Fifth Avenue corridor isn't hot property
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Even as the Consol Energy Center prepares to open in August, the Fifth Avenue corridor bordering it has yet to capitalize on its promise.
At least 10 properties in a three-block section of Fifth near the new arena are for sale or lease, but so far developers aren't rushing in to snatch up the real estate.
Given the proximity of the arena, owners are seeking top dollar for their properties, in some cases scaring away would-be investors. Some developers worry whether the area will produce enough business on non-event days to justify the investment.
And some property owners complain that the city has not done enough to make the area more attractive for development.
Mark Baranowski, owner of North Park Lounge, had a deal to buy a three-building complex on Fifth directly across from the arena that now houses Uniforms USA.
But he backed out because of concerns about whether there would be enough non-arena traffic to support his restaurant venture. The property owner, Howard Elinoff, is seeking $2.5 million for the three buildings at 1008, 1010, and 1016 Fifth.
"For a bar or restaurant owner, you're kind of rolling the dice because there's not a lot of activity there right now," Mr. Baranowski said.
He said he visited the corridor a couple dozen times as he investigated the purchase. Non-hockey nights were "scary because there wasn't a lot of people there."
Penguins broadcaster Paul Steigerwald also had considered Uniforms USA properties for a possible restaurant and sports bar, but was driven away by the asking price.
"A lot of those buildings are attractive at the right price. Unfortunately, they're all priced very high right now," he said.
Mr. Steigerwald also had looked at the Kadet Photo property across from Consol's Fifth Avenue entrance but decided not to pursue it because of the asking price, said to be about $1 million, and the need for upgrades to the real estate. He stopped short of saying owners were asking too much for properties along Fifth.
"I'm not saying they're asking too much. They're asking a lot and there's really no history there to lean on or use as a barometer to determine if the price they're asking is reasonable," he said.
However, Rob Stephany, city Urban Redevelopment Authority executive director, said some of the pricing could be too high.
"I would say the fact they're not being sold that the price obviously is one of the reasons," he said.
But Mr. Elinoff said he does not believe he's asking too much for his buildings. He noted that a building on the corner at 1000 Fifth was bought by Duquesne in 2007 for $550,000, adding his real estate, with about 30,000 square feet, was equal to "four of those" buildings.
Mr. Elinoff said he has spoken to six or seven groups with a "serious interest" in the property. Besides Mr. Baranowski, one other group had an agreement to buy the buildings but couldn't secure financing, he said.
With no buyer currently on the horizon, Mr. Elinoff said he may try to redevelop the property himself. He envisions a sports bar with a rooftop deck overlooking the arena's Fifth Avenue entrance.
He also disputed concerns about the lack of traffic on non-event days. He said Duquesne, UPMC Mercy, and Grant Street business and government offices are within a few blocks of the property and that UPMC health plan employees are located in Chatham Center across from Consol Energy Center.
Mr. Elinoff is not the only property owner who has seen a surge of interest but few commitments as the Consol construction has progressed.
Chaim Davidson, a broker for Aishel Real Estate who is leasing properties at 1100 and 1102 Fifth, described many of those looking as "tire kickers." He said they want to lease space at $8 to $9 a square foot when he believes the rate should be $18 a square foot, given the location.
"They want to get a deal they would have got four years ago before the construction started," he said. "Now it's too late."
Tom McChesney, senior vice president of Grubb & Ellis Co., who is trying to lease retail space at 900 Fifth, said the economy may be a factor for some businesses, perhaps impairing the ability to get financing or making people more cautious.
"It's a long-term commitment of capital, and people are wary in general," he said.
Others believe developers may be taking a wait-and-see approach to see what kind of impact Consol Energy Center has on Fifth Avenue.
"I think a lot of people are waiting for the new arena to open," said Philip Scolieri, a shareholder in Dosco Inc., the owner of a building for sale at 1207 Fifth next door to the arena. Dosco is seeking $750,000 for the property, which it bought for $335,000 in 2002.
As many adjacent property owners are seeking buyers or renters, the Penguins are marketing at least several street-level retail spaces at the arena.
Maybe the only entity buying property on Fifth right now is Duquesne University. In addition to the 1000 Fifth purchase, it has sales agreements to buy buildings at 916 and 912/914 Fifth, spokeswoman Bridget Fare said.
Some property owners say the city has done nothing to help spur investment by improving sidewalks, lighting and landscaping in the area even as the Consol Energy Center side sports new sidewalks, trees and lighting.
The URA tried to secure money for upgrades but was unable to do so, Mr. Stephany said. He added the agency has offered to make streetface and public space improvement funds available but those would require contributions by the property owners themselves.
Even as property owners look to cash in on the arena, it is not unusual for areas around new sports venues to take time in developing, according to David Glickman, vice president of the Grubb & Ellis Retail Services Group. "If you're putting the arena in some other area, you don't typically see, even in other cities, an immediate rush of retail and restaurants. It builds up over time," he said.
First Published May 28, 2010 12:00 am