Developer in wait-and-see mode on Strip
Downtown real estate mogul Aaron Stauber plans to become part of the redevelopment of the Strip District after acquiring two properties on Smallman Street for about $2 million.
Stauber, one of the largest private owners of Downtown properties, said on Monday he will wait for another developer -- Buncher Co. -- to proceed with its own renovation of property on Smallman before proceeding.
With the Buncher property on one side and the successful Cork Factory apartments on the other, Stauber, president of Rugby Realty, said he will wait and see what to develop on the two-block area he controls.
"At this time, I think the potential for my nearly 3.5-acre site -- between 21st and 23rd streets -- is more of a mixed-used development with a combination of retail, residential and hotel," Stauber said. "I plan to delay any development of my property until I see how the Buncher development proceeds."
Stauber completed the acquisition of the two-block area on Feb. 29 when he purchased a building at 2300 Smallman St., where the popular Benkovitz Seafood restaurant is located. The site includes the Benkovitz food preparation facility.
Under Two 2225 Smallman Associates LP, Stauber paid $1.16 million to SEP Real Estate LLC, whose president is Richard J. McSorley Jr. He acquired a partial interest in Benkovitz in 2006.
"Benkovitz will continue to operate there because it has a long-term lease on the building," Stauber said.
In 2006, he acquired the Tom Ayoob Inc. building in the 2100 block of Smallman for $950,000. Ayoob Produce continutes to operate there.
At its peak a few years ago, Rugby Realty owned 16 properties with about 2.5 million square feet of commercial real estate here. Its holdings include the landmark Gulf Tower and Frick Building, which his New Rochelle, N.Y.-based company has acquired over the last decade Downtown, in the Strip District and the North Side. Some properties have since been sold.
It's not unusal for Stauber to purchase a building that may be underperforming and turn it into a successful project.
For example, the 11 Stanwix Street building was losing some of its major tenants and occupancy had dropped to less than 75 percent when Stauber acquired the building in 2008. He purchased a note that was in default from a lender and acquired it through a "deed in lieu of foreclosure." Under Rugby, occupancy has increased to 95 percent. In June, GLL Real Estate Partners GmbH purchased 11 Stanwix for $66.7 million, according to Allegheny County records.
Buncher plans to revitalize the Strip District by adding residential and commercial buildings along the Allegheny River by tearing down about a third of the nearly 1,500-foot-long Produce Terminal on Smallman Street from 16th Street to 17th Street, opening access to 55 acres of vacant property paralleling the river from 11th Street to 21st Street. In addition to the housing and retail development, Buncher plans to build a six-story commercial building at 13th and Smallman streets.
Since it opened in 2007, the 297-unit luxury Cork Factory apartment complex has been at or near 100 percent occupancy. The $70 million conversion of the former Armstrong Cork Factory, built in 1901, was redeveloped by Daniel McCaffery Interests of Chicago in partnership with Charles Hammell III and Robert Beynon, the local businessmen who own the property on Railroad Street between 23rd and 24th Streets.
The late Bernard Benkovitz relocated the Benkovitz restaurant and seafood store to Smallman Street in the 1970s. It had been operating on Centre Avenue in the Hill District since 1910, when it was founded by Benkovitz's father and uncle.
Tom Ayoob Inc., a private company, was established in 1902. The company is a wholesaler of fruits and vegetables, including pumpkins, potatoes and onions.