PITTSBURGH-As the city’s central business district continues to emerge as a destination for healthcare and energy industries, HFF has been tapped to market Penn Avenue Place, a 557,559-square-foot, class A office property in the downtown here. The firm will market the building at 501 Penn Ave. exclusively on behalf of the seller, Penn Avenue Place Associates, an affiliate of real estate services firm Oxford Development Co.
HFF’s senior managing director Mark Popovich, tells GlobeSt.com that the building is 95% occupied by longtime healthcare company Highmark, which just executed a 10-year lease extension after remaining in the space for 15 years. “This building is physically connected to their headquarters building via a sky bridge,” Popovich says, noting Highmark’s main office is located at 120 Fifth Ave. up the block. “The fact that they have been there for 15 years and renewed for 10, it’s almost like an adjunct to their headquarters.”
Originally built in 1907, Penn Avenue Place underwent a complete renovation in 1997 and features 419,479 square feet of office space, 55,531 square feet of retail and 82,549 square feet of storage space. “Because Highmark has invested their own money and has been in the building since, it was converted for their use,” Popovich says, noting that the building was upgraded to class B to A status 15 years ago. The total property is 99.6% occupied by tenants such as Civic Light Opera, Rite Aid and Max & Erma’s restaurant chain.
Popovich says an investor would find the building’s rents and strong tenant base as a good value. Asking rents for top-tier space in Pittsburgh range from $22 to $24 per square foot. “Their contract rent is very much below market, which again, provides investors a great opportunity if they should ever vacate,” he says. “Gross rent is probably 35% to 40% below where class A rents are.”
The building is located directly in front of Pittsburgh’s newly-reconstructed light rail terminal, which upon completion, will provide service around the city’s CBD, North Shore and South Hills suburbs. “It’s been under expansion for the last three years and they’ve added another line that goes over where the sports stadiums are,” he says. “That’s another great amenity.”
In addition to Popovich, HFF’s investment sales team representing the seller is being led by executive managing director John Pelusi and senior managing directors Jaime Fink and Jeff Bramson.
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