Burns & Scalo, Oxford Development vie for Downtown Pittsburgh visibility

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Forget Smithfield Street. Forget the Strip District. Forget the former Civic Arena site. James Scalo says he knows where the next skyscraper will be built Downtown -- right on his land.

For the past three years, Mr. Scalo, president and CEO of Burns & Scalo Real Estate Services, has been marketing the 29,000-square-foot parking lot on Fort Pitt Boulevard near Smithfield Street to potential office users.

So far, he has gotten no takers. But he believes that will change.

"This will be the next high-rise in Pittsburgh," he said boldly Thursday as he surveyed the parking lot. "Nobody's going [elsewhere Downtown] when you can come here. Location. Location. Location."

Mr. Scalo might get an argument from Oxford Development Co., which is marketing a site on Smithfield Street between Fifth and Forbes avenues for a new skyscraper, or the Pittsburgh Penguins, who are preparing to develop the 28-acre former arena property, or the Buncher Co., which has plans for offices and residences on a riverfront parcel in the Strip District.

But Mr. Scalo maintained that his site has greater visibility and better access to highways than the others do. The Scalo property is located a block or two from ramps to the parkways east and west and faces the Monongahela riverfront. A new building would be visible from Mount Washington and the Fort Pitt Bridge.

"It's a perimeter lot with river views. In commercial real estate, sight lines and views really dictate desire and value," he said.

Burns & Scalo bought the parking lot and the adjacent 132,500-square-foot One Smithfield Street building from Allegheny County for $11.4 million in late 2009. The county rents space in the building under a 20-year lease. A separate 20-year lease governs the parking lot, but Burns & Scalo has the ability to terminate that agreement with a year's notice, Mr. Scalo said.

For several years, the company has been marketing the parking lot for a 300,000-square-foot building with lower level parking. Burns & Scalo has the ability to go as high as 18 stories at the location, perhaps higher with a variance, Mr. Scalo said.

Both U.S. Steel and Chevron, he said, have considered the location for a potential headquarters, he said.

U.S. Steel is thinking about leaving its longtime home in U.S. Steel Tower for a new location when its lease expires in 2017. The Post-Gazette reported in September that the corporation is considering the 37-acre parcel in the Strip owned by Buncher and a 116-acre property off McClaren Road in Findlay. At the same time, it has not ruled out staying at its current location on Grant Street.

Mr. Scalo said U.S. Steel has told him that it is looking for more of a horizontal campus-like headquarters than a vertical office tower.

"If they were going to build new Downtown, this would have been it," he said. "Nobody knows what they're doing yet. Who knows? Maybe they'll come back."

The city and the county, Mr. Scalo said, would like to see U.S. Steel move to the Civic Arena site if it doesn't stay in U.S. Steel Tower.

County Executive Rich Fitzgerald said he has talked to the corporation about the arena site as well as the Buncher property in the Strip. "We would love to have a major presence like U.S. Steel be part of [the arena development]. Whether that fits into their overall plans remains to be seen," he said. "It certainly would be a good fit."

What's most important, he added, is that the steelmaker stay Downtown, he said.

U.S. Steel has been tight-lipped about its plans. In a statement Thursday, it said, "We're currently exploring several alternatives in order to arrive at the best long-term business solution for our company."

Mr. Scalo said Chevron also considered his property for a headquarters before settling on a potential location in Moon.

He noted that one of the drawbacks to building Downtown is that a developer has to charge $38 to $40 a square foot in rent to pay for the construction, much higher than a company would have to pay in the suburbs or even for the top class A space in the Golden Triangle.

Burns & Scalo has no plans to build without a tenant in hand. Banks typically won't lend for a high-rise office construction unless the developer has at least 40 to 50 percent of the building pre-leased.

While Mr. Scalo said he is "not actively talking to anyone" about building at the Fort Pitt Boulevard site, but he doesn't think it will be long before that changes.

With natural gas prices rising again, he believes more energy companies will be looking for space in Pittsburgh -- and Downtown, specifically.

"There are a lot of people looking to come here. It will happen," he said. "I would be surprised if in the next five years we don't have anyone."

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


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