Gardens at Market Square high-rise back on course

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Gov. Tom Corbett, Mayor Luke Ravenstahl and other dignitaries Aug. 21 hoisted silver shovels but turned no dirt at a ceremonial groundbreaking for a $103 million office, hotel and retail complex Downtown near Market Square.

Three months later, the ground remains undisturbed.

The 18-story Gardens at Market Square high-rise on the south side of Forbes Avenue has been delayed by the loss of the project's anchor tenant and a complicated financial deal that took time to complete, said Lucas Piatt, president and chief operating officer of Millcraft Investments, the developer.

Despite the setbacks, Mr. Piatt said construction should be ready to start at the end of the month, with the building scheduled to be occupied in October 2015.

"Everything is lined up. We are full speed ahead," he said.

One of the last formal pieces of action will take place Friday when the Pittsburgh Urban Redevelopment Authority board is expected to sign off on documents related to $8.6 million in tax-increment financing to pay for the development's 330-space parking garage and public improvements.

Kevin Acklin, the head of Mayor-elect Bill Peduto's transition team, said the incoming administration is reserving comment on the proposed TIF authorization pending a meeting with the URA leadership today.

The Gardens project hit a snag when Millcraft lost the proposed anchor tenant, believed to be Fifth Third Bank, right before the groundbreaking. It was to occupy two floors in the building, which will feature 130,000 square feet of Class A office space.

Larry Magnesen, director of corporate communications for Fifth Third Bank Corp., would neither confirm nor deny that the bank was to be the anchor tenant.

While Millcraft has not identified the anchor, Mr. Piatt acknowledged that losing it "slowed us down a little bit."

The developer, he said, has found some replacements, but still has 70,000 square feet of office space to lease. Mr. Piatt said he expects to have all of the space filled by the time the structure is completed.

"We're talking to about four very hot prospects right now," he said.

The anchor tenant was the second tenant Millcraft lost. The firm dck worldwide was to take 30,000 square feet in the building and serve as construction manager for the project, but was unable to come to terms.

It was replaced by Turner Construction, which is taking one floor in the high-rise.

The other factor that delayed the start of construction, Mr. Piatt said, was the complexity of the financing. He said there were "12 different layers of capital" involved, including the tax-increment financing, new markets tax credits, and a $4 million state redevelopment assistance capital grant.

Millcraft now should be in the position to close on all the financing by the end of the month, he said.

Robert Rubinstein, acting executive director of the URA -- which is selling the land to the developer for the project -- said Millcraft was required by the lenders to reach certain pre-leasing thresholds before it could move forward with the project. When Millcraft lost the anchor, "it took another two months to retool and get that back on track," he said.

Mr. Piatt said Millcraft is close to leasing all of the project's 20,000 square feet of retail space. Hamburger haven Burgatory and Roost Fifty New American Kitchen, a high-end restaurant that will overlook Market Square, have committed to the development, which also will feature a 197-room Hilton Garden Inn.

Millcraft is looking at other restaurants and entertainment uses, perhaps even a nightclub, to fill the 7,800 square feet of space still left.

"We think there's a gap Downtown in what happens after dinnertime," Mr. Piatt said. "We've got a couple of good concepts to fill those gaps."

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