Demolishing the former Wholey’s cold storage warehouse in the Strip District was supposed to make way for a state-of-the-art office complex.
But four years after the building came down, developer Acram Group has yet to break ground on the roughly 20-floor project.
A sluggish commercial real estate market means the best the New York City-based firm can do right now is make the parcel a parking lot.
“We’re not abandoning by any means the large-scale development of doing an office tower there,” Matthew Cassin, a managing principal at Acram, told TribLive on Tuesday. “But in the meantime, because the office demand has been slow, we’re going to create an amenity there.”
Acram will go before the Pittsburgh Zoning Board of Adjustment on Feb. 5 seeking four variances to pave 148 parking spaces. Critically, the company needs permission to place a new parking lot in the Golden Triangle district.
The other three variances, if granted, would make Acram exempt from the area’s landscaping requirements. The parking lot proposal has far fewer trees than the district typically calls for. It wouldn’t make sense to plant dozens of trees only to remove them once work on the office tower got underway, Cassin said.
Acram says is has $1.8 billion in assets under its management across 11 cities. In Pittsburgh, it also owns the mixed-use Pennsylvanian Downtown and the former Sears outlet in the city’s Lawrenceville neighborhood, which now serves as an Amazon warehouse.
Pamela Austin, president of economic development group Strip District Neighbors, did not return requests for comment.
Pittsburgh City Councilman Bobby Wilson, D-North Side, who represents the Strip District, could not be reached for comment.
Market conditions
Acram — then known as JMC Holdings — bought the “Wholey’s building” in October 2018 with plans to tear it down and erect an office complex in its place. Pennsylvania’s Redevelopment Assistance Capital Program pitched in $1 million for the demolition.
By that point, the refrigerated concrete fortress had long ceased to be critical to the fish market’s operations.
The deal came amid a strong appetite for new office space in Pittsburgh.
Acram’s proposal — branded 1520 Smallman, as in its street address — consisted of four connected office buildings of slightly varying heights, robotics research areas and first-floor retail.
Less than two years later after Acram took over the site, the commercial real estate market cratered as companies instituted work-from-home policies in response to the covid-19 pandemic. Demolition proceeded, anyway, taking place in 2021 to 2022.
Demand has since partly recovered and is expected to stay on an upward trajectory. Last year brought a 35,000-square-foot net gain in occupied office space in Pittsburgh — the first net gain since 2019.
“We have leasing demand, we just don’t have demand for speculative (offices),” said Sam McGill, a managing director at commercial real estate brokerage Cushman and Wakefield.
McGill compared the change of plans at the Strip District site to a recent rethink of Walnut Capital’s expansion in Bakery Square. The development in Pittsburgh’s East End could see a drastic reduction in the proposed 1.5 million square feet of office space and more of a focus on retail and housing.
Cassin said his firm will not start construction until it has secured an anchor tenant. Capital markets remain tight, real estate experts say, but securing financing to build offices is easier with occupancy commitments from major companies.
Richard Beynon, senior advisor at SVN Three Rivers Commercial Advisors, said employers who are trading down to smaller offices right now may find themselves regretting their decisions within the next few years. That could lead to more favorable conditions for office projects.
The 2026 NFL Draft in Pittsburgh could also bring in out-of-towners who realize the perks of basing workers in the city, he said. Office space in the Golden Triangle goes for about $25 a square foot — a fraction of what it costs in other far more expensive cities.
“It’s those types of events that get people from out of town looking at the office market and how, quite frankly, inexpensive it is to be here versus New York or San Francisco or Seattle,” Beynon said.
If that rebound comes, Acram will be ready.
“We really believe in the site and the city and would love to welcome either existing tenants or potentially new tenants to the market,” Cassin said.
