Pittsburgh Business Times
Brokers see retail appeal in closing school
Tim Schooley
March 12, 2006

As Pittsburgh Public Schools looks to jettison 18 school properties as part of its rightsizing campaign, look for Reizenstein Middle School to garner the most interest from developers.

That may include potential interest from major big-box retailers that would get the rare opportunity to find a large, flat, 12- to 15-acre site in the city near densely populated and well-off residential neighborhoods, say retail brokers.

"Any large box would be interested in that site," said Brian Kerr, a vice president of Langholz Wilson Ellis Inc., a Downtown commercial real estate firm. Kerr represents Costco, the big-box discount membership store that so far has two locations in the region and a third planned for the Waterfront development in West Homestead. While Kerr wouldn't comment on Costco's potential interest in the property, he expects desire for the site will be strong.

"It sits right in the middle of some of the strongest demographics in the region," said Kerr. "If that happens to come on the market, everyone is going to be interested in it."

Costco representatives did not return calls for comment on the site. A spokeswoman for Wal-Mart, a big box that has been expanding aggressively in the Pittsburgh area, said the company has no confirmed knowledge of or interest in the site.

The prospect of the property being redeveloped came a little closer to reality last week when Pittsburgh Public Schools chose to close the school, opting to keep Schenley High School open rather than moving it to the Reizenstein facility, now a middle school. A final date for the closure of the Reizenstein building has yet to be decided.

Currently, A+ Schools, a Downtown-based foundation-funded nonprofit organization that advocates for improving Pittsburgh Public Schools, is working with the school district to develop a strategy to find how to best sell and redevelop the school properties.

Most of the schools slated to close are older buildings, many of which are elementary schools located within struggling city neighborhoods. Some of the buildings, such as South Vo-Tech High School, which is already closed, are considered to have historic value. But Reizenstein was built in the 1970s and is not centrally located within any one community like many of the other schools.

"There are a lot of buildings and a lot of them are in weak markets," said Carey Harris, deputy director of A+ Schools, of the challenge the school district faces with the schools. "We want to help the district think about systematic ways of disposing of these buildings."

A+ Schools is working with the Community Design Center of Pittsburgh, and Kerr's firm, Langholz Wilson Ellis, to evaluate the school properties and develop strategies for their reuse. Harris said A+ Schools will deliver a report to Pittsburgh Public Schools sometime in May.

She also believes Reizenstein would draw interest.

"I would think it would a pretty marketable site," she said of Reizenstein and its proximity to the major redevelopment happening in East Liberty.

Rob Stephany, real estate director for East Liberty Development Inc., a community development company, expects Langholz Wilson Ellis to advise the school district that a retail buyer could generate the highest financial return on the school.

Retail real estate throughout the region is increasingly selling for more than $1 million an acre, according to various retail sources. Pittsburgh Public Schools could command near that price at Reizenstein, said Stephany, including in the equation the potential cost of clearing the property.

"Clearly, Langholz has the retail contacts," said Stephany. "And retail is going to drive the highest value per square foot."

He said using the site for a big-box store would face resistance, both from residents at the high-priced town houses within the Village of Shadyside next door, as well as from The Ellis School, which is nearby.

Stephany also cautioned on how a big-box store would impact development in the rest of East Liberty.

"There's two sides to the coin of highest and best use," he said. "The highest value use would be to a box retailer. I would hope the school district would weigh the difference between highest value and best use for the site."

Stephany remained ambivalent on the impact of East Liberty's last big-box store to open, Home Depot.

He acknowledged the store has played a major role in ushering new customers into East Liberty for the first time in years when the store opened a few years ago. But he regrets how Home Depot wedged a suburban-scale design with lots of parking into an otherwise dense urban neighborhood.

He hoped to see the Reizenstein property reserved for a thoughtful mixed-use project, to expand nearby Mellon Park or for an extension of the Village at Shadyside, in which town houses sell for more than $200,000.

Tony Dolan, a principal for Shadyside-based Walnut Capital Partners, was another developer confident Reizenstein would draw plenty of interest, perhaps from his firm. "If it became available at the right price, we'd be foolish not to be (interested)," he said.

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