New incentives and tax abatements may get Gulf Building redevelopment started
PITTSBURGH (KDKA) — Since the pandemic, Pittsburgh has lagged behind other cities in converting downtown office towers to residential, resulting in higher vacancy rates and dropping real estate values.
But KDKA Lead Investigator Andy Sheehan says new incentives and tax abatements may get one major project off the ground, and there's hope it could be the catalyst for others.
From its pyramid roof to its marble lobby, there is no building in Downtown Pittsburgh more iconic than the Gulf Building. Once the stately home of the oil giant and prestigious law firms, its business tenants drained away during the pandemic.
But now looking to be reborn as a luxury hotel and upscale residential address, its developers are hoping to help bring the sparkle back to the Golden Triangle.
"We believe it will be the catalyst for many, many other investors to come to town and invest in the city," Larry Walsh of Rugby Reality said,
Rugby Realty says it's getting ready to launch a $200 million transformation of the building. Plans calling for a 120-room, four-star hotel from the fourth to 12th floors topped by 225 upscale apartments up to the 38th floor.
Rugby Realty is moving ahead while other downtown conversion projects are stalled, and Pittsburgh continues to lag behind Buffalo, Cleveland and Cincinnati.
"They recognized very early on in the pandemic that they needed to convert office product to residential and we are way behind," Walsh said.
Owners looking to convert their buildings have clashed with the Gainey administration over its demands for the inclusion of affordable units and a lack of incentives. But a thawing in those requirements and new tax abatements are giving some hope.
Rugby Realty says if the state comes through with a $10 million grant, it can begin converting floors in the spring.
"All these deals are so tight to begin with," Walsh said. "So every little bit helps."
With continued government help, Rugby Realty is building a model hotel suite and an apartment for prospective tenants to see. It believes that given its theaters, its restaurants and proximity to the stadiums and sporting events, Downtown can be transformed into a new neighborhood where as many people live as well as work.
"We are very, very positive and bullish on Downtown," Walsh said. "We believe that these cycles have come and gone before, and we're going to get through it. It's going to be a new version of Downtown that we've never seen before."
The hope is that the dozen or so other owners looking to convert their buildings will begin to move their projects along and begin the transformation of Downtown in earnest.