FNB’s new skyscraper as a ‘white giraffe’
It appears that First National Bank’s (FNB) proposed 26-story headquarters skyscraper on the old Pittsburgh Civic Arena site is in trouble.
But the question is if that trouble comes from unreasonable demands from neighborhood groups, an ill-conceived project to begin with or a combination of both. The answer appears to be the latter.
As the Post-Gazette tells it, members of the Hill Community Development Corp. continue to give the $230 million project “failing grades” for not “meeting the goals of a neighborhood master plan and a benefits agreement related to the 28-acre site.”
That is, groups are complaining that some of the shakedown tributes they’ve demanded have not yet been paid.
But the developer of the skyscraper, the Buccini/Pollin Group (BPG), continues to insist that, again, as the P-G puts it, the development will be “a catalytic one that will benefit the entire Hill District.”
That said, perhaps this project isn’t the catalytic converter it was sold as. For some details are emerging that suggest the viability of the skyscraper once built will be a huge question mark.
The first clue is that FNB is the only signed tenant — itself. It will take nine of the skyscraper’s 26 floors. With 17 floors of this proposed new office tower unspoken for, it’s certainly sounding like a “spec building,” does it not?
The second clue is that the P-G reports “lease rates for the office space will be in the upper $30 (per square foot) range, far higher than the going rates for existing Class A office space in downtown Pittsburgh.”
Well, if you’re getting shaken down, you have to attempt to recoup your costs somehow, right?
Do remember, though, that such office space in the Golden Triangle already is facing vacancy rates at a decade high (some in the double-digit percentages) – and that was before a coronavirus pandemic hit that may have changed the way we work forever.
And lest we forget, the public yet again has been corralled into helping FNB offset its costs with a $10 million state grant (and there could be more).
The public has no business underwriting such space in good times, let alone bad. And, clearly, if this project starts to tank, there should be no public bailout.
Indeed, there can be little doubt that community groups’ demands on FNB and, by proxy, PBG – an estimated $34 million for this ancillary project and that – have played no small role in the quite high per-square-foot lease cost.
Simply put, the surrounding neighborhood should benefit from this project, or any project, based on the tax revenue it generates and not any strong-armed “public purpose” shakedowns.
That said, neither should government – through turning taxpayers into venture capitalists – only further enable the glut of office space.
Even without the shakedown, there’s ample market evidence to suggest this 26-story skyscraper, if still built, has every chance of being not a Hill District “catalyst” but a cataclysmic white giraffe.
Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (firstname.lastname@example.org).