The State Office Building sits in a spot so prominent it could be the front door to the Golden Triangle, and the first three rules of real estate are location, location, location.
That's why it seems counterintuitive for the state to sell the 52-year-old, 16-story building for just $4.6 million. Auditor General Jack Wagner thought so, too, which is why he tried to convince the Department of General Services to hold off.
But James P. Creedon, who heads the agency, makes a compelling case that it's in the interest of taxpayers to sell now. He estimates that by moving state offices to rented space, the state will save $14 million over 20 years because it won't have to maintain or rehabilitate the State Office Building.
The building had an assessed value of $14.9 million, but the state didn't get any takers willing to pay that much. Last year, the Buncher Co. bid $4.5 million, but later withdrew the offer. This time around, only one bidder met the minimum asking price, River Vue Associates LP, an affiliate of developer Millcraft Industries, which also owns and is redeveloping the former Lazarus-Macy's and G.C. Murphy buildings Downtown. Which recalls another rule of real estate: A property is worth only what someone will pay for it.
Still, why didn't the state wait to see if the real estate market and economy would improve enough to drive up the price? After all, there is no gun to the state's head making a sale imperative.
The state is happy with the rent it negotiated and Mr. Creedon doesn't think a better deal will come along in the future. The base rent averaging $11.16 per square foot is locked in for two decades. Some state offices will be moving to Millcraft's Piatt Place, where the lease includes six months' free rent and a credit toward furniture and equipment. Millcraft executive Lucas Piatt characterized the deal as "recession lease rates."
The move will get state employees out of a building that has no sprinkler system, whose elevators are aging and where there have been broken pipes and other problems. Mr. Wagner does raise some valid questions about the projected costs of renovation, and he says he will conduct an investigation to ascertain the true costs of the sale and move. But given his stated opposition, he may not be the right party to undertake an unbiased inquiry.
It is clear that, in Millcraft, the state is selling to a developer with proven expertise in renovating and selling housing and retail space in Pittsburgh's Downtown, and that suggests a hopeful future for the building. We're anxious to hear more about plans for the spot. It would be a mistake to leave such a prominent building empty for very long, something akin to turning off the city's porch light.