Highwoods Properties Acquires Landmark Office Building in Downtown Pittsburgh
In a $91.2 million deal, Highwoods Properties Inc. has purchased the 616,000-square-foot EQT Plaza skyscraper in downtown Pittsburgh. The transaction included the full acquisition of building owner Liberty Avenue Mezzanine LLC, a Delaware holding company.
Highwoods Properties plans to invest another $8 million to improve the 32-story office building. Currently at 92.2 percent, the property’s occupancy rate will increase to 95.9 percent by the third quarter of 2013. Major tenants include EQT Corp., insurer AIG and law firms Cohen & Grigsby, McGuireWoods and Fox Rothschild.
“We are thrilled to expand our footprint by 40 percent in downtown Pittsburgh with the acquisition of another Class A office building,” said Ed Fritsch, president and chief executive officer of Highwoods.
According to the Pittsburgh Business Times, the real estate company currently has $300 million worth of property in Pittsburgh, which has become its fifth-largest office market. Last September, the company acquired PPG Place—a six-building, 1.5 million-square-foot office complex in the city’s downtown area. Highwood’s investment amounted to $214.1 million, including improvement costs.
“Our investment in Pittsburgh has already exceeded our expectations,” said Fritsch. “The downtown market is thriving, with competitive Class A office properties 94 percent leased. Occupancy at PPG Place is now expected to increase from 81.2 percent at acquisition to over 88 percent at year-end.”
According to a recent CBRE report, the Class A vacancy rate continues to decrease in the Pittsburgh area. During this year’s second quarter, the Oakland Class A market registered a vacancy rate of zero percent, while the East End was at 1.6 percent and Cranberry and the Parkway North were at 1.7 percent.
The city’s downtown area registered a Class A vacancy rate of 6.1 percent, while the suburban market carried a vacancy rate of 7.6 percent. During the same period, Class B vacancy increased to 12.7 percent from 12.5 percent, while Class C vacancy decreased to 13.4 percent from 13.8 percent.
Photo credits: Wikimedia Commons
Chart courtesy of CBRE, Inc.