Forest City Enterprises started 2013 by putting Station Square up for sale. It's ending the year with a change of heart.
After selling three other Pittsburgh properties this year, the Cleveland developer has decided to hold on to Station Square, the South Side riverfront entertainment, dining, retail and office complex linked to Downtown by the Smithfield Street Bridge.
"I would say that we tested the waters in terms of the interest that might be out there and didn't see the values that we thought the property really merited," said Jeffrey Linton, a Forest City spokesman.
Forest City is now actively seeking a partner to help develop apartments or condominiums on the east side of the complex, a project "that we think would add a new dimension to the property," Mr. Linton said.
The company hired the CBRE Inc. real estate firm late last year to begin marketing for sale the 52-acre, 669,800-square-foot complex on the banks of the Monongahela River.
The move was part of Forest City's strategy to focus on major markets -- such as New York, San Francisco, Boston, Los Angeles, Denver, Dallas and Washington, D.C. -- where it had a significant presence, while looking to sell assets in "legacy" or "non-core" markets such as Pittsburgh.
That led the developer to sell in August the 27-story Liberty Center office tower, home to Federated Investors, and the adjoining 616-room Westin Convention Center Hotel to a subsidiary of Starwood Capital Group of Greenwich, Conn., for $135 million.
A month earlier, the company had sold the 399-room Sheraton Station Square Hotel for $61 million to a joint venture led by Pyramid Hotel Group of Boston.
Forest City acquired Station Square, a former Pittsburgh and Lake Erie railroad terminal, from the Pittsburgh History & Landmarks Foundation in 1994. It purchased the Sheraton four years later.
In 2002, it completed a $25 million, 104-room expansion to the hotel and the $25 million Bessemer Court project that brought the Hard Rock Cafe and other restaurants and bars along with a 100-foot-wide dancing fountain synchronized to lights and music.
More recently, Forest City added Highmark Stadium, the Pittsburgh Riverhounds soccer venue, and Texas De Brazil, a Brazilian-American steakhouse.
The properties offered for sale included the ground lease to the stadium; the Landmarks Building, home to the Grand Concourse restaurant and office tenants; Bessemer Court; Commerce Court, with offices and retail; the Freight House Shops, which houses restaurants, shops and the Bradford School; and the East Warehouse.
While CBRE reported a lot of interest in the property, it apparently never generated the kind of offers that Forest City wanted.
"It sounds like they didn't get the right price," said Peter Sukernek, vice president and general manager of Howard Hanna Commercial Real Estate Services.
While Forest City is seeking to divest itself of assets in non-core markets, it doesn't have to sell off all of them, Mr. Linton said.
"That's not the objective," he said. "We don't want to do any divestiture on a fire-sale, everything-must-go basis. If we're not getting the value we want ... we're not going to sell it."
While Mr. Linton would not rule out a potential sale in the future should the right price come along, he added that the developer, at this point, is "not actively looking to exit the property."
Forest City has been talking about doing a residential development on the east side of the property since 2006, when it proposed up to 1,200 condos as part of its unsuccessful bid for the Pittsburgh casino license.
Mr. Linton said the developer is looking to develop a "meaningful" number of apartments or condos at the site but added that it was too early to give an exact number. No timetable has been set for the possible residential component.
"Having taken this opportunity to test the waters, we're anxious to move ahead with the additional development that will make the property even stronger," Mr. Linton said.
Richard Beynon, president of Beynon & Co., a Pittsburgh real estate firm, called Station Square a "pretty strong location" for residential, given the views of Downtown, easy access in and out, and the shopping and parking available on site.
"I think it would be a tremendous opportunity. I think it would do extremely well," he said.
Mark Belko: firstname.lastname@example.org or 412-263-1262.