At a table in Arnold’s Tea on East Ohio Street, Mark Masterson weighed the outcomes of his organization’s recent success on Pittsburgh’s North Side. Community organizations here are finding traction after years of courting developers to revive the area.
“Fifteen years ago, you would’ve killed to have private partners even take a second look at you,” said Masterson, executive director of the Northside Community Development Fund. Now, with some parts of the North Side seeing a booming real estate market, businesses like Arnold’s Tea, which opened in 2015, are filling empty storefronts.
But the newfound success can cause problems. At the top of the list is the steady disappearance of market-rate homes that are affordable for low- and moderate-income residents, according to Masterson and neighborhood leaders around the city. “I think it’s slowly dawning on folks that have been in the neighborhood: ‘Yeah, it’s great that we have all this investment, and my house is worth more, but my kids can’t afford to live here,’” Masterson said.
For areas of Pittsburgh experiencing rising land prices, new patterns of development raise questions about who are the winners and losers. In a city of distinct neighborhoods, the impact of redevelopment and how it’s seen by residents and community groups can vary widely, depending on local history, who is investing and who has a seat at the table. PublicSource will be examining these issues in-depth in the coming months. This story sets the scene by looking at five areas of the city where communities are feeling the impact of redevelopment.
After decades working to bring back investment, North Side community leaders are seeing businesses and residents fill vacant buildings and storefronts. It’s helping boost property values, yet some residents worry about being priced out.
The North Side is home to city institutions that draw visitors from around the region, from Heinz Field and PNC Park to the Children’s Museum of Pittsburgh and the National Aviary in the Allegheny Commons Park. Made up of 18 distinct neighborhoods, the area features several public housing complexes that serve low-income residents as well as sections like the Mexican War Streets, where the price of historic homes has jumped in recent years.
As an example, a four-bedroom rowhouse on Monterey Street is shown in property records as a boarded-up home assessed at $83,300 for tax purposes. Now renovated, it’s listed on the market for $543,000.
Allie DePasquale, an owner of Pittsburgh-based October Development, saw investment opportunities in the mid-2000s and started buying dilapidated homes in East Allegheny he said were rented by absentee landlords to low-income tenants.
He fixed them up and has sold them predominantly to affluent empty nesters and young couples looking for a city-oriented lifestyle. He said he was looking to sell a home to a couple in another county “just so they can come to Pittsburgh, do their night out” and have a place to stay.
DePasquale is also working to complete the Workingmen’s Square Comfort Inn hotel and an adjoining wedding venue inside the former Workingmen’s Bank building on East Ohio Street in East Allegheny, near 16th Street Bridge and an I-279 ramp. He expects the hotel to open this summer, with the venue project to follow a few months later.
Another active developer in Pittsburgh, TREK Development Group, has been engaged in plans for new construction on North Avenue next to the historic Garden Theater building. In February, TREK oversaw the final of three teardowns of vacant buildings on the block to make way for a $16 million 60-unit apartment building with ground-floor retail.
The tension over whether the buildings should be left standing or demolished has been a point of considerable controversy, as PublicSource examined last year.
TREK President and CEO William Gatti did not respond to several requests for an interview by phone and email.
Angela Williams, president of the Charles Street Area Council, served as president of the Northside Leadership Conference board for about 18 months until she resigned in protest last May, arguing that the development organization was too focused on revitalizing East Ohio Street, North Avenue and other areas at the expense of nearby residents.
“It’s sad. The funds that were used that leveraged development were awarded to community groups based on [the fact] that the area was low to moderate income,” Williams said.
Compared to elsewhere in Pittsburgh, development projects in the North Side have been more piecemeal and locally driven, according to Mark Fatla, executive director of the Northside Leadership Conference. He said the conference’s approach to redeveloping East Ohio Street was to entice more higher-income residents to the North Side to support businesses that can serve people of all incomes.
“Neighborhoods do not exist in snow globes; they are not frozen in time in any one condition,” Fatla said. Rising property values have attracted private developers, allowing community development leaders to focus on other issues, he continued. “But...to think that you can somehow freeze a neighborhood in place is mistaken.”
Effectively the poster child of gentrification in Pittsburgh, business leaders and developers in East Liberty are pressing forward with a transformation of a largely black community and hub for affordable housing into a busy commercial center criticized as catering to affluent white residents.
The change, critics say, is at the expense of residents who are faced with a decision to pay higher market-rate rents or leave. At Bakery Square, rents for a two-bedroom range from about $2,400 to $3,000.
Activist Crystal Jennings noted that some new residents cross the street when they see a black person in the neighborhood. “Evidently, they feel uncomfortable, but there are going to be black people in the future,” she added, using a phrase that has become a rallying cry for affordable housing activists in Pittsburgh. It’s an adaptation of Alisha Wormsley’s statement, “There are black people in the future,” which was displayed on a billboard atop a building in East Liberty and removed by the landlord.
Lori Moran, vice president of development at Ballymoney Real Estate Services and president of the East Liberty Quarter Chamber of Commerce’s board of directors, casts the focus on retail as returning a neighborhood that had fallen on hard times to its mid-20th century role as a regional center for shopping.
“There was a whole stigma for years and years” because of crime and vacant storefronts, Moran said. After chamber leaders worked with police and city officials over the last 10 years, “these storefronts don’t have people hanging in front of them anymore,” she said. “People hanging and selling drugs don’t want to be in a brightly lit area with shoppers, that’s not where they’re comfortable.”
East Liberty Development Inc., the neighborhood’s community development corporation, collaborated with the city, Urban Redevelopment Authority [URA] and others in a project that secured $54 million in government grants and financing for the $158 million redevelopment of the East Liberty Transit Center, which opened in 2015. The project, carried out by developer Mosites Construction & Development Company, includes 43,000 square feet of retail space and 360 market-rate housing units.
Moran pointed to Bakery Square developed by Walnut Capital, another project the URA helped to finance, as a turning point for investor interest in East Liberty.
But such quick changes raise the question of who gets to stay in the neighborhood. The demolition of Penn Plaza gives perhaps the starkest example of change in East Liberty.
Since the 1960s, the Gumberg family owned and managed the Penn Plaza complex, which provided affordable housing to as many as 300 residents at one time. In 2015, the family notified tenants that leases would not be renewed and gave them notice to vacate.
The Gumbergs said their company LG Realty Advisors is bringing new investment by turning the site into retail and office space.
“Our goal is to build a true mixed-use development to basically help continue the growth of the area and attract new talent to Pittsburgh,” said Zachary Gumberg, principal at the company.
Gumberg said LG Realty’s plans were based in part on a community action plan facilitated with local input by the area’s CDC, East Liberty Development, Inc.
Displaced tenants and activists like Jennings have criticized LG Realty for uprooting longtime residents and ignoring repeated calls to include affordable housing on the site.
Last month, Pittsburgh’s Planning Commission approved LG Realty’s plan. Two of the commission’s members opposed, including chair Christine Mondor, who raised concerns that neither the Gumbergs nor the city had properly tracked where displaced former tenants had landed and whether they had found adequate housing.
“We have not addressed the displacement part of this issue from a holistic perspective,” Mondor said at the Feb. 12 meeting.
Gumberg said LG Realty is committed to allocating half of the dollars it receives through a real estate tax break to an affordable housing fund, projected to total about $2.5 million over 20 years.
Affordable housing advocates argue the money will not return most of the former Penn Plaza residents to the neighborhood.
“It would be nice if we could work with them and they could understand us, but they live in a whole other realm,” said Jennings, an organizer with the Penn Plaza Support and Action Coalition. “Their outlook is making money, not tending to people’s needs.”
After several years of new luxury housing developments cropping up in the Strip District, the former wholesale marketplace is about to see a massive investment to the tune of $100 million.
The URA board approved the plan from Chicago-based McCaffery Interests in February. The project calls for a $50 million renovation of the Produce Terminal for retail space and another $50 million to refurbish the neighboring 1600 Smallman St. building for office space.
McCaffery Interests’ first foray into the Pittsburgh market came with the redevelopment of the nearby Cork Factory into luxury apartments, completed in 2006. The developer added another nearby luxury apartment complex, Lot 24, finished in 2012.
Pamela Austin, a senior project manager in development at McCaffery, said the idea was to revitalize and honor the terminal as a historic asset that would draw residents and new businesses to the area.
“I hope that everyone will appreciate the sensitivity, the thoughtfulness that went into trying to keep the (terminal) structure intact and try to make it part of the community,” Austin said after the URA board unanimously approved the plan.
Development of the Produce Terminal marks the end of years of effort by city officials to find a developer for the site. In 2014, the city ended work with Buncher Company, the previous developer. That plan called for the demolition of one-third of the Produce Terminal, something Mayor Bill Peduto objected to at the time.
PublicSource reached out to Mayor Bill Peduto through his spokesman on Feb. 19 to discuss development in Pittsburgh. Spokesman Tim McNulty did not respond to the request until Feb. 25 when Peduto was traveling on an international trip and unavailable for comment before publication.
McCaffery’s deal to develop the terminal includes a 99-year ground lease from the URA.
Adjacent to the Produce Terminal, Sewickley-based engineering firm PVE LLC proposed a 443-unit residential complex to city officials on behalf of Cleveland-based developer NRP Group and Buncher Company, the Pittsburgh-based landowner.
Called Riverfront Residences II, the proposal estimated the project’s cost at $52.5 million. The city Planning Commission approved the plan in July and NRP Group’s vice president of development, Chris Dirr, said he expects crews to break ground on the project in mid-April.
The project would add to NRP’s footprint in the Strip. Edge 1909, its first development, features 364 units, catering to higher-income residents. Its last phase of construction was completed in December.
“At Edge 1909, a number of the residents have relocated from outside the area, maybe from Washington D.C., where they lived in a new building downtown,” said Chris Dirr, vice president of development at NRP. “So they were looking for a similar type of new build with onsite parking and the walkability features that we can provide.”
On nearby Penn Avenue, small business owners and managers said they worry redevelopment of the terminal could fundamentally alter the small-business feel of the area.
“We'd like to keep it as small as possible because it's authentic to the Strip District,” said Lesly Moran, manager of Lucy’s Handmade Clothing Shop on Penn Avenue. “We have a little bit of every culture and that's going to change now, but hopefully we'll still have the same amount of tourists coming in and things like that.”
Jim Coen, owner of Yinzers in the Burgh on Penn Avenue, said the opening of the Cork Factory apartments brought new customers to the Strip in recent years, but a push from city officials and pro-bicycle residents to make the area less car-friendly worries him.
To make way for the Produce Terminal renovation, the city’s Department of Mobility and Infrastructure has developed plans to remake the length of Smallman Street on the south side of the Terminal building.
The plan, scheduled to be completed by August, will remove 253 existing parking spaces on Smallman Street and replace them with 153 angled-parking spaces, as well as a new bike- and pedestrian-friendly streetscape, according Emily Gaspich, project manager for the city. McCaffery’s plan calls for an additional 277 parking spaces, accessible by a gate, on the north side of the Terminal.
“Most of our customers are not from here,” Coen said. “On Saturdays, the people coming here are from Cranberry, Wexford, Sewickley — places where you have to drive here.”
Coen also worries that rental costs will jump in the area: “The rents are going to skyrocket — they're talking $30, $40, $50 a square foot” to lease space in the terminal. “On this side, it's $20, you know what I mean? So, of course, you worry.”
Austin said rental rates for the Produce Terminal will be “commensurate with the market and quality of the project we will be providing” and that negotiations with potential tenants were confidential.
Coen said he hopes the project is successful but doesn’t chip away at the area’s character.
“The more people that come here, the better,” he said. “I'm just afraid of too many changes too fast, and we need to really think about what we have here.”
As other communities in the city grapple with large-scale developments, longtime business owners and managers along East Carson Street say the commercial area has been generally stable, though keeping larger retailers remains a challenge.
“I don't think there's anyone except for maybe some of the bars that are going to become millionaires, but there's a lot of businesses that have been around for a while,” said Cyril Esser, owner of Cindy Esser's Floral Shop.
Esser, who also owns his building, said the commercial strip has generally stayed full, even as businesses continue to turn over. “There's been businesses steadily opening, but that's because there's been businesses steadily closing,” Esser said.
Barbara Rudiak, board president of the South Side Community Council, said business leaders here have tapped consultants to investigate why some businesses are not remaining in the area. “Are they empty because they don’t meet an incoming businesses’ needs? Or is it the rents are too high?” she said.
South Side was among the leading areas for development 15 to 20 years ago, Rudiak said. “The question for us is, ‘What is it we need to do to revitalize ourselves with the understanding that there are other places’” for entertainment and nightlife in Pittsburgh?
SouthSide Works, a $450-million project on 123 acres that ultimately received some $123 million in public financing, opened in phases starting in 2002. The project included new park space, a commercial marina and riverfront trails.
Its retail space is now 50 percent vacant, according to Ian Ross, managing principal at Somera Road, Inc., a New York-based real estate firm that purchased the project’s debt from its current owners, the Soffer family.
Ross said he believes a new owner can turn around SouthSide Works by focusing on what businesses could serve the local area rather than national chains meant to attract shoppers from around the region. “Pittsburgh is on fire,” Ross said. “And I believe there’s a lot of long-term potential for this site if new ownership is able to invest in it and reconceptualize it appropriately.”
Meanwhile, construction is underway for 280 new apartments at SouthSide Works. The $40 million plan, approved by the city Planning Commission in December, includes 10 percent of affordable housing for families earning 80 percent of area median income, a metric from the federal government.
Toward the west end of East Carson Street, the $110 million Highline project at the Pittsburgh Terminal Warehouse, developed by Pittsburgh-based McKnight Realty Partners, includes 600,000 square feet of new office and retail space in the South Side.
Izzy Rudolph, president of development and acquisitions at McKnight, said the South Side Flats is attractive for developers because of its proximity to nearby amenities.
“So you can buy a house for $300,000 or $400,0000 and walk to any entertainment you can want, and proximity to town is fabulous,” Rudolph said.
For now, several local business owners along East Carson Street say business has been good, helped in part by more out-of-town tourists. But John Bechtold, owner of Pittsburgh Guitars on East Carson Street, noted the strain on parking. “There are times I come down here and I’m circling for 20 minutes, trying to find a parking spot.”
While commercial vacancies may be an issue, South Side Chamber of Commerce board member Gavin Robb said residents moving into new developments could help retail thrive.
“My personal feeling is to see less national chains but having some more independent businesses move into that end of town,” Robb said. “But just getting rid of the vacancies first and foremost — whoever’s willing to slide in there is going to be a positive.”
The consequences of the URA razing the Lower Hill in the 1950s to build the Civic Arena are still driving central questions about the future of the Hill District.
The now-demolished former home of the Pittsburgh Penguins replaced a once-bustling commercial and residential area that was predominantly home to black residents. Hill leaders are keeping a close eye on massive redevelopment plans, urging the Penguins to include affordable housing on the site.
Last year, the Penguins tapped Intergen Real Estate Group, a government-certified minority-owned business, to build 250 units of housing on a 6.5-acre site, part of a first phase of the Penguins’ preliminary development plan. It’s unclear if that plan will include affordable housing. Intergen did not respond to a request for comment.
Leaders of the Hill District, including Hill District Community Development Corporation [CDC] Executive Director Marimba Milliones, have pushed the city and Penguins organization to include more input from Hill residents.
“We want to make sure there's local hiring, that there is sustainability of the site, that there's ownership from [minority-owned businesses], that there's ongoing revenue to the neighborhood,” Milliones said.
The Hill CDC reached a settlement with the city and Penguins in 2015 after objecting to a lack of community input in the planning process. U.S. Steel planned to locate its headquarters at the site before backing out in November 2015.
The settlement also led to the creation of the city’s Affordable Housing Task Force. But a plan to build affordable housing on the site fizzled after developer McCormack Baron Salazar failed to win $1.2 million in federal low-income housing tax credits from state officials.
In February, Penguins CEO and President David Morehouse announced construction of part of the site would begin at the end of this year. He declined to provide more details when he made the announcement. PublicSource left several messages with the Penguins’ office and did not get a response.
Carl Redwood, Jr., a board member of the Hill District Consensus Group, has leveled criticism of the Hill CDC leaders’ talks with the Penguins and developers over the site.
In lieu of securing a a specific plan for affordable housing at the former Civic Arena site, Hill leaders negotiated a portion of future real estate tax revenues to go to a “reinvestment fund” to be used to benefit the Hill District, held by the URA as a restricted account. Redwood viewed the agreement as a concession to developers and city officials.
“They just sold out people and didn’t get anything in return,” he said.
Both Redwood and Milliones said they still want to see the Penguins incorporate affordable housing into the Civic Arena site. Most residents in the Hill District want to see the development happen, Milliones said, but given the years that the Lower Hill site has remained a parking lot for the new arena, some are wondering if anything will ever be built.
With massive development in the works and a fraught history, Hill District serves as a cautionary tale for the disconnect between the residents and business interests.
“I don't think the people want to see it happen just to see it happen,” Milliones said. “I think they want to see it happen in a way … that enriches our community and reconnects our community back to Downtown in a respectful way.”
This story was fact-checked by Harinee Suthakar.
Tom Lisi is PublicSource's Develop PGH reporter. You can reach him at 412-368-6480 or by email at email@example.com.
Develop PGH has been made possible with funding from The Heinz Endowments.