PNC’s plan could be harbinger of Downtown revival
Paul O’Neill longs to see a Golden Triangle revival, and hopes adding The Tower at PNC Plaza to Pittsburgh’s skyline will help.
“Think about 3,000 people in that space and the implications of that for those who choose to live Downtown and patronize the business,” said O’Neill, the one-time U.S. Treasury secretary and former CEO of Alcoa. “Every investment moves us in the right direction.”
PNC’s announcement last week that it plans by 2015 to build the 40-story skyscraper for 3,000 employees reinforced the hope that O’Neill, Mayor Luke Ravenstahl and the tower’s designers share for reinvigorating Downtown.
“In fits and starts, the city has become a remarkably better place than what it was when I came in 1987,” O’Neill said.
Yet, it’s not the advent of a Golden Triangle high-rise binge.
“I don’t think our market is ready for high-rise speculation. The rates aren’t ready for that,” said Andrew Wisniewski, executive vice president of CB Richard Ellis, a Downtown real estate firm.
The 800,000-square-foot, eco-friendly tower will be a recruiting tool for the company and city, said Doug Gensler, a principal in the Boston office of Gensler, the architecture firm that designed The Tower and Three PNC.
“It’s beginning to help complete the idea of a rich, thick urban center,” Gensler said. “It fits with that 24-by-7 feel of Market Square, the Cultural District and the Fairmont (Hotel) at Three PNC.”
Gensler’s concept is to create a tower of atriums. Each would become employee meeting spaces spanning several floors, to break up 40 “horizontal slabs” that can be isolating.
PNC Chairman and CEO James E. Rohr said the company will spend $400 million to build The Tower at PNC Plaza at the corner of Wood Street and Forbes Avenue, about a block from One, Two and Three PNC Plaza.
The last high-rise opened in 2009 and was the first one built in more than 20 years, largely because it’s cheaper to rent rather than build Class A office space, which has been plentiful, but is becoming scarcer.
If PNC’s skyscraper materialized today, its square footage would nearly equal the amount of Class A office space available to rent in Pittsburgh’s Downtown commercial real estate market.
It’s an encouraging result of steadily climbing demand, rising rental prices and leading employers such as UPMC and BNY Mellon gobbling up office space in premier buildings.
But PNC plans to occupy all of its building — except for some first-floor retail space — so, it won’t add to the rental market.
Class A office space vacancy is about 7.2 percent — compared with 15.9 percent for the lower B and C classes — with 875,556 square feet available, according to real estate company Grubb & Ellis, which puts out quarterly reports on the market.
“I think it is at a historical low,” said Pamela Lowery, vice president of research and marketing for Grubb & Ellis, adding that firms in need of lots of space will turn to the ample supply of Class B rather than construction because it’s “too expensive” for most.
Wisniewski said rental rates would need to approach a lofty $38 a square foot to make high-rise construction more palatable. They’re about $25 now.
Smaller projects of about 10 floors are feasible, he said, or higher if they include hotel and residential space over offices as is the case with Cecil-based Millcraft Industries’ plans to spend $70 million to convert the 16-story former State Office Building into River Vue, a 218-unit apartment building.
Ravenstahl predicted sites the Urban Redevelopment Authority owns, scattered across the Cultural District, Grant Street and elsewhere, should be easier to sell to developers as a result of PNC’s investment.
“If there was a hesitancy, or folks that weren’t sure about (investing Downtown), this will eliminate all of that,” Ravenstahl said at the PNC tower announcement.
The new tower is a positive sign, “but I wouldn’t hang my hat on that as the renaissance,” said Aaron M. Renn, a Chicago-based urban analyst and consultant.
U.S. skyscraper construction boomed in the 1980s and early ’90s, he said. Downtowns in mid-sized cities became overburdened with commercial real estate.
“The future of the economy is not about a long-time Downtown bank adding a building. It’s about all the new businesses there, and about who’s starting tomorrow’s PNC bank,” he said.
Greenest of them all?
At least two skyscrapers — the 48-story Duke Energy Center in Charlotte, N.C., and the 55-story Bank of America Tower in New York City — achieved LEED platinum certification from the U.S. Green Building Council, which rates a building’s energy efficiency.
PNC is seeking that same highest rating. It could succeed in building the world’s most environmentally friendly building because the rating standard grows more rigorous over time and benefits go beyond lower electricity bills, said John Quale, a University of Virginia associate professor of architecture who studies green building design.
Workers in well-lit, properly ventilated and comfortable offices tend to miss fewer days, be more productive and stay with the company longer, reducing turnover, he said.
Since personnel often are a company’s highest cost, savings there easily eclipse what can come from using high-efficiency LED lights or installing green rooftops to reduce heat gain.
“To set the benchmark that high is essentially saying if they don’t do it, it’s going to be embarrassing for them as a company, so everyone is going to focus on that goal,” Quale said.
When the tower is complete, it will alter Pittsburgh’s acclaimed skyline, but it is puny when compared to the truly enormous structures across the globe, said Carol Willis, curator of the Skyscraper Museum in Manhattan.
The 160-story Burj Khalifa in United Arab Emirates is the world’s tallest building.
Willis said U.S. cities generally constrain building height, while governments in China, South Korea and Middle Eastern countries encourage it to spur economic growth and accommodate huge populations.
Is a 40-story office tower really a skyscraper?
“Skyscraper is the romantic term,” she said. “It’s all relative. Skylines and skyscrapers go together, so if it pops up in Pittsburgh’s skyline it’s a skyscraper.”