Mellon’s Downtown plans leave subtenants in limbo

By Ron DaParma
TRIBUNE-REVIEW REAL ESTATE WRITER
Thursday, March 9, 2006

Come May 31, one of Pittsburgh’s most dramatic buildings, the ornately designed Two Mellon Bank Center, will be nearly empty.

That’s not surprising, since the major tenant, Mellon Financial Corp., announced last year it planned to vacate the 11-story Downtown building — also known as the Union Trust Building — sometime before the end of May.

However, the question that has many people still guessing is: “What’s next?” for the landmark building constructed by industrialist Henry Clay Frick and opened in 1917.

“Limbo is a good word,” said Rick Conley, owner of Oliver Flowers, describing the plight of the more than 20 tenants who still populate the first-level retail arcade area, and remaining office tenants on the floors above.

“We really haven’t heard anything,” said Conley, who just about every day talks to someone else with a question about what’s going on there.

“We’re waiting for the other shoe to drop,” said Rachelle Scanga, owner of the Remedies pharmacy, a 20-year-plus tenant.

Scanga, like a number of other tenants, said she’d like to stay, and is anxious to hear word on her fate from DeBartolo Property Group LLC, the building’s owner.

Most of the tenants are subleasing from Mellon, which has decided not to renew its master lease for the nearly 600,000-square-foot structure designed in Flemish Gothic style by noted Pittsburgh architect F.J. Osterling.

Their continued tenancy is in question because their subleases expire concurrently with Mellon’s master lease at the end of May.

Last year, Joseph Lufkin, senior vice president of Tampa, Fla.-based DeBartolo, successor to the Edward J. DeBartolo Corp., of Youngstown, Ohio, told the Pittsburgh Tribune-Review that it was the company’s intention to try and re-lease the building.

However, the building is losing occupancy at a time when the city’s commercial office market vacancy rate remains just under 20 percent and large tenants looking for space are scarce.

In the meantime, there has been little word from DeBartolo, tenants say. Lufkin could not be reached for comment.

One of those not moving is Larrimor’s, the upscale clothing store that has been in the building for 66 years. The store has a separate, longer-term lease with DeBartolo, said its owner, Tom Michael.

Business at the store is good, he said.

“We like our space, we believe in Downtown, and we think our location is fairly good, although I wish the building wasn’t empty,” Michael said.

Also not moving “at this time” is a Citizens Bank safety deposit box and foreign exchange center in the building’s first sub-basement level, said Mike Jones, a Citizens spokesman.

But others are, including a 3,000-square-foot U.S. Steel Corp. training center that is shifting to the U.S. Steel Tower, and the Disciplinary Board of the Pennsylvania Supreme Court, which is moving to the Frick Building on Grant Street.

“We’re moving at the end of March,” said Sky Foerster, president of the World Affairs Council of Pittsburgh, whose office is on the 11th floor at Union Trust. The council is moving to One Mellon Center across Grant Street.

“The Union Trust Building is one of the most significant buildings, architecturally, in the city, after the Allegheny County Courthouse,” said Arthur P. Ziegler Jr., president of the Pittsburgh History & Landmarks Foundation.

“It’s a very dramatic, highly visible piece of Gothic architecture, remarkable inside and out, and we were delighted with the restoration that was completed several years ago,” Ziegler said. “It is one of the most lively and agreeable buildings in which to step out of your office and into the hallways and see that great rotunda space and the beautiful terra cotta Gothic ceiling.”

Mellon is relocating its employees to one of three other Downtown buildings — One Mellon Center, 325 William Penn Place and the Mellon Client Services Center.

“The pending expiration of this lease at Two Mellon Center has provided us with the opportunity to restack our headquarters facilities, which is part of a larger ongoing initiative to reduce occupancy expenses corporate-wide,” said spokesman Ron Gruendl.

Mellon, which has a total of 6,300 employees Downtown, hasn’t said how many of those workers are based at the Union Trust building. Real estate officials have estimated it occupies about 70 percent of the nearly 600,000 square feet of office space there.

Ron DaParma can be reached at rdaparma@tribweb.com or 412-320-7907.

This article appeared in the Pittsburgh Tribune Review © Pittsburgh Tribune Review