Pittsburgh Post-Gazette
Who will be next to build region?
By Dan Fitzpatrick
December 02, 2006

Developer Eddie Lewis gave Joe DeMartino his first job out of college, and the O'Hara commercial real estate investor now models himself after the legendary builder of One Oxford Centre and Monroeville Mall.

"He was a gunslinger," said Mr. DeMartino, 40. "There are not a lot of people like that left."

Mr. DeMartino was among hundreds yesterday who attended the Shadyside funeral of the former Oxford Development Co. chairman, one of the last of Pittsburgh's old-school real estate risk-takers.

Other development giants gone in recent years include Jack Buncher, Joseph Soffer and Leonard Rudolph, all, like Mr. Lewis, from the generation of real estate executives who preferred a handshake to a signed contract and were willing to risk it all on a single new shopping center or skyscraper, thereby shaping the physical landscape of southwestern Pennsylvania.

Mr. Lewis, who died Thursday at the age of 69, was best known for building the 45-story One Oxford without any signed tenants, hoping to fill the $100 million building as it went up -- the sort of risk few, if any, people take anymore.

"These guys were much more on the hook personally," said Bill Rudolph, the son of Squirrel Hill developer Leonard Rudolph, who died in late 2003. "They had much more skin in the game.

"My father loved the thrill of the gamble and so did Eddie. That was the mind-set for those type of guys, which is a lot different than today,'' Mr. Rudolph added. "They didn't have foreign cars. They didn't have jets. They didn't really care about that so much. They loved to build."

Perhaps the last giant of Mr. Lewis' generation still left is 79-year-old Stanley Gumberg, chairman of Braddock Hills-based J.J. Gumberg Co. Mr. Gumberg's father started the company in 1929, and he helped build many of the region's first shopping villages in Cranberry, Leetsdale and Pittsburgh's South Side.

Today, the privately-held J.J. Gumberg controls 15 million to 18 million square feet of shopping centers around the United States, along with the former Lord & Taylor building, Downtown. Three of Stanley Gumberg's sons also are in the business, including J.J. Gumberg Chief Executive Officer Ira Gumberg.

Like Mr. Lewis, Stanley Gumberg remembers the time, several decades ago, when a handshake was enough to clinch a deal.

"The industry has changed," he said.

What stayed the same, though, was the danger.

"You take your risks every day," he added. "It is not a business for people who have weak hearts."

So who are the new risk-takers? And can they duplicate the accomplishments of Mr. Lewis, who inherited a small real estate firm from his father and grew it into a 1,600-person operation that controls more than 10 million square feet?

Several descendants of the old generation are doing what they can to carry the tradition forward, the younger Gumbergs being one example.

Another is Damian Soffer, the son of the late Joseph Soffer, who now oversees a local empire that includes Penn Center East, Penn Center West and the SouthSide Works, a 34-acre mix of retail, office and residential space on the site of a former LTV Steel plant.

The elder Soffer -- a war veteran who got his start purchasing single-family homes and small apartment buildings among the steel mills of the Monongahela Valley -- began preparing his son to take over The Soffer Organization in the 1980s, but remained as chairman until his death earlier this year. The younger Mr. Soffer, now in his late 50s, is largely responsible for luring the Cheesecake Factory, Urban Outfitters and the headquarters of American Eagle to the South Side.

Yet another example is the duo of 55-year-old Bill Rudolph and 56-year-old James Rudolph, sons of the late developer Leonard Rudolph. They, along with members of the Perlow family, became owners in 1999 of the former Gimbels department store Downtown, paying $15.5 million for a building with virtually no tenants beyond a few retailers. They spent $50 million on renovations and in 2000 lured H.J. Heinz as a major tenant.

Not all young real estate risk-takers have the benefit of family development connections.

Developer Frank Kass, from Columbus, Ohio, did what no one else wanted to do when he turned the site of the former USX Homestead Works into The Waterfront, a local retail-and-restaurant sensation built with the backing of a Columbus insurance company and government assistance.

Developer Steve Mosites turned an old East Liberty warehouse into a Whole Foods grocery store, jump-starting a new spate of development in that long-neglected neighborhood.

Mr. DeMartino, managing partner of O'Hara-based Star Realty, bought and sold several significant buildings in Pittsburgh's Cultural District, including the property that became a Renaissance Hotel.

And Gregg Perelman and Todd Reidbord at Walnut Capital Partners in Shadyside spent millions acquiring key buildings along the Walnut Street shopping strip while taking on a slew of other ambitious projects in the Strip District and the East End, using the sale of Mr. Perelman's mail-order pharmacy as seed capital.

But the big deals in local real estate no longer belong solely to families and strong-willed individuals. Institutional players -- pensions funds, insurance companies, publicly traded real estate investment trusts, Fortune 500 companies, private equity funds -- now do most of the large buying and selling in the aftermath of an industry wide crash in the early 1990s.

In recent years, Gateway Center, One Mellon Center, the Dominion Tower and National City Center were all sold to big, out-of-state buyers. Mr. DeMartino said if he had the money to buy Dominion, he would have done it. But New York-based private equity fund Blackstone Group, which controls more than $22 billion of real estate worldwide, paid $45 million at a sheriff's sale, elbowing out any local buyers.

"It's so hard for somebody like me to compete," Mr. DeMartino said.

So his philosophy instead is to emulate the aggressiveness of Mr. Lewis, the late Oxford chairman, on a "smaller scale."

Even Oxford, under Mr. Lewis, adapted to the new rules of the game as it stayed private, adding an array of real estate services to balance out the more unpredictable aspects of its business. And it remains an active development player, leading the construction of PNC Financial Services Group's $179 million Three PNC Place on Fifth Avenue.

David Matter, Oxford's longtime president, runs the company day to day, as he did while Mr. Lewis was around, but it is also clear that family members will still have a role. The ownership of the firm remains in the hands of Mr. Lewis' wife, four children, his sister and a brother-in-law.

And Mr. Matter already has his eye on the next generation. Son Ben Lewis, still in high school, was recently accepted to the University of Pennsylvania, his father's alma mater. Just as Mr. Lewis followed his father into the real estate business, "I expect his young sons to do the same," said Mr. Matter.

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