Burns & Scalo turns attention to west for new growth

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Horace Greeley once implored young men to go west. James Scalo has the same idea in mind for his real estate company.

As his firm draws closer to completing its three-building Zenith Ridge project at Southpointe II near Canonsburg, Mr. Scalo, president and CEO of Burns & Scalo Real Estate Services, is turning his attention to the Parkway West corridor.

He believes that is where the next wave of office development will take place.

“[Hockey great] Wayne Gretzky said to go where the puck is going, not where it is. That’s the analogy here. We’re going to where the puck is going,” he said.

Burns & Scalo already has started construction on a one-story, 60,256-square-foot office building at Industry Drive and McClaren Road in Findlay near Pittsburgh International Airport. The 8-acre site is being leased from the Allegheny County Airport Authority.

Mr. Scalo said he has a tenant lined up to take half the building, which was started on speculation. Although Burns & Scalo owns existing office buildings in the corridor, the $12 million Industry Drive project represents its first new development.

It could be the beginning of up to half a million square feet in development Mr. Scalo envisions for his firm in the corridor, the largest office submarket in the region.

He believes the area is poised for more expansion, in large part because of the availability of land. He also sees it as a good investment, saying many of the existing buildings are “tired” or older, providing an opportunity for new development.

Other factors influencing potential expansion include Royal Dutch Shell’s proposed cracker plant in Beaver County, Chevron’s plans to build a regional headquarters in Moon, and the oil and gas drilling set to take place on airport property, he said.

“The [office] market has to go somewhere,” Mr. Scalo said.

He won’t get an argument from Jason Stewart, executive vice president of the Jones Lang LaSalle real estate firm.

Mr. Stewart has been representing Continental Real Estate Companies and Chaska Property Advisors in the development of four office buildings on airport authority land near Cherrington business park.

Two of those buildings have been completed and leased to ServiceLink; the third totaling 53,000 square feet is under construction and has been leased to ANH Refractories and Mastech; and construction of the fourth, also 53,000 square feet, is expected to start in September.

That makes four buildings in 21 months.

“I don’t think our region is going to have one big growth area, but I think [the airport corridor’s] one of the areas where we’re going to see growth. There is an availability of land,” Mr. Stewart said.

Neither Continental nor Chaska had a presence near the airport before they started their current projects. Mr. Stewart said they decided to test the water based on the depth of the market, roadway improvements, and the availability of land.

While the Marcellus Shale drilling boom was a factor in the decision, it wasn’t the only one, Mr. Stewart said. “We were attracted to the market because of how many different segments of industry were using the market,” he said.

Even with the Continental/Chaska projects, the Burns & Scalo development and the expansion of Dick's Sporting Goods, the airport authority still has about 100 acres of land ready for development, said Randy Forister, senior director of development at the airport authority.

Another 1,500 acres could be available for development in the future. The authority already has developed about 400 acres, he said, and is preparing more land for construction at Clinton Commerce Park.

“We’ve seen a real uptick in interest this year, probably in the last six to nine months,” Mr. Forister said. “The market was kind of idle for awhile after 2008 and the financial crisis. I think we’re seeing a lot more activity.”

Gerry McLaughlin, executive managing director of the Newmark Grubb Knight Frank real estate firm, agreed with Mr. Scalo that as space fills up at Southpointe and in Cranberry, the Parkway West is the “next natural area” for potential office tenants to go.

But he added that there are still vacancies in the Cranberry market, particularly with the closing of the Verizon Wireless customer service call center and the decision by Bayer Corp. to list a three-story office building in Warrendale for sale.

And while the Parkway West could be a natural area for expansion, Mr. McLaughlin noted that tenants coming into the market still look to the north and the south before heading west.

“For the most part, new tenants seem to be focusing on the north and south. It can change very quickly if there’s no place for them to go in the future,” he said.

Mark Belko: mbelko@post-gazette.com or 412-263-1262.

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