Bakery Square 2.0

The week that was: Week of April 13, 2014April 20, 2014 12:00 AM

By Deborah M. Todd / Pittsburgh Post-Gazette

Twice baked

After turning a former Nabisco factory in Larimer into a crown jewel of the Google empire,Walnut Capital has broken ground on Bakery Square 2.0. The massive expansion will sit acrossthe street from Bakery Square at the former Reizenstein Middle School and will feature a218,000-square-foot office building, 350 apartments and 52 townhouses. The first of the BakeryLiving apartments will be complete in June and will offer rents ranging from $1,150 for a studioand $3,200 for a two-bedroom.

Raised rents

Paying thousands a month for a high-end studio isnt the norm in Pittsburgh, but rising rentalprices could change expectations. Pittsburgh is giving large metro areas such as New York andSan Francisco a run for their money in terms of rental prices, according to San Francisco personalfinance website NerdWallet. Experts attributed the rising rents to increases in demand due to theoil and gas industry, as well as increased commerce surrounding the citys emerging tech sector.

Feeling the squeeze

H.J. Heinz Co.s Pittsburgh employees are feeling the squeeze in light of a recent buyout offerthat affects the majority of the organization. The company sent buyout offers to 775 Pittsburghemployees last week, offering deals that start at six months severance pay and increase dependingon years of service. Although the company has cut 600 office positions in the U.S. and Canadasince it was acquired by Berkshire Hathaway and 3G Capital for more than $28 billion in June,managers said they are committed to remaining in Pittsburgh and any employee here who takesthe buyout will be replaced. Eligible employees have until Monday to accept the offer.

Jobs jump

Pennsylvania has weathered the economic storms of recent years to come out on top in terms ofjobs. The state's unemployment rate in March fell to 6 percent, two points down from Februarysrate and far below the national average of 6.7 percent. The 6 percent rate is the lowestunemployment has been since the October 2008 start of the Great Recession. The state'sunemployment rate rose largely due to the addition of 19,000 people to the workforce, while thenumber of unemployed individuals dropped by 8,000 and the state's labor force, a combinationof residents who are working and those who are unemployed, grew by 12,000.

Quote of the Week

"I was like, 'What do I do now?' UPMC is all I see every day. I was ignorant that there was evenanother hospital around here." University of Pittsburgh student Alaina Smith explains herthoughts after being denied service with a UPMC orthopedic office because she carriedHighmark's Community Blue insurance.

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Bakery Square Development ContinuesResurgence Of East LibertyApril 17, 2014 6:02 PM

(Photo Credit: KDKA)

Related Tags: Allegheny County Executive, Bakery Square, Bakery Square 2.0, Business, Development, EastLiberty, Google, Jon Delano, Lt. Gov. Jim Cawley, Mayor Bill Peduto, Reizenstein School, Residential, RichFitzgerald, Shopping, U.S. Rep. Mike Doyle, Walnut Capital

PITTSBURGH (KDKA) Not exactly in unison but united nonetheless, developers and

community leaders broke ground on a $120 million development on what was once the

Reizenstein School on Penn Avenue in East Liberty.

The first building were building offers 218,000 square feet of space, and Google has already

signed a lease to occupy one third of it, observed Gregg Perelman of Walnut Capital.

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Named Bakery Square 2.0, across the street from Walnut Capitals highly-successful Bakery

Square, it builds on that innovative office space with hip shopping and residential living where the

smells of Nabiscos baking used to waft through the air.

So much media attention about a new cracker plant in Beaver County, Mayor Bill Peduto joked,

but theres going to be 800 engineers around an old cracker plant in East Liberty, and a whole

new economy being built around it.

Elected officials hailed the transformation of East Liberty.

This whole corridor was at times like a war zone, recalled U.S. Rep. Mike Doyle, a Forest Hills

Democrat, and you just thought what is ever going to happen? And people avoided saying the

word East Liberty.

But that is changing.

Were one of only three regions in the country in which 20 percent of our young workforce has a

post-graduate degree. We have a brainy city, a smart, industrial, hardworking city which is a

model of what people can do around this country, noted Allegheny County Executive Rich

Fitzgerald.

The developers predict the project will create 3,500 jobs with 350 apartments for rent and 52

townhouses for sale and continued growth for this part of East Liberty.

People around the country are looking to Pittsburgh as an example, looking to Pittsburgh for

ideas, looking to Pittsburgh for answers, said Lt. Gov. Jim Cawley.

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From the Pittsburgh Business Times:http://www.bizjournals.com/pittsburgh/news/2014/04/17/bakery-square-2-0-rises-from-originals-google-bred.html

Apr 17, 2014, 1:44pm EDT Updated: Apr 17, 2014, 1:50pm EDT

Bakery Square 2.0 rises from original'sGoogle-bred success

Tim SchooleyReporter- Pittsburgh Business TimesEmail | Twitter | Google+ | Facebook

The next major development to continue the revitalization of the citys East End got the fullceremonial groundbreaking treatment Thursday on an already-busy construction site where theformer Reizenstein school once stood on Penn Avenue.

The principals of Walnut Capital Partners were joined by Mayor Bill Peduto, AlleghenyCounty Executive Rich Fitzgerald, Lt. Gov. Jim Cawley, U.S. Rep. Mike Doyle, D-Pittsburgh, Carnegie Mellon University President Subra Suresh and many others to celebratethe construction of a new 218,000-square-foot office building that will allow Google to expandacross Penn Avenue into the new Bakery Square 2.0, a project that will eventually extendBakery Square to eventually triple the amount of office space at the original development.

Todd Reidbord, a principal of Walnut Capital, emphasized the approach that enabled the projectto succeed to the point where the first-phase redevelopment of the former Nabisco bakerybuilding is now 100 percent occupied, largely by Google (Nasdaq: GOOG) but also by theUniversity of Pittsburgh and others.

Build it right and they will come, said Reidbord.

The original Bakery Square is a fully-leased success with only a few remaining retail spaces leftto fill. An expansion by Google helped drive demand for the new 217,000-square-foot officebuilding under construction across Penn Avenue. So far, Google has agreed to lease one-thirdof the new building, which will include a new sky bridge over Penn Avenue.

Gregg Perelman, the managing partner for Walnut Capital, said the company is in talks with ahandful of other potential tenants for the new building, which he didnt identify.

Perelman remembered a time when they were just starting on the redevelopment of the originalBakery Square years ago as the economy was slumping into recession and retailers pulled out of

the project. He recalled having serious talks with funders about dropping the plan.

We didnt turn off the oven, said Perelman. We kept baking.

To be sure, Walnut Capital has generated ample public support on the project, with publicmoney about 12 percent of the funding on a combined project with a total investment of nearly$300 million. Thats more than $30 million for both phases of the development, which straddlesLarimer and Shadyside.

The new office building, expected to be the first of two designed by downtown-based StradaArchitecture, is expected to be completed in the spring of 2016. The total economic impact forboth phases of Bakery Square is more than 3,500 full-time jobs, 800 construction jobs and1,000 spin-off jobs, according to Walnut Capital Partners.

Fitzgerald expressed the optimism Pittsburgh is experiencing right now by the growinginventory of groundbreakings and ribbon cuttings hes attended.

Ive got more shovels than Home Depot, said Fitzgerald. And Ive got more scissors thanOffice Depot.

Peduto compared Googles presence in the former Nabisco building with Shells proposed newcracker plant development in Beaver County.

Theres going to be 800 engineers around an old cracker plant in East Liberty, he said.

Tim Schooley covers retail, real estate, construction, hospitality, arts andentertainment, and government. Contact him at [email protected] or 412-208-3826.

Google may be eyeing Bakery Square 2.0 spaceJanuary 7, 2014 9:50 PM

By Mark Belko / Pittsburgh Post-Gazette

Over the past two years, Google has twice increased its presence at Bakery Square in the EastEnd. Now, the construction of an office building across the street could usher in yet anotherexpansion for the search engine operator.

Google appears to be the leading candidate to occupy at least part of a new six-story officebuilding being built by developer Walnut Capital at the site of the former Reizenstein MiddleSchool.

The 218,000-square-foot building along Penn Avenue will be the anchor for the developer'sBakery Square 2.0 project, which includes a mix of office space, apartments and townhouses.

It will be connected to Bakery Square, the former Nabisco plant redeveloped by Walnut Capital,via a two-level sky bridge over Penn, providing Google with a visible -- and practical -- link toextend its campus if it chooses to do so.

But if another Google expansion in Pittsburgh is in the works, Gregg Perelman, Walnut Capital'smanaging partner, wouldn't say. He had no comment when asked if Google had any interest inthe new space.

However, a source with knowledge of the situation said that the Mountain View, Calif.-basedcompany could take at least one third of the new building and perhaps more.

Google spokeswoman Rebecca Ginsberg Rutkoff said the company doesn't comment onindividual real estate transactions.

If the company does move into the new building, it will mark its third expansion since movinginto Bakery Square in Larimer in 2011.

That December, a month after opening a 40,000-square-foot office in the development, Googleleased an additional 70,000 square feet. Last year, Google took another 50,000 square feet of

Daniel Marsula/Post-Gazette

space and added 75 employees.

Another expansion here would not be surprising. Google has been beefing up its presence inNew York, Chicago, San Francisco and Seattle.

In fact, Bloomberg News reported that Google and other growing technology companies havebeen increasing their space while financial firms and other office users have cut back.

Mr. Perelman said Walnut Capital has talked to the University of Pittsburgh and CarnegieMellon University about expanding their presence at Bakery Square. He said the goal of BakerySquare and Bakery Square 2.0 is creating jobs.

"It's all about job growth for us, the opportunities that we have. These are new jobs toPittsburgh. It's not shuffling jobs. It's not a company relocating. We're talking about new jobs,new people paying income tax, paying state taxes, paying city taxes who live in the city and whowork in the city," he said.

While he declined to comment on negotiations with possible tenants, he said that leasing hasbeen going well, though he does not expect to have the building fully rented by the timeconstruction starts.

Walnut Capital hopes to start construction on the project, to cost more than $40 million, inMarch and have it completed in 18 to 24 months.

The new development will make use of an existing 950-car garage at Bakery Square. There arealso plans for a 900- to 1,000-car garage at Bakery Square should the need arise.

Walnut Capital will be seeking a LEED silver rating from the U.S. Green Building Council in thedesign of the new building. There will be bike and pedestrian paths in front of the building.Rooftop gardens will collect rainwater. The sky bridge also will be lighted at night.

A second office building, 350 apartments and 57 townhouses also are part of the master plan forthe $120 million Bakery Square 2.0 development. The first residential units are to be completedin June. Mr. Perelman said Walnut Capital has had inquiries from 400 to 500 people about theapartments.

"What we're finding is that people that are working at Bakery Square now are going to berenting apartments from me across the street," he said.

Mark Belko: [email protected] or 412-263-1262.

From the Pittsburgh Business Times:http://www.bizjournals.com/pittsburgh/news/2014/02/03/google-confirms-expansion-to-bakery.html

Feb 3, 2014, 5:28pm EST

Google confirms expansion to BakerySquare 2.0

Tim Schooley

Google Inc. today confirmed a long-expected commitment to expand its office at BakerySquare into a new office building expected to soon go up across Penn Avenue at the secondphase of the East End development.

According to a spokesperson: Google has signed a lease for an additional 66,000 Square Feetat Bakery Square 2.0 to accommodate for natural growth in our Pittsburgh office. GooglePittsburghs engineers and product managers work on search, ads and ads-shopping productsused by hundreds of millions of people, as well as core engineering infrastructure.

While the company offered no further comment, Google has been a driving force at BakerySquare, starting with a 40,000-square-foot office a few years ago. It is now the largest officetenant in the building, occupying 140,000 square feet.

The new lease will put Googles total presence at Bakery Square at more than 200,000 squarefeet.

The new building will include a sky bridge across Penn Avenue, allowing Googles new space tooperate seamlessly with its main office and the developments 900-plus space parking garage atthe original Bakery Square.

Gregg Perelman, a principal of Walnut Capital Partners, the local developer of BakerySquare, told the Pittsburgh Planning Commission in early January that the firm expected tobegin construction in March on a 216,000-square-foot office building at the second phase ofBakery Square.


From the Pittsburgh Business Times:http://www.bizjournals.com/pittsburgh/news/2014/01/07/bakery-square-20-office-building-to.html

Jan 7, 2014, 4:21pm EST

Bakery Square 2.0 office building to startconstruction in March

Tim Schooley

Walnut Capital Partners has its financing in place, its contractor ready to go and expects tobegin building a new 216,000-square-foot office building in March as part of its expansion ofBakery Square 2.0.

Thats the basic gist of what the company reported to the Planning Commission on Tuesday on aproject to build upon the established Bakery Square development to create a new larger 20-acreoffice-apartment-retail campus along Penn Avenue in the citys East End.

Bids are going out next week, said Gregg Perelmann, principal of Walnut Capital, of the chainreaction of commitments falling into place that should see a new office building completed onthe former site of the Reizenstein school in the next 18 to 24 months.

The new office building is expected to be the first of two 200,000-plus-square-foot structureson the site, which is also expected to now also include a second 950-space parking garage,along with the two 175-unit apartment buildings and a collection of townhouses also slated forthe plan.

Perelmann was mum about whether Google, which occupies 140,000 square feet in the originalBakery Square, had made any commitment to expand into the new building.

Anonymous sources familiar with the plan expect Google to take a significant portion of the newoffice building, which will be built with a two-level sky bridge spanning Penn Avenue connectingthe Larimer side of the established Bakery Square with the new Shadyside addition to thedevelopment.

Perelmann said the company continues to talk with potential tenants.

Were focused on the university-based companies that need to expand, said Perelman.

The new office building saw little to no resistance from the Planning Commission, save fromsome massing issues of how the new six-story structure will serve as a companion to the formerNabisco building across the street that is the original Bakery Square.

Designed by downtown Pittsburgh-based Strada Architecture LLC, with PJ Dick establishedas the projects builder, the new Bakery Square 2.0s first 175-unit apartment building is nearingcompletion in a development mix in which Perelman expects employees will become residentsand vice versa.

An open house for the first apartment property is scheduled for Saturday, Jan. 18, at BakerySquare for a building expected to open in the Spring.

Perelman said that Walnut Capital has already received 400 to 500 inquiries about leasing thenew apartments through its web site in an overall development that will allow employees to livein close proximity.

Demand for apartments in the neighborhood remains strong, with the companys redevelopmentof the Highland Building nearby in East Liberty now more than 97 percent occupied.


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Bakery Square 2.0