While the Reed Smith law firm plans to relocate its Downtown headquarters to the new Three PNC Plaza next year, it may soon move a separate back office operation from the Gulf Tower on Grant Street to another location.
While the Reed Smith law firm plans to relocate its Downtown headquarters to the new Three PNC Plaza next year, it may soon move a separate back office operation from the Gulf Tower on Grant Street to another location.
Officials involved in the transaction won't comment, but the law firm may be ready to commit to take about 50,000 square feet of space at 20-story National City Center at 20 Stanwix St.
As reported, National City Bank, the building's anchor tenant, has put some of its space there on the market for sublease. The bank also is marketing for sublease about 100,000 square feet of space at Allegheny Center on the North Side.
Mika Realty Group likes the Pittsburgh real estate market enough to buy a second major Downtown building, the James H. Reed Building.
The sale price was $6.5 million, according to a deed filed Thursday in Allegheny County.
The Los Angeles-based group is purchasing the nine-story building at 435 Sixth Ave. eight months after buying the historic Union Trust Building on Grant Street for $24.1 million.
The building has been owned by Reed Smith LLP and 435 Sixth Avenue Associates, two entities composed of current and former partners of the major Pittsburgh law firm, Reed Smith.
It will become vacant when Reed Smith relocates its offices to the new $179 million Three PNC Plaza building on Fifth Avenue next year.
"We love the building and love the synergy that we have between this building and the Union Trust Building," said Rick Barreca, CEO of Mika Realty. "We will keep all of our options open, and we are optimistic we can find a viable and economic use for the property that everyone in Pittsburgh will be happy with."
Officials of Reed Smith declined to comment.
"The Reed building is an historic structure, located in a prime location in the heart of Downtown," said Jeffrey Ackerman, a commercial real estate broker with CB Richard Ellis/Pittsburgh, who had been marketing the building on behalf of Reed Smith.
The 181,348-square-foot building could continue as an office facility, but residential or hotel uses also are possibilities, he said.
An improving office market is one factor that may be attracting out-of-town investors like Mika and Rugby Realty Co., of New Rochelle, N.Y., which owns more than 20 buildings in and around the Downtown, including the landmark Gulf Tower and Frick Building, said Gerard McLaughlin, commercial broker with the Grubb & Ellis Co. commercial real estate firm.
At the end of the 2008 second quarter, office vacancy Downtown and nearby areas such as the North Side, South Side and Strip District stood at 17.2 percent, down from 19.6 percent at the same time in 2007, according Grubb & Ellis market analysis.
Allegheny County public records list the Reed building's market value at $16.78 million, but the fact that structure soon will lose its sole tenant makes the purchase price reasonable, said Peter Sukernek, general manager of Hanna Commercial, an arm of Howard Hanna Real Estate Services.
"They are paying about $36 per square foot, which I think is a fair price," said Sukernek, who was not involved in the sale.
Since its purchase of Union Trust, Mika has been able to attract a major new tenant Siemens Power Generation Inc., which is taking four of the building's 11 stories, Sukernek noted. Mika likely believes that it will have similar success in finding new tenants for the Reed building, he said.
