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Commercial development around Consol Energy Center lagging

| Monday, Aug. 8, 2011

The Cambria Suites hotel next to Consol Energy Center fills about 41 percent of its 142 rooms on average.

When the Penguins play at home, the occupancy rate shoots to about 70 percent, said General Manager Mark De Intinis. When musical acts such as Lady Gaga or Elton John came to town, it rose to more than 90 percent.

"There's no question in anyone's mind, with Consol and the events it hosts, that's the only means of getting people to come to this part of the city and stay (at the hotel)," De Intinis said.

Consol opened a year ago, on Aug. 18, to a sellout crowd for Paul McCartney. Since then, taxes generated on ticket sales are up 27 percent from the last year at Consol's predecessor, the Civic Arena; attendance is up nearly 500,000; and the number of events went from 141 to 175.

Still, there's little commercial development around Consol, built for $321 million, including $48 million in public money. Officials point to Cambria Suites and a few other businesses as examples of what the future could hold.

A TGI Friday's restaurant inside the arena, with an exterior entrance along Fifth Avenue, opened in May. Travis Williams, the Penguins' senior vice president of business affairs and general counsel, said the team hopes to open a Subway restaurant soon.

"This is a microcosm of what we could do," Williams said.

Yet plans remain in limbo.

The city-county Sports & Exhibition Authority, which owns the Civic Arena, and the Penguins, with development rights to the 28-acre site for 10 years, want to tear down the old arena, saying it would interfere with development. Preservation Pittsburgh sued in federal court last month, seeking to put the demolition on hold so it might find a developer to reuse the arena.

The Penguins said redeveloping the site could create 3,000 jobs.

In March, Smoker Friendly opened at Fifth Avenue and Washington Place, within a slapshot of Consol. Store manager Adam Tews said the business opened not only because of Consol but because of its proximity to Duquesne University.

"It's a growing area," Tews said. "We've been fairly happy with the spot."

Several other businesses report an increase in pedestrian traffic along Fifth before and after arena events.

Penguins officials have said they did not expect development to happen overnight, pointing out that it took nearly a decade for development on the North Shore after construction of PNC Park and Heinz Field.

"It's not unusual that (development) tends to lag a little bit behind," Williams said. "There's so much energy and effort going into (opening the arena), it takes a year or two to see the tangible effects."

Other measuring sticks are clearer. The city of Pittsburgh collected $3.3 million in taxes on ticket sales during the Civic Arena's last year. In Consol's first year, the city collected $4.2 million, according to SMG, the firm that manages the arena.

Consol General Manager Jay Roberts expects events at the arena to draw 1.7 million people by Aug. 17. In the last full year the Civic Arena was open, it drew 1.2 million people.

Williams declined to discuss how much additional revenue the Penguins receive in the new arena, which includes 10 more luxury suites and nearly 1,000 more seats than its predecessor.

"This gives us an opportunity to be a viable organization and ensure the long-term success of the Penguins in Pittsburgh," Williams said. "This ensures we're here for a long time."

Williams said the arena has been "a game changer" for employment in the Hill District.

Figures released in January showed nearly 40 percent of 522 new full- and part-time arena and Cambria Suites employees live in the Hill District or were hired through First Resource Center, managed by Hill House Association. Those numbers did not include 68 of 128 employees at TGI Friday's whom First Resource hired.

"The Penguins have made great efforts to hire Hill District residents, and their efforts may set a benchmark for similar local hiring processes in other large-scale developments," said Carl Redwood, chairman of the watchdog group One Hill Coalition.

Redwood said he did not have numbers more recent than January, and he wonders whether the Hill District's representation remains at 40 percent.

De Intinis said the hotel's employment has fluctuated since December to 46 now. He expects to add eight people when business travel picks up in the fall.

In its first three months, De Intinis said, the hotel was at 41 percent occupancy, far better than the usual 27 percent or 28 percent for a new Cambria Suites.

"We were relying solely on what Consol was bringing to the neighborhood," De Intinis said. "It sustained us through the first three or four months of existence."

Without the new arena, McCartney would not have played Pittsburgh, Roberts said. Organizers could not book him before because the old arena could not support his stage setup.

Roberts said entertainers and promoters tell him they're happy with Consol: from improved acoustics to easier loading and unloading of equipment.

"The shows will keep coming as long as people are buying tickets," he said.

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