herrara, a senior vice president at Franklin, a Pittsburghbased design firm that specializes in workspace furniture and layout.

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Herrara says there have been numerous changes in what businesses are looking to get from their office space.

“One major change we’ve seen is a much stronger focus on spaces purpose-built for digital collaboration. With the rise of hybrid meetings, companies are rethinking how conference rooms, huddle spaces, and even individual enclaves function. It’s no longer just about putting a screen on the wall, it’s about creating rooms where people can truly see and be seen, hear and be heard. Some of the most valued office features today are hybrid collaboration spaces and singleperson enclaves for video meetings.”

Architects and workplace designers mentioned the increased focus on digital collaboration, noting an uptick in interest about once niche topics like acoustics.

“Working from home, you get accustomed to silence but, in the office, you get a lot more background noise. In recent years, there has definitely been an increase in attention to good acoustic design,” says Kate LaForest, a principal at Moss Architects.

More private rooms are being added for employees to make and receive Zoom calls for virtual meetings, and there is an increased emphasis on making the interior more hospitable.

“Placer.ai classifies individuals as employees if they are observed in the Central Business District (CBD) four or more days per week, and as visitors if they are present three days or fewer. This methodology helps avoid misclassifying long-weekend travelers or frequent short-term visitors as employees,” explains Cate Irvin, senior director of development at PDP.

most frequent in office days are Tuesday through Thursday.

But Flex Index’s survey shows the average number of days in office is 2.78, with the

“Things have clearly improved from where they were,” he says. “That said,

Brad Totten, principal and managing director for the Pittsburgh office of Avison Young says that the parking garage at PPG Place tells the story of the recovery graphically, with a display that gives a real-time count of available spaces.

Union Craftsmen

“Prior to the pandemic, companies didn’t care as much”, says Catherine Montague, founder of Montague Design.

“The old office was bland walls and old furniture. Companies must be more appealing now. The office must be an extension of home.”

All of this is being done to bring employees back, but is it working? There are indications that it is.

The Pittsburgh Downtown Partnership (PDP) tracks daytime and off hours traffic in and out of the city. Its data on daily employee visits are built on observations by Placer:ai, a location intelligence firm that uses cell phones to analyze office traffic.

In its tracking of daily employee visits at the end of February, there were an average of 41,260 employees in Downtown offices. That is just 58.8 percent of the 70,099 employees who occupied offices Downtown in January of 2020, a powerful indication that local employers are not pushing employees’ back full time.

Foot traffic levels have definitely picked up since the pandemic, but last year appeared to flatline. The monthly average was 57 percent in 2024, whereas it was 56 percent in 2023 and 42 percent in 2022.

But it is important to note that Placer. ai is likely under-counting the number of employees regularly commuting downtown, and thus where Pittsburgh’s office recovery stands.

Building the Region

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Mondays and Fridays are still in the mid-to-low 20 percent range of people in the office.

In the middle of the week, it’s probably 65 percent.”

Additional city data also lends credence to the three-day work week. The PDP also tracks garage and lot activity from the Public Parking Authority of Pittsburgh (PPAP). Its data indicates that parking garage activity across downtown has returned to about 75 percent of prepandemic levels, far higher than the foot traffic would suggest.

The PPAP also tracks and posts daily usage of downtown’s meters. While not a complete glimpse into return to work, it does provide real insight into parking activity in the heart of downtown during the work week. Its data corroborates Flex Index’s report, showing that the heaviest days of use are Tuesday to Thursday.

The number of companies with structured hybrid policies continues to rise, while those enforcing a full return decline. Source: Flex Index.

Additional insight can be gleaned from The Port Authority’s database, which collects and publishes monthly average use for its bus routes and the light rail. Though down about 40 percent when compared to the three-year average leading up to the pandemic, public transportation use has picked up on both the bus and light rail.

Monthly minutes from PPAP meetings also reveal that January 2025 parking garage revenues were $2.1 million, Aggregated parking meter transactions by workday shows highest levels of vehicle activity in middle of the up 1.2 percent from January work week. Source: Western Pennsylvania Regional Data Center. of 2024. The January 2025 meeting breaks down the are in fact returning to the office and likely parking court revenues, as more tickets revenue generated from 2024, doing so at a higher rate than in 2023. are likely to correspond with additional showing that year’s garage revenue was Though it seems unlikely this dynamic will at $2.3 million, up from $2 million in 2023, vehicles. Revenue generated in 2024 accelerate rapidly while employees retain for parking tickets was $9.9 million, but down from the base year of 2019, the level of leverage they currently enjoy, compared to $11 million in 2019. which was $2.9 million. should economic winds shift, employers These data all indicate that while flexible Another measurement of activity RTO mandates may be more effective. DP schedules remain entrenched, employees downtown can be seen in the form of

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EYE ON THE ECONOMY

A

t the end of the first quarter of 2025, both the local and national labor markets and economic indicators appeared stable enough, but that stability was undone by the afternoon of April 2, when sweeping tariffs were announced by Donald Trump. While the economy was already showing signs of typical late-stage business cycle slowing, the likelihood is greater that there will be atypical changes because of the new administration’s policy steps.

Reactions from the markets, trade partners and adversaries alike were decidedly negative; however, the inconsistent explanations given for the basis and calculation of the tariffs offer hope that they may be temporary and open to negotiation.

There are a few interesting points to keep in mind when assessing the economic impact of the tariffs. First, while the concerns about tariffs reigniting inflation are understandable, history shows that the impact is less likely to be inflationary and more likely to be recessionary. Much of the impact of the planned tariffs will

reach consumers on discretionary items, like autos, appliances, or construction.

While circumstances will dictate that some share of purchasing will occur, despite higher prices, many purchases will be deferred because of the higher cost. In periods of similar trade wars in the past, economic activity slowed. Consumers did not pay more; they chose to wait it out.

The earliest detectable impact of the tariffs appears to have been the 10 percent increase in imports during January, in anticipation of the tariffs that Donald Trump promised during the presidential campaign. Businesses helped drive the increase by building inventories. Wholesale inventories grew 0.8 percent, driven by a surge in industrial supplies inventories. The bump in imports will weigh on gross domestic product (GDP) growth in the first quarter, but the inventory build should provide an offset.

Consumers also backed off ahead of the change in administration, spending 0.5 percent less than in December on an inflation-adjusted basis.

The Trump administration initiative that could be more impactful is the attempt to reduce the size of the federal government through the so-called Department of Government Efficiency (DOGE). The majority of DOGE’s cuts have been reversed or are in litigation; however, the effort has resulted in voluntary reductions in staff in the tens of thousands. The immediate impact of DOGE’s downsizing, if it reaches its intended goal, could be the kind of shock to the labor market that would trigger larger-scale layoffs. U.S. employers cut 172,017 jobs in February, more than triple the number of layoffs in January.

The related reduction in real estate footprint for the General Services Administration (GSA) would also have an adverse impact on the markets that are heaviest in government leases. An effective DOGE downsizing will have a recessionary impact on regions that rely on government hiring and contracting, like northern Virginia and the District of Columbia.

Reducing the federal workforce need not be recessionary, however. During the Clinton administration, approximately 350,000 employees were eliminated between 1993 and 1998, a period when the U.S. economy roared. While the reduction in military spending and staffing received most of the headlines, every federal department except the Department of Justice ended the Clinton years with a reduced head count.

If the new administration and the Congress can thread the needle, downsizing without causing recession or higher interest rates, plans to cut taxes further will stimulate the economy.

The 2017 Tax Cuts and Jobs Act (TCJA) is slated for permanent extension, and Congress has promised further cuts across the tax bracket. After its passage in late 2017, TCJA pushed GDP to three percent in 2018. Economists expect further tax cuts will stimulate higher growth.

Through the first three months of the Trump administration, policy has been

The three-month moving average of new non-farm payroll growth fell to 153,000 per month in April. Source: Bureau of Labor Statistics, Federal Reserve Bank of St. Louis.

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less impactful than the uncertainty of its somewhat chaotic implementation.

By the fourth quarter of 2025, that uncertainty should have been resolved.

According to the January 2025 Job Openings and Labor Turnover Survey (JOLTS), job openings totaled 7.74 million—up from 7.5 in December 2024 and well below the three-year average of 9.41 million. However, this figure remains slightly above the six-month trailing average of 7.57 million, suggesting a modest rebalancing rather than a sharp decline in labor demand.

January’s job opening rate stood at 4.6 percent, matching the recent six-month average but down from a 5.7 percent three-year average. Hiring rates, separations, and quits also reflect this stabilization. The new hire rate remained steady at 3.4 percent, mirroring recent months, though under the three-year average of 3.8 percent. Total separations registered at 3.3 percent, and the quit rate came in at 2.1 percent, indicating that workers may be slightly less confident about job-hopping than they were in the recent past. The layoff rate held at 1 percent, unchanged from the longer-term average. Unemployment currently sits at 4.1 percent and the Fed forecasts it to end the year at 4.4 percent, an upward revision which they attribute to anticipated tariffs.

Payroll data from ADP and the Bureau of Labor Statistics (BLS) further underscore the steady pace of hiring. ADP reports 134.3 million Americans on payroll as of mid-January, marking a year-over-year increase of 1.8 million and an incremental gain over the prior three months. BLS figures show payroll employment increased by 151,000 in February—just below the 12-month average of 168,000.

Meanwhile, total U.S. employment reached 162.5 million, an increase of 197,000 from January.

Consumer confidence fell further than expected in March, reaching 57.9. That is down 22 percent since November 2024. Such a steep decline has generally preceded a recession. Consumer confidence in business conditions, which is a window to the consumer’s confidence in their job security, is weaker than any time since the 1970s.

Consumer spending is also weakening.

Spending increased by only 0.2 percent from February to March. Certain categories of discretionary spending are falling at alarming rates. Restaurant receipts fell by an annualized 8.5 percent during the first quarter. Grocery sales meanwhile jumped 6.2 percent during the same period. During economic slowdowns, consumers typically shift from dining out to eating at home.

Consumer credit data from the Federal Reserve’s FRED database shows that U.S. households have steadily rebuilt revolving debt since the pandemic, peaking in late 2024. A small dip at year’s end may point to either tighter lending conditions or more conservative borrowing.

Delinquency rates have risen to 3.2 percent, above pre-pandemic norms, and appear broadly based, signaling rising repayment stress.

Personal income rose by 0.8 percent and disposable income by 0.9 percent, though the personal savings rate, at 4.6 percent, remains marginally below

historical norms. Still, it is well above pandemic-era lows, reflecting household balance sheet improvement.

The durable goods report for February shows a 1.2 percent increase in shipments and a 0.9 percent increase in new orders compared to January. Year-to-date, shipments are up 1.3 percent from 2024 levels, with a 2.3 percent gain in total volume—an encouraging sign for industrial output.

Investment and monetary policy expectations reflect the current economic moderation. The Fed’s latest projections, cited in JPMorgan’s March 2025 economic outlook, revise GDP growth for the year down to 1.7 percent from an earlier estimate of 2.1 percent. At the same time, core inflation expectations have been revised upward to 2.8 percent for 2025, partly due to new U.S. tariffs and international trade retaliation. The Fed Funds rate now stands at 4.33 percent, about a full percentage point lower than at the start of 2024.

Meanwhile, the Consumer Price Index (CPI) decreased 0.1 percent month-overmonth in March for the first time in five years, shrinking to 2.4 percent annually.

Year-over-year, core prices have risen 2.8 percent, pointing to continued gradual disinflation but still elevated costs relative to pre-pandemic benchmarks. Without the economic disruption of the tariff policy decisions, this data would be

Unemployment in March ticked up to 4.2 percent, as 232,000 people joined the labor force, offsetting the 228,000 new jobs. First-time unemployment claims totaled 226,500 as of March 1, not alarming in isolation but part of a broader upward trend that extends back to early January. Continuing claims have also trended upward for much of the past year, indicating some softening in labor market momentum.

Source: PA Department of Labor and Industry.

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Closer to home, February’s data from Pennsylvania’s Department of Labor and Industry shows the commonwealth’s unemployment rate (3.8 percent) has not budged much since its January measurement. The state figure is under the national index but a touch higher than the February 2024 reading.

This is due in part to a dip in the civilian labor force, which declined by 3,000 since last month, with total non-farm jobs dropping by 1,000 from January’s record high of 6,191,800. Between January and February of 2025, job levels increased in five of the 11 industry super sectors, the largest being in education and health.

Consumer spending leveled off or declined since the fourth quarter of 2024. Source: U.S. Census Bureau.

supportive of monetary policy loosening, perhaps as soon as mid-year. Forecasting

where monetary policy might go from mid-April is not feasible.

The Pittsburgh metro also saw a slight increase in total non-farm employment, rising to 1,192,100 in February. The biggest gains locally were in the educational and health services sector, with a month over month increase of about 4,500. Pittsburgh’s unemployment rate is at 4.5 percent as of January 2025, continuing an upward trajectory that began in September of 2024. DP

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OFFICE MARKET UPDATE

T

he Pittsburgh office market has witnessed substantial activity with several significant recent movements, expansions and renewals indicating a dynamic and evolving landscape.

The adaptive reuse of existing structures and a focus on mixed-use developments have played a crucial role in addressing evolving market needs, blending residential, office, and retail spaces to better align with current trends. This strategic pivot towards flexibility and diversification has allowed Pittsburgh to mitigate some of the economic impacts worsened by the pandemic.

Government and community support, such as the substantial investments proposed for downtown revitalization, has paved the way for longer-term economic transformation and is expected to positively influence the future for Pittsburgh’s central business district (CBD).

This investment, targeted at reducing office vacancies through potential conversions to residential use, further exemplifies the city’s proactive approach to recovery and growth.

2024 Brought Many Renewals After an extensive search, the K&L Gates law firm has opted to keep its Pittsburgh headquarters at the K&L Gates Center with a new 15-year lease, reaffirming its commitment to Downtown Pittsburgh despite the recent trend of businesses relocating to fringe areas.

work models. The firm will maintain its presence in approximately 150,000 square feet across eight floors in the 37-story skyscraper, highlighting its strategic importance to the CBD. This stability is seen as a positive sign for Downtown’s recovery, enhancing its appeal as a business hub, which can ultimately benefit the local retail and restaurant sectors.

The RAND Corporation has also renewed its lease to remain in its Oakland location through 2035. This extension cements their role as a pivotal part of the Pittsburgh Innovation District, strategically positioned between Carnegie Mellon University and the University of Pittsburgh.

RAND continues to contribute to the area’s dynamic academic and research environment amid significant ongoing neighborhood redevelopment.

Simultaneously, Notable Corporate Relocations and Lease Agreements Were Announced Among the most significant, FNB Financial has transitioned its offices from the Northshore to the new First National Bank Financial Center, occupying approximately 230,000 square feet of the

newly completed building. The project’s opening marks a significant milestone for the area, promising nearly $1 billion in economic expansion. The 26-story, $300 million skyscraper, built on the site of the former Civic Arena, embodies state-of-the-art design with LEED Gold certification, featuring advanced air filtration systems and eco-friendly amenities like solar integration and touchless entry.

Duquesne Light Company’s decision to move its headquarters to Nova Place in the Fringe submarket from the CBD indicates a noteworthy shift in office demographics. This decision follows a thorough search for a new site that aligns with the utility company’s hybrid working model and cultural needs. It chose Nova Place for its proximity to other existing facilities and its vibrant, innovative environment shared with tech companies and organizations.

Allegheny Health Network (AHN) has signed a 20-year lease with Faros Properties to occupy approximately 48,000 square feet in Tower Two at Nova Place, significantly reducing its office space from a 200,000-square-foot footprint at Four Allegheny Center, where

This decision comes amid challenging market conditions, with the CBD facing high vacancies and declining property values due to the pandemic and shifts towards hybrid

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indicating a further drop to roughly $87 million. This trend highlights a shift in demand, likely influenced by persistent remote work models and companies reassessing office space needs.

it had maintained a presence for 30 years.

This downsizing, driven by a shift towards remote work that has reduced on-site staff from 1,200 to about 200, aligns with AHN’s strategic adaptations to optimize their real estate use while supporting its digital and telehealth operations.

WVU Health Systems secured a 15-year lease for the entire 90,000 square foot building at The Fountainhead in Southpointe, highlighting a positive development for the South market.

Range Resources Corp. has also renewed its lease for its regional headquarters at 3000 Town Center Blvd. in Southpointe, marking its 20th anniversary since first establishing natural gas wells in the Marcellus Shale. The Fort Worth-based natural gas producer committed to a 10-year lease for nearly 146,000 square feet, reducing its footprint by over 30,000 square feet, as it adapts to efficient and potentially hybrid work models.

Range’s continued presence is expected to enhance its adaptability to market fluctuations in the natural gas industry, while contributing positively to the leasing activity at Southpointe, which, despite being below prepandemic levels, is on the rise. The rebound is evident through other recent decisions including Consol Energy and Crown Castle’s to remain in the area.

From 2018 to present, buyer volume for office real estate

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has seen notable shifts, reflecting broader economic and workplace transformations. In 2018, the market started robustly with a volume of approximately $478 million, sustaining high activity into 2019 despite a decrease as it settled at around $319 million. The onset of the pandemic in 2020 led to increased activity as buyer volume grew to approximately $366 million, spurred by evolving workspace needs and speculative investments. The market reached another peak in 2021 with a significant uptick to about $467 million, driven by a reshuffle in office space requirements amidst changing work habits.

However, from 2022 onwards, buyer volume experienced a sharp decline, with 2023 figures plummeting to about $92 million, and projections for 2024

Aaron Stauber and local investors acquired One Oxford Centre, the third-largest office building in downtown Pittsburgh, from Shorenstein Properties, whose investment faced devaluation due to pandemic-related challenges. This acquisition is notable as it occurs outside of Stauber’s usual Rugby Realty portfolio activities. Stauber and his group plan to implement a long-term ownership strategy aimed at revitalizing the property and the Grant Street corridor, viewing it as a premier business address. The 45-story, approximately one-million-square-foot office, retail and club building is currently at 65 percent occupancy.

Asking rents for office spaces have increased steadily in both Class A and Class B buildings over the past decade.

Class A rents have climbed from $24.33 per square foot in 2014 to $29.33 in 2024, reflecting a consistent upward trend with slight fluctuations, most notably a significant jump between 2020 and 2021. Similarly, Class B rents have increased from $19.97 in 2014 to $22.09 in 2024. After some modest fluctuations between 2017 and 2021, Class B rents have recently trended upwards, reaching their highest level in 2024. This consistent rise in asking rents indicates a strong and

growing demand for quality office space over the period, with Class A properties commanding a more substantial increase compared to Class B. The market vacancy rate has shown a clear upward trend over the past decade, starting at 15.0 percent in 2014 and steadily increasing to 24.4 percent by 2024. Notable increases occurred between 2019 and 2021, during which the vacancy rate surged from 16.9 percent to 20.8 percent. The upward trajectory continued through 2022 and 2023, with rates climbing to 24.1 percent in 2023 and plateauing slightly at 24.4 percent in 2024. This trend underscores persistent challenges in the market, possibly due to increased remote work and changing demand for office spaces.

The data over the past decade illustrates significant shifts in construction deliveries, net absorption, and vacancy rates within the market. Construction deliveries were relatively high from 2014 to 2016, with net absorption also largely positive, resulting in a moderate decrease in vacancy from 17.2 percent in 2015 to 17.0 percent in 2016. By 2018, robust net absorption of

618,060 square feet led to a decrease in vacancy to 16.4 percent, the lowest within this period.

2020 marked a turning point, with a surge in construction deliveries coinciding with a major negative absorption of 573,064 square feet, which drove the vacancy rate up to 19.3 percent. The trend worsened

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The adaptive reuse of existing structures and a focus on mixed-use developments have played a crucial role in addressing evolving market needs, blending residential, office, and retail spaces to better align with current trends. This strategic pivot towards flexibility and diversification has allowed Pittsburgh to mitigate some of the economic impacts worsened by the pandemic. through 2021 and 2023, with high vacancy rates peaking at 24.1 percent in 2023, exacerbated by a substantial negative absorption. In 2024, increased construction activities of 640,452 square feet and positive absorption of 80,760 square feet brought a slight stabilization, maintaining a vacancy rate of 24.4 percent and reflecting challenges of aligning new supply with demand in a fluctuating market.

especially in robotics and AI, office spaces will likely cater to these sectors with modern, tech-equipped workspaces.

Pittsburgh’s commitment to sustainability means new developments will adhere to green building standards, appealing to environmentally conscious tenants.

As businesses recover post-pandemic, vacancy rates are expected to decline, signaling market stabilization.

Looking Ahead

The trend of mixed-use developments such as Bakery Square will likely continue, fostering vibrant community environments. Demand for flexible leasing and coworking spaces will persist due to the shift towards hybrid work models. Enhancements in public

Even with the uncertainty in the market, the 2025 Pittsburgh office market is expected to embody national trends while being influenced by local dynamics. With a focus on technology and innovation,

transportation linking downtown to Oakland will improve accessibility, making downtown and surrounding areas more appealing. Overall, Pittsburgh’s office market in 2025 is expected to blend traditional and modern concepts, driven by sustainability and technological advancements, offering an environment conducive to business growth. DP Newmark 210 Sixth Avenue, Suite 600 Pittsburgh, PA 15219 412-281-0100 www.nmrk.com Gerard McLaughlin Executive Managing Director Gerard.McLaughlin@nmrk.com

Where Learning, Care, and Innovation General Contractor | Construction Manager

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INDUSTRIAL MARKET UPDATE

“S

urvive until Twenty-Five” was the phrase that was bandied about throughout the last half of 2024.

Well, here we are at the end of the first quarter of 2025, and what a difference a few months make!

2024 marked a downturn in the Pittsburgh real estate market with net absorption of only 507,700 square feet (SF), the market has not seen such a small amount of space absorbed since 2019 when only 408,435 SF of net absorption was reported. That was followed by the pandemic year of 2020 when absorption went in the opposite direction with 703,400 SF of negative absorption. Industrial real estate brokers representing larger available spaces report that they have responded to more requests for proposals (RFPs) in the first eight weeks of 2025 than they did in all of 2024. An informal survey of the most active industrial real estate brokers shows that activity in the first quarter of 2025 points toward a very robust real estate market in 2025.

Tariffs As we enter the second quarter of 2025 the current administration continues to threaten tariffs of varying amounts on foreign goods. The uncertainty that has gone along with the threatened tariffs has caused a ripple effect across the industrial real estate landscape. According to CoStar, “Warehouse owners say tenants are delaying decision-making on new leases as a result of the tariffs, both enacted and proposed.” The impact of the tariffs on the consumer has yet to be felt, but most assuredly tariffs will cause a slowdown in consumer spending.

Additionally, there will be a direct impact on the cost of construction, with the housing sector taking a direct hit that will most certainly slow housing starts, which in turn will slow demand for new / additional warehouse space.

contains 231,000,000 SF of industrial space. The industrial vacancy rate that stands at 5.4 percent as compared to 7.0 percent for the remainder of the United States, and an average asking rent of $8.66 compared to $12.12 nationally.

With only 155,000 square feet of space under construction at the present time, the need for first generation Class A space will only increase over time.

There are numerous proposed projects in the market.

Notably there are only eight that could support a user of 150,000 square feet or more.

Western Pennsylvania has always been a conservative market when it comes to speculative development.

In the last ten years, projects reported under construction averaged 1,377,500 per year with the high-water mark being 2022 when 3,400,000 square feet of space was under construction.

Properties presently undergoing construction are reported to be slightly above 400,000 SF.

a million square feet of activity, with renewals accounting for 56 percent of activity this quarter. Some notable leasing transactions were:

According to CBRE’s Q4 Industrial Report, fourth quarter leasing activity saw over

SDC Nutrition leased 133,554 square feet at 260 Solar Drive. While Brockway

Pittsburgh’s Market Dynamics According to CoStar, at the end of the first quarter of 2025 the Pittsburgh metropolitan statistical area (MSA)

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Commerce Center announced that they have secured a 100,000 square foot tenant, that has yet to be disclosed. BCC is still under construction and reportedly will now begin construction on an additional 65,000 SF of space.

Mitsubishi Electric announced that the company is building a 160,000-squarefoot factory in Beaver County. The plant

will initially produce vacuum and gas circuit breakers, transitioning to primarily vacuum circuit breakers as operations expand. The factory will create over 200 jobs when fully operational.

On the sales side, at 500 Woodlawn Road in West Aliquippa, Middleton Properties sold the 237,000 square foot building for $4,100,000 or $17.29 per square foot.

RIDC sold the property at 320-380 Locust Street McKeesport, the 145,715 square foot property sold for $3,000,000 or $20.59 per square foot.

Class A Space The biggest challenge facing tenants looking for class A space in the Pittsburgh market is the lack of available inventory. At the end of the first quarter of 2025, tenants looking for existing Class A space in the 20,000-to-50,000 square foot range have only five properties to choose from. The Airport Corridor contains four of the five, with the Fay-Penn Economic Development property in Dunbar, Fayette County being the fifth. Except for the Dunbar property, with a published triple-net rate of $12.50 per square foot, rates are not published but are estimated to be in the $9.00-$10.00 range for the other properties. As previously noted, demand is so strong at the present time that few if any of these spaces will be on the market by the end of the third quarter of 2025.

The prospects are even fewer for tenants looking for 150,000 square feet or more of existing space. The Merus (formerly Al. Neyer) property at Commerce Crossing on Waltz Mill Road is the only available property in that size range. At 250,200 square feet of available space and a very attractive asking rent in the range of $7.25 per square foot, users can occupy 2023 new construction.

With only 155,000 square feet of space under construction at the present time, the need for first generation Class A space will only increase over time. There are numerous proposed projects in the market. Notably there are only eight that could support a user of 150,000 square feet or more. The asking rent for these spaces, while not published, will certainly be north of $10.00 per square foot. If the tariffs are enacted as proposed, the trickle-down effect of the cost of steel, lumber, and aluminum is projected to increase construction costs anywhere from three to five percent.

Additionally, if there are curbs placed upon migrant workers that are critical to the construction industry, those increases could top 10 percent.

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National Industrial Real Estate Trends On a national scale, the industrial real estate market has experienced notable shifts: •

Net Absorption: In 2024, net absorption—a key indicator of demand—declined by 35.1 percent year-over-year, with 140.4 million square feet absorbed, 31.8 million of which occurred in the fourth quarter.

•

Vacancy Rates: The national vacancy rate surpassed 7 percent for the first time since 2014, reaching 7.1 percent by the end of 2024.

•

Rental Rates: Despite these challenges, the national average asking rent for industrial space rose by 0.9 percent quarter-over-quarter, settling at $12.12 per square foot.

Think 20 years down the line.

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Conclusion Looking at the overall market, all signs point towards the Parkway West market continuing to be the darling of the industry for the next couple of years, while Washington County will see growth along the Southern Beltway. While Butler County will continue to see increased rental rates as development has slowed in that market, the lack of new construction will drive tenants to other parts of our market, such as Beaver County. Allegheny County will most likely continue its status quo of steady growth in rents while not seeing much new space come to the market. Westmoreland County, while our largest submarket based upon square footage, will continue to be one of the most affordable. Pittsburgh’s industrial real estate heartbeat has remained steady over the past six months. Now with spring upon us, the market looks towards a fresh start. Unlike our beloved Pirates, when the industrial real estate market comes off a bad year, our market consistently rebounds, and we see multiple years of growth following that off year. DP Hanna Commercial Real Estate 11 Stanwix St., Suite 1024 Pittsburgh, PA 15222 412-261-2200 www.hannacre.com AJ Pantoni Vice President of Industrial Services ajpantoni@hannacre.com

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CAPITAL MARKET UPDATE

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apitulation. No downturn ends until the parties that are facing losses decide enough is enough, take their lumps, and sell. When the Federal Reserve Bank aggressively hiked interest rates throughout 2022, property owners with mortgages that matured in the years that followed were left holding the bag, especially office owners. After three years of extending loan maturations, the market seems ripe for capitulation.

If that is the case, dealmaking – and robust capital markets – will return.

If uncertainty – like that caused by massive tariffs – continues to define the marketplace, capital is more likely to stay on the sidelines a bit longer.

the bid-ask gap will narrow in 2025,” says Tony Rossi, senior vice president at CBRE.

swing in 30-days or less. That changes the economics of the deal.”

“We foresee a significant pickup in transactions, especially within the office sector. We’re getting to a point five years post-COVID where, if things haven’t gotten better, there’s not a lot that will help,” says Nick Unkovic, senior managing director and co-head of the Pittsburgh office of JLL Capital Markets. “We are seeing more volume in deals coming to the market where everyone in the capital stack has agreed that they are sellers and will sell at the market price. There is significant capital and a pool of buyers who are ready to execute.”

For several years, the gulf between buyers and sellers has been too wide to bridge. There were numerous examples of gaps in the perception of a property’s cap rate that were 200 basis points or more. In 2024, there were high profile cases of trophy assets trading hands at discounts of 90 percent or more, but these were exceptional, not symptomatic of a re-balancing of the market. Now, that re-balancing seems to be happening.

While Unkovic is referencing the office market as the most distressed asset class, the bid-ask gap widened on all property types after prime lending rates moved above six percent in 2023. The Fed’s fourth quarter 2024 rate cuts pushed short-term rates down 100 basis points or more, but long-term rates, on which permanent financing is based, moved higher and became more volatile. Even though the bid-ask narrowed in 2024, that volatility was a problem. As the Fed holds steady for now, yields on the 10-year Treasury bond are moving in a narrower, more predictable range.

The yield on the 10-year Treasury dipped to 3.63 percent on September 16, 2024, the day before the Federal Reserve Open Markets Committee cut the Fed Funds rate for the first time in four years. But rather than drifting gradually lower as the Fed cut short-term rates by 100 basis points over the next few months, the 10-year yield reversed course. By January 13, 2025, the yield on the 10-year had jumped to 4.79 percent. Deals initiated following the Fed’s September cuts would have seen a cap rate jump of a full percentage point while loan processing occurred. As Unkovic noted, many of those deals never got across the finish line.

“I expect that we will see an increase in volume on both the sales and debt transaction sides of the market. That will be a result of improved capital market conditions and a meeting of the minds on pricing between buyers and sellers. I think

“The general expectation is that the volatility on long-term rates will calm down, although there’s nothing calm about the world right now. The macroeconomic drivers are not going to change,” says Unkovic. “I am optimistic that 10-year yields will be in the mid four-percent range. As long as we have that stability, transactions can happen. What gets challenging is when there’s a 50-basis point

Economic conditions suggest that there will be some downward pressure on the 10-year yield throughout 2025. The most recent data on hiring, quits rate, and layoffs all point to slightly higher unemployment as the year unfolds, and indicate a higher risk of recession. But the chaos in the bond markets since the April 2 announcement of tariffs and April 9 announcement of the tariff pause pushed investors away from U.S. Treasury bonds. Yields ranged from 3.86 percent to 4.54 percent during those seven days.

The pullback that followed the pause offers some hope that long-term yields will return to the pre-tariff trend, but the prospect of a narrower trading range for the 10-year bond looks less optimistic.

The prospects will dim further should China decide to reduce its $760 billion U.S. Treasury bond holdings or its regular purchases at Treasury auctions.

There were improvements to the marketplace in 2024. Real estate investment trust (REIT) prices soared 30-40 percent. Interest in commercial mortgage-backed securities (CMBS) returned, pushing issuances up 150 percent from 2023. Debt costs edged downward. In most U.S. cities, there was evidence that even troubled assets were beginning to move. The market seems ready to reset.

“The One Oxford transaction is a great example of a deal where there is a reset

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share for CMBS. Because the outlook for interest rates appears to be higher for longer, CMBS borrowers favored five-year loans, which made up 70 percent of the 2024 volume, compared with 42 percent a year earlier. The latter trend continues through the first quarter of 2025.

Delinquency on CMBS loans for office properties remains elevated above 11 percent.

A slight dip in early 2025 is not expected to continue and rating agencies forecast that the peak delinquency rate is still to come. Investors nonetheless have an appetite for assets that are performing well in a new basis environment.

of the capital stack. It was a market sale and that means that the basis was reset.

There was new debt. Now there is an office building with a new capital stack that can execute a business plan,” says Unkovic. “That is going to happen on nearly every office building at some point to sign new lease deals and perform tenant improvements. There is liquidity and capital to make deals happen. The hard part is getting the seller to the market. Fortunately, that is starting to happen more.”

“I think there are two dynamics playing out on the office market. I think what you saw playing out at Oxford is an actualization of the market and the lender deciding to get what they could out of the market.

What we saw was a price that was $56 per square foot. That resets the capital stack, resets the economics of the deal, resets the office leasing,” says Tyler Noland, CEO of PenTrust Real Estate Advisory Services.

“I think there are still a lot of owners holding office assets that are waiting for a supply adjustment. Whether that is buildings becoming obsolete or becoming residential, there is hope that if you can show seven or eight years of solid cash flow and get to 2027 or 2028 with a stable property, cap rates will come back down.

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But, if you are trying to sell an office asset right now, there is no one buying that is not looking for a discount.”

At the opposite end of the spectrum from distressed sales, there is also increasing demand from investors for high-quality, cash-flowing properties. This trend is driving the increased appetite for CMBS loans, which have evolved to the postpandemic realities of the market. Investors favor multi-family, industrial, and Class A trophy office buildings. CMBS also benefit from banks’ diminishing appetite for commercial real estate.

According to Kroll Bond Rating Agency, CMBS volume topped $115 billion in 2024.

Analysts expect demand to increase in 2025 again, pushing volume another 10 percent higher.

The makeup of CMBS issuance has shifted significantly since interest rates moved higher in 2022. Large single-asset, single-borrower loans comprised more than 45 percent of all CMBS deals, more than double the year before. The traditional multiple-loan conduit CMBS issuances fell to 30 percent of the volume last year and Fannie and Freddie loans dipped to 26 percent of the market

Fannie Mae and Freddie Mac were given slightly higher allocations for multi-family loans for 2025, at $73 million each. As has been the case since 2023, half of that allocation must go to mission-driven deals for affordable housing. The increase anticipates a significant increase in business from 2024, when Fannie and Freddie originated $121 billion in loans compared to a $140 billion allocation.

The potential privatization of the two government-sponsored enterprises looms as a more disruptive policy change for Fannie and Freddie. As part of its overall policy of reducing regulation on financing, the Trump administration has already made rule changes to allow Fannie and Freddie to accumulate more capital in anticipation of pulling the government out of its conservatory role. Privatization could prove to be a double-edged sword.

Without the implied backing of the federal government, Fannie’s and Freddie’s role as the primary purchaser of residential mortgages would be a major disruption to the housing market. At the same time, such a move would allow Fannie and Freddie to respond to the marketplace, rather than federal policies that may create imbalances in the market.

“A partial or full privatization of Fannie and Freddie will result in a more navigable

application and closing process, with more borrower-friendly processes regarding underwriting and due diligence,” predicts Rossi. “Removing the federal backstop would make the agency products more like other privately available capital sources, such as CMBS, commercial banks, or life insurance companies.”

During the first quarter of 2025, Fannie and Freddie were more competitive. While cap rates remained higher, spreads were tightening for agency deals.

“Generally, we’re seeing compression on spreads in most areas, especially when it comes to Fannie and Freddie in multi-family. We see interest rates on the lower side of the mid-fives on from the agencies,” says Bryan McCann, senior vice president for Colliers Pittsburgh Capital Markets. “With the regional banks you may not see the same compression. It varies because everyone has a different balance sheet.”

Conditions improved again in 2024 on the supply side of the equation. The current market difficulties in commercial real estate did not result from overbuilding, but the recovery that develops in the next 12-to-24 months will be aided by the steep decline in new construction. After peaking at 215 million square feet of new construction in the third quarter of 2023 – driven mostly by approximately 180 million square feet of industrial properties – new construction of office, retail, and industrial fell below 50 million square feet in the fourth quarter of 2024. Construction of new commercial supply fell below 275 million square feet for the full year in 2024.

Reducing the new construction leasing options available should drive rent growth, which will help more of the refinancing deals to work. But the upward pressure on rents will mainly help those properties that needed a push to get deals across the finish line. Properties that require a resetting of the capital stack to refinance, either through additional equity injected or a sale at a discount to the loan balance, are unlikely to see rent growth that reverses their fortunes.

Because many loans that matured in 2022 through 2024 were extended, 20 percent – or nearly $1 trillion – of outstanding commercial mortgages are set to mature in 2025. That is a three percent increase from the $929 billion that matured in 2024. The property types for the loans that are maturing vary from a high share of office (24 percent) and hospitality (40 percent) to loans for retail and healthcare (18 percent), and multi-family (14 percent).

For lenders, the decision to extend bridge financing to borrowers with loans that mature or have matured will depend on the lender’s balance sheet and the property’s performance. Both Noland and McCann note that stabilized properties with positive cash flow are likely to be extended.

“It depends on the borrower. It depends on the asset. It depends on the bank. If it’s a good relationship and the asset’s good, even if the bank is in a little bit of trouble, they’ll probably work with the borrower,” predicts McCann. “If you get two out of those three, the lender will try to work with

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you, but if it’s one of those three you may have a problem.”

For the most part, lenders will have the ability to work with borrowers because there is excess liquidity. (That may change if the stock market correction becomes a full-blown bear market.) In 2022 and 2023, there was plenty of dry powder, but little appetite to deploy it. Over the past year, investors and lenders have become selectively more interested in deploying capital. Even with assets that are not at their most desirable state, the lack of opportunities created its own pressure to find deals.

“At the beginning of this year we saw incredible dry powder from lenders for commercial real estate. The biggest problem for lenders is that there aren’t enough deals to get their money out in the market,” says Unkovic. “We’re seeing spreads and rates compress on loans. We’re seeing lenders get more aggressive and competitive on terms. That’s happening with lenders of all kinds across the spectrum.”

Even with accommodative lenders, the capital markets still need buyers and sellers to be sufficiently motivated to consummate transactions. There remains enough conflicting motivation among buyers, sellers, investors, and lenders that a market capitulation is not in the offing. And the Trump administration’s trade war only adds more conflict to the equation.

“There is enough chaos still that we have to let the dust settle,” Noland says. “There are more banks that seem to have itchy trigger fingers, but I’m not sure we’re at the place where lenders are pushing for a sell off.” DP

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LEGAL/LEGISLATIVE LOOK

NAIOP Corporate Lays Out its Legislative Agenda

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ommercial real estate continues to face challenging market conditions in 2025, some of which are the lingering aftereffects of the pandemic.

A new administration has new priorities, which create new opportunities for thoughtful legislation or government intervention that will benefit commercial real estate. NAIOP Corporate has focused on three issues to improve conditions for the commercial real estate industry.

Tax Policy Congress should pass comprehensive tax legislation that renews expiring provisions of the Tax Cuts and Jobs Act of 2017 (TCJA) and maintains long-standing tax policies that support an economically vibrant commercial real estate industry.

The tax code should promote capital formation, reward entrepreneurship and long-term investment, support housing production, and foster community and economic development Tax policies and provisions of the Tax Cuts and Jobs Act (TCJA) important to the commercial real estate industry will soon expire or be reconsidered. Specifically regarding TCJA, as part of comprehensive tax legislation, Congress should: •

•

Continue lower capital gains tax rates: Federal tax policy should recognize the long-term, capitalintensive nature of real estate assets and the inherent higher investment risk involved. A lower tax rate on capital gains income is needed to ensure continued investment in long-lived commercial real estate assets that leads to job creation and economic growth in our communities.

Extend the deduction for partnerships and pass-through businesses: Real estate partnerships and other pass-through businesses drive job growth and are an important source of entrepreneurial activity.

The current 20 percent deduction for pass-through income in Section

199A of the tax code is designed to ensure that pass-through entities are not disadvantaged compared to corporations that are taxed at lower rates and should be extended.

•

Extend certain deadline dates for opportunity zones: Tax policies that successfully incentivize investment in underserved communities, such as those in the opportunity zones program, should be maintained.

Investment deadlines in the program should be extended.

Comprehensive tax legislation should maintain Section 1031 providing for tax-deferred, like-kind exchanges. Real estate assets are long-lasting, and past depreciation increases the tax burden of transferring property, creating a lock-in effect. Limiting the availability of tax deferral under Section 1031 would severely undermine modern commercial real estate markets, threatening their liquidity and resulting in reduced investment and transactions.

Congress should include tax incentives to encourage conversion of buildings left vacant or underutilized by pandemic remote work patterns to much needed housing. The Revitalizing Downtowns and Main Streets Act, bipartisan legislation introduced last Congress by Representatives Mike Carey (R-OH) and Jimmy Gomez (D-CA), would create a temporary tax credit to offset conversion costs and help increase the supply of affordable housing.

Energy and Electricity Congress needs to pursue comprehensive energy policies designed to meet the growing need for electricity throughout the U.S. economy, including increased investment in electrical grid expansion and modernization, permitting reforms for energy generation and transmission projects, and increased coordination on major regional projects across multiple jurisdictions. The lack of future availability of electricity is hindering the

commercial real estate development needed to support industries in a rapidly transforming economy.

The U.S. is set to experience an increase in power demand at a rate not seen in a generation due to increased electrification across various sectors of the economy. Near-term forecasts for electricity demand have been revised up substantially, according to a report by the Federal Reserve Bank of Kansas City, which noted the “ongoing transformation to a more electrified economy.”

Rapid adoption of AI, and the corresponding development of additional data centers, is a key driver of demand growth. A ChatGPT query requires nearly 10 times more electricity than a typical Google search, and AI-focused data centers require an increased amount of power. Energy needed by data centers is projected to more than double in the next five years, increasing from 3 percent in 2022 to 8 percent in 2030.

EVs, nearshoring of manufacturing, and electrification efforts across industries and jurisdictions are major contributors to this economic transformation.

Because of this rapid increase in energy demand, Congress must act to ensure the U.S. has adequate electrical capacity for the critical real estate and industrial development needed to support continued robust economic growth. Commercial real estate projects are already being delayed for years, and planned developments are being scrapped because energy providers cannot meet additional demands in economically viable time frames.

An urgent need for policy changes exists in energy generation, transmission and distribution, and electrical grid reliability. Additional investments are needed for electrical grid expansion and modernization. It simply takes too long for power generators to connect new facilities to the grid. At the end of 2023, there was a backlog of nearly 12,000

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power generation projects seeking to connect to the grid, according to the Federal Energy Regulatory Commission.

Permitting reform legislation is critical.

Legislation introduced in the Senate during the last Congress, but not yet passed, would have shortened federal permitting timelines and reformed litigation procedures that unnecessarily delayed energy projects. Congress should pursue enactment of similar legislation and support federal agency efforts to simplify permitting procedures.

We know Pittsburgh.

Federal policies are needed to promote and incentivize regional coordination and cooperation by utilities and local jurisdictions on major transmission projects. These projects often cover multiple jurisdictions, with different planning and siting processes being complicated and time-consuming.

Transmission infrastructure can take 3-7 times longer to build than energy generation installations. Moreover, economic benefits are often not equally shared among consumers of the affected areas, creating disincentives for utilities to justify the additional costs to their ratepayers. Congress should enact policies that enable utilities to pursue major transmission projects of strategic importance.

Without federal energy policies that meet growing electricity needs, the commercial real estate sector will be limited in its ability to build data centers, warehouses, cold storage facilities and manufacturing centers critical to economic growth and the nation’s continued global leadership and international competitiveness.

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Congress should pass legislation to incentivize the adaptive reuse of vacant and underutilized commercial buildings.

The Revitalizing Downtowns and Main Streets Act was introduced in the last Congress by Representatives Mike Carey (R-OH) and Jimmy Gomez (D-CA) to create a tax credit to offset the costs of conversions. Adaptive reuse property conversions can help increase the supply of affordable housing and help restore economic vitality to communities dealing with the impact of post-pandemic workplace changes. Conversion of existing structures to better uses, rather

than demolition, is a cost-effective means of increasing housing supply while reducing the negative economic impact of underutilized commercial buildings.

The aftermath of the COVID-19 pandemic and resulting remote work trends have led to historically high vacancy rates and underutilization of commercial structures in many communities. Hybrid work patterns are now widely believed to have become a permanent feature of modern-day labor markets. While Class A trophy buildings have remained market competitive, Class B and C commercial structures are likely to become stranded assets unless repurposed for economically viable uses.

•

The decreased number of workers at underutilized office buildings has been devastating to the restaurants, retailers and other small businesses that depend on daily workers for much of their business. The decline in property values has also hurt localities, which depend on property and sales taxes for much of their revenue.

•

At the same time communities are coping with the impact of underutilized commercial buildings, many are struggling with a severe lack of housing supply. In some instances, underutilized structures in these communities are suitable for conversion to residential usage and could become a part of a comprehensive approach to increasing housing supply.

•

The Revitalizing Downtowns and Main Streets Act, introduced in the last Congress by Representatives Mike Carey (R-OH) and Jimmy Gomez (D-CA), would provide a 20 percent tax credit for the eligible conversion costs of an adaptive reuse project.

Congress should pass property conversion incentive legislation, which would help increase housing supply and economic productivity in many communities. DP

For more information contact Aquiles Suarez, NAIOP Corporate senior vice president for government affairs at suarez@naiop.org (703-904-7100) or Eric Schmutz senior director of federal affairs at schmutz@naiop.org (703-674-1450).

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Mark Popovich Senior Managing Director mark.popovich@jll.com

Nick Unkovic Senior Managing Director nick.unkovic@jll.com

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VOICES Is it important to better connect the institutions in Oakland with the neighborhoods that are home to the technology transfer businesses that have developed? What would be the most viable next step after the BRT? Lynn DeLorenzo Director, Land Advisory Services, Fourth River Development

Timothy White Senior Vice President, Business Development and Strategy, RIDC

“The most viable next step in connecting Oakland with its surrounding neighborhoods, including emerging Hazelwood Green, is to focus on the Second Avenue corridor. The Second Avenue transportation logjam is strangling connectivity and stymieing economic development in this crucial corner of Pittsburgh.

“The breathtaking view of downtown Pittsburgh from the Fort Pitt Tunnels is an unforgettable experience for visitors and lifelong residents alike. Yet, for many university students, researchers, and professionals arriving in the city for the first time, their introduction to Pittsburgh’s university center in Oakland comes via the Parkway East, exiting onto Bates Street – a corridor that is neither grand nor welcoming.

For years we have talked about and shelved multiple reports and concepts to connect Oakland, South Oakland and its many neighborhoods, through Bates Street, but inevitably momentum stops, and we end up back where we started.

Meanwhile, the Oakland area continues to explode beyond its borders and is the real catalyst for the region’s growth in the sectors of Eds & Meds, healthcare, robotics, AI and life sciences.

While it is challenging to talk about future planning for transit and mobility when we are facing a major funding crisis within our borders, thinking about the next step following the BRT is the absolute thing we must do. Second Avenue is awaiting its rebirth as that of a multimodal artery from Downtown to Hazelwood Green and points east. Once we have solved this key corridor, our connection to the universities and their expanding campuses will allow us to truly connect our assets.”

It’s time to transform Bates Street to ease traffic congestion and make a bold impression on new arrivals. This means razing deteriorating buildings and replacing them with a visually striking gateway. Thoughtful urban design, enhanced streetscapes, and improved pedestrian access would make this entrance more than just functional – it would be emblematic of Pittsburgh’s forward momentum.

To address congestion and improve accessibility, adding a slip ramp from the Parkway East to Second Avenue would be a tremendous improvement, creating a more efficient route to the city’s emerging innovation corridors in Lawrenceville, the Strip District and Hazelwood.

Transforming Bates Street into a welcoming, efficient gateway would strengthen Oakland’s connection to the broader region, fostering economic growth and solidifying Pittsburgh’s place as a global leader in education, healthcare, and technology.”

Chip Desmone CEO, Desmone Architects “There is a piece of advice given to the few newcomers we have here: If you get lost, think like water and you will get to where you need to be.

Our city was created around the notion that all roads lead downtown, much like the water does. But downtown is not so much the center of attention it once was, and Oakland has been considered the driver for the local economy for several decades. As Lawrenceville transformed itself with the NREC facility, Carnegie Robotics and others incubated through the creation of what became Robotics Row, now extending deep into the Strip, that connection seems even more important. Once CMU and Pitt moved into the Pittsburgh Technology Center and now Hazelwood Green, there is a desperate need to connect all these economic drivers. Sadly, PRT is not positioned to make those kinds of connections happen easily, but nothing big is easy.

Fortunately for us there exist some great companies in this corridor who might be able to assist. Much of this conversation began years ago when RIDC acquired the Hazelwood site and considered how connections through Oakland might be accomplished. Today we recognize that some of the greatest minds in transportation sit at the end points of all these locations, with Alstrom in the Strip, Hitachi in the Pittsburgh Technology Center and Motional in Hazelwood Green, among others. These sites are all connected or nearly adjacent to a rail line owned by Allegheny Valley Railroad.

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Wouldn’t it be great if a lease could be negotiated for the part time use of this right of way to allow people living and working in the Strip to connect quickly to Oakland and the PTC and Hazelwood Green?

Imagine stops in the Strip, through Lawrenceville, through the tunnel under Neville Street, with stops in Oakland between Pitt, CMU and Carnegie Museum in Panther Hollow, and coming onto Second Avenue to connect to PTC and Hazelwood Green. This same spur could run to the Carrie Furnace Site as it expands. There is another spur that connects to Bakery Square, and to the future 50-acre site that is being cleared in Sharpsburg. Imagine the possibilities!”

Amanda Markovic Principal, GBBN Architects “We don’t see the Bus Rapid Transit as just a connection between downtown and Oakland—it’s a catalyst for creating a new kind of neighborhood. What’s often overlooked in that conversation is Uptown. It’s the in-between place that has seen the most disinvestment, but it holds the potential to be the connective tissue. Uptown can become a bridge—an inclusive neighborhood that reflects the full range of our region’s economic and cultural life. The BRT is so much more than the ‘University Line’—it’s a visible thread that ties together our two largest economic centers, enriching everything in between.

The next step must be about investing in the spaces along the line to create real opportunities in a neighborhood that reflects everyone.”

Rich Fitzgerald CEO, Southwestern Pennsylvania Commission “Oakland is the economic heartbeat of our region. Companies that have been born out of Pitt, UPMC, and CMU are spreading across the region. It’s more important than ever that we keep Oakland connected – both literally and figuratively.

One planned solution: SPC’s TIP includes plans to widen Bates Street to make it easier to get into Oakland from the eastern suburbs. SPC will continue looking for other ways to support Oakland’s development in our next Long-Range plan, which we start writing this year.

We also need to work together as a region to support the unique development opportunity in front of us.

Life sciences, AI, and robotics industries see Southwestern Pennsylvania’s available space, well-trained workforce, and natural gas deposits as a perfect combination to support their industries.

That attractiveness only continues if we support Oakland’s connections to the region at large.”

Matt Smith Chief Growth Officer, Allegheny Conference on Community Development “With the Pittsburgh region spearheading critical advancements in today’s high-growth sectors—advanced manufacturing, energy, robotics and AI, and life sciences—we have a unique opportunity to leverage our world-class assets and innovation to drive business investment and long-term economic growth.

Oakland stands at the center of this transformation.

Home to Carnegie Mellon University, the University of Pittsburgh, and UPMC, Oakland’s Innovation District brings together research, academia, and industry, creating a powerful engine for growth, collaboration, and technological breakthroughs that ripple throughout southwestern Pennsylvania. Through great partners such as InnovatePGH, stakeholders are accelerating the Pittsburgh region’s rise as a global innovation hub. Partnerships like this are crucial in strengthening connections between Oakland, downtown Pittsburgh, and the greater region—laying the foundation for a globally competitive economic future.”

Shawn Fertitta Interim Executive Director, Oakland Business Improvement District “Oakland is a vital innovation hub for our region, and building strong connections is essential for attracting life sciences and the tech economy.

Employees of these companies thrive in dynamic districts like the Oakland Business Improvement District, where quality restaurants, retail, green spaces, and cultural amenities create an environment for success. People are at the heart of our work, and we strive to make Oakland a vibrant place to live, work, and play. Ensuring that our community remains accessible and welcoming to everyone is a priority.

The upcoming University Line enhances connectivity between Oakland, Uptown and Downtown.

Expanding transit services to connect other tech-focused neighborhoods would further strengthen these ties, fostering collaboration and growth.

Additionally, encouraging future investment in infrastructure and community amenities will position Oakland as a leading destination for innovation and job creation.”

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News from the Counties LAWRENCE NEW CASTLE

BUTLER BUTLER

KITTANNING

ARMSTRONG

BEAVER BEAVER

ALLEGHENY PITTSBURGH

WESTMORELAND GREENSBURG

WASHINGTON WASHINGTON

FAYETTE WAYNESBURG

ACED is fostering a more collaborative and strategic approach INDIANA that enhances the alignment of INDIANA resources across various agencies, programs and funding sources. This comprehensive approach aims to engage communities and projects holistically, integrating infrastructure, housing, and business development efforts, making them more attractive to investment. This is reflected in recent investments made in Sharpsburg, McKees Rocks, and Glassport communities, where ACED is investing in site development, mobility infrastructure, main street initiatives, business development, and housing development leveraging significant private, state, and federal investment.

UNIONTOWN

GREENE

Allegheny County Allegheny County Economic Development Koppers Building 436 Seventh Avenue, Suite 500 Pittsburgh, PA 15219 412-350-1000 (T) Lauren Connelly, Director www.alleghenycounty.us/econdev Allegheny County Economic Development (ACED) is working with partners to create more vibrant communities across Allegheny County that will retain and attract businesses and residents. Under the leadership of County Executive Sara Innamorato, ACED has launched several transformative initiatives that underscore its commitment to fostering economic growth and sustainability across the region.

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The Redevelopment Authority of Allegheny County (RAAC), under the umbrella of ACED, completed the acquisition of the 3.6-mile Brilliant Branch rail line in April. The acquisition marks a major step forward in transforming the former railroad corridor into a multi-municipal and multi-use pedestrian and bike trail that will expand access, recreation, and economic development throughout the region. The trail will connect the communities of Homewood and Larimar in the City of Pittsburgh, including the Bakery Square development, to the 47-acre Allegheny Shores development along the Sharpsburg riverfront where ACED has made additional investments. Planning for the bike/ pedestrian trail and adjacent development opportunities will begin later this year in parallel with the county’s comprehensive planning.

The recently launched and actionable comprehensive plan for Allegheny County, set to unfold over the next 18 months, lays a robust foundation for enhancing the efficacy and proactivity of economic development initiatives across the county. Key focus areas will include establishing expanded transit-oriented development zones to improve accessibility and stimulate future growth and investment,

as well as identifying site development opportunities to support industrial and commercial real estate development.

Clear, data-driven guidance and community insight will inform and empower municipalities, county departments and agencies, developers, investors, and state and federal partners in their efforts to contribute to the bright future of Allegheny County.

Join us in shaping the future. Together, we are building a stronger, more diverse and inclusive regional economy that delivers shared prosperity and growth.

Reach out to ACED today to discuss programs, projects, and how we can help in stewarding your project.

ACED’s focus on supporting both small and large businesses reflects the belief that a robust economy is built on a diverse array of enterprises. As industries evolve, ACED is positioning Allegheny County as a hub for innovation and high-growth sectors. This past year, ACED committed $10 million to projects driving technological advancements, additive manufacturing, and homegrown entrepreneurship. The commitments made to businesses in the Allegheny River Valley, Airport Corridor, and Mon Valley, will yield more than one thousand new jobs for the region.

Beaver County Corporation for Economic Development 1000 3rd Street Beaver, PA 15009 724-728-8610 (T) | 724-728-3666 (F) Lew Villotti, President lvillotti@beavercountyced.org www.beavercountyced.org

While large-scale projects fuel growth, small businesses are the backbone of our economy, driving job creation and activating commercial corridors. ACED remains committed to ensuring these businesses have the funding, resources, and space to succeed. ACED is expanding the Open for Business Program to deliver more business development services and technical assistance to support existing and growing businesses and will launch an expanded main street program in the summer. As part of the program, $1.5 million will be deployed over the next 18 months to support district planning and design efforts in addition to streetscape improvements, facade improvement programs, and main street marketing efforts. ACED knows that small businesses are also in need of capital to support their business plans and will launch a new fund and program for grants and loans for small businesses. These programs will be showcased at an event for businesses of all types and scale being held on June 18th at the Convention Center where ACED will connect businesses with county resources, lenders, and state and federal programs available to support business growth.

Beaver County

The Beaver County Corporation for Economic Development is proud to continue to assist in enhancing the overall business environment and quality of life of Beaver County.

CED manages the Business District Initiative Mini-Grant that is funded by the Appalachian Regional Commission that aims to assist new business within the nine designated walkable business districts of Beaver County. To date, the program has given out $180,000 in total grant funds. CED has also received funding for the further development of Westgate Business Park in Beaver Falls.

We have received $400,000 in LSA funding that will be utilized for the pad ready preparation of 30+ acres within the business park.

Kenson Plastics, a manufacturing company that specializes in precision pressure-formed plastics since 1972, continues its expansion efforts. They have purchased a new property located in New Brighton that will be used for warehousing and R&D purposes. Another local company continuing its expansion efforts is Stefanik Next Generation Contracting.

Stefanik’s is a local construction company founded in 1968 who is investing over $1,000,000 in equipment to continue growing their company.

In March, Mitsubishi Electric Power Products (MEPPI) announced their expansion into Beaver County with

the construction of a new advanced switchgear facility. MEPPI held a groundbreaking ceremony to celebrate the $86 million investment and 200 jobs that will be brought to the county.

Beaver County has seen incredible growth and progress in the last three years; furthermore, as an organization that has assisted in promoting the overall business environment of Beaver County for over thirty-seven years, CED is proud to be part of countless local investment and expansion efforts by businesses within the County. In the last year alone, we have seen a $40 million Versatex expansion, a multimillion-dollar investment by US Gypsum and Kenson Plastics, and the announcement of MEPPI. In addition, in the last three years, we have had 133 new businesses open within our nine downtown business districts, Standard Horse Nail purchased Precision Kidd Steel, and the establishment of GetBlok Farms hydroponic farming pods.

Fayette County Fayette County Economic Development Fayette County Courthouse 61 East Main Street Uniontown, PA 15401 724-430-1200 x 1501 (T) Mark E. Rafail, Economic Development Coordinator mrafail@fayettepa.org www.fayettecountypa.org Fayette Forward: Grounded in Legacy, Building the Digital Future An established leader across many industries, Fayette County continues to stand out as one of Pennsylvania’s most business-friendly destinations. With 240 years of growth and innovation behind it, Fayette County is now poised to take a bold step into the digital age — inviting data center development supported by sustainable microgrids fueled by its abundant energy resources.

“Fayette County sits atop the Marcellus Shale gas fields, and we’re uniquely positioned to harness that energy for nextgeneration infrastructure,” said Mark Rafail,

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Fayette County Economic Development Coordinator. “Combining our location, connectivity investments, and energy assets give us the opportunity to attract businesses that need reliability, resiliency, and room to grow — like data centers.”

Microgrids + Data: A New Energy Future With the rise in demand for secure, always-on digital infrastructure, data centers are rapidly expanding — and they need reliable, redundant power. Fayette’s natural gas resources, combined with its forward-thinking infrastructure investments, offer the ideal environment for microgrids: localized power systems that provide consistent energy with minimal downtime. These microgrids can blend natural gas with renewables, creating sustainable power options for energyintensive industries.

“By bringing data centers to Fayette, we’re not just adding jobs — we’re powering the future,” Rafail said. “We want companies to see this as a long-term partnership. We

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have the land, we have the power, and we have the vision.”

Strategic Infrastructure Investments Recent years have brought one of the biggest economic booms in Fayette’s history, thanks to strategic investments and visionary leadership.

The Fayette County Infrastructure Bank, launched in 2021, has already received over $18.5 million in low-interest loans to fund public transportation and utility projects. This kind of smart, local funding model accelerates shovel-ready development and improves connectivity across the region.

“Each year, we grow this program to help our municipalities modernize faster and smarter,” Rafail said.

Workforce Ready, Location Perfect Fayette County has partnered with FayPenn Economic Development Council, the County Redevelopment Authority, and the

Fayette County Chamber of Commerce for decades to offer site-ready business parks, available land, and a workforce primed for the jobs of tomorrow.

Commissioner Vince Vicites emphasized the importance of workforce development to support long-term growth.

“We’re training citizens for jobs of the future,” Vicites said. “With our low cost of living, central location, and unmatched outdoor amenities, this is an ideal place for employees to live and thrive.”

Commissioner Dave Lohr added, “Fayette is on a direct line from Pittsburgh to Washington, D.C., with access to rail, road, river, and air. We’re close to eight major metro areas and offer some of the lowest operating costs in the region.”

Broadband Expansion: Building Digital Roads A key piece of Fayette’s future is digital connectivity. The county has invested

more than $5.3 million in broadband expansion since 2020, with dozens of new WiFi hotspots already installed.

“We’re bridging the digital divide and preparing our infrastructure to support 21st-century industries,” Rafail said.

“Reliable, high-speed internet is no longer a luxury — it’s a necessity.”

Tourism Meets Tech Even as Fayette looks toward the future, its quality of life and natural beauty continue to draw millions of visitors each year. From Fallingwater to Ohiopyle, the county’s thriving tourism industry provides a solid foundation for livability — an attractive feature for businesses and their employees.

Energy, Innovation, Opportunity

Fayette Future: Come Grow with Us

Fayette County’s leadership has outlined five core focus industries — agriculture, healthcare, manufacturing, energy, and tourism — with education and housing serving as key supports. The addition of data centers backed by clean, efficient microgrids creates a bridge between these sectors and opens the door to new, future-focused industries.

Whether it’s new business development or expansion of existing operations, Fayette County offers the space, the support, and the energy to make it happen.

“As we invest in infrastructure, we’re laying the groundwork for innovation,” Dunn said. “This is a chance to build something truly transformative.”

“We’re ready to grow, and we want businesses to grow with us,” Rafail said. “If you’re in search of a location that’s connected, cost-effective, and committed to building a future — Fayette County is ready.”

Learn more: www.fayettecountypa.org

“Our outdoor amenities aren’t just for tourists,” said Commissioner Scott Dunn.

“They support the kind of lifestyle that helps companies attract and retain top talent.”

Spring 2025

Another Publication

by Carson Publishing

D OAKLANUP DATE MARKET

Indiana County Center for Economic Operations Indiana County, Pennsylvania

| Resources • Business / Industrial Parks

| Available Properties

• Multi-Tenant / Flex Buildings

• Windy Ridge Business & Technology Park

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• 119 Business Park

• Business Plan Assistance

• Corporate Campus Business Park

• Financial / Tax Incentives

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• 280 Indian Springs (Highpointe)

• Conferencing • Visitor / Tourism Information

The Indiana County Center for Economic Operations (CEO) is a public -private partnership dedicated to furthering economic prosperity of our communities.

412-548-3823 • carsonpublishing.com

www.IndianaCountyCEO.com • 724-465-2662 • info@IndianaCountyCEO.com Spring 2025 | DEVELOPING PITTSBURGH

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Indiana County Indiana County Center for Economic Operations 801 Water Street Indiana, PA 15701 724-465-2662 (T) 724-465-3150 (F) Byron G. Stauffer, Jr., Executive Director byronjr@ceo.co.indiana.pa.us www.indianacountyceo.com Indiana County is experiencing a transformative period marked by significant economic development initiatives and infrastructure enhancements. These efforts are poised to bolster the local economy, attract investment, and improve the quality of life for residents.

Homer City Generating Station Redevelopment The Homer City Generating Station, a landmark project, is set to undergo a remarkable transformation. The retired coal-fired power plant is slated to become a $10 billion natural gas-powered data center campus, a move that holds great promise for the region. This ambitious initiative, designed to meet the escalating energy demands of artificial intelligence and high-performance computing sectors, is expected to create approximately 10,000 construction jobs and 1,000 permanent positions upon completion. State Senator Joe Pittman hailed the development as “truly historic and incredibly exciting,” underlining its potential to revitalize the region’s economy. The Homer City Redevelopment project in Pennsylvania marks a significant transformation of the former Homer City Generating Station from a coal-fired power plant into a state-of-the-art natural gaspowered data center campus. Central to this redevelopment are seven highefficiency 7HA.02 hydrogen-enabled gas turbines supplied by GE Vernova, capable of generating up to 4.5 gigawatts (GW) of electricity.

Multimodal Transportation Funding has been awarded for three projects to foster more significant economic development and improve local transportation infrastructure in Indiana County. The Commonwealth Financing Authority (CFA) approved these investments in Harrisburg on February 24, 2025.

“These projects are an extensive undertaking which aim to significantly improve the quality and safety of local roadways and bridges, benefiting both area residents and visitors alike,” Pittman said. “By addressing deteriorating conditions, the projects will enhance driving experiences, reduce vehicle wear and tear, and improve overall traffic flow. I’m pleased to have advocated for this substantial state support, which will significantly benefit the long-term stability of our local transportation infrastructure.”

New Downtown Indiana Welcome Center to Unite Tourism, Business, and Community Under One Roof In February 2024, First Commonwealth Bank announced the donation of its historic downtown Indiana branch building, located at 600 Philadelphia Street, to Indiana County to establish a new Welcome Center. This initiative aims to create a centralized hub for community engagement by housing the Indiana County Tourist Bureau, the Indiana County Chamber of Commerce, and Downtown Indiana, a non-profit organization, under one roof. The collaboration enhances cooperation among these entities, promoting business development and tourism within the county.

Renovations to transform the 600 Philadelphia Street building into the Welcome Center are underway, with occupancy expected by mid-2025. This development exemplifies a successful public-private partnership, leveraging community assets to drive economic growth and enrich the cultural fabric of Indiana County.

Infrastructure Improvements

Healing the Future: IUP’s Proposed College of Osteopathic Medicine Set to Transform Healthcare and Economic Growth in Indiana County

Sen. Joe Pittman (R-41) and Reps.

Jim Struzzi (R-62) and Brian Smith (R-66) announced that $1,805,023 in

Indiana University of Pennsylvania (IUP) is advancing plans to establish a College of Osteopathic Medicine, a project

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poised to impact the university and the broader Indiana County community significantly. This initiative addresses the critical shortage of primary care physicians, particularly in rural areas, by training future doctors committed to serving underserved populations.

Osteopathic medical programs have a strong track record of producing primary care physicians in rural settings. The proposed college has garnered substantial support, reflecting its anticipated importance to the region. An anonymous gift of $25,000 has been given to the IUP-proposed College of Osteopathic Medicine. This brings the total donations for the proposed college to over $31 million. Additionally, the Pennsylvania State System of Higher Education Board of Governors has allocated $2 million in design funds to renovate academic buildings to house the health sciences cluster, including the proposed college.

Once operational, the college is expected to generate an estimated $79 million in annual regional economic impact, further solidifying its role as a transformative development for Indiana County.

Community Engagement and Events Community organizations are actively fostering engagement through various events. Downtown Indiana, a nonprofit dedicated to revitalizing the central business district, hosts several upcoming activities, including the Third Thursday series starting April 17. Third Thursdays is a lively monthly event series held in IRMC Park on North 7th Street in Downtown Indiana. These gatherings, featuring live music and local food vendors through September, create a vibrant community atmosphere. Attendees are encouraged to bring their folding chairs and invite neighbors to join the festivities. The events are free and open to the public.

They promote local businesses, enhance community spirit, and foster an inclusive environment for all community members.

These initiatives reflect Indiana County’s commitment to sustainable economic development, infrastructure modernization, and community enrichment, positioning the region for a prosperous future.

November 2024 by Spain-based Lawrence County inApplus+, a worldwide leader in the Lawrence County Economic Development Corporation 325 East Washington Street New Castle, PA 16101 724-658-1488 (T) 724-658-0313 (F) Benjamin G. Bush, MPA bush@lawrencecounty.com www.lawrencecounty.com Lawrence County continues to see economic growth and new opportunities arise as a result of collaboration among our municipalities, governments, and businesses. Several projects in early 2025 advanced to the construction / implementation phase.

Steelite International, the global leading manufacturer and supplier of tabletop, lighting, and buffet solutions for the hospitality industry in the United State, Canada, Caribbean, Central and South America, broke ground earlier this year on a 325,000 square foot addition to its warehouse and distribution center in Neshannock Township and will pour another 200,000 square foot pad to prepare for future expansions. Steelite expects to invest $50 million to construct the building which will be completed by the end of 2025, while adding 50 – 75 new employees over the next 3 years.

Steelite currently employs about 300 people in the region. “We continue to enjoy terrific growth in the market on both an organic and acquisition basis,” said John Miles, President and CEO at Steelite International.

Keystone Compliance completed construction on a 10,000 square foot addition to its testing lab in downtown New Castle which will expand the company’s testing capabilities.

Keystone has built a strong reputation in the compliance sector and offers solutions for nearly all Electromagnetic Compatibility and Electromagnetic Interference (EMC / EMI), mechanical and ISTA-certified package testing, and services such global-leading organizations as Amazon, Sam’s Club, Walmart and Costco. Keystone employs about 45 people in Lawrence County. The company was acquired

testing, inspection and certification sector and is committed to acquisitions of complementary industry-leading businesses in the U.S and Canada.

The infrastructure for Stonecrest Business Park in New Beaver Borough will be completed by the end of June and includes installation of gas and water lines, a new lift station for sewage, and improvements to State Route 18.

Stonecrest, a $14 million site development project, the first private business park to be constructed in Lawrence County in 40 years, is expected to create up to 750 new jobs and nearly 1.5 million square feet of space. The business park is designed to provide pad-ready sites attractive to light manufacturing and warehouse/ distribution operations with all public utilities in place.

Lawrence County’s retail, shopping, and entertainment options continue to grow with the repurposing of a former strip plaza into Shenango Commons, which features an indoor pickleball center, the pending addition of a community college branch, an indoor dog park, multi-tenant retail space with antiques, crafts, consignments, and several new restaurants.

Forward Lawrence CEO Ben Bush is bullish on Lawrence County’s trajectory and future economic growth. “We’ve seen significant investment by new and existing companies in the county which will add jobs and more prosperity to our community. We enjoy our high quality of life and comparatively low cost of living, and we want share that story with the region.”

Developer John LaCarte of LaCarte Enterprises believes that growth and development is moving in the direction of Lawrence County because of its strategic location which provides convenient highway access to Interstate 79, the Pennsylvania Turnpike, Interstate 376, as well as lower operating and infrastructure costs and a well-trained workforce.

A new four-story 119,050 square foot climate controlled self-storage storage facility is under construction in downtown New Castle. The $12.5 million project is being built in a Federal Opportunity Zone and will be completed later this year.

The Lawrence County Economic Development Corporation, (LCEDC), via a $1 million RACP Grant Program and a grant from the Hoyt Foundation, secured URC, a regional refractory company that will create 30 new jobs and operate in a 40,000 square foot rehabbed former steel plant in New Castle’s industrial corridor. The buildings are adjacent to the New Castle Industrial Rail, providing access to two Class One rail carriers.

The renovation of this heavy industrial space brings back to use a New Castle industrial property that has been vacant for more than two years.

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Washington County Washington County Chamber of Commerce 375 Southpointe Boulevard #240 Canonsburg, PA 15317 724-225-3010 (T) 724-228-7337 (F) Jeff Kotula, President jeff@washcochamber.com www.washcochamber.com Washington County continues to maintain its leadership position among Pennsylvania counties as a premier location to start or grow a business, raise a family, or experience our diverse recreational opportunities.

Washington County also continues to strategically cultivate a diverse economy across several industry sectors to maintain stable growth and present opportunities for job creators and job seekers alike. Some highlights from the manufacturing community, which remains a critical sector in the county, include the expansion of Crane1 into a 30,000 square foot build-to-suit manufacturing building. The company is a local manufacturer and service provider of overhead cranes. This new facility in Washington County will allow Crane1 to continue existing operations and expand their manufacturing capability and equipment service business. Two other local manufacturers also embarked on ambitious expansion plans recently. AccuTrex Products, a veteran-owned custom metal manufacturing and fabrication company, is expanding their locations in Southpointe and Chartiers Township.

Additionally, Atlas Metals, a titanium processing manufacturer, has also announced plans to expand their facility in Eighty-Four to increase production capacity to accommodate high demand for specialty titanium products.

The Mon Valley also saw several exciting new manufacturing additions and expansions. Spaleck USA, a leading global manufacturer of conveying and separation machinery,

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has partnered with the Mon Valley Alliance to build a new building in the Alta Vista Industrial Park to consolidate their Pennsylvania and Indiana operations into a single production facility. Just down the road in Alta Vista, PR North America, an affiliate of California, PA-based rose plastic, is building a new plastic recycling facility. They will recycle pre-consumer waste plastics, providing sustainable feedstock to support rose plastic’s packaging manufacturing operations in the California Technology Park.

However, manufacturing was not the only industry with a positive impact on the county’s economy.

The energy industry continues to lead the way in Pennsylvania and Washington County, and natural gas continues to be a major part of our economy. As MSC President Jim Welty pointed out during the State of the Economy, the industry supports more than 123,000 jobs in the Commonwealth and generates more than $41.0 billion in economic activity.

The consumer benefits of natural gas are another key driver in our economy, with data showing that end-use consumer prices are down, translating to average annual savings of between $388 and $1,182 per household.

Natural gas is not the only energy industry in Washington County gathering headlines this year. Highlighting the continued success possible in coal production is the merger of Consol Energy and Arch Resources into the newly created Core Natural Resources.

The merger closed in January 2025, creating one of the largest North American coal production and export companies, with 11 mines operating across six states and two export terminals on the East Coast. Core Natural Resources is headquartered in Southpointe and will continue to serve their global client base as demand and consumption for metallurgical and thermal coal production continue to hit all-time global highs.

Washington County invests in our own future, prioritizing infrastructure development and blight reduction. The

County recently announced that they will utilize American Rescue Plan Act blight mitigation funding to engage in a public-private partnership to demolish the blighted Washington Mall complex, making way for a new retail and commercial redevelopment project. The new development will be anchored by a national RV dealership and a national warehouse club location. Additionally, the Washington County Local Share Account (LSA) grant program continues to drive investment in infrastructure and economic development projects. The Washington County Commissioners recently approved more than $10 million in LSA grants, representing 67 projects and leveraging more than $68 million in matching investment for economic development, workforce, community recreation, and infrastructure projects.

Through the strategic diversification of our economy, the maximization of opportunities presented through new and existing business investment, and unique public-private partnerships, Washington County is a leading destination to grow a business or career, raise a family, and experience a variety of recreational and entertainment opportunities for both visitors and residents. We invite you to share the energy of Washington County.

THE MASTER BUILDERS’ ASSOCIATION

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Westmoreland County Westmoreland County Industrial Development Corporation 40 North Pennsylvania Avenue # 520 Greensburg, PA 15601 724-830-3061 (T) 724-830-3611 (F) Jason W. Rigone, Executive Director wcidc@wpa.net www.westmorelandcountypa.gov When the Commonwealth shared the results of Deloitte Consulting’s efforts to identify development-ready industrial properties in the latter half of 2024, Westmoreland County Industrial Development Corporation (WCIDC) was proud to see that more than one quarter (four of 15) of the “Tier I” properties across Pennsylvania were in Westmoreland County, with a site at Commerce Crossing at Westmoreland receiving the highest rating.

Two pad sites at Commerce Crossing and two other pad sites at Westmoreland Distribution Park North were identified as “Tier I” status.

Additionally, property at WCIDC’s I-70 Industrial Park just barely missed out on being included in the top category.

This recognition underscores WCIDC’s proactive strategy for growing its industrial park system, which provides ready sites and essential infrastructure to attract economic-development projects.

Speaking of projects …

In October, Roechling Industrial celebrated the completion of a 30,000-square-foot expansion at its facility in Westmoreland Technology Park I. The project nearly doubled the company’s manufacturing space to 64,000 square feet. Roechling is planning further growth, including a second facility on an adjoining lot it acquired in 2023.

Tech Park I is part of the Westmoreland Technology Drive industrial complex along Route 119. Positioned near major highways and an intermodal facility

in the central portion of the county, this industrial zone with four industrial parks and RIDC Westmoreland ensures seamless connectivity to Pittsburgh and beyond, making logistics efficient and cost-effective.

In November, Weiss-Aug Group marked the grand opening of its new 69,000-square-foot advanced manufacturing facility at Westmoreland Business & Research Park in northern Westmoreland. The company’s president, Dieter Weissenrieder, praised the region’s workforce and frictionless development process, and he noted that the facility will serve critical sectors such as medical, aerospace, defense, and automotive.

into a vital employment hub. WCIDC redevelopment efforts on adjacent parcels resulted in the creation of Jeannette Industrial Park and a $60 million cryodynamic products testing facility for Elliott Company. Once RA/ LB completes the remediation, the 4-acre site will be available for yet further revitalization in this Federal Opportunity Zone.

Around the same time, the WCIDC finalized $1.85 million of upgrades at Mount Pleasant Glass Centre in the southern part of the county.

Improvements included a new building façade, modern lighting, and an updated fire alarm system, reinforcing the property’s role as a hub for manufacturing and innovation.

There also were crucial funding announcements in the latter half of the year. In July, a $6 million grant/ loan package from Commonwealth Finance Authority was secured so the WCIDC/RIDC joint venture could continue efforts to modernize New Kensington Advanced Manufacturing Park (NKAMP). And in November, the state Redevelopment Assistance Capital Program announced $6.5 million that will support a roofreplacement at South Greensburg Commons, the NKAMP project and improvements across the county’s industrial park system.

Lastly, as 2024 ended, Westmoreland County Redevelopment Authority and Land Bank (RA/LB) was nearing completion of demolition/remediation of the former Fort Pitt Brewery building in downtown Jeannette.

This project is the latest in a string of successful efforts to transform the city’s formerly blighted industrial core

Spring 2025 | DEVELOPING PITTSBURGH

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When your Customer Counts,

Count on Eisler.

800-420-8733

EislerLandscapes.com 1031 New Castle Road Prospect, PA 16052 PAHIC#001400

David L. Lawrence Convention Center Planters and pavers by Mascaro Construction

People & Events

(From left) NAIOP’s Erica Loftus, Bob Dezort from Anderson Interiors, PenTrust’s Tyler Noland, Joe Pascarella from TriState Capital, Red Swing’s Matt Smith, Melissa Hancock from Officeworks, NAIOP Executive Director Tom Frank, and Paige Myers at the NAIOP Pittsburgh Ski Outing.

Shawna Crow (left) and Casey Mrazik from T Construction.

MBA’s Elli Fry (left) and Miranda Anderson from Atlantic Engineering.

Tyler Niedzwicki (left) and Jonathan Glance from LGA Partners.

(From left) Hanna Commercial’s Sandy Cikovic, Angela Gillot from McKnight Realty, Kelly Hoover Heckathorne from NAI Burns Scalo, and T Construction’s Traci Yates.

Spring 2025 | DEVELOPING PITTSBURGH

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People & Events

(From Left) Visit Pittsburgh CEO Jerad Bachar, Lucas Piatt from Piatt Companies, Carrie Nolan-Robson from the North Side/Shore Chamber of Commerce, Elisabeth Leach from The Pittsburgh Business Collective, and CBRE’s Amy Litzinger were the panelists for CREW Pittsburgh and The Business Collective’s joint March 27 meeting. Photo by Chad Isaiah Photography.

(From left) KEVCON’s Anne Duggan, CREW Pittsburgh President Nicole Rice from Langan Engineering, and Alicia Smith, CREW Pittsburgh administrator. Photo by Chad Isaiah Photography.

Outgoing NAIOP Pittsburgh president Brandon Snyder from Merus (left) thanks past president Jamie White from LLI Engineering for his service to the NAIOP Pittsburgh board at the 2024 holiday party.

Elmhurst’s Eric Schindler (left) and Justin Hunt (right) flank Genfor’s Connor Jangro.

(From left) NAIOP Pittsburgh President Nate Phillips from Chapman Properties, Lauren Connelly from Allegheny County Economic Development, Bedrock Detroit’s Andrea Daniewski, David Morehouse from the Pittsburgh Steelers, and NAIOP Executive Director Tom Frank at the March 20 chapter meeting on the 2026 NFL Draft.

Grant Huchel (left) from Civil & Environmental Consultants and Joseph Sheerer from NAI Burns Scalo.

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www.naioppittsburgh.com

Invest.

Innovate.

Inspire.

We are honored that FNB’s new corporate headquarters has been recognized as Pittsburgh’s top commercial real estate project of the year.

This transformational investment was made possible by FNB and its stakeholders and will have a significant social and economic impact on our region for generations to come, including:

• Nearly $1 billion in economic expansion designed to help revitalize the historic Hill District and reconnect it to Downtown Pittsburgh.

• More than $200 million in loans, investments and grants directly benefiting the Hill District.

• $7.2 million in LERTA-generated funds to the Greater Hill District Reinvestment Fund.

• A $1 million equity contribution to provide working capital for minority contractors, ensuring that local firms can participate in the project.

• Substantial engagement with underrepresented businesses (committed to 30% minority-owned and 15% women-owned business enterprise participation).

www.fnb-online.com

Member FDIC