M&J Wilkow didn’t just want to “dip our toe in the water” when it decided to jump into the Pittsburgh market in 2012 with the purchase of the Waterfront retail complex in Homestead, senior vice president Marty Sweeney likes to say.
“We wanted to do a cannonball,” he said.
Five years later, the Chicago developer might be ready to make its biggest splash yet.
M&J Wilkow has teamed with Philadelphia-based CenterSquare Investment Management to convert classrooms and chalkboards at the former Art Institute of Pittsburgh building Downtown into a state-of-the-art office complex with the kind of top-flight amenities seen in larger cities like San Francisco and Chicago.
Mr. Sweeney said more companies are gravitating to the kind of “landmark, vintage, high-quality loft office building” that M&J Wilkow envisions for the site at 420 Boulevard of the Allies — as long as they are loaded with amenities.
“When you do that and you do it right, you get the best tenants in the market and you get some of the highest rents in the market,” he said.
Several months after the Art Institute moved out, M&J Wilkow is gutting the interior of the 154,000-square-foot building, which was built in the 1920s, to create open floors and expose ceilings that range from 12½ to 15 feet high.
Among the amenities planned are a rooftop deck with views of the Monongahela River, a first-floor tenant lounge with free Wi-Fi, a 60-person conference center and a fitness complex in the basement, and a bike lounge with more than 40 parking spaces.
In addition, a 5,000- to 6,000-square-foot restaurant with an outdoor deck is planned on the first floor.
“This building is very well-suited for that kind of new vision we’re seeing around the country. It’s a very handsome, vintage, historic-looking structure. It’s windowed on all four sides, which is really unique for a building this age. So you’ve got a lot of natural light,” Mr. Sweeney said.
Pittsburgh-based Education Management Corp., the parent company to the Art Institute, sold the nine-story building to M&J Wilkow in 2014 for $9.9 million.
At the time, the for-profit school signed a lease to stay in the building for three years. The Art Institute moved out in April, relocating to the Strip District.
With the help of CenterSquare, M&J Wilkow has wasted no time in getting started on the rehab. It has not had to borrow any money for the conversion, enabling it to hit the ground running after the Art Institute moved out. The developer hopes to have the space ready in early 2018.
The company did its homework before settling on an office conversion. It had toyed with the idea of doing condominiums or even a hotel at the location.
“We really think the office market in Pittsburgh is the strongest of those three classes of use,” Mr. Sweeney said. “Office still has a lot left in the tank.”
M&J Wilkow has found a “good niche” in redeveloping empty office buildings in other cities, including San Francisco, Denver and Chicago and its suburbs.
Jason Stewart, the Jones Lang LaSalle executive vice president marketing the space, said the response in Pittsburgh so far has been curiosity.
“They’re really, really interested to understand what this building is that they’ve been driving by every day on their way into town and out of town,” he said.
The experience of M&J Wilkow is part of a recent trend where out of town companies have been buying up some of Downtown’s top real estate and improving it. That includes Shorenstein Properties at One Oxford Centre, The Davis Companies at the Union Trust Building, and Highwoods Properties at PPG Place and EQT Plaza.
In the Pittsburgh region, M&J Wilkow now owns more than three million square-feet of space. Its holdings include the former Westinghouse building on Stanwix Street, which it bought for $81.3 million in February, and 20 Stanwix across the street.
It also owns the Plaza at the Pointe in North Fayette in conjunction with Alto Fund II; Penn Center East; and 275 Technology Drive in Canonsburg.
With each investment, M&J Wilkow has grown to become one of the bigger players in the region. Pittsburgh, Mr. Sweeney said, is now the company’s largest market.
And it might not be done buying and redeveloping here. “We’re looking at opportunities,” he said. “We don’t own anything up north, so that could be it.”
The developer also isn’t afraid to invest in retail at a time when many malls and retail centers are experiencing trouble. “A lot of people are scared of retail. It’s in our DNA. We’re probably not smart enough to be scared of it. So we keep looking at it,” he said.