Strada/Millcraft Investments Strada, an architecture, interior design, landscape and urban design firm, produced this rendering of the Millcraft Investments plans to renovate the Macy's-Lazarus building at Fifth and Wood streets, Downtown. Click photo for larger image.

The Lazarus-Macy's department store could go from hawking housewares and clothing to dishing out penne pasta with pesto and marinated vegetable salads as part of a $49 million retail, residential and office redevelopment unveiled yesterday.

Millcraft Investments, the Washington County developer undertaking the project, is talking to several grocery stores about opening a market in part of the vacant store, which was closed last year.

Lucas Piatt, vice president for development for Millcraft, said the developer is looking for a more exclusive type of market that would offer prepared foods and cater to the needs of the residents and office tenants who will occupy the building after its rebirth.

Such a market has long been at the top of the wish list for many people who call Downtown home, and the idea has gathered momentum as developers have presented plans for more condos, apartments and student housing units in the city's center.

"That's what we think needs to be there," Mr. Piatt said. "I think everybody in the community would support a Downtown grocery store big time."

The market would occupy some of 50,000 square feet of retail space Millcraft is planning on the ground floor of the building at Fifth Avenue and Wood Street.

The developer also is searching for one-of-a-kind retailers rather than mall regulars to fill out the space.

"We feel that for us to be successful here, and actually for the whole Fifth and Forbes [corridor], you got to be careful about putting stuff Downtown that's already in malls. It needs to be something more unique. For anyone to be successful, the Downtown location should be their only location," Mr. Piatt said.

The retail space would supplement a much larger redevelopment plan that calls for including 28 loft-style condominiums and 19 two-story rooftop townhouses with balconies that would rise above the four-story building. The units would sell for $300,000 to $900,000, with a penthouse priced at $1.4 million.

Residents would have access to on-site storage, a small movie theater, a full-service health club and spa, valet parking and concierge service. Millcraft is negotiating with the city's Parking Authority for up to 75 parking spaces in the Lazarus-Macy's garage for residential tenants.

Millcraft also is looking at developing 105,000 square feet of office space on the second floor and part of the third. It already has had talks with one law firm about occupying space. For office tenants, it will be adding a business center and conference rooms to the mix of planned amenities.

The new details emerged during a news conference yesterday inside the old department store to announce the sale of the building to Millcraft and its chairman, Jack Piatt, the developer most widely known for the Southpointe golf course, residential and office complex in Cecil near Canonsburg.

According to Millcraft, the redevelopment will create 600 new jobs as well as 200 temporary construction jobs.

Millcraft is planning to sell off its interest in a steel-related repair business early next year and use part of the proceeds to help fund the Lazarus-Macy's redevelopment and other projects, Jack Piatt said.

"We're going to concentrate on projects like this. And a lot of them, I think, will be in Downtown Pittsburgh," he said.

Millcraft will be paying $8.5 million to Federated Department Stores for the building, well below the $36 million Federated and the city spent erecting it in the latter half of the 1990s. As part of the deal, however, Millcraft has agreed to repay, under a proposed profit-sharing arrangement, a $13 million Urban Redevelopment Authority loan that helped to finance the building's construction.

The sale has been a year in the making and had its genesis in the work of the Pittsburgh Task Force, a group of foundations and nonprofit organizations that is trying to revive the flagging Fifth and Forbes business district.

Task Force Chairman Herb Burger, who spearheaded the negotiations with Mr. Piatt, said the redevelopment will help to "jump start" the resurgence of the district.

"This is a very special moment. I'm pleased to say that Fifth and Forbes development will begin for real this time," Mr. Burger said.

"What was Lazarus will become a jewel in the middle of the city, and there is more to come very soon."

The task force also is working with Washington, D.C.-based developer Madison Marquette on plans for a residential and retail development on Fifth and Forbes avenues, utilizing the old G.C. Murphy's and other URA-owned buildings.

And later this month, PNC Financial Services Group is expected to unveil details of its proposed $170 million residential, retail and office complex on Fifth Avenue adjacent to its headquarters at Fifth and Wood Street, opposite Lazarus-Macy's.

Mayor-elect Bob O'Connor called the Lazarus-Macy's project a "great first step" in the overall redevelopment of the Fifth and Forbes corridor. He believes the corridor, which has fallen on hard times with numerous business closings in recent years, has turned the corner.

"We're getting a lot of inquiries and I think a lot of energy now from across the country. People see what Pittsburgh is all about and the opportunity here," he said.

Madison Marquette is planning about 150 residential units as part of its development and is also trying to recruit national retailers.

Mr. O'Connor, who takes office next month, said he is still awaiting more details from Madison Marquette, including the project cost and financing, before committing.

"I'm looking for a wow," he said.

Millcraft hopes to close on the deal with Federated by the start of the year. It hopes to have a first condo model available shortly thereafter and the retail and office space finished by the end of next year. The residential component will have a three-year build-out.

As part of the makeover, the building will be renamed Piatt Place.

"We're figuring that we're taking such a big risk down here that we want to put our name on the project," Lucas Piatt said.