Walnut Capital to begin final building at Pittsburgh's Bakery Square
Pittsburgh-based Walnut Capital is finalizing plans to start construction this year on the last building in its Bakery Square complex, a development that began in 2007 and became a catalyst in the revitalization of blighted East End neighborhoods.
The company has applied for a zoning variance to build a nine-story office building and parking garage on the 20-acre complex straddling Penn Avenue in Larimer and Shadyside, said Gregg Perelman, Walnut's founder and CEO. Pittsburgh zoning rules limit buildings in the area to six stories.
A growing demand for office space at Bakery Square prompted the expansion and Walnut is negotiating with tenants for space in the new building, Perelman said. He declined to identify potential tenants.
He said the $40 million project dubbed Bakery Square 3.0 would include an 800-space parking garage and mark the end of development on the site. Construction is expected to begin in summer and take 18 to 24 months.
“We're really happy,” Perelman said. “It's been a great ride.”
It didn't begin that way.
Walnut purchased the former Nabisco Bakery factory from the Regional Industrial Development Corp. of Southwestern Pennsylvania in 2007 for $5.4 million when Larimer and neighboring East Liberty were plagued with unemployment, crime and unhealthy housing options.
Then came the recession of 2008 and “everything went bad,” Perelman said.
Skeptics doubted the proposed development would succeed.
The opening of a 110-room Marriott Springhill Suites in 2010 and Google's move from Carnegie Mellon University completely changed the dynamic.
“We were lucky to weather the storm, then Google showed up in 2009, and that sort of changed everything a lot,” Perelman said.
Others including UPMC and CMU showed up.
Walnut expanded with offices, apartments and townhouses known as Bakery Square 2.0 across Penn Avenue from the 1918 factory. It added a bridge linking both sides of the complex.
The campus includes a strip mall with a fitness center and trendy shops.
Kendall Pelling, director of land recycling for East Liberty Development Inc., said Bakery Square created an economic ripple effect across the city and particularly for blighted neighborhoods.
He said it prompted the city to change traffic patterns in East Liberty that permitted Target to build a store in the neighborhood and played a large role in bringing a $30 million Housing and Urban Development Choice Neighborhoods grant for new homes in Larimer.
“We have an Ace Hotel in East Liberty in part because Ace Hotel is one of Google's most preferred hotel chains,” Pelling said. “The Google presence has helped fuel the additional development in the neighborhood that has helped create more jobs. I think it exceeded expectations to say the least.”
Bob Bauder is a Tribune-Revew staff writer. Reach him at 412-765-2312 or bbauder@tribweb.com or on Twitter @bobbauder.
