By Mark Belko
May 17, 2017
After buying the historic Union Trust Building in 2014, The Davis Companies made a “big bet” that combining historic grandeur with top flight amenities and technology would produce dividends. On Wednesday, the strategy paid off in a big way.
Buchanan Ingersoll & Rooney, one of the region’s largest and most prominent law firms, has signed a letter of intent to move its headquarters to the Union Trust Building from One Oxford Centre in October 2019.
It will occupy nearly three full floors totaling about 140,000 square feet of space in the 11-story, 517,376-square-foot gem designed by architect Frederick J. Osterling and built by industrialist Henry Clay Frick. The law firm now occupies 200,000 square feet in Oxford Centre.
As part of the new deal, Buchanan Ingersoll, with 343 employees in Pittsburgh, will get its name on the building. The law firm notified employees of the move Wednesday.
Buchanan Ingersoll’s decision marks one of the biggest real estate deals of the year in Pittsburgh. It represents a coup for The Davis Companies, a Boston-based real estate investment and development firm, and a big loss for Shorenstein Properties, the new owner of Oxford Centre, where it is spending an estimated $50 million on improvements.
“It’s a significant transaction for our market,” said Gregg Broujos, managing director and founding principal at the Colliers International real estate firm.
The law firm, which is expected to sign a lease this summer, will be trading space in a 45-story skyscraper built during the city’s second renaissance for new digs in an ornate structure opened in 1917 and filled with marble, brass and terra-cotta, as well as mosaic tile ceilings and stained glass windows. Its defining feature is a central rotunda with a stained-glass dome.
Jonathan Davis, CEO and founder of The Davis Companies, said that when his firm bought the building it decided to spend $100 million to do a full-scale rehab, adding state-of-the-art amenities while restoring the opulence, rather than settle for modest renovations.
“I think the fact that one of the largest and most highly respected law firms in Pittsburgh moved from a tower to our building speaks volumes about the affirmation of that strategy,” he said.
The law firm will become the Grant Street landmark’s largest tenant. It had launched a search for a possible new headquarters last year. The firm has been a tenant at Oxford since 1995 and its current lease runs until December 2019.
During a competitive bid process, Buchanan Ingersoll considered as many as 15 locations for its headquarters, including refurbished space as well as new construction, said Nolan W. Kurtz, chief operating officer. The Davis Companies, he added, has created “an innovative and cool space” in the Union Trust Building.
“We have been focused internally on becoming more innovative in the way we practice law. We just thought that space would match up well with how we ultimately want to use our space,” he said.
Although the law firm will be reducing its space by 30 percent in the move, Mr. Kurtz said that’s not unusual in this market.
He called the firm’s current layout and design, spread over floors 16 through 22 and 40 and 41, “quite dated.” Lawyers and staff use space much differently than they did 22 years ago, he said.
Buchanan Ingersoll is hoping its new space will “encourage greater collaboration, increase efficiency and offer a flexible working environment,” he explained.
While the office has lost a number of lawyers to the Cozen O’Connor law firm recently, Mr. Kurtz said that had nothing to do with decrease in space associated with the move, noting the decision to go to 140,000 square foot was made more than a year ago.
The Grant Street building “best meets the needs of our firm and the way we intend to practice law in the future,” added Joseph A. Dougherty, Buchanan Ingersoll CEO and managing director.
Shorenstein has been pushing the envelope on rents at Oxford Centre, seeking as much as $34 a square foot for space, an extremely high rate for an existing office building Downtown. But Mr. Kurtz said the decision to move was about the space that “we thought would best represent us for the future.”
Jeremy Kronman, the CBRE executive vice president handling leasing for Oxford Centre, said Shorenstein made a bid to keep the firm.
“I don’t want to contribute to the myriad of speculation about Buchanan Ingersoll. They are a great firm and we wish them the best of luck with their downsizing of space,” he said. “We are happy they will at least get to experience the fully renovated One Oxford Centre for two years before they have to leave.”
While the loss of the firm is a blow to Shorenstein, it will have a chance to update and reposition the floors involved to “create a nice block of space” for another tenant, Mr. Broujos at Colliers International said.
In its new home, Buchanan Ingersoll will have access to amenities like a 75-seat state-of-the-art training facility, a 375-seat theater once used by Frick, a 5,000-square-foot fitness center and a 175-space underground parking garage.
The move will increase the Union Trust Building’s occupancy to 85 percent — more than double the 39 percent The Davis Companies inherited when it bought the building at a sheriff’s sale for $14 million.
Among the tenants signed since then are Nokia, a cell phone maker and global leader in technology services; Truefit, a commercial app and software company; the Blank Rome law firm; and Carnegie Learning, which creates math curricula for schools nationwide.
It also added two new restaurants — Union Standard, developed by Pittsburgh chef Derek Stevens, and Eddie V’s, an upscale seafood restaurant.
A Flemish Gothic structure, Union Trust opened as a four-story shopping arcade with 240 shops on lower levels and 700 offices above.