BNY Mellon is putting iconic Citizens Bank Tower up for sale
The Citizens Bank Tower, an iconic building that was one of Pittsburgh’s first skyscrapers and remains among the tallest in its skyline, is up for sale as its owner hopes to capitalize on intense interest for Downtown office space.
Owner Bank of New York Mellon is shopping the building as part of plans to scale back its real estate footprint to cut costs. No price has been set, nor has the bank identified a broker to represent the property, said spokeswoman Lane Cigna.
However, BNY Mellon is eager to take advantage of a hot market in Pittsburgh.
“There is a lot of outside interest in Pittsburgh in terms of the market itself. If you’re an astute real estate investor, you see the building that’s going on,” she said. “It’s really good timing to start to market this.”
Built in 1951 for Mellon National Bank and the U.S. Steel Corporation, the 42-story skyscraper at 525 William Penn Place symbolized the city’s economic underpinnings in the middle of the 20th century, said Arthur Ziegler, president of Pittsburgh History & Landmarks Foundation.
“It was very tall for Pittsburgh at the time and bespoke for the two corporations that were in it — Mellon and U.S. Steel,” he said.
BNY Mellon has 1,500 employees there who are expected to begin moving sometime in March to the bank’s other office buildings at BNY Mellon Center on Grant Street and its client service center on Ross Street. BNY Mellon has 7,300 employees in Pittsburgh.
The Citizens tower comes on the market just two months after U.S. Steel announced plans to move out of Pittsburgh’s tallest building, which it has occupied since 1970, and into a five-story corporate headquarters to be built on the former Civic Arena site by September 2017.
The moves by BNY Mellon and U.S. Steel could slow rising rents for premium Downtown office space.
“The more space you have on the market, the less likely rental rates are going to go up,” said Gerry McLaughlin, executive managing director at Newmark Grubb Knight Frank, a commercial real estate firm. “It will have an impact on rental rates.”
Office space rents have climbed throughout Pittsburgh in recent years, but some of the most expensive property is Downtown, said Edie Hartman, director of business development for Grant Street Associates, Inc.
Premium office space in the Golden Triangle rents for $25.92 per square foot, she said, compared to $22.20 in suburban office parks.
The Downtown market has become prized among companies looking to attract younger workers, she said.
There is still plenty of demand for suburban business parks like Southpointe and Cranberry Woods, Hartman said, which are 95 percent occupied. But BNY Mellon’s move out of the Citizens building could open opportunities for companies that have until now been shut out of the Downtown market.
“There are quite a few companies that are starting to look more seriously at the central business district,” she said. “I think 2015 is going to be an interesting year where we’re all going to be watching what the progress will be.”
BNY Mellon’s departure will free up two-thirds of the Citizens Bank Tower. BNY Mellon occupies about 30 floors, or 650,000 square feet, with Citizens as the next largest occupant with six floors, or 150,000 square feet, said BNY Mellon spokesman Ron Gruendl.
Citizens spokeswoman Lauren Digeronimo said it does not expect the building’s eventual sale to affect Citizens’ presence in Pittsburgh. Citizens has a long-term lease with an option to renew. The sale is part of BNY Mellon’s larger strategy to cut costs and shrink its real estate footprint. The bank sold its headquarters at One Wall Street in New York City last year.
Hartman said the Citizens Tower offers premium space that has been well-maintained and would attract investors from outside of Pittsburgh.
“I think this building will garner quite a bit of interest from outside investors because it’s in a very stable market,” she said. “With a marquee tenant like Citizens, I think that it will do very well.”
Chris Fleisher is a staff writer for Trib Total Media. He can be reached at 412-320-7854 or [email protected].