Silence far from golden at Two Mellon Center

By Ron DaParma
TRIBUNE-REVIEW
Thursday, June 1, 2006

Paulo Costa doesn’t want to move his tailor shop from its first-floor location in the Union Trust building, Downtown.

Not only has the store been his livelihood for 15 years, Costa said, the ornate building — designed in Flemish Gothic style by noted Pittsburgh architect F.J. Osterling — also reminds him of the Galleria, an architectural landmark in his native Milan, Italy.

“Look, there was a tailor shop right there,” he said Wednesday, pointing to a picture of the Milan building in a book that he has in the store.

Despite Costa’s fondness for the 11-story building — also known as Two Mellon Center — he fears he soon may join the ranks of the ever-dwindling number of tenants in the nearly empty structure at 501 Grant St.

Most tenants face an uncertain future because of what they say has been an almost total lack of communication with the building’s owner — Florida-based DeBartolo Property Group LLC.
“We have heard nothing,” said Costa, adding that he plans to remain until told to leave but doesn’t know when that will be.

“We have not heard a peep, (from DeBartolo),” said Rick Conley, owner of Oliver Flowers, who already has decided to move his store by July 1 from the building to the 300 Sixth Avenue Building, Downtown.

Conley said he wanted to stay at Union Trust but gave up awaiting the building’s fate — which has been unclear since the major tenant, Mellon Financial Corp., announced last year that it was leaving the building.

Mellon’s last day as the master lease holder for the building was yesterday. Having occupied about 70 percent of the rentable space under the master lease, Mellon has moved all its people to its three other buildings Downtown — One Mellon Center, 325 William Penn Place and the Mellon Client Services Center.

DeBartolo officials could not be reached for comment in recent days. In September, a company official denied the building would be taken to foreclosure or put up for sheriff’s sale.

“There have been different stories bandied about what could happen, including that it could be going back to the lenders,” said Pat Sentner, of NAI Pittsburgh Commercial, a Downtown-based commercial real estate firm.

Tenants interviewed yesterday said they continue to hear speculation that the building’s mortgage holder — Philadelphia-based health-insurance firm Cigna Corp. — may seek to foreclose on the building or that Cigna or DeBartolo may be soliciting buyers.

A Cigna spokeswoman declined to comment yesterday.

“People said we would be contacted by the new owners, but no one from DeBartolo ever contacted us,” said Randy Sams, manager of A-New-U Avon products store, which closed yesterday. Sams, who said he’s not sure if the company-owned store would reopen elsewhere Downtown, heard reports last year that the structure would be turned into a condominium complex, but nothing ever came of that plan.

Others said they had heard the building might to turned into a multi-use complex that would include a hotel.

“I’m optimistic about the building,” said Tom Michael, president of Larrimor’s, the upscale clothier that occupies a prime corner at Grant Street and Fifth Avenue.

Unlike most tenants, who operated their businesses under sub-leases with Mellon Financial, Michael has a separate, longer-term lease for his store that doesn’t expire until 2010.

“We’re happy to be in the building, and I think this is going to be resolved,” he said.

The building’s owner is Pittsburgh DeBartolo Historic Associates, and the structure’s estimated market value is $30.7 million, according to Allegheny County’s real estate Web site.

The site also shows that about $144,000 in county real estate taxes are unpaid for 2006. County Treasurer John Weinstein said that those taxes, along with about $8,600 in penalty and interest, are delinquent.

“We have fully satisfied our 2006 real estate-tax obligations for Two Mellon Center for both the city and the Pittsburgh School District,” Mellon spokesman Ronald Gruendl said. “We will make our payment to the county, once the ultimate owner for the building is determined and is set to pay the remainder of the county obligation.”

As of yesterday, fewer than 20 retail tenants, either in the first-floor arcade area or the first-sub-basement level, remained in the building, along with a few fourth-floor office tenants.

Outside, signs on some of the store windows told of pending moves to new locations, including that of the Nettleton Shop of Pittsburgh upscale shoe store, which plans to move to One Oxford Centre. Others, such as Betsy Ann Chocolates, gave no indication of plans to close or relocate.

Still other windows reveal vacant store areas inside.

Mellon’s Gruendl said that it his understanding that office tenants will be allowed to remain until the end of June under a temporary lease extension.

As of today those arrangements will be in the hands of DeBartolo, he said.

“Our master lease for the building ends today (Wednesday), so as of Thursday, DeBartolo becomes the landlord for all of the remaining leases,” he said.

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