There will be no white knight for some of the Pittsburgh region’s premier development sites.
With HQ2 going elsewhere, no one can count on Seattle online retailer Amazon to swoop into town to grab millions of square feet of space, whether it’s at the old LTV Coke Works in Hazelwood, the former Civic Arena site in the lower Hill District, or another location.
“It would be nice for someone to come in and take everything. Now they will have to work harder,” said Gerard McLaughlin, executive managing director of the Newmark Knight Frank real estate firm.
And that’s OK with Rebecca Flora, project director of Hazelwood Green, as the 178-acre LTV site is now known. It is believed to be one of the locations offered to Amazon in the region’s pitch for the second headquarters, as part of a business competition that has stretched out over the past year.
But Ms. Flora said she was never counting on the e-commerce juggernaut to be the site’s savior.
Instead, she and the Almono partnership that owns the property focused on finishing a preliminary land development plan and issuing a request for qualifications for the development of part of the site.
“We stayed on schedule while all of that [with Amazon] unfolded,” Ms. Flora said. “I think that was a wise decision not to get too distracted by it.”
She would not say whether she held any land back for Amazon.
But like Ms. Flora, it appears that most of the region’s developers and land owners took a business-as-usual approach to marketing buildings, sites and projects despite the frenzy surrounding Amazon’s search.
Pittsburgh was one of 20 finalists for the big economic development catch, with its promise of 50,000 jobs and $5 billion in investment. In the end, Amazon, in an 11th-hour decision, divided it equally between Arlington, Va., and New York.
Izzy Rudolph, president of development for McKnight Realty Partners, said his company held nothing off the market for Amazon.
That included McKnight’s $110 million Highline redevelopment on the South Side, a historic old cargo warehouse near Station Square. McKnight has about 200,000 square feet tied up in new, expanded or renewed leases, and another 50,000 square feet left to fill.
Mr. Rudolph never thought that Pittsburgh had a realistic shot at HQ2 given the size of that development.
But he does believe the region should have been in the running for what Amazon doled out to Nashville the day it announced HQ2 — an operations center that will involve 5,000 jobs, one million square feet of space, and more than $230 million in investment.
That’s the kind of development, about equivalent in size to One Oxford Centre, that Pittsburgh easily can handle — and should pursue.
“I thought that was one we could have handled without giving away the store. That’s one we should have chased,” he said. “There will be others. It could be Amazon. We just have to figure out how to do it.”
Mr. McLaughlin said the incentives dangled before Amazon — the state offered up to $4.6 billion — should be used to help attract other companies.
The competition, he noted, also showed off some of Pittsburgh’s warts, including the need to build a more robust transportation system. But overall, he did not view the loss of the headquarters as a setback.
“It’s like going to a ballgame and being down a run or two after an inning. You feel down. That’s what this is. It’s an inning. It’s not a make-or-break event for Pittsburgh,” he said.
In the aftermath of that high-profile competition, Gregg Broujos, managing director of the Colliers International real estate firm, said the focus should be on growing and retaining companies already in Pittsburgh, while attracting others to the region.
The loss of HQ2 will force big developments like Hazelwood Green and the 28-acre arena site to diversify and spread the risk. That is a good thing, he said, noting that it helps to prevent the kind of calamity that happened when US Airways dramatically scaled back in Pittsburgh. The region lost thousands of jobs and hundreds of flights.
“With Amazon, you were going to be all in. What would have happened if it ever left or downsized?” Mr. Broujos asked. “Then you would have been left with a building specifically constructed for Amazon that would have been difficult to re-tenant with multiple companies who wouldn’t necessarily want the same office layout and design.”
Like Mr. Rudolph, he believes the kind of development Nashville landed is what the city should be pursuing, while at the same time helping local companies to grow.
“If you put the same amount of effort, planning and economic incentives in place for companies that are here and for smaller companies outside the region, I think the payoff is better,” he said.
Dan Adamski, Jones Lange LaSalle managing director, pointed out that Hazelwood Green’s Mill 19 redevelopment already has attracted Carnegie Mellon University’s Advanced Robotics for Manufacturing Institute and the Manufacturing Futures Initiative and self-driving car startup Aptiv.
“Now that the HQ2 announcement has been made and we know it’s not Pittsburgh, we should concentrate on the innovative work coming from tech and health care companies who are already here,” he said.
“For example, we have tremendous investment and research in the autonomous vehicle industry and these companies haven’t even gone to market yet. We don’t know how big our local technology industry can become so it is still a very exciting time to be in Pittsburgh.”
In a newsletter post Wednesday, Herky Pollock, one of the region’s top retail brokers, recalled the city’s “darkest hours” decades ago when he would call on companies to locate here “only to be ignored or scoffed at.”
That has changed over his 33-year career, thanks in part to the positive publicity generated by Pittsburgh being a finalist for HQ2. Amazon, he said, “fully validated our position in the national landscape.”
“Companies and individuals will now look upon us in a different light than in our darkest days. And those same companies that I called are now calling me to enter the market,” he wrote.
Mark Belko: mbelko@post-gazette.com or 412-263-1262.
First Published: November 15, 2018, 11:58 a.m.