At 350 Oliver, Pittsburghers can now expect condos instead of a hotel. Lucas Piatt, President and COO of Millcraft, sees a demand for condos downtown that “we feel … is the only niche market that is really underserved in downtown.”
Read the article below, or at the Pittsburgh Business Times.
Millcraft Investments and McKnight Realty Partners have changed plans for the second phase of their redevelopment of the former Saks Fifth Avenue property downtown, dropping a proposal to build a boutique hotel with some apartments to instead pursue a 70-unit condo project.
The joint venture expects to complete the $35.5 million first phase of development on the site, a seven-story structure with a 600-space parking garage above first floor retail, in October. Then, they expect to move into their revised plan for the location at 350 Oliver Avenue and transition into building out a condo property, to be called Lumiere Residences, shifting out of a previous plan expected to also include some new apartments along with a boutique hotel to operate under the millennial-targeted Moxie flag.
Lucas Piatt, president and COO of Millcraft, sees a demand for condos downtown that “we feel … is the only niche market that is really underserved in downtown.”
In fact, Millcraft and McKnight assert that the demand for residential ownership in downtown is at an all-time high, with the apartment market still relatively strong and growing. Yet only 49 condos have been built in the golden triangle since 2013.
“We know the market,” said Piatt, noting the Millcraft’s Piatt Sotheby’s International Realty has its ear to the ground for the city’s residential demand. “We know that there’s a huge pent-up demand for new (downtown residential).”
Millcraft and McKnight cite recent research by the Pittsburgh Downtown Partnership that projects 2,100 new residents to move into the city’s greater downtown within the next 18 months, joining the more than 12,000 established residents there now.
The new condo plan, one the company has signaled it has considered in the past, is of comparable scale to Millcraft’s Piatt Place redevelopment, which built out 65 condos into the former Lazarus department store nearly 10 years ago. In a Pittsburgh market in which condos have long been outside the norm, McKnight has also developed condos before, building the 5000 Fifth Avenue Condos located in Shadyside in the 1980s.
Both companies own mixed-use projects that include hotels on sites near 350 Oliver: Millcraft developed and owns Tower 260 at The Gardens, including a Hilton Garden Inn; and McKnight owns the Henry W. Oliver Building, to which it added an Embassy Suites by Hilton.
Izzy Rudolph, vice president of development with McKnight, noted the new condo plan will bring the last remaining real estate type into the ongoing revitalization of Mellon Square, a section of downtown in which many of the buildings five to seven years ago were struggling with vacancy and owners in debt.
He expects the appeal of the revamped Mellon Square park will prove a strong amenity to potential residents of the condo plan.
“This has the appeal of really overlooking the fountain at Mellon Square … which is a unique feature,” he said. “It’s main and main in downtown Pittsburgh. We think the location is second to none.”
While expressing confidence in the performance of his company’s Hilton Garden Inn property, Piatt acknowledged that demand — and funding — for hotels may be slowing.
“The financial markets for hotels is tightening right now,” he said. “It’s much more difficult to finance and close on a hotel.”
He also suspects that the pipeline of apartment development in the downtown core could represent a level of supply that may take time to fill.
The change in plans is expected to reduce the overall scale of the project’s second phase, with a 10-story hotel likely to be reduced to seven stories of condos. The change in plans also frees up a 13,000-square-foot space in the project’s first floor originally to be a hotel lobby, which will be marketed for lease to join an already inked Fogo de Chao restaurant.
Piatt said a final budget for the condo plan has yet to be fully determined for a project expected to be built by Mosites Construction Co., with Indovina Associates Architects continuing in its design role for the revised project.
Lumiere’s condos will be marketed for sale starting at $225,000 for one-bedroom units, and buyers will have the option to customize their build-outs in the initial stages of the development.
The building will include a rooftop social room with a kitchen and outdoor deck, featuring fire pits, a yoga area and a dog park.
Piatt said there’s already a pool of nearly a dozen potential buyers for Lumiere, a mix of downtowners who already appreciate the proximity and work-life balance that often comes from living downtown, as well as a law firm or two considering a unit as an amenity for staff.
He sees a very different environment for selling condos now than when Millcraft first launched Piatt Place more than 10 years ago.
“The cool thing is 10 year ago when we did Piatt Place, nobody lived downtown,” he said, seeing lots of downtown apartment dwellers with few options to buy. “They’re used to living in an urban environment. They live it and they’re looking to make it a permanent residence.”
Tim Schooley
Reporter
Pittsburgh Business Times
Photo credit: Tim Schooley, Pittsburgh Business Times
