Robin Rombach, Post-Gazette Mayor-elect Bob O'Connor, left, and Gov. Ed Rendell shake hands after the unveiling yesterday of the new Three PNC Plaza, to be built Downtown. At center is Gregory B. Jordan, managing partner of Reed Smith, the law firm that will be the lead tenant in the office complex. The mixed-use high-rise complex will feature office space, a hotel and condominiums.

By Mark Belko
Pittsburgh Post-Gazette

PNC Financial Services Group will build Downtown's first skyscraper in nearly two decades as part of a $170 million complex seen as a big first step in transforming the bedraggled Fifth and Forbes corridor.

The 25- to 30-story tower, named Three PNC Plaza, will feature a luxury hotel of 150 or more rooms, about 30 top-floor condominiums and 360,000 square feet of office space, about half of which will be leased by the Downtown law firm Reed Smith.

To clear the way for the project, which also will include some ground-level retail stores and a restaurant, PNC will demolish 13 buildings it has amassed on one side of Fifth Avenue between Wood Street and Liberty Avenue over the last 20 years.

	Robin Rombach, Post-Gazette Mayor Tom Murphy, Mayor-Elect Bob O'Connor, Allegheny County Executive Dan Onorato and Gov. Ed Rendell at the unveiling of the new Three PNC Building during a press conference at One PNC. Click photo for larger image. More on the story Graphic: Location where PNC's skyscraper will be built Downtown building owners excited over PNC's plans

The few remaining tenants in that block-long area are on month-to-month leases and will have to relocate or close. PNC hopes to begin demolition this summer, with construction to be completed by late 2008, in time for Pittsburgh's 250th birthday.

Reed Smith will move about 500 employees now in the James H. Reed Building on Sixth Avenue and at Federated Investors Tower, Downtown, into the new building. It will occupy 46 percent of the total office space, with the possibility of future expansion.

PNC, which expects to add about 1,000 jobs in Pennsylvania over the next three to five years, many of them in Pittsburgh, will also use some of the space.

The project is expected to generate about 800 construction jobs.

PNC will invest about $122 million in the project, with another $48 million coming from public sources. Gov. Ed Rendell has pledged $30 million through various state funding streams. The city, Allegheny County and the Pittsburgh school district will kick in another $18 million through tax increment financing.

Three PNC Plaza will be Downtown's first building of 25 stories or more since the 32-story CNG Tower, now Dominion Tower, began accepting tenants in late 1987. It will complement PNC's other three office buildings Downtown -- One PNC Plaza and Two PNC Plaza near the development site, and its Firstside Center.

PNC Chairman and Chief Executive Officer James E. Rohr and others see the project as a key element in the rebirth of the Fifth and Forbes corridor of boarded-up storefronts and low-end retailers.

It is an area that has defied several previous attempts at redevelopment, including an ambitious $522 million retail and entertainment project once proposed by outgoing Mayor Tom Murphy.

Mr. Rohr said the corridor would go from "dark" to "vibrant" with a hotel, restaurant, major office building and activity round the clock.

Mr. Rendell called the proposed PNC complex a "very dramatic first step" in transforming the corridor.

"I think we will mark this day as the day Downtown Pittsburgh turned around for good, once and for all," he said.

Mr. Rohr said burgeoning residential development in and around the Fifth and Forbes corridor made the timing right for the project.

Landing Reed Smith as the anchor tenant also "takes some of the risk out" of the development and "brings excitement" into the Fifth-Forbes area, he said. Once the move has been made, Reed Smith probably will sell the Sixth Avenue building, managing partner Gregory B. Jordan said.

Mr. Rohr said he regretted the way Fifth Avenue, one of the main Downtown thoroughfares, has deteriorated over the years. But he added he is hoping the PNC project, coupled with others planned in the corridor, will renew its grandeur.

"In order for it to really work, somebody had to start. That's exactly what we're doing," he said.

As part of the development, PNC will demolish a triangular building at Liberty and Market Street that was home to Harris Bros. Florist for more than 50 years. That property will be used as a staging area during construction of the high-rise but eventually will become the site for a second building, perhaps for retail.

The high-rise is one of several projects in the works in the corridor.

Last week, Washington County developer Millcraft Investment Inc. announced the $8.5 million purchase and $49 million redevelopment of the Lazarus-Macy's department store at Fifth and Wood, across the street from PNC headquarters.

That development will feature 28 condominiums and 19 rooftop townhouses, plus office space and one-of-a-kind ground-level retail, possibly to include a market targeting residents and office workers. During his visit yesterday, Mr. Rendell awarded $3.75 million in state aid for that project.

Washington, D.C., developer Madison Marquette is working on plans for a retail and residential complex on Fifth, opposite the new PNC skyscraper. It is seeking to recruit retailers like Crate & Barrel and Tiffany & Co.

With the Millcraft and PNC announcements, it probably has been "the best week in Pittsburgh" in 10 years, said Mayor-elect Bob O'Connor, who takes office next month.

"There's a new synergy and a new energy here," he said.

But Jake Haulk, president of the Allegheny Institute for Public Policy, questioned the level of public funding going into the PNC project, calling it "corporate welfare at its worst."

"I understand that PNC wants to do something with its properties. I say go for it, but there's no good reason for the taxpayer to be an investor in this," he said. "I don't understand why taxpayers should be subsidizing a company that can well afford to put money in this."

Mr. Haulk also wondered what impact more office space would have on other parts of Downtown, which is plagued by high vacancy rates. He said government would be better served addressing the issues that he believes have helped to stifle investment Downtown -- high real estate, business and parking taxes.

Mr. Rohr said that without the public help, the PNC project would not have been feasible.

Mr. Rendell defended the aid, saying the private investment is about 2 ¹/₂ times the public involvement. He said that PNC also has pledged to create 1,000 new jobs, which will allow the state to "recoup our investment in a short period of time."

The tax increment financing, meanwhile, will be repaid using 60 percent of the estimated $1.2 million in new property taxes created by the development.

Oxford Development Co. will serve as developer for Three PNC Plaza. The firms of Astorino in Pittsburgh and Gensler in San Francisco will design the building.