7:35 AM | Jan 4, 2018
A former warehouse that housed Art Institute of Pittsburgh students for a decade could become Downtown’s newest apartment complex.
The Davis Companies, the Boston-based firm that owns the historic Union Trust Building on Grant Street, purchased the debt on Shannon Hall on Second Avenue after the former owner, Try Street Associates LP, faced a possible foreclosure.
Try Street was in technical default of the mortgage after the Art Institute, part of the struggling Education Management Corp., decided not to renew its master lease for the space.
That lease expired last July, leaving Try Street without a tenant. Try Street owed about $23.5 million on the mortgage. Jonathan Davis, CEO and founder of The Davis Companies, declined to say how much his firm paid for the debt.
The Davis Companies plans to convert the 230,000-square-foot, nine-story building into a loft-style apartment complex featuring about 200 units, a mix of studios and one and two bedrooms. The building is located across the street from the Pittsburgh Parking Authority’s First Avenue garage.
Amenities are expected to include a fitness center, indoor parking, a rooftop deck, a dog washing station, common rooms, and on-site security.
The Davis Companies plans to spend $10 million to $15 million to convert and renovate the former warehouse built in 1910 into apartments. The 200 units planned for the site will be about 60 more than what the Art Institute had for its students.
Shannon Hall’s columns and high ceilings lend themselves to more of a loft-style product, Mr. Davis said. “We’re really going to accentuate the industrial aesthetic of it,” he said.
He described the project as a “value alternative to new construction with most, if not all, of the same amenities,” suggesting that his firm plans to price the units at lower rates than some of the other newer apartment buildings that are under construction or have opened Downtown over the last decade or so.
The goal “is to create a loft-style aesthetic and to do so at a price point that’s a value compared to new construction,” he added, though he declined to give possible rental rates.
Based on Pittsburgh Downtown Partnership figures, studios rented for an average of $1,105 to $1,500 a month in the Golden Triangle in the 2017 third quarter; one bedrooms with one or two baths from $1,219 to $1,745; and two bedrooms with one bath from $1,705 to $2,048.
The Davis Companies is not the only one building apartments in or near Downtown.
Among them, Core Realty is completing the construction of 312 units at the former Macy’s/Kaufmann’s department store on Smithfield Street. Trammell Crow Co. has started work on a 319-unit apartment complex at Station Square, and NRP Group LLC is building 364 units in the Strip District.
In all, more than 1,300 units currently are under construction, according to the PDP.
The Shannon Hall acquisition marks The Davis Companies’ latest foray into the Pittsburgh market, where it has become a bigger player since first buying the Union Trust Building, built by industrialist Henry Clay Frick, in 2014 for $14 million.
It has spent $100 million renovating and restoring the Grant Street landmark, cleaning the inside and outside, adding restaurants, amenities, and new tenants as well as a 190-space parking garage.
The Davis Companies also is working with the parking authority on a proposed $175 million mixed use development at Ninth and Penn avenues Downtown that would include 185 high-end condominiums, 30,000 square feet of street-level retail and a new 935-space parking garage, replacing the 583-space authority garage at the site.
And in a signal that it’s not finished in Pittsburgh, the firm has hired James Scott, an assistant vice president at Oxford Realty Services, to focus on possible future acquisitions in the market, Mr. Davis said.
“We’re looking at a bunch of things and hoping to have more opportunities,” said Mr. Davis, who grew up in Squirrel Hill, graduated from Allderdice High School and is looking to leave his imprint on his hometown.