Developer closes in on Macy's building in Downtown Pittsburgh
June 5, 2014 11:38 PM
J. Monroe Butler II/Post-Gazette
Macy's bought the former Kaufmann's in 2005 and consolidated space in the building in 2011.
Macy's building Downtown Pittsburgh.
By Mark Belko / Pittsburgh Post-Gazette
The talk at Macy's Downtown on Thursday was not so much about Father's Day sales or new fall fashions as it was about plans to turn much of the venerable old building with the famous clock into residences.
Philadelphia developer Core Realty has reached an agreement to buy the 13-story building on Smithfield Street with the intent of converting all but four floors into apartments, the Pittsburgh Post-Gazette has learned.
As part of the sale, Macy's department store would stay, although the number of floors devoted to retail would be shrinking once again. The store, once a 12-floor behemoth, is expected to be housed on the building's first four floors, minus the mezzanine level, which would be closed and used as an entrance for residents.
Three years ago, Macy's cut the number of floors in half, consolidating all retail, including furniture, on the first six floors of the building, plus the mezzanine.
The proposed transaction, which has yet to close, would end a four-year quest by Macy's to sell the property, a Downtown landmark that has served generations of Pittsburghers who have shopped its retail floors, visited with Santa or marveled at its Christmas window displays, eaten at its restaurants, or had their hair styled at one of its salons.
Macy's spokesman Jim Sluzewski wouldn't say Thursday whether the building is under agreement to be sold.
"We want to make better use of unproductive space in the building. At whatever point we have a final resolution, if and when we do, we'll duly report it. Until that time we're not making any comment," he said.
Randy McCombs, a broker with the Grant Street Associates real estate firm who is marketing the building for Macy's, declined comment. Randy Mineo, Core Realty executive vice president, had no comment.
The sale would include the main department store building, which occupies Smithfield between Forbes and Fifth avenues, and a smaller annex that sits behind it and is connected to it.
No sales price has been disclosed, and Core is still completing its due diligence on the property. As part of the deal, Core is studying the potential for underground parking at the site.
The property, which for decades housed the Kaufmann's department store, has a long and rich history. It dates to the latter 1800s when the Kaufmann family opened a store at Smithfield and Diamond Alley (now Forbes Avenue).
It expanded rapidly, reaching its current form by 1913. It not only is known for shopping but also for the clock that sits above the first floor display windows at the corner of Fifth and Smithfield, one that has served as a meeting spot for lunch dates and other appointments.
Macy's gained ownership of the building in the 2005 acquisition of May Department Stores, the former Kaufmann's owner. May paid $2.8 million for the main building in 1986 and $1.5 million for the annex in 1993. The properties are currently assessed at $10.1 million and $3.3 million respectively, according to the Allegheny County real estate website.
At the time Macy's put the property up for sale, it stressed that the department store would remain under a lease-back arrangement.
It is not known what impact, if any, the further consolidation of retail space would have on employees.
When Macy's cut the retail space from 775,000 square feet to about 525,000 square feet in 2011, all 363 workers stayed on the job.
At the time Macy's said the 525,000 square feet was more than double the size of a typical suburban mall store.
Rich Beynon, president of the Beynon & Co. real estate firm, sees the proposed combined use as a boost for Downtown.
"We're in desperate need for residential space and that would be a great use for those upper floors," he said.
Core Realty, a real estate company formed by developer Michael Samschick, has been involved in apartments and a number of other projects in Philadelphia, including a proposed $600 million, eight-block urban entertainment district. An offshoot of the company was behind the development of the Tanger Outlet Center in Washington County and Collier Town Square.
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